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The PMs, and the senior engineers. "Leave well enough alone" is never a winning pitch. We see this phenomenon literally everywhere. The Patent and Trademark Of
by AlbertCory 4y ago
The PMs, and the senior engineers. "Leave well enough alone" is never a winning pitch.
We see this phenomenon literally everywhere. The Patent and Trademark Office just replaced their perfectly usable Search page with something vastly more complicated, and incomprehensible at first glance.
When I was researching my article about Twitter and firing all those engineers, I looked at the R&D spending for Proctor & Gamble and other consumer products companies. It's usually 1-2% of revenue. They spend their money on marketing, where it belongs when your product is mature.
- BurningFrog 4y agoYou may be right, but percent of revenue is a terrible measure.
- AlbertCory 4y agoWhat do you think is better?
- BurningFrog 4y agoNot sure what the economists call it, but if a business spends $8M producing goods they sell for $10M, the money they can potentially spend on research is $2M, not $10M (the revenue).
- AlbertCory 4y agoI was going to answer this, but too many accounting questions: Is the $8M "cost of goods sold", i.e. variable costs, or does it include the fixed costs (buildings, salaries, utilities, etc.)
- BurningFrog 4y agoYeah, there is a lot of detail, and I don't have a perfect formula. My point was that OP equated revenue with profit, which is clearly and substantially wrong.
- AlbertCory 4y agoOP was me, wasn't it? I said "It's usually 1-2% of revenue."
- BurningFrog 4y agoOh, I didn't realize you're OP :) Yeah, I read that as "of all the money they could spend these greedy bastards only spend 1-2% on R&D", but in reality their "disposable income" is much less the revenue. Did I miss your point in some way?
- AlbertCory 4y agoI think you read "revenue" as "disposable income." R&D as a percent of revenue is a pretty common metric in the investment world. It's not perfect, like most accounting metrics. Maybe there are people who measure R&D as a percent of (revenue - COGS) but I haven't seen that.
- BurningFrog 4y agoThat's more than I know, but you're probably right. Perhaps one day I'll revolutionize accounting with my ideas, but for now I'll accept this :)