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by danielmarkbruce 5 hours ago
No, they argue they shouldn't be counted as operating expenses because they are basically capex dollars. It's a completely reasonable argument. If I spend $100 million on s&m to get a bunch of customers to my saas, it's not different economically to drilling 20 oil wells at $5 million a pop.
2 comments
nl 5 hours ago
Yes that capex is a fair point too.

(To explain: It's basically saying they are spending $X now to get them as a customer which will yield a lifetime value which is some multiple of $X. That's a very valid thing to do - see the whole field of cohort analysis for SAAS)

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vkou 5 hours ago
An oil well doesn't disappear once you put it in the ground (The oil might).

If the marketing and promotions and discounts stopped tomorrow, that revenue will drop.

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nl 4 hours ago
Page 6 of Google's 10K statement to the SEC[1] they are separate items. The line items are:

Cost of revenues Research and development Sales and marketing General and administrative

Take it up with the SEC I guess?

[1] https://s206.q4cdn.com/479360582/files/doc_financials/2026/q...

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vkou 1 hour ago
I'm not saying that the SEC is stupid. They have a consistent way that they expect a corporation to do their books.

But for all practical intents and purposes, you can't just fire all your sales people and shut off your marketing firehose, and stop giving discounts, and expect revenue to remain steady in either the short, or the long-term.

You can shut down your R&D, and it will remain steady, at least in the short term.

I am clearly mincing terms that mean specific things, and I'm very sorry to do so. I am simply trying to communicate that generally speaking, OpenAI is currently spending ~$1.05 to make a dollar, and is also on top of that, spending ~$3.00 in R&D.

Now, I do think that it's likely that they can increase their prices to close that 5-cent gap.

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danielmarkbruce 5 hours ago
If you drill a dry well, under successful efforts accounting, you expense it. You also make zero dollars.

On top of that, oil wells decline, slowly but surely, just like... customers churn.

If you spend $100 mill on sales and marketing and get zero customers, I'd agree it should expensed. If you get a bunch of customers, it's hard to argue against the capex treatment idea.

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otterley 5 hours ago
Brand equity lasts long after advertising has ceased. Coca-Cola could stop advertising for a year tomorrow and people would still be aware of it and buy it.
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