#noncosmere

To other accountants this will probably be real fucking stupid and to anyone who followed me for cosmere stuff this is going to sound utterly incomprehensible, but I am sleepy and have thoughts about intangibles and accounting, and how much we are growing to rely on them in business.

At the heart of the modern business structure is an accounting style foundationally rooted in asset (Things, Land, Stuff) and asset allocation (Turning cash into things, Land, and Stuff), where people are completely ignored as anything but an expense largely because it's extremely hard to estimate the value of a human life. Accounting's foundational roots are in asset-management practices with a presumption that management understands the value of human lives and will act accordingly.

Tesla is a company where it's wealth is foundationally rooted in what it owns and how it can use it- It's revenues are driven by the cars they produce, and that enables them to grow and develop while relying less on employees or labor. For context, they only spend about 5.3% of their revenue on research and development, with the majority of their wealth from asset costs. Twitter spends 23.49% of their revenue on R&D.

Twitter is a company foundationally rooted in intangibles and goodwill, and that is what drives their organization to be able to succeed- The people who run twitter and the tribal knowledge they hold, the customers who use twitter, and the advertisers valuation of those customers. They are a company that is not driven by advertisers, but by intangible assets that literally not listed on the balance sheet, and in which they invest all their money into developing (Hence the 23% in R&D).

In a more traditional asset-based business, Elon's decision would have made perfect sense, and is outright *recommended* by many trusted sources for management advice. But that's because those products are fundamentally driven by the assets the company controls, and not the employees who understand how the company works. Their success isn't tied to a particular employee, but rather to ensuring they have the stuff to sell and scale.

The problem is that Twitter doesn't exist as an asset-based company, but as an intangibles-based company. Twitters success is rooted in it's brand, it's users, and it's employees. If you're wondering why you're hearing less about accountants, it's because our asset-based accounting methodology *falls apart* when you're relying on and trying to capitalize intangibles. Because employees don't exist on the balance sheet, and Can't exist on the balance sheet. But they are the assets that foundationally drive the companies driven by intangibles. And the entire world is starting to rely less on the stuff you own and more and more on the people you know, even more than it used to do, with companies being up to 30-40% intangibles, which you can't even properly value because you have nothing in your own records to root it in, so you have to mostly just make a rough estimate about how much they're worth with stuff you dragged from the rest of the world which makes everything look so much better or worse and makes the books mean less and less.

Megan from the Reckoners Series [Work in Progress]

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“I barely got to be a real part of the flight, and it’s being ripped apart again.”

(I know Jorgen is described as having a baby face, but I wanted to use Sendhil Ramamurthy as a reference SO I DID)