3 ms·

This isn't surprising given how different businesses may value a payment against an ongoing obligation to customers. @patio11 had a good podcast about this "Cas

by adolph 3mo ago

This isn't surprising given how different businesses may value a payment against an ongoing obligation to customers. @patio11 had a good podcast about this "Cash received is not revenue earned" last April. What the GoDaddy CEO said in many interviews and investor presentations is: "Look, since we're not going out of business, and since the cost of serving domain names is essentially the same whether we're serving a million of them versus a hundred million of them, you should really treat this as a cash-and-carry business. So all of the money that comes in this year is our revenue, regardless of this massive balance sheet item that says deferred revenue." What sophisticated investors looking at GoDaddy said was, "Well, no. You do have to still keep running the business. And so from my perspective, it looks like GoDaddy is incredibly levered. You've got so much debt on the books. The debt isn't to a bank or to a private credit fund–it's just to your customers. But oh goodness, is there a lot of debt. And since that debt must get satisfied before US equity holders get the residual value of the company, we are not willing to extend equity investment at the valuation you think you're worth." https://www.complexsystemspodcast.com/episodes/cash-received-is-not-revenue-earned/ https://www.complexsystemspodcast.com/episodes/cash-received...

RugnirViking 3mo ago
what debt does the comapny owe, given his observation that the marginal cost of serving another customer is zero? sure, if they stopped serving them, theyd have a problem, I agree there. But when you try to value the liability here, its surely not very big? Thats what he's saying. Same here with these games. All sony has to do is not delete your games. They still keep your account, and your payment info and a hundred other things. but the cost of keeping a binary "owns/doesnt own" on their database is suddenly too much?
- adolph 3mo ago
  Maintenance isn't cost-free. As an example, the operating system and other software dependencies of the game depends will eventually be depreciated and not supported. If a security vulnerability is discovered in software still available from company servers but the teams that built it have moved on, what is the company's liability for recomposing teams in order to make a fix that does not negatively affect other aspects of the software?
  - RugnirViking 3mo ago
    right, but if a game no longer works and you don't assign resources to fix it, thats way more understandable than removing access to a game that others can play perfectly fine because your account is old or some other reason

by adolph 3mo ago

RugnirViking 3mo ago

what debt does the comapny owe, given his observation that the marginal cost of serving another customer is zero? sure, if they stopped serving them, theyd have a problem, I agree there. But when you try to value the liability here, its surely not very big? Thats what he's saying. Same here with these games. All sony has to do is not delete your games. They still keep your account, and your payment info and a hundred other things. but the cost of keeping a binary "owns/doesnt own" on their database is suddenly too much?

adolph 3mo ago
Maintenance isn't cost-free. As an example, the operating system and other software dependencies of the game depends will eventually be depreciated and not supported. If a security vulnerability is discovered in software still available from company servers but the teams that built it have moved on, what is the company's liability for recomposing teams in order to make a fix that does not negatively affect other aspects of the software?
- RugnirViking 3mo ago
  right, but if a game no longer works and you don't assign resources to fix it, thats way more understandable than removing access to a game that others can play perfectly fine because your account is old or some other reason