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Comment by thisisit | Hacker News Reader

> I'd like to point out that profitability is not a black-and-white consideration. A company has many financial dials and switches, and ours specifically could have easily been profitable if they had chosen to do so. It was a very intentional decision to funnel money towards further growth, which frankly I had/have no issues with.

I am unsure what you mean exactly but if the company is making a choice between being profitable and growth it is a black-and-white (or a binary) consideration.

> A company has many financial dials and switches

What are these financial dial and switches?

It is one thing to opine whether a company might be profitable if they chose to and other to look at practical implications of this choice. An example, Uber might be chose to be profitable by raising ride prices or charging higher commissions to drivers or other means but it might lead to many drivers jumping ship or users booking less rides etc.

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Consider this.

* Revenue > OPEX, but all the difference is put into expanding to new areas, maybe even topped with some debt. If needed, the expansion can be curbed, and profits will show. This is the Amazon case.

* Revenue < OPEX, and no matter what other expenses you cut, you make a loss on every sale. You cannot show a profit however you try. This is the case of WeWork and maybe Uber, AFAICT.

The amount of other expenses that you can cut to turn profitable, and the amount of profit surfaced this way, is indeed a kind of a spectrum, from near zero to a quite healthy ROI. But it does not apply for companies that are fundamentally in the red.

It's really not. You gamble with your margins -- it's a continuous variable. You could be profitable by a cent or millions of dollars, or not at all. Each of these decisions yields a very different growth and risk trajectory.

The label of "profitable" itself is pretty meaningless, given that you are at battle over many many years against competitors. One quarter of profitability might yield doom 3 quarters down the line due to lack of investment.

> The label of "profitable" itself is pretty meaningless, given that you are at battle over many many years against competitors.

Good God, that's a terrifying statement.

When business stops being about "making money", I don't know what we're doing anymore.

The point of battling the competition is to make money. It's not about crushing them, beating them, or even being more profitable than them. It's about making money.

Yes, it's absolutely valid to choose to sacrifice a period of profitability in order to strategically set yourself up for better profits later. And if crushing the competition is how we do that, great.

But this game of never making profits is a fools game. If I invest my money in your company, it's because I expect you to make me money.

If the only way you make me money is by raising the value of the stock, then we're in a game of Dutch tulips, and the only question is whether I can time selling my stock properly to not be the greater fool.

But if you make me money by running a profitable company and disbursing the dividends, I'll hold onto that stock forever.

One of those approaches is ethical. The other is a scam.

You could make it binary and label everything as improving profit or investing in the growth of the company but I think we should define "growth" in this case as the relatively short-term investment made to grow. That's immediately what I thought of when I read and re-read the parent comment.

Reading what was said, I imagine rolling out new markets, testing new customer acquisition methods, and hiring to focus on new features would all fit in this label as growth.

Things like R&D might not. If Uber has been investing in self-driving vehicles, it may not pay off in the short-term, and therefore wouldn't fit in this set as it's quite speculative. Technical debt might fit here too. Or marketing debt: perhaps they want to establish brand guidelines and everything that comes with it. Great investment but not what directly helps you grow. A more direct "financial dial" might be restructuring your company from a legal perspective and forming new entities.

Just sharing how I read "black-and-white consideration". Maybe the parent can clear up what they meant.

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