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0 pointsblantonl14y ago0 comments

the rules actually are different when you're selling something with zero marginal cost.

I don't think there is any business that sells something with zero marginal cost. Even if LinkedIn grows significantly without any marketing and sales activities, they still must deal with:

More users == more servers More users == more support staff and on and on.

Use Google and Facebook as classic examples.

And if you aren't getting more users, then you are ramping up marketing efforts to do so.

While LinkedIn is a definite success story, I'm not buying it that they are running a zero marginal cost business. I don't believe that anyone is.

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drumdance14y ago

Yeah, but it's a step function. You can service, say, 100k users on a couple of servers. User # 100,101 means you have to buy a new server. Technically that user costs more, but the next 99,999 cost 0. (Leaving out rules about depreciation, amortization etc - I'm just talking pure cash flow.)

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