I've recently read somewhere that market penetration of food delivery in the US is c. 3%, compared to c. 4% in UK (due to takeaway culture?) and c. 11% in China.

Trying to find actual source, but this was from a recent analyst report...

a) All IFRS (International Financial Reporting Standards) compliant financial statements will have a accounting policies statement preceding the 'Notes to the accounts'. This accounting policy section will outline how revenue is recognised and how this is recorded in the financial statements. There is a trend for financial market regulatories to require auditors to provide a summary of 'key audit matters' in their opinion to the accounts - which details the key risk areas in the financial statements for an entity.

b) Aggressive in this context likely means that revenue (and earnings) were being improperly accounted for in the current period. My guess in this context relates to revenue recognition. For instance if I sell SAAS product for $1000 setup and $100 per month and I expect the customer to stay on average 10 years - how do I recognise this revenue?

The aggressive accounting would recognise revenue of $1000 (setup) and $1200 (subscription) in the first year. But it may be fairer (and potentially more appropriate) to recognise $100 (10% of the setup costs as customer expected to stay 10 years - apportion over this period) and $1200 (subscription) in the first year.

On this simple alteration in treatment revenue could differ from $2200 to $1300. NB: This is an oversimplification and the actual recognition criteria depends on scenario, nature and company policies.

Cloud accounting (read: SAAS) is still relatively new and very different to traditional licensing and the accounting/finance community is still grappling with the recognition and treatment.

I'm seeing, in the field, Oracle reps offering bundles of Oracle software licenses + cloud for less than Oracle software license on it's own. Is that something that could be tricky to account for properly?

That's very curious. So by adding cloud capabilities, you are effectively getting a discount.

Generally speaking, when I see hard-to-explain sales behaviours from enterprise vendors my experience is that:

1/ The sales incentives are leading to sales teams optimising their incentives in ways that seem bad for the organisation over all, and/or

2/ The contract has nasty fishhooks that will make all that money back, and more, in year two or three (classic example from my experience with a different vendor: selling servers at $50k, discounted from $250k, but then assessing maintenance on the original price, leading to a $50k/year opex).

Reduced transparency (if one does not realize what comes in year two or three) makes it really hard to make a fair comparison in year one.

As I understands it, some companies may also recognize the contract signing as the revenue and capitalize $13,000 for the year the contract was signed ($1000 setup and $1200 subscription pr year * 10 years).

If the customers cancel the contract they may then book the lost revenue as a loss, so an annual statement with high losses may be an indicator that they booked revenue before the revenue was truly secured.

It's actually wrong to book revenues until one has satisfied the performance obligations to the customers, i.e., until the services have been provided. It means that I can't book revenues for 10 years ahead under no circumstances.

It is possible though to have something called "deferred revenues" in case the customer has pre-paid for those years (i.e., transferred the cash for the 10 years), but those are not revenues (not on the P&L), but a liability to the customer to satisfy the performance obligations (on the balance sheet), and this will be gradually released (apportioned) to actual revenues over the course of the remaining years.

Good points. The new IFRS 15 tries to deal with those issues, and defines principles of performance obligations, un-bundling etc., which should be helpful in this case.

I'm sure the Big 4s have issued Q&As and position papers to their audit clients already on the adoption of IFRS 15, but this is going to be a nightmare to implement...

Thanks for the links. Most of the issue is identifying the cost-benefit of pursuing etc.

Hey folks,

We've been working on this for the last 12 months. It all started by repairing a few too many dropped iPads and thought we could make a better protection system for iPad.

We followed a engineering design process which started by dropping iPads thousands of times and measuring the results with accelerometers, strain gauges and load cells before proceeding to design our protective product.

Any feedback is appreciated!

This is a very difficult topic and there are plenty of thoughts and blog posts available online. The need for a lawyer probably depends on whether you intend to raise capital or just see it as a short term project? For bringing in new founders you should look at some sort of vesting agreement to vest founders over time.

For general equity-split, the calculator below is thought provoking: http://foundrs.com/

However generally with two founders a 50-50 split is best as both of you need to be 100% committed for it to work out.

Thanks for your reply! What do you mean by "vest founders over time"?

We are not intended to actively looking to raise capital (though we don't mind it) but neither do we see it as a short term project. We want to see growth of revenue and profit.

The use of 'contractors' is interesting (following on from Exec, iCracked, TaskRabbit etc.) Perhaps this is the future of employment - providing more flexibility to both the firm and the individual?

As well as this the mobility of the contractors is really fascinating. The internet has really started to disrupt the need for retail-service premises; think of print shops (Printing.com), computer repairers (iCracked), florists (1-800 Flowers), real estate agencies (Redfin), education (ie TutorSpree). Interesting to see what verticals remain untapped.

I wonder the implications of completely opening up these sort of platforms entirely - ie allowing 'anyone' to complete a car repair job. [Obviously in the case of YourMechanic there are warranty implications :P]

Interesting point. I've seen plenty of customers bring in damaged iPhones with damaged motherboards or charging ICs who have been using their devices with non-branded chargers sourced from the likes of eBay. Most people seem to be happy saving a few dollars on a charger for an expensive phone!

Its great to see an in depth article in to the design and the cost-cutting.

(Source - I work at an iPhone repair company)

Quoting Paul Graham "ideas are worthless" (ref: http://www.paulgraham.com/ideas.html)

I would suggest cracking out a prototype and go from there - "ideas are 1% inspiration and 99% perspiration".

I ended up building the prototype this morning (a bit of insomnia). Now I've got this cool little demo (fully functional) running on my iphone--- now what?