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Originally Posted by notorious
I've always scratched my head at how Netflix, Amazon, etc. can dump hundreds of millions into a series, or in the case of LOTR a billion.
Well, I guess we're finding out they really can't.
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As per usual, the downfall of an otherwise solid company: Doing moronic shit for the sake of stock price.
I think history will look back on the 2010s as the idiocy of the tech boom. From my admittedly passive attention that I've paid to the thing, here's my understanding.
Software scales cheap, right? So Microsoft makes Windows and it is a massive amount of research and programming and development and testing. Expensive shit right? But the cost of printing another Windows 95 CD is cheap as ****. So the model is set. Tech companies have high upfront costs, but it scales cheap.
So then along comes the startup boom Google Amazon et. al. Same shit. High upfront cost, MASSIVE losses in the beginning, but when they rule a segment they print money.
So then comes Facebook, Twitter et. al. They're not really even MAKING anything. But they're the same deal, massive losses, huge income when it scales.
So the tech industry is booming and the stage is set, you need to find a founder (who may or may not be a complete ****lehead) and some half baked ass idea, and a plan to scale the thing.
So then valuation (pre-IPO) and stock price (post-IPO) is pretty much based solely on growth. GROWTH GROWTH GROWTH. **** margins, sound business strategy, capital management, any of the shit grown ups have to do, it'll all work itself out after we own the industry right? RIGHT?
And that's how we get absurdity like Theranos and WeWork (and before that, Enron). Because mother****ers bamboozle other mother****ers in focusing exclusively on growth instead of, I don't know, achieving a return for investors?
Netflix falls into that, first as a success story, good idea, disruptive, stole a massive amount of marketshare, grew substantially. ****ing killed it. Right? Well everyone has a Netflix account so there is nowhere to grow to. So rather than shifting focus to earnings and a dividend model. They say, "WE'RE DOING IT AGAIN" and decide to take over the film production industry. And that isn't cheap, and they've gotten their asses beat like a drum, lost money and are getting raped on the stock price. All for the sake of growth at the expense of profit.
Now the adults have to talk.