Loved this piece even if I felt personally attacked by the comment about doing the books with an abacus - I'm literally embarking on my abacus journey right this moment!
In all seriousness, genuinely enjoyed how self-aware this article was. I always batled with the zero marginal cost idea.. because of course you constantly need to build to retain customers; switching costs are relatively low, so of course there's always someone waiting to poach your customer with more bells and whistles. Thank you for helping me realize I wasn't crazy.
Great piece that needed to be written as we live in a world where investors (VCs, growth capital folks etc.) push their software businesses to artificially inflate gross margins in many ways including what you say about parts of R&D being really equivalent to COGS.
The more time I spend around businesses, the more I realize that what I learned early in my career in the 1990s, was that free cash flow (after capex and capitalized expenses) is the most important financial metric, and perhaps even more so free cash flow per share (so that we account for dilution from SBC.)
Loved this piece even if I felt personally attacked by the comment about doing the books with an abacus - I'm literally embarking on my abacus journey right this moment!
In all seriousness, genuinely enjoyed how self-aware this article was. I always batled with the zero marginal cost idea.. because of course you constantly need to build to retain customers; switching costs are relatively low, so of course there's always someone waiting to poach your customer with more bells and whistles. Thank you for helping me realize I wasn't crazy.
I felt like I was attacking myself the entire time I wrote this 🤣🤣
Thanks for the ongoing support
Great article. I was just pondering how the entire tech sector markets itself to an almost pathological extent.
We are the greatest marketers to perhaps ourselves
Great piece that needed to be written as we live in a world where investors (VCs, growth capital folks etc.) push their software businesses to artificially inflate gross margins in many ways including what you say about parts of R&D being really equivalent to COGS.
The more time I spend around businesses, the more I realize that what I learned early in my career in the 1990s, was that free cash flow (after capex and capitalized expenses) is the most important financial metric, and perhaps even more so free cash flow per share (so that we account for dilution from SBC.)
Love reading your substack every time, CJ!
Thanks for the ongoing support, you the man
Love the search fund snark!
So glad that resonated. I will not be rolling up regional laundromats