More econ 101...or why flying pigs can't

[Larry Honig]

Inconsistent, but more important, destructive to your credibility and
thus *harmful* to the ideas which you seem to be espousing: You recently
wrote:


> 2. The yield is not 15 times. You show "$1m in"...above I show $50m 
>    in...and $15 million out, that is 30% return on the investment of 
>    $50m...

 but you previously wrote: 

> @ >
> @ > If a /8 requires $1 million in staff and support
> @ > per year, then the net profit can be about
> @ > $15 million per year. With a 5 times multiple
> @ > this places the value at about $75 million.
> @ > A more conservative value could be $50 million.
> @ >

If you try to use words, then, for your own sake, kindly use them
accurately. Most (nay -all) folks define "net profits before taxes" to
mean "what is left over after *ALL* expenses associated with generating
the profits are deducted from "gross receipts". "Net profits" generally
means "net profits before income taxes" minus "income taxes".

Again, a business that enjoyed ridiculous profit margins would certainly
have a much higher multiple than 5x, which is more appropriate to a
steady-state (old fans of McKinsey charts might prefer their term,
"cow") business, so your $75M , or your $50M figure, which are properly
referred to as "valuation", or "market cap", are entirely specious as
well. 

> 3. We have not discussed the cost of routing IP addresses
>         which has to be factored into these discussions.
> 

Nor have you factored in the cost associated with "marketing, marketing,
marketing".. (which are closer in concept to your "business model") ..
but this point seems to indicate that you see ARIN's "business" as
actually *ROUTING*. Huh? So you now have a roomful of well-trained
hamsters (none of whom have worked for ARIN and know this from a
technical perspective) not only dishing out numbers, from a protected
pool, to a credulous client base, who won't go to a lower-cost
"provider" since they have been entranced by your "marketing", who
incidentally are also pushing bits around making sure that my Aunt Sue's
" HTTP 1.0 GET " message goes to www.disneyworld.com (or
"Register.A.Mall") and not to Saddam Hussein?

Show me the money, Jim. If you can really demonstrate this, then find a
banker and start the biz. If you think, rather, that some of my points
have independent merit - and I am in no way indulging in any sort of ad
hominem attack, simply responding to your ideas as expressed by you, in
your words - then as a lesson in "Marketing 101", let me respectfully
submit the oldest lesson of all: The customer is always right. I (and
everybody else on this list) should be treated as .. your customer!!
That's right! and you are trying to sell...your ideas!! That's right!!
and if your ideas are *GOOD*, then we will buy them, because they
are...better!! That's right!! But if your exposition is flawed, or if we
don't understand what you are saying because your message is not well
thought out or expressed, then, as customers...we won't buy them!!
That's right!!


/Larry