[alcio]

Not only is it terrible, but misleading too.

Google has 88k employees and had a $32B revenue last quarter. Let's assume 25% of employees are R&D, each paid $250k/y: Google would spend $5.5B a year on R&D, or 4.2% of revenues ; not quite a "large portion of their capital".

[thedufer]

Comparing to revenue doesn't make much sense. If you look at profit margins they could easily be spending more than all of their profit on R&D.

Also, that's a rather low estimate for average compensation for devs at Google. If, as you mentioned elsewhere, the 25% number is a purposeful overestimate, then combining it with an underestimate of compensation means that your total number is murky; it could easily be a drastic over- or under-estimate.

That said, 25% is also an underestimate - in 2016 Google reported that ~38% of full-time employees were in R&D. So it sounds like you think you're overestimating how much they spend on R&D, but in fact you're way underestimating it.

[barrkel]

Comparing costs with revenues is right. Profit already accounts for costs, and can be razor thin in very large companies with lots of costs - a comparison of costs with profit in such a company would be highly misleading.

[thedufer]

I think you're right that comparing to profit isn't right, but I still contend that comparing to revenue isn't either. What I meant is looking at per-unit profit margins (i.e. excluding things like R&D) - if just producing whatever they're selling costs 99% of revenue generated from it, then 5% of revenue on R&D looks pretty high - they're drawing on capital to do so. If, on the other hand, those costs are only 5%, then they're stashing away an enormous portion of revenue despite R&D and thus they're R&D spend looks pretty low.

[dunpeal]

It's arguably Machiavellian: "Hey you, minimum-wage security guard, you know all these engineers you greet at the gate? Each one of them is making x5 your salary! Capitalistic pigs, eh?"

(But let's not talk about the executives you never see, coming in through private entrances straight from their private landing strips and making x1,000 your salary.)

[chrisseaton]

> Let's assume 25% of employees are R&D

25% of people are researchers at Google? Are you saying that's what you think it is at the moment or hypothetically? Research is a tiny tiny proportion of Google's work.

[dunpeal]

"R&D" is what SWEs do. If you're developing anything new, such as a new software system, then you are doing R&D by definition.

"Production" is something like building the same factory that was built thousands of times before, to fabricate the same widgets that were fully designed by an R&D team.

The actual top researchers at a place like Google would be making way more than $250k.

[alcio]

I cast a super wide net to show how ridiculous the original statement was.