Re:Ten predictions (2004)
by nullymcnull on Friday February 15, 2013 @08:17AM
(#5225965)
So, you were assuming that they weren't making a profit based on some sort of gut feeling that they were "still in start-up mode", but you used quite absolute language suggesting personal knowledge of the state of their books.
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Re:Ten predictions (2004)
by seanmcdirmid on Friday February 15, 2013 @09:12PM
(#5230018)
Why the heck would GitHub take $100 million in investment and still push for earning a profit every quarter? Does it make any sense to you? Now you can see why I'm confused.
The idea that taking investment automatically means you would actively forgo earning a profit is kinda odd. You take investment to grow, not because you have an allergy to profits.
Re:Ten predictions (2004)
by seanmcdirmid on Friday February 15, 2013 @11:54PM
(#5230445)
Not really. Say you take $100 million in finance, so you are now $100 million in debt and you are probably not going to put the money in the bank, but spend it. When you spend (invest) the money, that is taken away from earnings and you can spend more than you earn thanks to the financing. Even if the company's valuation goes up because of these investments, they are still taking a loss now. You have to take a hit now to grow and earn more later.
I'm not an accountant, and this is just my uninformed understanding.
> Say you take $100 million in finance, so you are now $100 million in debt
Venture capital is not a loan; it's a purchase of equity. You are not in debt after taking money.
Re:Ten predictions (2004)
by seanmcdirmid on Saturday February 16, 2013 @05:18PM
(#5233272)
You are right. But the $100m is not earnings either, and you have to spend it, so your balance sheet is still negative for awhile.
I get the feeling we don't know why yet.
Re:Ten predictions (2004)
by mcintyre1994 on Saturday February 16, 2013 @08:46AM
(#5231452)
Surely that sort of investment is a bet on going public?