[186131] in North American Network Operators' Group
RE: Bluehost.com
daemon@ATHENA.MIT.EDU (Kiriki Delany)
Mon Nov 30 16:13:36 2015
X-Original-To: nanog@nanog.org
From: "Kiriki Delany" <kiriki@streamguys.com>
To: "'Matthew Petach'" <mpetach@netflight.com>
In-Reply-To: <CAEmG1=p14aTPiaDf1dATjBj_hsiANgUhjMi+yjXcyW=pZfW-Eg@mail.gmail.com>
Date: Mon, 30 Nov 2015 13:13:25 -0800
Cc: 'NANOG' <nanog@nanog.org>
Errors-To: nanog-bounces@nanog.org
I was more stating the macro economics, and specifically commenting on =
the effects of the losing investments if the product/service itself is =
being sold at a loss. Slim margins on the long-tail of high-volume low =
end is to be expected. =20
The rich are getting richer, was a generally observation that there is a =
trend of more money coming down from the top. I *think* there is more =
losers than winners in general, but the point is about how businesses =
survive. They either have to be profitable, and typically providing =
value in the "free market" or are being subsidized in some way (by =
investment). The constant subsidy of investment, before there is an =
actual value-add to the service/product, damages the rest of the value =
proposition for the industry.
I don=E2=80=99t claim to have the answers, just observations from our =
perspective as a privately held, profitable service company.=20
These issue are at the heart of conversations about the value of =
services like YouTube (Paid for by Google but a successful business =
model?) and Streaming radio services like Pandora, Spotify, Tidal, =
etc... Typically those conversations are about the value of the content, =
vs the revenue paid to the content creators, and who is doing more =
"work" i.e is Google getting the content out there? Or is it destroying =
the value of the content by providing access. These are content =
examples, but I think it=E2=80=99s the same conversation for the web =
hosting and networks.=20
I'm also saying more energy needs to be put into increasing value and =
being able to raise the prices of a service. After-all if you are =
supplying a higher value, it's worth more to the customer, and they are =
actually saving money in the long run paying for a more valuable =
service. As networks and web-hosting becomes more of a commodity, I =
wonder how the service side is being addressed. It's certainly a =
struggle for most large operators, just look at Telco's and Cable =
operators, some of the most hated support provided. Even the airlines =
are horrible. No one's solving the problem of how to massively scale and =
keep up the quality of your support services too.=20
-Kiriki
-----Original Message-----
From: NANOG [mailto:nanog-bounces@nanog.org] On Behalf Of Matthew Petach
Sent: Sunday, November 29, 2015 1:13 PM
Cc: NANOG
Subject: Re: Bluehost.com
On Sat, Nov 28, 2015 at 8:13 AM, Bob Evans <bob@fiberinternetcenter.com> =
wrote:
> I think he means to say the rich get richer on the other side of the=20
> investment by playing the shorting and the buying of stock in the=20
> gambling marketplace. As the stock itself can create a new=20
> currency.... so they make more money playing with that than the=20
> actually investment. They are on the inside hence the saying the rich =
get richer.
> Thank You
> Bob Evans
> CTO
Ah!
So there's two types of value being discussed; network value, vs dollar =
value. While dollar value is being made, and the rich are getting =
richer, the value of the network resources may indeed be destroyed.
Unfortunately, it's very hard to steer behaviour when the incentives are =
not aligned with the desired outcome, and in these cases, the incentive =
(get richer) is often at odds with what the technical community might =
desire.
As much as we might wish it to be otherwise, the primary job of public =
companies is to make money, not create network value--at least, as long =
as the majority of your voting shares are held by investors rather than =
technologists.
I look at companies like Google, Alibaba, and Facebook as interesting =
anomalies because they've structured their corporate ownership in a way =
that doesn't cede control over to the institutional investors the way =
the vast majority of public companies have. It remains to be seen if =
that separation allows them to prioritize creating
network value above making money. (I suspect
Google sidestepped the question when picking their motto--"Don't be =
evil" doesn't define the nature of evil; for investors, not doing =
everything possible to make a profit might be seen as 'evil'. )
Thanks!
Matt
>
>
>
>
>> On Wed, Nov 25, 2015 at 5:54 PM, Kiriki Delany=20
>> <kiriki@streamguys.com>
>> wrote:
>>> [...]
>>>
>>> Bottom line, is the industry needs to be increasing value, because=20
>>> the flip side.... working for no profit, surviving off investment=20
>>> only... there's no end-game. You see this cycle time and time again=20
>>> as market share is grabbed, then underperforming companies are=20
>>> rolled up. In this process value is destroyed.
>>>
>>> Ultimately this is also why it's extremely damaging for investors to =
>>> constantly invest in companies that don't make a profit, and don't=20
>>> provide a successful economical model for the services/products=20
>>> provided. These companies largely live on investor money, lose=20
>>> money, and in their wake destroy value for the entire industry. Of=20
>>> course the end-game for the investors is to make money... I'm always =
>>> surprised how strong investment/gambles are for non-profitable=20
>>> companies. I guess there is no end to those with too much money that =
>>> have to place that money somewhere. As the rich get richer, there=20
>>> will only be more dumb money cheapening the value proposition. After =
>>> all, who needs value when you have willing investors.
>>
>>
>> I'm confused. If these companies largely live on investor money,=20
>> lose money, and destroy value...how is it that a scant two sentences=20
>> later, the rich are getting richer, and there is _more_ dumb money?
>>
>> I would posit the rich get richer because they *do* see value in the=20
>> investments they make. That is, value is being created in these=20
>> deals...just not for everyone.
>>
>> Matt
>>
>
>
