Hacker News Reader

I believe that many business indeed operate at a loss for extended periods of time, by deliberately spending more money on future developments or obtaining customers than they take in revenue.

View on HN

This was definitely true for tech in the last cycle, but how true is this both outside of that industry and historically at all?

Any big business lives on loans. Which is why you see, for example, retailers going bust right before Christmas - which "surely" should be the busiest and most profitable time of the year...? But to go through it you need to buy inventory, which requires loans - if you can't raise money, because the market thinks you're already in bad shape, you have to close up shop.

Most significantly-sized businesses rely on credit week-in week-out, and tend to implode very quickly if the market turns off the tap.

Reply on news.ycombinator.com