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Comment by kelnos | Hacker News Reader

> No, a business usually exists to provide some useful good or service to its customers. FedEx delivers packages. Apple makes phones and computers. Etc.

That's just an avenue to make profit. If those activities weren't profitable, they probably wouldn't get done, outside of government regulation or subsidy.

Sure, some businesses are "labors of love", but they still would likely not exist if they were break-even, certainly not if they were money losers. Or at least they wouldn't exist for long.

And this is the problem with capitalism: I agree that things should be as you say, but they unfortunately aren't.

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Apple's mission statement isn't "try to extract as much money from our customers' wallets as possible" or even "deliver the highest profit and value to our shareholders." (Recall Tim Cook's comment on the "bloody ROI.")

In fact I'd be hard-pressed to find such a mission statement for a non-financial firm - at least one that doesn't mention any other purpose for the company.[1]

It's a mistake to think that companies only exist for the benefit of their owners or shareholders. Realistically there are many stakeholders including employees, customers, and society at large.

[1] https://www.forbes.com/advisor/business/mission-statement-ex...

I think the point is that the stated mission is window dressing on top of the underlying truth. Following POSIWID, all for profit enterprises have making money as their core mission.

I'll caveat your comment with "existing". 90% of businesses will fail inside 5 years and always got the same reason, because they run out of cash.

Unless you are an outlier, and manage to balance revenue with expenses every month [1], you will need to average positive cash flow or you'll run out of cash.

[1] of course if you are small, and tolerate fluctuating pay, then you can balance the books by not taking a salary but taking out all excess revenue each month.

Except that doesn't really work, because plenty of businesses start in low-margin industries, but if profit is actually the first motivation then every business would be a hedge fund. Ray Kroc wanted to get rich making burgers, not just get rich.

Making burgers is the activity; getting rich is still the first motivation. Besides, I'm not sure Ray Kroc is the best example, and I doubt he personally made a lot of burgers; he bought the national franchise rights to the McDonald's restaurant chain after it was well established, and set about getting rich by making a more efficient burger-restaurant process.

You are incompletely right. Businesses benefit multiple stake-holders. Products and services are created to provide value, that value being sold for cash.

But if a business doesn't make a profit over the long run, it will run out of cash and fail. In other words, it's no longer a business.

Of course most businesses do fail, and always for this reason. So every successful business is implicitly making a profit and has to do so.

So you are right. Businesses don't exist to make profits. People don't exist to breath air. But if you remove profit from the equation, the business will die.

You don't put that in the mission statement in the same way you don't write 'try to get as much salary as possible' in the objective statement of a resume.

At the end of the day, if a business isn't making money for the owners and isn't making them happy for other reasons, they'll find new owners or shut it down; without regard to the stakeholders.

True. The same can be said for employees - eventually they might unionize or quit en masse, regardless of what the owners want. Or for customers - they might decide to quit buying the company's products or services. Or for society as a whole - perhaps laws will be passed to strictly regulate a business or to ban its core activities - even if the company is profitable and has lots of enthusiastic employees and customers.

I would not call it a problem with capitalism, I would call it capitalism's greatests feature. A free enterprise system ensures that resources are used to create the greatest value for consumers. If firms did not need to seek a profit, why would you expect to get anything from them that you value.

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