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Comment by jmcdiesel | Hacker News Reader

A company's goal should be profit. Why is profit a bad word so often? They aren't abusing customers or employees to get that profit... both of those groups regularly praise the company... so I don't see the problem in seeking as much profit as you can. Thats how free market works, right? And if they go to far in the name of profit, they will see it reflected and profits drop... on a site created around startups, its interesting that the "profit" as a bad word is still a thing here...

You can want to make as much profit as possible while ALSO doing the right thing ethically.

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> A company's goal should be profit.

No. You've confused means with purpose.

A company with investors has to make enough profit to give the investors a fair return. And any company needs enough profit to reinvest in growth. But profit alone isn't a sustaining motivation. One entrepreneur I know sold his first company back in the 90s for >$100m. As he was working on his next venture, he said, "Profit isn't the point. Profit is permission to continue."

The purpose of a company is generally to create value for a given audience in particular ways, often ones that have a broader impact.

For example, the purpose of the New York Times is to inform readers about the things that matter to them and to the world. They do that because they see journalism as necessary to a healthy society, a healthy world.

If you approach the same audience and tools with a goal of pure profit, you end up with things like supermarket tabloids, viral clickbait, and Macedonian fake news farms. Those have a much higher ROI than real journalism; they're going to be much more profitable. By your theory, they're better companies. But they aren't.

>> One entrepreneur I know sold his first company back in the 90s for >$100m. As he was working on his next venture, he said, "Profit isn't the point. Profit is permission to continue."

Easy to say profit doesn't matter once you've cleared $100mm.

Of course if I hadn't mentioned how well his previous business did, somebody would have suggested the person knew nothing about business.

And since you missed it, let me be clear: he didn't say profit doesn't matter. He said profit wasn't the point. His previous business was quite profitable, but that's not why he did it.

The most profitable companies in the world tend to create a lot of value. If you want to create a company seeking "pure profit", you'd be well advised to create a lot of value. Get-rich-quick scams sometimes work, but they're not scalable, and hardly ever "much more profitable" than solid businesses.

Could you give me a simple definition of "value"?

Something someone is willing to pay you money for is fairly simple. (It's not all-encompassing, of course.)

So... profit?

Value is closer to revenue than profit, IMO. Profit is an internal accounting issue.

If you give me two $10 bills in exchange for a single $20 bill, it's clear that the value of what you gave me was $20, but unless you are counterfeiting or laundering money, I presume your profit was $0.

Conversely, if you save the seeds from tomatoes, grow them in your yard, and sell me $20 of tomatoes, same $20 of value, and presumably close to $20 in profit.

Value is definitely closer to revenue, but it's important to note that it can diverge. For example, channel-stuffing [1] creates revenue but does not deliver value. Fraud too can have high revenue but deliver no value.

[1] https://en.wikipedia.org/wiki/Channel_stuffing

Goods and services that don't turn a profit can still have great value. For instance, can you monetize the air you breath? Not really, but I imagine it has great value to you.

Dive boat operators and dive shops monetize air all the time.

Except that's clearly not the good or service I'm referring to is it?

Breath is monetized quite often. How much do you think an assisted breathing machine costs? Or a CPAP mask, or a scuba tank?

Everything is monetized, and profit drives everything, we are a capitalist society. A business will not operate on charity very long...

In the Lean world (as in Lean Manufacturing), the definition of value is the customer's definition. That makes sense, as that's the definition that, at least over the long term, controls how much you can make.

This is a very thoughtful comment. Thank you.

To expand a bit, I see business success as balancing the needs of four groups, whose needs are naturally in tension:

(1) Employees, who want the best pay, work conditions, job satisfaction, etc. (2) Investors, who want the best financial return (3) Suppliers, who want to be paid on time and want repeat business (4) Customers, who want great products at the minimum price possible

I'm American. One thing I've noticed reading economic histories of the US, such as Reich's Supercapitalism, is how shareholder/profit-oriented US business became, around say, the late 1970s/early 1980s. This was the heyday of leveraged buyouts, and I can't help but think that, in terms of operating quality of US companies, there was indeed much trash to be taken out. Business was too cozy; customers and investors were getting a raw deal. You hear all these Mad Men-esque stories of sexual harassment, two-Martini lunches, expense accounts, and I can't help but think, man, the customers and investors must have gotten a pretty raw deal that employees could get away with that stuff (working so little, being distracted, wasting capital, making shoddy products).

I also think Japanese and German capitalism are more employee/manager-oriented than the US for various reasons.

In the end I think it depends on which group (of the four above) are culturally privileged. We hold investors in pretty high regard in the US vs. employees; it's very "capitalist". I have no idea whether it's right, but I think it's a useful insight. In the end I think it comes down to culture, and that US culture is pretty capitalist compared to say, France.

It didn't dawn on me that investors are only one constituency. For owner-operators, investors and managers are the same person, so of course, businesses would be operated (managed) for benefit of their investors; they're the same people.

But you're right, investors are only one group, you need to keep them happy, and that's done with profit. It's not a very important insight when investors = operators (most small businesses), but as the two groups diverge, such as when entrepreneurs use a lot of outside funding, I think "permission to continue" is a good way of looking at it.

(5) Society, who wants the economic process to be sustainable in the long term

"A company with investors has to make enough profit to give the investors a fair return."

A company with investors has to make enough profit to give the investors their expected return that they were promised, within the bounds of the forward looking statements, etc., that the company put forth to receive the investment.

There's no "fair" anywhere in there - nor should there be.

"But profit alone isn't a sustaining motivation."

That's true for me and it might be true for you but it isn't true for everyone, nor should it be. We should expect that there are many people and organizations for whom profit alone is a sustaining motivation - and we should take steps that we are not fragile to such actors.

> There's no "fair" anywhere in there - nor should there be.

This is basically a moral claim. I think it's a sad sort of morality. That's irrelevant to that point, which is a practical one. Businesses generally have to give investors a return they feel is fair, or they stop getting investors. Investors are primates, and so have a sense of fairness. [1] The notion of a fair rate of return is also related to the market rate, and companies that fail to provide market-rate returns don't do well, no matter how precisely correct their forward-looking statements.

As to profit being a sustaining motivation, feel free to give examples, but I find your raw assertions unpersuasive. I believe that it's necessarily true for organization in the long run, in that profit-seeking is a short-term motivation, one that essentially conflicts with the long-term work needed for sustainable companies.

> we should take steps that we are not fragile to such actors.

Sure, but that's true whether or not their exploitative behavior is in some sense sustainable. Indeed, we need to be most careful of the unsustainable ones; they're the most dangerous.

[1] See, e.g., https://www.ted.com/talks/frans_de_waal_do_animals_have_mora...

> the purpose of the New York Times is to inform readers about the things that matter to them and to the world.

Why isn't the purpose of the New York Times to mis-inform and trick its readers into blindly accepting horrific policies such as the US Invasion of Iraq in 2003? [1]

A corporation's means and purpose are one in the same: profit.

I love reading vague, romanticized mischaracterisations of corporations that enables the writer to not need to reconcile their politics with their current living scenarios. But this is a totally inadequate explanation for the existence and purpose of corporations today.

Companies exist to derive profit for their investors, primarily by increasing the value of their common stock and by dividends. Whatever other impact is made by a company's operations in the marketplace is an externality.

Sometimes an externality is positive, sometimes it is negative. The New York Times exists to derive profit for its investors, and it does this by, yes, making a product that informs its readers. But they also do it by nuzzling up next to evil, moneyed interests - making deals with the devil and serving significant positions in helping to roll out horrible public and international policies.

Perhaps journalism is necessary for a healthy society, but could you honestly accuse NYT of being the purveyors of such an ideal? NYT is extraordinarily guilty of nefarious, trixy, and immoral activity compared with its competition, in fact. The goal of pure profit has certainly made the NYT a strong purveyor of tabloid-esque material, clickbaity headlines, and outrageous, unfounded articles.

To change this, the American public needs to elevate its own desire for quality journalism to the extent that it becomes more valuable to pursue that goal, than to pursue clicks, outrage, and lowest-common-denominator dreck like the NYT and all other corporate news entities do today. That would be quite a tall order for a society driven to mass mental illness by their weak, thoughtless acceptance of social media into their every waking moment.

[1]: http://www.ianwelsh.net/always-remember-the-nytimes-pushed-h...

I'm just going to ignore your NYT frothing, for which you are reasonably being downvoted. If you really can't put your personal opinions aside for three entire minutes, there are plenty of other companies that are clearly shaped by a sense of purpose.

Toyota, for example, is explicit about it. If you talk with employees at Apple, Intel, or Google, you can easily see that they're not just doing whatever random thing that is profitable; all three companies have a deep sense of purpose. They know their chosen audiences and are dedicated to creating value.

> Companies exist to derive profit for their investors, primarily by increasing the value of their common stock and by dividends.

There are several ways you could mean this, but I think all of them are wrong.

Companies exist societally because we have decided that we want to encourage certain sorts of positive-sum economic activity. If they didn't, we wouldn't allow them. What you write off as an externality is, systemically, the entire point.

Individual companies exist because one or more people have lined up around an idea and pursued it with great dedication. I have not met a single entrepreneur whose chosen purpose is "produce a good return for the LPs of some investment fund".

Those companies attract employees partly because they can make a living. But also because the company's audience and work are something they can get behind. Nobody lasts long doing a job where they hate the company's mission.

From the customer's perspective, the question of purpose is even clearer. It's to give them things they want in exchange for reasonable amounts of money.

In theory you might be right about the investor's sense of purpose: maybe they see companies as pure profit-making machines. But even there, the investors I've met don't act that way. They get really excited about who a company's audience is and how they are choosing to serve them.

And I'm hardly alone in disagreeing with the "maximize shareholder value" school of thought. If you care to search for "world's dumbest idea" you'll find plenty of discussion slamming it. Including from business luminaries like Jack Welch and Mark Benioff: http://www.forbes.com/sites/stevedenning/2015/02/05/salesfor...

Entertainingly, even the Whole Foods CEO disagrees with your theory. He wrote: "But we have not achieved our tremendous increase in shareholder value by making shareholder value the primary purpose of our business. [...] the most successful businesses put the customer first, ahead of the investors. In the profit-centered business, customer happiness is merely a means to an end: maximizing profits. In the customer-centered business, customer happiness is an end in itself, and will be pursued with greater interest, passion, and empathy than the profit-centered business is capable of."

Not all companies are for-profit. And, to some people, the very definition of profit is the extra money you can get by paying workers only so much while charging customers that much more. That is to say, profit is the stolen excess value of labour that you never paid back to the worker. So in this perspective, profit is by definition gained from the exploitation of worker or consumer or both.

There are plenty examples where companies will profit even though they are "going too far." Just think of all the profit made from war while the majority of people disagree with the war.

Your ethics of "doing the right thing" while making as much profit as possible are also subjective if you consider the definition of profit that I proposed above. I know I'm saying all this in a forum based around startups but I think it's worth pointing out.

So in this perspective, profit is by definition gained from the exploitation of worker or consumer or both.

That is a perspective, yes. It's also ridiculous zero-sum thinking contradicted by both theory and reality. The iPhone has resulted in hundreds of millions of happy customers, and tens of thousands of high paying jobs. But apparently all of those people are "exploited" because Apple makes a profit.

But you can't prove that this would not have been possible if Apple were non-profit.

Sure, it probably would have been unlikely but this is because non-profits are usually less thrilled about hiring de-facto slave labour in China or elsewhere on the supply chain in order to produce an iPhone at a price where large profits can be made.

My libertarian bestie teases me "The problem with you Liberals is you can't tolerate hypocrisy."

No one cares if Whole Foods makes piles of cash. Just don't pee on my leg and tell me its raining.

Is he saying we'd be better off tolerating hypocrisy?

I'm not the friend (nor am I a libertarian), but YES.

Don't tolerate hypocrisy for hypocrisy's sake, but recognize when it's pragmatic to tolerate it to either move things in the correct direction or simply to limit how far they slide in the wrong direction.

Could you provide an example of such a situation? How do people get this wrong?

Negotiating with some one who is both anti abortion and pro execution. Do you refuse to work with that person (eg prison reform, women's health)? Or do you focus on shared interests, win/win?

That's inconsistency, not hypocrisy. Hypocrisy is someone who is anti-abortion, but would get an abortion because they had a trip to Hawaii planned, or is anti-execution, but is pushing a prosecutor to go for the death penalty in the case of their child's murder.

But I do agree that there is a case to be made to work those people, if their views align with yours, even though they are personally hypocrites. On the other hand, maybe not the most trustworthy allies.

Thank you. I've been chewing on this. You're right. I need to learn to see the difference, and maybe be less judgmental.

It's almost inconceivable to me that someone(s) can be both anti-abortion and pro-execution without some deeper, darker, cynical motivator.

Huh. Again, thank you.

Can I ask you a question then? If you feel there is a conflict in being anti-abortion and pro-execution, wouldn't that equally apply to people who are pro-abortion and anti-execution?

I don't think there is a conflict with either position because they are vastly different scenarios, and neither side is basing their argument on an absolute position on the value of all life in all circumstances. A good example would be: Someone who opposes kidnapping, but supports imprisoning criminals. Those positions are not in conflict, even though prison is just legal kidnapping.

My position, as much as possible, is harm reduction. I favor reasonable measures to reduce abortions, reduce executions.

The problem is that you're assuming that all life is equally valuable. That's a flawed assumption, and is not true of people who are simultaneously anti-abortion and pro-execution. To them, unborn fetuses are innocent, whereas convicted criminals are not. So it's wrong to "execute" unborn fetuses, who haven't committed any crimes, whereas convicted criminals aren't innocent at all, and are fair game for execution.

First, let me point you to where such tolerance has been effective at advancing agendas (note that in neither case do I agree with or support the agendas).

My preferred concrete example, simply because of how staggeringly effective tolerating hypocrisy was at getting a resoundingly unpopular law to become the law of the land is American Prohibition. During the lead-up to prohibition in the United States one of the most successful lobbyists was a man named Wayne Wheeler of the Anti-Saloon League. He would work with or endorse any candidate that supported a dry agenda, and he'd work to replace those that didn't with those that did. This included candidates who were, themselves, barely-functional alcoholics. They would drink while meeting with him (he himself was truly a teetotaler as far as we know) while discussing the very legislation that would make acquiring alcohol illegal. He took it all in stride as long as they voted the right way. Despite the perceived success of the wets in attaching a 7-year limit on time-to-ratification for the 18th amendment, it passed the required number of state houses in less than two years.

For a more modern example I direct you to Republican's willingness to re-elect "family values" candidates who support and push through anti-LGBTQ legislation but who have themselves been caught in flagrante delicto. I find such laws reprehensible, but I cannot deny the effectiveness of the right in passing them, in part due to a willingness to tolerate effective but hypocritical legislators.

In terms of where I believe a failure to tolerate hypocrisy has resulted in net loses for progressive causes, I'd point to politicians with strongly progressive voting histories are pilloried and their political careers are summarily executed because they turn out to be corrupt, sexist, racist, homophobic, etc. If their voting history and the legacy they're leaving behind is a progressive one (and stays that way), who cares if they're only pursuing it because they know it will get them re-elected? Unless you can find a candidate who will produce a better net effect, stick with the flawed bigot.

Concretely, take Hillary Clinton after the primaries[0]. I saw it argued that she was a hypocrite for taking millions in speaking fees from big banks while talking about protecting the little guy. She may well be a hypocrite (and her banking voting history isn't great), but the platform she was running on and much of the rest of her voting history are solidly progressive. The number of votes lost due to perceived hypocrisy probably wouldn't have swayed that contest, but more broadly I see it in the same category of being idealistic to a fault.

People waste a lot of time arguing over charges of hypocrisy. In practice, it ends up being a way of shifting the conversation from the argument that someone is making to the person who is making it.

Hypocrisy isn't great, but practically everyone has been guilty of it in one way or another. So it's an easy charge to make that gets everyone worked up.

I don't know if we should tolerate hypocrisy, but I'd be in favor of talking about it less in favor of more direct and productive arguments.

He's asking: Do you want to win? Or do you just want to be right?

The thing is liberals have a lot of their own hypocrisy to answer for too so I'd say they are actually pretty tolerant of it, just selectively so.

> The company's only goal is profit and this is very evident when you hear their libertarian CEO speak.

> You can want to make as much profit as possible while ALSO doing the right thing ethically.

OP even said that their ONLY goal was profit. Of course as a company in a society like ours you have to make profit. It's when that becomes a priority that obscures all others that people find it distasteful.

"A company's goal should be profit."

One of a companies goals may be profit, but it may not be it's only goal.

When companies engage intelligently, they an create 'win win' scenarios. When they don't they can create zero-sum - or worse - can profit by actually destroying net value.

That seems to be the problem from the article. Whole Foods had seen its profits drop due to competition, so it has to ditch the "do the right thing ethically" to maintain its profit margin.

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