6 ms·

That reminds me of dot com times when two ad supported businesses would trade ads for themselves on each others platform and then both book some big and sales w

That reminds me of dot com times when two ad supported businesses would trade ads for themselves on each others platform and then both book some big and sales without any money changing hands. Like yahoo would show AOL ads for $100M and AOL would show Yahoo ads for $100M. I don’t know why people can’t stop themselves from fraud, but the whole auditing/financial controls stuff is proven again and again as of vital importance.

akira2501 4y ago
> I don’t know why people can’t stop themselves from fraud It's clearly a valid strategy that yields some desirable results in the short term. From history, it seems people usually convince themselves they can come back and fix it if they can just make it to the long term.
- lanstin 4y ago
  Well in my programming i make similar choices, so I guess that makes sense but I always assumed people that went to school for business stuff had higher standards. I suppose code reviews and release requirements serve a similar function.
  - TeMPOraL 4y ago
    I think business schools teach business ethics just as much as tech schools teach engineering ethics. I.e. maybe some, sometimes, a little bit, possibly as an add-on course people mostly take because they need to take some filler classes.
benjaminwootton 4y ago
I know of a few situations where a company valued in the $billions are paying a fortune to a company valued in the $hundreds of millions for very questionable value. If the value of the buyer at the top of the food chain crumbles then the value of a whole ecosystem of vendors are hurt too. Large parts of the VC backed software industry are built on a house of cards.
- mrisoli 4y ago
  Sounds like every startup ecosystem
derbOac 4y ago
> I don’t know why people can’t stop themselves from fraud In my experience it's because more minor or gray instances of it that we never see get swept under the rug or ignored, and people get pressured or encouraged into bigger and bigger, more clear-cut fraud until it gets caught. Survivorship bias works with vice like anything else.
mmaunder 4y ago
Lived through that working for eToys.com. The tide continues to go out and will be for at least 36 months I'd say. Fun times ahead.
mertd 4y ago
That scheme isn't necessarily zero sum. If Yahoo simply didn't have the inventory to show certain ads but AOL did and vice versa then it would be a mutually beneficial deal that fills ad slots that would otherwise go unfulfilled. Say Yahoo gets a lot of queries for plumbers but plumbers for whatever reason were using AOL to run their campaigns.
- not2b 4y ago
  That's an argument for two companies to show ads on each other's platforms, but not an argument for the vastly inflated prices they were pretending to charge each other. At least for public companies, regulators should crack down on that kind of thing.
  - robertlagrant 4y ago
    Presumably this only affects top line revenue of each company.
    - not2b 4y ago
      Yes, but big artificial revenue growth coupled with equally big artificial expense growth can look like a growing company and hide the fact that non-bogus revenue is actually shrinking. I don't think sophisticated investors will be fooled by this, but with a public company many potential investors might be deceived.
Waterluvian 4y ago
This reminds me of all the garbage mobile games that advertise each other.
CurtHagenlocher 4y ago
"You have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets." (via Michael Lewis)
- TeMPOraL 4y ago
  Obviously you can't create new money this way (not without involving an external substrate for scam, such as crypto tokens), but I think if you tried hard enough, you could create for yourself a tax liability on those billion dollars.
  - vlovich123 4y ago
    Huh? Replace dog and cat with “Art piece I had an appraiser that I hired claim it was worth this”. Happens all the time. Monetary value is totally arbitrary. If not, tulips in holland wouldn’t have been valuable enough to buy a house at one point and then moments later been totally worthless.
  - singron 4y ago
    You would owe capital gains tax if these were considered like breeding livestock. You would probably want to sell the pets again so you could offset your gain with loss. Otherwise, I think this sale would be considered ordinary income (other than the fact that it's for an outrageous amount). If you did this as a person, you would have an enormous tax bill and no cash to pay it. As a business, you could deduct your expenses and end up with 0 taxable income, although the IRS probably wouldn't like it.
- cutemonster 4y ago
  This sounds pretty close? > online grocery-delivery company Boxed Inc. received $20 million and signed a five-year, $20 million contract. Days after receiving Palantir’s money, Boxed paid $15 million to Palantir as part of the contract
- sofixa 4y ago
  Funnily this happens in football too, most recently Juventus (a fairly old and famous Italian club) are being investigated for financial fraud including around one such deal with Barcelona (which did a number of them), where two players were swapped for overinflated values, on different days to fall in different fiscal quarters.

akira2501 4y ago

> I don’t know why people can’t stop themselves from fraud It's clearly a valid strategy that yields some desirable results in the short term. From history, it seems people usually convince themselves they can come back and fix it if they can just make it to the long term.

lanstin 4y ago
Well in my programming i make similar choices, so I guess that makes sense but I always assumed people that went to school for business stuff had higher standards. I suppose code reviews and release requirements serve a similar function.
- TeMPOraL 4y ago
  I think business schools teach business ethics just as much as tech schools teach engineering ethics. I.e. maybe some, sometimes, a little bit, possibly as an add-on course people mostly take because they need to take some filler classes.

benjaminwootton 4y ago

I know of a few situations where a company valued in the $billions are paying a fortune to a company valued in the $hundreds of millions for very questionable value. If the value of the buyer at the top of the food chain crumbles then the value of a whole ecosystem of vendors are hurt too. Large parts of the VC backed software industry are built on a house of cards.

mrisoli 4y ago
Sounds like every startup ecosystem

derbOac 4y ago

> I don’t know why people can’t stop themselves from fraud In my experience it's because more minor or gray instances of it that we never see get swept under the rug or ignored, and people get pressured or encouraged into bigger and bigger, more clear-cut fraud until it gets caught. Survivorship bias works with vice like anything else.

mmaunder 4y ago

Lived through that working for eToys.com. The tide continues to go out and will be for at least 36 months I'd say. Fun times ahead.

mertd 4y ago

That scheme isn't necessarily zero sum. If Yahoo simply didn't have the inventory to show certain ads but AOL did and vice versa then it would be a mutually beneficial deal that fills ad slots that would otherwise go unfulfilled. Say Yahoo gets a lot of queries for plumbers but plumbers for whatever reason were using AOL to run their campaigns.

not2b 4y ago
That's an argument for two companies to show ads on each other's platforms, but not an argument for the vastly inflated prices they were pretending to charge each other. At least for public companies, regulators should crack down on that kind of thing.
- robertlagrant 4y ago
  Presumably this only affects top line revenue of each company.
  - not2b 4y ago
    Yes, but big artificial revenue growth coupled with equally big artificial expense growth can look like a growing company and hide the fact that non-bogus revenue is actually shrinking. I don't think sophisticated investors will be fooled by this, but with a public company many potential investors might be deceived.

Waterluvian 4y ago

This reminds me of all the garbage mobile games that advertise each other.

CurtHagenlocher 4y ago

"You have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets." (via Michael Lewis)

TeMPOraL 4y ago
Obviously you can't create new money this way (not without involving an external substrate for scam, such as crypto tokens), but I think if you tried hard enough, you could create for yourself a tax liability on those billion dollars.
- vlovich123 4y ago
  Huh? Replace dog and cat with “Art piece I had an appraiser that I hired claim it was worth this”. Happens all the time. Monetary value is totally arbitrary. If not, tulips in holland wouldn’t have been valuable enough to buy a house at one point and then moments later been totally worthless.
- singron 4y ago
  You would owe capital gains tax if these were considered like breeding livestock. You would probably want to sell the pets again so you could offset your gain with loss. Otherwise, I think this sale would be considered ordinary income (other than the fact that it's for an outrageous amount). If you did this as a person, you would have an enormous tax bill and no cash to pay it. As a business, you could deduct your expenses and end up with 0 taxable income, although the IRS probably wouldn't like it.
cutemonster 4y ago
This sounds pretty close? > online grocery-delivery company Boxed Inc. received $20 million and signed a five-year, $20 million contract. Days after receiving Palantir’s money, Boxed paid $15 million to Palantir as part of the contract
sofixa 4y ago
Funnily this happens in football too, most recently Juventus (a fairly old and famous Italian club) are being investigated for financial fraud including around one such deal with Barcelona (which did a number of them), where two players were swapped for overinflated values, on different days to fall in different fiscal quarters.