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- Hacker News
- Had me hooked right up to this point: “When we get the check, we pay a commission to this representative. Assume the commission is $500.”
I’ve never seen a software company pay 50% commissions on a software sale. I know it’s and example but the percentages are wrong even for the perpetually licensed days. Should be closer to 8-15%.
Totally sales and marketing spend could indeed be higher in this model because autodesk moved to direct positioning with end buyers rather than distributors.
by jaynate - A further consideration here is that this wasn't just commission, but also a payment towards providing support to the customer.by WillAdams
- I'm pretty sure this is a roughly accurate breakdown of AutoCAD's cost structure 34 years ago. How long have you been in the business, and what was the highest-sticker-price software you were selling?by kragen
- Commissions were different back then. I worked part time selling computers around 1990 and a little earlier, margin on computers was moving down, but was as high as 50%, I recall it moving down to 30% and stabilising there for a while. I don't remember software margins, but it could have been about the same. I used to get 50% of the margin as commission.by jdswain
- (2015)by teach
- Also, Cringely's site last piece is from 2023.
Someone asked for news of him recently here, https://news.ycombinator.com/item?id=44739987 , but there were no actual answers...
by B1FF_PSUVM - For a further analysis of this letter (in the context of CAD) see:by WillAdams
- As Cringely himself admits, he's had something of an obsession with IBM; not sure of the history. And IBM has actually done pretty decently the past few years post-Rometty.
HP, by contrast, has been somewhat adrift even after all the boardroom drama.
by ghaff - I like that HP is putting out new products like the little roomba floor plan printer robot. Even if it’s not original (neither was the printer), they’ve got divisions that are ideating, improving, designing and manufacturing products. I haven’t seen the full scope of their offerings to be fair.by uvaursi
- Isn’t IBM still operating through a pattern of selling service contracts for sub-par products that do everything in their power to lock their customers in? I feel like they embedded themselves so deeply in some of these public sector orgs that they can’t really orient themselves in any other way than through a predatory business model that lacks innovation.by kamranjon
- (02015) but both HP and IBM seem to be alive and well 10 years later, even if their products are dog vomit.
This phrase "confusing the scoreboard with the game" is golden!
IL14 is a lot better than Cringely's commentary on it: https://www.fourmilab.ch/autofile/www/chapter2_86.html
by kragen - Hey, how dare you besmirch my favorite variety of slime mold by implying it's like HP and IBM products!
https://en.wikipedia.org/wiki/Fuligo_septica
Harvesting, cooking and eating Dog Vomit Slime Mold:
by DonHopkins - HP is dead for soon three decades. There is a company with its name nowadays that makes shitty computers and some printers.by varjag
- Nice article that sums up the modus operandi of rudderless companies.
Quote:
This is the pit into which HP and IBM have fallen. They want to maintain margins to keep Wall Street happy, but the easiest way to do that is by cutting costs. Eventually this will be visible in declining sales, which IBM has now experienced for three straight years. Yet with a combination of clever accounting and bad judgement even declining sales can be masked… for awhile.by rawgabbit - Pretty ironic too, considering the stagnation of Autodesk, and their constant push to offer less for more.
- > Ginni Rometty and Meg Whitman appear to be more interested in keeping their jobs than in saving their companies
I think this is why I have so much respect for Pat Gelsinger. He really was trying to save Intel, so much so that it cost him his job.
- I did too, until seeing this: https://www.theguardian.com/technology/2025/oct/28/patrick-g...by justinclift
- It’s rare to find a CEO who is willing to go down with the ship. Most are just posturing for the board and engineering a huge payout if they are forced to leave.by drob518
- I love the article, and love the genuinely appropriate intellectual outrage, but isn't this just the market telling AutoDesk that it was paying too much for its enterprise sales function, and that it should be able to run sales more efficiently ($375/seat cost of sales rather than $500/seat cost of sales), when the sale is happening at the enterprise scale where lots of seats are involved?
Given that your largest customers are generally your most profitable, the market was simply telling AutoDesk at the time that it was spending more than its peers selling to large enterprises and matching per-seat SMB sales costs shouldn't be their benchmark for enterprise sales costs.
By shifting the target from $500 to $375/seat cost of sales, AutoDesk would have kept their margins but doubled their returns. Alternatively, AutoDesk could keep the cost of sales unchanged ($500) and bump up the enterprise price from $1,000 to a little over $1,125, and achieve the same goal. The market doesn't care which approach AutoDesk takes, but it knows the company was giving away too much margin on enterprise sales. Most modern SaaS companies today take the later approach, except they would charge enterprises $2,500/seat instead of a little over $1,125/seat.
AutoDesk has had some very forward thinking senior leadership at different points in its history, but it's also made some missteps. Writing a wonderful assault on the accounting industry instead of realizing that enterprises will pay $2,500 for the same thing SMB's are buying for $1,000 is an example of one of those missteps (and yes, AutoDesk eventually figured how to screw over customers with pricing, but that's another misstep, explaining why I no longer own any AutoDesk products).
by yodon - The point is accounting doesn't just report numbers, it drives the default strategy of "This is too expensive and costs should be cut."
Management should know there are alternative strategies, and ideally should know which of those is best.
But accounting policies bake strategic implications into their reporting.
Which is why we are where we are - on the verge of a catastrophic crash, because genius Wall St analysts are chasing the gilded AI bubble, while the rest of the economy is starved of consumer spending.
With much more to come.
- I met John Walker in Second Life shortly after the pandemic started.
We both used the name "Acme" in our gadget names and he came by to see what I was building. He was wearing a Wile E. Coyote avatar.
It wasn't until after he left that I noticed he was one of the original authors of AutoCAD.
He was very prolific at writing code in Second Life from the beginning of the pandemic until shortly before his death.
He was very thorough in writing documentation for all the free code he wrote, and even included detailed diaries of his development of his neat gadgets.
His products were all removed from the Second Life store after his death, but I'm trying to get it all back up for people to enjoy. The code is still on github, but I'm trying to recreate some of the 3d objects needed for that code to work.
- Why were they removed?by kragen
- John Walker passed away last year.
His “Autodesk File” is an interesting read because it’s not the usual “just so” kind of startup memoir that tries to explain how success was preordained by the founder’s genius, but instead a collection of actual documents like memos in chronological order:
by pavlov - John Walker is the kind of guy that would (successfully) apply the engineering approach to non-engineering issues.
I was amused by his book "the hacker's diet": https://www.fourmilab.ch/hackdiet/
by znpy - I've had a bunch of interaction with John over the years, mostly around 'SpeakFreely', which he generously allowed us to use for the audio component of the webcam software.
It took a while before I had mentally linked the 'Autodesk' founder to the person I was interacting with and I think he had a quiet chuckle or two when I finally found out. What is so interesting to me is that instead of clinging to power at Autodesk he managed to let go of it and enjoy his (way too short) time afterwards.
We never met, unfortunately.
by jacquesm - > But oh what a difference it makes in the accounting! In the first case, where Autodesk sold the copy of AutoCAD to the dealer, that was the whole transaction; whatever happened to the copy of AutoCAD after the dealer paid for it has no effect on Autodesk’s books. Autodesk sells, dealer pays, end of story. But in the second case, when Autodesk sells to Spacely Sprockets, that appears on Autodesk’s ledger as a sale of AutoCAD for $1000. The instant the $1000 shows up, however, we immediately cut a check for the commission, $500, and mail it to the representative, leaving the same $500 we’d get from the dealer. Same difference, right? Not if you’re an accountant! In the first case, Autodesk made a sale for $500 and ended up, after expenses and taxes, with $125, and therefore is operating with a 25% margin (125/500). In the Spacely sale, however, the books show we sold the product for $1000, yet wound up only with the same $125. So now our margins are a mere 12.5% (125/1000).
I'd like to know how an accountant would respond to the above. Based on his two examples, it seems like accounting rules really distort the financial picture of a company.
by computator - Profitability is all lies, you report what you want, the goal is to ensure whatever numbers you want to communicate raises nicely quarter over quarter.by Foobar8568
- Perhaps R&D expenditures should be a mandatory disclosure?by jll29
- We have something similar with tariffs. We pass them through to the client, and they show up as revenue and expenses like this Autodesk example.. But, we immediately deduct the tariff expense from the tariff revenue above the gross revenue line, so Gross Revenue is not affected.by akgoel
- He is talking about the effect on stock price. The second scenario results in lower margins. Stock market analysts look unfavorably on this.by rawgabbit