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Elastic is IMHO a weird pick for this argument. Annual revenue over $1 billion growing at >30%. The money comes from corporations whose most valuable data flows

by pavlov 4y ago

Elastic is IMHO a weird pick for this argument. Annual revenue over $1 billion growing at >30%. The money comes from corporations whose most valuable data flows through the system created and provided by Elastic. How is that a Ponzi in any sense? It’s not like Elastic makes money from selling its own stock on endless promises. The product exists, works, and generates a billion dollar in sales. The valuation may not be attractive, but it seems clear to me that this can be a profitable and stable business if they decided to stop buying growth.

scarface74 4y ago
I know it’s a thing for startups. Bragging about “revenue” and ignoring lack of “profits” makes no sense. The entire idea of a business is to make more than you spend. Anyone can sell dollars for 95 cents. https://www.elastic.co/about/press/elastic-reports-strong-second-quarter-fiscal-2022-financial-results https://www.elastic.co/about/press/elastic-reports-strong-se... What is Elastic doing to “buy growth”?
- pavlov 4y ago
  The usual things enterprise software companies do: spend on sales, marketing, and R&D on features that would be attractive to new leads. If they stopped doing those things and just served the existing customers who bring in the $1B revenue today, I’m guessing they could be profitable fairly quickly and start paying dividends (or returning capital through stock buybacks). But that kind of stable enterprise software company would be mostly attractive as a takeover target for a larger player or private equity; it’s not the story that investors in public markets want to hear. So Elastic’s valuation would be slashed. This doesn’t make the company a Ponzi though. Seeking growth is a valid strategy and one that’s still sought out by many investors despite the valuation correction from last year.
  - scarface74 4y ago
    How is it “stable”? It’s based on open source software and they are trying to make money on hosting and support. Unfortunately, the three large cloud providers (including the one I work for) are taking the open source distribution and hosting it, providing support and integrating it with other services.

by pavlov 4y ago

scarface74 4y ago

I know it’s a thing for startups. Bragging about “revenue” and ignoring lack of “profits” makes no sense. The entire idea of a business is to make more than you spend. Anyone can sell dollars for 95 cents. https://www.elastic.co/about/press/elastic-reports-strong-second-quarter-fiscal-2022-financial-results https://www.elastic.co/about/press/elastic-reports-strong-se... What is Elastic doing to “buy growth”?

pavlov 4y ago
The usual things enterprise software companies do: spend on sales, marketing, and R&D on features that would be attractive to new leads. If they stopped doing those things and just served the existing customers who bring in the $1B revenue today, I’m guessing they could be profitable fairly quickly and start paying dividends (or returning capital through stock buybacks). But that kind of stable enterprise software company would be mostly attractive as a takeover target for a larger player or private equity; it’s not the story that investors in public markets want to hear. So Elastic’s valuation would be slashed. This doesn’t make the company a Ponzi though. Seeking growth is a valid strategy and one that’s still sought out by many investors despite the valuation correction from last year.
- scarface74 4y ago
  How is it “stable”? It’s based on open source software and they are trying to make money on hosting and support. Unfortunately, the three large cloud providers (including the one I work for) are taking the open source distribution and hosting it, providing support and integrating it with other services.