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Financial Misstatements

blog.samaltman.com

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121–130 of 194 posts

Re: Financial Misstatements

#121

Post by evo_9 »

Mr. Altman is talking about the basic misunderstanding of these terms and it's surprising to me that he didn't take a bit of time to define the terms himself. Maybe I'm naive and those terms are a lot harder to define than I'm imagining, but even then some references linking to other sites could have been provided.

I really enjoy reading Sam's posts and I'm usually bookmarking and/or forwarding his articles to a ton of friends. This one is a nice amuse-bouche but I guess I'm use to getting a full meal from Sam. Maybe a quick update with some links is all it needs? Good read otherwise.

Re: Financial Misstatements

#122

Post by randall »

kevin wrote: post #8

Here's the biggest offenders I see when talking to founders: revenue vs GMV (if you give GMV, give me your cut/margin) contract vs LOI burn vs expenses users vs customers (customers pay) signups vs users vs active users (you should give active with time interval and measurement of active. eg. logged in last 30 days) profitable vs cash flow positive Others people should know: diff between retention rate vs churn rate…

What's voluntary vs involuntary churn? (googling but if anyone wants to save me the time) :)

A: Voluntary churn occurs due to a decision by the customer to switch to another company or service provider, involuntary churn occurs due to circumstances such as a customer's relocation to a long-term care facility, death, or the relocation to a distant location.

from: https://en.wikipedia.org/wiki/Customer_attrition

Re: Financial Misstatements

#123

Post by embedding »

dang wrote: post #120
brobdingnagian wrote: post #114

Earlier quoted context omitted.

Dissent is not tolerated, despite that the criticism comes attached to clear evidence of poor moderation? Keep the downvotes coming - it only goes to prove how arbitrary and non-information bearing they are.

Please stop.

Stop what, exactly? A post that makes references to Sam Altman's previous post in the context of his present post has 3 downvotes. It's a legitimate point. You want me to stop making legitimate points? I am under the distinct impression that downvotes are not intended to be used when you simply disagree with someone, yet that's exactly what they are being used here for. Hypocrisy.

Re: Financial Misstatements

#124

Post by tptacek »

OliverJones wrote: post #65

A voice recognition company was in the process of IPO in the mid 1990s. They had some big purchase orders from institutional customers. The trouble was, those POs had side letters giving the customers the right to return the products for credit if they didn't work correctly. Not disclosing those side agreements to investors was treated as felony securities fraud. It made the company seem more valuable than it really…

That's a nutshell description of "cash flow positive" versus "profitable", right? It's about revenue recognition.

Re: Financial Misstatements

#125

Post by embedding »

embedding wrote: post #123
dang wrote: post #120

Earlier quoted context omitted.

Please stop.

Stop what, exactly? A post that makes references to Sam Altman's previous post in the context of his present post has 3 downvotes. It's a legitimate point. You want me to stop making legitimate points? I am under the distinct impression that downvotes are not intended to be used when you simply disagree with someone, yet that's exactly what they are being used here for. Hypocrisy.

So, Mr. dang, what exactly are these downvotes for, and why are they being tolerated?

Re: Financial Misstatements

#127

Post by dudurocha »

joshjkim wrote: post #56

Interesting idea: VCs should have in-house finance folks specifically meant to work with portfolio companies who spent a few days a month for year 1 after investment, or until the company gets it own finance team. Most VCs do less than 10-15 deals a year, so this seems tolerable and a relatively low cost way of to really know what's going on with the portfolio. (I know some VCs already kind of do this (Vantage Point)…

We always put a new CFO in the company. But non of them are from the VC firm.

This method you talk about is way more commom on large deal, like Private Equity, LBO, etc. Those companies make 2 to 4 deals a year. 10-15 deals isn't a small number of deals.

Re: Financial Misstatements

#128

Post by jsprogrammer »

duaneb wrote: post #18
kevin wrote: post #8

Here's the biggest offenders I see when talking to founders: revenue vs GMV (if you give GMV, give me your cut/margin) contract vs LOI burn vs expenses users vs customers (customers pay) signups vs users vs active users (you should give active with time interval and measurement of active. eg. logged in last 30 days) profitable vs cash flow positive Others people should know: diff between retention rate vs churn rate…

IANAL, and Sam mentioned a felony charge. Are there any legal protections for investors (or.... whoever this is protecting) for e.g. misrepresenting "signups vs users vs active users"? Surely that falls under subjective fraud rather than a straight up objective lie, especially for sites e.g. reddit where the line between "active user" and "lurker" is extremely murky. EDIT: Clearly I have no understanding of fraud.

There are substantial remedies. Civil courts allow actions for restitution and punitive awards.

If the fraud rises to a sufficient level, you can attempt to have the state lock the person up and/or prevent the person from interacting with you.

Re: Financial Misstatements

#129

Post by Animats »

smacktoward wrote: post #46

This post leaves a bad taste in my mouth, at least to the degree it's talking about executives of YC companies. I mean, the whole model of YC is to take kids straight out of college (if not before) and turn them into startup CEOs. If those CEOs come out of that process not understanding the legal obligations of their new position, whose fault is that, exactly? It's not like they're bringing decades of business experi…

"I’ve seen people use GMV for revenue or refer to an LOI as a contract many times in the past year when talking to investors. This is a felony."

This is only a problem when you're asking investors for more money. That's when you need an accountant to review what you're telling them. You need an accountant and a lawyer at that point anyway, or you're going to get screwed.

Re: Financial Misstatements

#130

Post by dang »

embedding wrote: post #125
embedding wrote: post #123

Earlier quoted context omitted.

Stop what, exactly? A post that makes references to Sam Altman's previous post in the context of his present post has 3 downvotes. It's a legitimate point. You want me to stop making legitimate points? I am under the distinct impression that downvotes are not intended to be used when you simply disagree with someone, yet that's exactly what they are being used here for. Hypocrisy.

So, Mr. dang, what exactly are these downvotes for, and why are they being tolerated?

You're breaking the HN guidelines by making unsubstantive comments, going on about downvoting, and engaging in a tedious one-sided flamewar. Downvotes and flags are justified.
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