5 ms·

The dynamics of 7% of ownership and 30% of ongoing revenue are vastly different. So different in fact that the comparison doesn't hold water.

Bud 1y ago
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johnnyanmac 1y ago
I'd love to hear a proper cointerargument, and not a dismissal.
- ianbutler 1y ago
  Equity ownership doesn't directly effect operating capacity on the same timescale as revenue. (sure investment does but in a positive way, but again not quite the same) Where as revenue does on shorter timescales, and 30% off revenue is an ongoing constraint to operating capacity day to day in a way ownership just isn't. They don't behave the same way so to make the comparison didn't make any sense. Note: Edited this a few times because words are hard.
- CGamesPlay 1y ago
  When Y Combinator gives $10,000 for a 7% stake in the company, the company goes from being "worth" $130,000 before the money to being worth $140,000 after, and they have $10,000 more in their bank account. Every dollar the company earns afterwards also increases their bank account by $1.00. When an app store takes a 30% commission on sales, every dollar the company earns afterwards increases their bank account by $0.70. The percent doesn't really matter (if YC took 30% ownership or app stores took 7% commission), the comparison doesn't really make sense either way.
  - ianbutler 1y ago
    Thank you, making it concrete expressed what I was trying to say way better than I was doing in my reply :P
  - close04 1y ago
    > Every dollar the company earns afterwards also increases their bank account by $1.00. Wouldn’t this be true also if YC owned 100% of the company? On the other hand from that point on, from every dollar the company is worth YC gets 7%. You need to know what is (or will be) bigger and more critical for your success, the investment worth 7% of your company, or the 30% Apple takes from your app. Either of these numbers can be millions or $0. I’m very much for alternative storefronts and letting people choose. Android already proved this works just fine and most people still go for the official store. But I don’t think the argument above paints a clear, unbiased picture.
    - CGamesPlay 1y ago
      Yes, that was my conclusion as well. > The percent doesn't really matter (if YC took 30% ownership or app stores took 7% commission), the comparison doesn't really make sense either way.
- kortilla 1y ago
  Ownership doesn’t cost the company anything. 30% of revenue cuts off the flow of money immediately even long before the company is profitable.

Bud 1y ago

[dead]

johnnyanmac 1y ago

I'd love to hear a proper cointerargument, and not a dismissal.

ianbutler 1y ago
Equity ownership doesn't directly effect operating capacity on the same timescale as revenue. (sure investment does but in a positive way, but again not quite the same) Where as revenue does on shorter timescales, and 30% off revenue is an ongoing constraint to operating capacity day to day in a way ownership just isn't. They don't behave the same way so to make the comparison didn't make any sense. Note: Edited this a few times because words are hard.
CGamesPlay 1y ago
When Y Combinator gives $10,000 for a 7% stake in the company, the company goes from being "worth" $130,000 before the money to being worth $140,000 after, and they have $10,000 more in their bank account. Every dollar the company earns afterwards also increases their bank account by $1.00. When an app store takes a 30% commission on sales, every dollar the company earns afterwards increases their bank account by $0.70. The percent doesn't really matter (if YC took 30% ownership or app stores took 7% commission), the comparison doesn't really make sense either way.
- ianbutler 1y ago
  Thank you, making it concrete expressed what I was trying to say way better than I was doing in my reply :P
- close04 1y ago
  > Every dollar the company earns afterwards also increases their bank account by $1.00. Wouldn’t this be true also if YC owned 100% of the company? On the other hand from that point on, from every dollar the company is worth YC gets 7%. You need to know what is (or will be) bigger and more critical for your success, the investment worth 7% of your company, or the 30% Apple takes from your app. Either of these numbers can be millions or $0. I’m very much for alternative storefronts and letting people choose. Android already proved this works just fine and most people still go for the official store. But I don’t think the argument above paints a clear, unbiased picture.
  - CGamesPlay 1y ago
    Yes, that was my conclusion as well. > The percent doesn't really matter (if YC took 30% ownership or app stores took 7% commission), the comparison doesn't really make sense either way.
kortilla 1y ago
Ownership doesn’t cost the company anything. 30% of revenue cuts off the flow of money immediately even long before the company is profitable.