alt Hacker NewsTo be honest, I think "vendor financing" is still a very risky premise.
Vendors may be positioned to know how a customer is doing, but they're also incentivized to overestimate how well a customer is going to perform.
GE Capital (edit: and GMCA) is a great example of how seemingly reasonable vendor financing can cause the lender serious problems.
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The risks are different, but there's no getting around that the value of any investment is based on future cash flows and that's speculating about the future.
To the extent that Google and Anthropic are competing for AI business, Google is somewhat hedged against Anthropic winning market share. They still get data center revenue and they own equity, so that’s a consolation prize.
On the other hand, it’s increasing Google’s investment in AI, in general.
GE Capital was a different creature, riding the line of fraud in some ways. They misapplied accounting rules and had to write down or capitalize over $20B for long term care insurance.
GE Capital was not just vendor financing and its serious problems were not due to vendor financing. I don’t think it is a great example in any way.
$40 billion is about a quarter’s worth of profits for Google. They make that much every 3 months, what’s the risk
If anyone is interested to learn about the damage that the financialisation of General Electric (USA) brought upon itself, you can ask ChatGPT to tell you the story. It is too long to repeat here.
Here is a sample prompt that I used to remind myself: