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| ▲ | jaggederest 14 hours ago | parent | next [-] |
| I'd cite as a counterexample in recent memory Sears, GE, Boeing, and Intel. I think collectively they've destroyed close to a trillion dollars by focus on quarterly results over long term, and they're not alone. |
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| ▲ | scrubs 13 hours ago | parent | next [-] | | I sometimes wonder what a Drucker or ishikawa would say of today's "vaunted American management". Speed roughly short term thinking is too strong of a force in our American thinking. Heck I've counted three recent HN posts this month pushing for speedy software development too. | |
| ▲ | tjwebbnorfolk 13 hours ago | parent | prev [-] | | Yes, and we all saw what happened. They've experienced serious financial consequences, some went out of business. This is exactly what is supposed to happen when you do dumb shortsighted things. There's also risk in investing in very long-term things that may not pan out. WAI, in other words | | |
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| ▲ | mcny 13 hours ago | parent | prev | next [-] |
| The exception proves the norm. The only major example I can think of is Amazon dot com which famously reinvested all its profits into itself for well over a decade. The fact that investors didn't punish Amazon dot com was seen as befuddling in the press. > Companies routinely lose money for years in pursuit of long term growth. No, I don't think this is true at all because you used the word "routinely". I would claim it is very rare. |
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| ▲ | gorgoiler 11 hours ago | parent | next [-] | | FAANG-like stock, in general, has paid little to zero dividends for long periods of time post IPO, their rational stock values being based on hypothetical future dividends only after the initial self-investment phase is over. | |
| ▲ | neltnerb 12 hours ago | parent | prev | next [-] | | Don't most tech startups lose money for years before they maybe make a profit? I mean, I agree that such companies are over-represented in thinking about small businesses if that's what you mean. Normal companies have to be profitable quickly for sure. It feels like tons of companies get valued based on userbase or revenue or theoretical breakthrough rather than ever having to really think about breaking even, but I know that's just because those folks get all the press. | |
| ▲ | terminalshort 12 hours ago | parent | prev [-] | | There's not much that doesn't befuddle the press |
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| ▲ | Ekaros 8 hours ago | parent | prev | next [-] |
| Growth in this case can also be growth of valuation. Or maybe that is in general the goal. Get the market cap or nominal valuation to go up. Some money is lost to push up this valuation or valuation based on some future sales, or market share or anything... |
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| ▲ | solid_fuel 8 hours ago | parent | prev [-] |
| > Companies routinely lose money for years in pursuit of long term growth. But much of that long term growth now is just the company growing to displace competitors in existing markets, often by subsidizing prices and dodging regulations - see: Uber, Lyft, Air BnB, etc. We've all seen the playbook a dozen times now: move into a market, keep prices artificially low until the existing competitors are displaced, then the raise prices to return the initial investment and more. That kind of growth-by-displacement is genuinely necessary sometimes but in these cases it's more like a fungus than a plant, just metabolizing an existing system. It's not the same thing as actually expanding a market or investing in concrete assets (steel mills, power plants, boats, railroads) or R&D that compounds future growth. When the actual investment is just spent artificially lowering prices there's no actual efficiency gains and the consumers ultimately pay the price and more when the company hits the peak of the existing market and shift to enshittification mode to really extract wealth. |
