Conversation

7) If P is net loss-making, where is the money coming from that it's using to advertise?

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A pizzeria owner made money buying his own $24 pizzas from DoorDash for $16

8) To make it even weirder: someone once made money by buying *his own pizzas* from Doordash:

theverge.com

This must make sense to someone, right?

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9) Ok, well, so, what's the *full* flow of funds here? Well... a) VCs invest in Meta b) VCs invest in $ X company P c) P sends $ X to Meta for advertising d) Customer S buys services from P, paying back $ X/2 e) P raises $ X/2 more from VCs f) Go back to step (c)

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10) You might think that Meta, and Google, are making their money from customers, or from companies. And to some extent that's true!

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11) But to some extent they're making money from VCs, because here's the *net* flow of funds: i) VCs: - $ X/2, + stock ii) Customers: - $ X/2, + some pizza iii) Companies: - stock, create pizza iv) Meta: + $ X

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12) In other words: --Customers buy cheap pizza from companies --VCs send money to Meta --VCs get equity in companies

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13) And what exactly do the companies get out of this? Well, one of the following, really: a) marketshare: future profit (???) b) founders get to sell out in secondaries c) you get to be 'a part of the future'

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14) But it gets even weirder. Because who is Meta, exactly? Well, Zuckerberg, to some extent. But mostly, it's similar shareholders to the companies investing in it.

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15) And so the flow of funds is, to some extent, really a cycle of funds.

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16) But how about VCs that *don't* get large dividends from Meta and Google?

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