3 ms·
there's no capital risk for the servicing company.
by compsciphd 6y ago
there's no capital risk for the servicing company.
- smogcutter 6y agoI get that there’s some value-add on the owner’s part by taking on the capital risk, but in this case it seems like it’s mostly an illusion. After all, the servicing company’s business (assuming they don’t own any of their own machines) is entirely dependent on having access to other people’s machines. Your risk might as well be theirs, plus they don’t have assets to leverage. I think the difference here vs something like say owning a building and hiring a property management company is the negligible value of the machine compared to operating costs. The capital portion is such a small piece of the puzzle that just owning the capital and contracting out everything else isn’t going to be competitive. I think this is borne out by TFA, which doesn’t describe any owners working the way that parent suggests.