I would enjoy doing that, however my direction is to focus on writing our novels and advancing a variety of ideas. I just don't have the energy or interest to drum up this business anymore and I don't have any perfect clients to pitch these ideas.


Here is my post that explains this better http://hallingblog.com/2010/03/14/acc...

"As Nathan Myhrvold puts it, inventing is funded under a charity model. "

Perhaps you should contact some of your clients and see if they can get a group in R and D to promote and propose doing the easier part, that is, the internal transfers to better account for revenues. You should expect some resistance from those being charged though, so you will need a top down approach. I don't see the balance sheet changes coming unless there is wide acceptance of the revenue changes first.

But you don't manufacture or sell a product. I understand that IP is the most important thing to you and I agree with Dale that Invention is the source of our growth in prosperity.

On the other hand don't downplay the importance of producing goods. IP is worthless unless someone manufactures goods and sells them. If you have developed IP you can:

1. produce and sell products yourself which will give you money based on your production.

2. license the IP to someone else who is going to produce and sell products to get money.

3. become a patent troll and sue other companies who are producing and selling products to get a portion of the money they get.

In the end, the source of the money is the products that are produced and sold. Attributing all your revenue to the IP will distort your production decisions and your subsequent revenue.

minus 1. I have many graduate level accounting and economic classes under my belt. Not to mention the fact that Dale and I operate a successful business and represent dozens of successful start-ups. Sorry to disappoint you, Michael.

When you calculate ROI, all the inventions have been expensed so they are not considered to contribute to the return. They are not shown on the balance sheet either. What is needed is that the accounting systems (internal) show what value is appropriately attributed to the inventions and what is appropriately from manufacturing.

Yes that would work, but in fact I do not think it is being done at all

I'm missing something, Dale. How do the current reports indicate all profit is from manufacturing?

Assuming this is true, wouldn't an internal charge to manufacturing and a revenue credit to R & D display the value being earned by the IP (similar to a royalty fee as if the IP was licensed to manufacturing)?. This internal accounting is done frequently for other items. I have no data but I imagine some companies are already doing this.

Really? So hot spots and cameras and GPS and real time traffic maps, and routing maps and innumerable things to improve reception are just standard off the shelf stuff. That is just absolute nonsense.

Current accounting states that all the profits come from manufacturing. Only if the invention (patent, copyright, trade secret) is licensed is it shown to have any return. As a result, any hard headed businessman see that he makes no money from inventions according to his accounting system. This cause all sorts of bad decisions that I discuss in detail in my book Source of Economic Growth.

Does that statistic include manufacturing of the inventions or just royalties or sales from patents? Does current accounting make it possible to include the value of owned patents in the manufacture based on them?

Ayn Rand started with a sense of life at a very early age and wanted to be a writer to project it. But she had to formulate a full philosophy to explain and justify it, including how to present it in fiction. A sense of life is an implicit philosophy, and she started writing and portraying it long before she had a fully formed explicit philosophy. Atlas Shrugged was the culmination when she was able to portray her vision of the "ideal man" which she had sought to do for so long and which her philosophy made possible.

There hasn't really been that much innovation in cellular phones anyway. Most of the profit in them comes from taking actions that anyone ought to be able to do for free with his own purchased hardware -- such as take pictures -- and rig the phone to turn them into billable events. In effect, all the phone companies are preying on their customers. The companies were so over-optimistic about our willingness to pay for these features when they first came out that they created the bubble that led to the 1999 dot-com boom.

Let them offer real value and people will be willing to pay for it.

should be theft percentage of GDP. -- j
.

William, I did not mean to imply that ALL corporations are completely stupid... I would have encouraged your company's strategy if anyone asked!
But I've worked at two corporations which were, for sometimes a LONG time... successful despite a lot of poor management thinking. I brought some great innovations to the first one and brought some valuable skills to the second one. The second one had a very strong antibody-like reaction to NIH ideas that didn't "come from the right sources," and I think that kind of non-Critical Thinking really hurt them in a lot of markets.
And I'm retired now and still in friendly contact with many alumni of both companies.
Although we Are starting to die off... age does that, to a degree...

I do not understand that you think Rand was looking for a philosophy to explain her fiction. Philosophy is developed. We can critique the philosophy. fair game. Your statement is cynical and not rooted in the actual reality of Rand's work. I call context dropping

Interestingly, our company's product is laboratory information software. We give free copies to schools who are training laboratory technologists to use in their training for pretty much the reasons you gave. We can't quantify any return at this point but it's a relatively minor expense.

The entire system, world-wide, is fantasy. As a result, it is subject to manipulation on a grand scale, or just enough to keep a person rich. If real money, based on real assets or services were the only thing the economy was based on, the scams, the Ponzi schemes, the manipulations, the screwy accounting hoop-jumping, would become obvious immediately and as a result not succeed. I am not an Utopian. I realize that such an economy is no longer possible. But, what is possible, is a movement in the direction of real assets as opposed to make-believe assets. However, it most likely would take more courage than any politician has to date to move the economy toward reality. Plus, the squeal of economists, accountants, money managers, hedge fund operators, and stock marketers would be deafening.

So what you are saying is that if you invent IP the best thing to do is to sell it to someone else who will produce goods since manufacturing them yourself doesn't make money?

This only works in the bizarro world where inventing things is the only revenue producing thing. Yes, invention moves us ahead, but we only make revenue if SOMEONE actually makes a product and sells it.

khalling: I do not understand "are you kidding?"

let's start here: " Rand, who, having a vision of how she wished to display her love of writing, had to invent a philosophy in order to project the heroic “truth” of her characters"
are you kidding?

In reading this thread two thoughts have occurred to me.

1. Much like Newton, who, having a number of profound thoughts about gravity and motion, had to invent the Calculus in order to demonstrate and prove their “truth;” or as Rand, who, having a vision of how she wished to display her love of writing, had to invent a philosophy in order to project the heroic “truth” of her characters; the ancient merchants, who, wishing to engage in trade using endless numbers of middle-men when transacting with their customers, invented “double-entry” accounting in order to successfully do so. It is an absolutely essential aspect of keeping proper score of economic “truth.”

On the other hand, it carries with it the potential, when economic “truth” becomes but one of many values pursued, of being a “double-edged” (no pun intended) sword. It does so because:

2. To the extent an enterprise becomes focused internally rather than on its external market and customers, it tends to serve a false God. It quickly builds a bureaucracy that becomes primarily concerned with its internal political “workings” at the expense of the external reasons for its existence.

Becoming focused on “keeping score,” whether forced to do so by the law, or because of perhaps trying to obtain something for nothing, is wasteful, and carries with it the potential for disception.

A deceptive waste that in a competitive environment will lose to those less deceptive and wasteful.

hear hear

Not everyone is in the US. This does not have to be a GAAP thing. In fact it is really about internal operations and more like cost accounting.