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And he can't put it into CDs because of liquidity risk. PayPal's first business plan was to make money on the float. That didn't work, so they started chargin
by sachinag 17y ago
And he can't put it into CDs because of liquidity risk.
PayPal's first business plan was to make money on the float. That didn't work, so they started charging (ever higher) fees. In the history of the world, I don't think anyone's ever made their money on the float.
- ensignavenger 17y agoWarren Buffett
- byrneseyeview 17y ago1) Doesn't use a ton of leverage, even considering the float. 2) Makes an excess return with or without float. 3) Made his initial money without using float. 4) Is a fairly unusual guy, which is why we've all heard of him.
- cperciva 17y agoYes, but I'm not Warren Buffet. :-) A more useful comparison would be to Jeff Bezos: Even disregarding unearned income, tarsnap produces roughly 1.5 months of float due to AWS billing a credit card at the end of each month (0.5 months after usage, on average) which has a billing period ending 3 weeks later (0.75 months) and which has a long enough grace period that I can wait another week (0.25 months) before paying off the credit card bill. This "negative working capital" model is one of the reasons Amazon could grow so quickly in the early years -- and makes it very unlikely that I will ever need to raise capital to fund tarsnap's growth.