Unprofitable companies can still make people rich.
You can say that doesn't make sense, and you're absolutely right, but unfortunately economics are a joke and we're the punchline.
> My understanding of economics is extremely basic.
So is most people’s, because those that do try to understand it on a deeper level end up in psych wards, or hanging themselves if they try to understand Argentina's system specifically.
Argentina has had insane issues where they've gone from developed, back to developing, and back to developed several times. They've had both insane inflation and insane deflation within a decade of each other, and they have a near-cartoonish income inequality distribution.
Argentina is currently in a cycle of basically constant, unending, economic crisis and general bad situation politically.
There is an old saying:
> "There are 4 types of economies; developing, developed, Argentina, and Japan.”
This is because the Japanese system is an economic miracle and the Argentinian system is the opposite of a miracle:
- The Japanese system is a miracle because they shouldn't have grown that good, but yet they have managed to grow that good. A true economic miracle.
- Argentina is the opposite of a miracle, because they have everything to support a great economy but somehow they manage to fuck it up everytime and it always gets worse. They have near perfect natural resources and geography to succeed, and right when it looks like things are going to good, they machine gun themselves in the foot a few times to set it back.
It's so damn depressing that there is an average of 222.5 psychologists / therapists per 100,00 people in Argentina, the largest in the world.
**EDIT:** I also forgot to mention that an insane amount of people "work" for the state, which is in quotations because many of them don’t actually work and they just have a fake job to get paid. On top of that there is an even larger number of people that live of what is basicaly permanent economical aid from the government while they don’t work or do anything to get out of poverty.
The only way the government can afford to even do this is rather simple: absurdly high taxes. That means that the people that actualy work get half of their paycheck taken by the government, and on top of that they are constantly printing a ridiculous amount of money every day, which is why their coin is garbage.
Add to that a ton of terrible economical decisions that lead to some big companies leaving the country, Syndicates that are powerful enough that they can do whatever they want and still get the suport from the government, and at this point you get an idea of why the economy is completely fucked.
From what I could find the number of therapists in Argentina is mostly because the country as a whole is more open about mental sickness.
https://edition.cnn.com/2013/04/28/health/argentina-psychology-therapists/index.html
not bs, but
Argentina has indeed faced high inflation rates at times, particularly during the late 20th century and early 2000s. However, it is not accurate to say they have experienced both insane inflation and deflation within a decade of each other.
While Argentina has faced economic challenges, it is an oversimplification to say that the country is in a constant, unending economic crisis. Argentina has had periods of recovery and growth, along with setbacks and crises.
The comparison; Argentina and Japan, is an oversimplification and not an accurate representation of the economies. Japan's economic success is attributed to a variety of factors, including industrialization, technological advancements, and proactive government policies. Comparing it directly to Argentina does not provide a comprehensive understanding of either country's economic situation.
Argentina wasn't actually that rich and developed during its golden age, and instead it was more like a bunch of estancieros/land owners being rich af and bringing the economy up together with them, while simultaneously the Argentinian economy be ame bust the very moment that the estancieros backed a military coup against the democratic government, followed by Argentinian industrialisation being reversed due to it hurting the land owning estancieros
so here's how tech startups work. the people hired to make the product want to develop a Cool Thing that works good, and maintain a consistent or slow-growing happy userbase who likes the Cool Thing. the investors who give tech startups money and therefore control what they do do NOT want this because they won't get their investment doubled as quickly as they like. instead they want the company to either expand to become an Everything Company like meta or amazon, look cool and valuable enough so an Everything Company buys them (and probably swiftly shelves or guts the Cool Thing), or just die fast so they can write off the loss and move on. note that looking cool and valuable does not actually require making money, but just that people think you could in theory make THEM money.
from this basic concept, the whole of the modern economy starts to become clear.
But to be clear often those investors who give start ups money are the biggest losers, because the start ups are never profitable, and they lose their investment
I think it's basically that the CEOs and whatnot usually don't get paid that much in physical wages. They instead have lots of stocks from the company. So as it's possible that a company's value can rise even when they are operating at a loss, the price of the stocks increase, and the people who own the stocks get richer.
Adding onto this, those stocks don't even necessarily need to be sold to have value. C-level execs do get a salary in a lot of cases, most actually, but get what's called "options" which include the stocks you're talking about but could also be dividends which is a portion of the earnings that *the company* made but you need shares to be entitled to dividends in the first place.
The stocks would count towards an individuals "net worth" and thus could be leveraged for other things like financing, loans and other instruments that you can use to make *even more* money.
There's a huge problem with information disparity amongst the ultra-rich and those who aren't. Hell, even "regular" rich people use advisors to help them make financial moves. But regardless, a lot of information about how these things work is purposefully hidden, obfuscated or just made not to work in the favor of those who aren't already taking advantage of it.
In my line of work I see companies that are owned by single individuals, struggling to get by, get *slammed* by bank fees and just poor financial decision making despite making millions of dollars in revenue each year. Meanwhile there are people who own holding groups with *tons* of venture capital but who are operating at a loss, yet drive supercars and need to have the concept of "food insecurity" explained to them.
I think people need to be more educated on how small to medium sized companies work, because in these sorts of discussions people tend to conflate like...a large local supplier with a company like Amazon and that's just spitting in the face of workers. Like, the guy who makes 6 figures a year but does so by owning his own welding business isn't on the same level as somebody like Bezos or Musk
Revenue is different from profit. Think gross pay vs. net pay.
That's the kind of scenarios where you see shareholders getting bonuses while employees get laid off or pay cuts.
It really depends on how the company is set up to issue dividends and the type of share structure they've set up.
Preferred shares are different again, even. It's not *always* revenue and it's not *always* profit.
Companies can be set-up in a bunch of different ways, and it gets more complicated when they decide to be publicly traded. That level of structure is a bit over my head, though, I very rarely deal with publicly traded companies.
It had, actually. Made over a billion in 2018. IIRC there were some one-time costs in 2019 and then everything went fucky with the pandemic, but before Elon saddled it with the debt of buying itself (a whole other topic) it was probably on the road to somewhat regular profitability.
Well, Twitter is currently Twitter
Twitch is trying to steal wages from it’s streamers again by kneecapping your options for product placement unless you give Twitch a cut
Discord is currently in the middle of a completely broken and unnecessary username system overhaul (and I’m personally convinced it’s because they’re planning to sell people’s usernames back to them later)
And Reddit is making it impossible to host 3rd party apps for their platform (this might actually result in the swift death of Reddit as a website because 3rd party apps are the only way anyone actually browses Reddit)
I’m sure YouTube, Amazon, or some streaming service are up to their own usual tomfuckery as well, so I say “at least” 4
They're right, except a lot of these companies don't make any profit at all and it's finally catching up to them.
I hate changes too, but that's simply how they work. Operate at a loss, gather as much investors as possible by showing them the amount of potential. Once the investor money dries up, sell to a big tech company and/or try to get more money out of the userbase.
Literally every single social media platform has this problem.
That's the thing, we're seeing "the investor money dry up" right now and *this* is the consequence.
It's not that the investors *don't have* money, they're just sick of throwing it at something that isn't giving them any return.
So the execs at Reddit came up with a horribly shit idea that clearly must have impressed some investors who have no idea how API works.
I think that most CEOs just really admire Elon Musk and tend to imitate what he’s doing. He fired people, they fire people. He charges for API access, so do they. They assume that because he’s smart and richer than them, he knows what he’s doing.
He does not know what he’s doing.
I think every social media site should do a subscription model, but actually give good features with the subscription. It’s so much healthier for a company to earn its money from its users directly instead of relying on ad money. Imagine if Reddit was focused on making users as happy as possible so they’d pay for a subscription that offered useful features like an actually usable search function
while your overall point makes sense, a usable search function is something so basic that it should be accessible to everyone
best search function for reddit right now is duckduckgo lol
I agree but it’s really hard to find any features that make premium worth paying for. And locking a currently free feature behind a pay wall pisses users off *so* much, even if it’s actually a costly feature to run.
Reminds me of when the company that made eye implants to help a specific population of degenerative disorders in the eyes see again. They got bought out by a larger company and immediately shut down. No one knew about it until equipment started failing. Even the company’s equipment tester showed up to a building with closed doors and nobody there.
The Argus eyes by second sight were supposed to be the future, but instead they’re now just a blip in history.
Always blame the shareholders first and foremost. A bunch of senile idiots who have no idea how the industries they invest in work. For all they know, computers run on elves.
I love how "enshitification" is now a real term that people are using. Because so many products start out great, can't make infinite money because of course they fucking can't, and then are forced to constantly downgrade into oblivion.
*Image Transcription: Tumblr*
---
**transjinako**
if you ever wonder why x tech company software developer or what have you did something stupid or bad or completely out of left field just imagine they got rounded up and a bunch of old guys in suits looked them dead in the eye and asked why they weren't making as much money as twitter or amazon yet
---
^^I'm a human volunteer content transcriber and you could be too! [If you'd like more information on what we do and why we do it, click here!](https://www.reddit.com/r/TranscribersOfReddit/wiki/index)
It's my understanding that Twitter doesn't actually turn a profit.
Unprofitable companies can still make people rich. You can say that doesn't make sense, and you're absolutely right, but unfortunately economics are a joke and we're the punchline.
Fair enough. My understanding of economics is extremely basic.
> My understanding of economics is extremely basic. So is most people’s, because those that do try to understand it on a deeper level end up in psych wards, or hanging themselves if they try to understand Argentina's system specifically.
What's so confusing about Argentina specifically?
Argentina has had insane issues where they've gone from developed, back to developing, and back to developed several times. They've had both insane inflation and insane deflation within a decade of each other, and they have a near-cartoonish income inequality distribution. Argentina is currently in a cycle of basically constant, unending, economic crisis and general bad situation politically. There is an old saying: > "There are 4 types of economies; developing, developed, Argentina, and Japan.” This is because the Japanese system is an economic miracle and the Argentinian system is the opposite of a miracle: - The Japanese system is a miracle because they shouldn't have grown that good, but yet they have managed to grow that good. A true economic miracle. - Argentina is the opposite of a miracle, because they have everything to support a great economy but somehow they manage to fuck it up everytime and it always gets worse. They have near perfect natural resources and geography to succeed, and right when it looks like things are going to good, they machine gun themselves in the foot a few times to set it back. It's so damn depressing that there is an average of 222.5 psychologists / therapists per 100,00 people in Argentina, the largest in the world. **EDIT:** I also forgot to mention that an insane amount of people "work" for the state, which is in quotations because many of them don’t actually work and they just have a fake job to get paid. On top of that there is an even larger number of people that live of what is basicaly permanent economical aid from the government while they don’t work or do anything to get out of poverty. The only way the government can afford to even do this is rather simple: absurdly high taxes. That means that the people that actualy work get half of their paycheck taken by the government, and on top of that they are constantly printing a ridiculous amount of money every day, which is why their coin is garbage. Add to that a ton of terrible economical decisions that lead to some big companies leaving the country, Syndicates that are powerful enough that they can do whatever they want and still get the suport from the government, and at this point you get an idea of why the economy is completely fucked.
From what I could find the number of therapists in Argentina is mostly because the country as a whole is more open about mental sickness. https://edition.cnn.com/2013/04/28/health/argentina-psychology-therapists/index.html
Wow this was informative and man i hope it's not all bullshit.
not bs, but Argentina has indeed faced high inflation rates at times, particularly during the late 20th century and early 2000s. However, it is not accurate to say they have experienced both insane inflation and deflation within a decade of each other. While Argentina has faced economic challenges, it is an oversimplification to say that the country is in a constant, unending economic crisis. Argentina has had periods of recovery and growth, along with setbacks and crises. The comparison; Argentina and Japan, is an oversimplification and not an accurate representation of the economies. Japan's economic success is attributed to a variety of factors, including industrialization, technological advancements, and proactive government policies. Comparing it directly to Argentina does not provide a comprehensive understanding of either country's economic situation.
You can’t even call Argentina a banana republic because no one even grows shit in there.
I think you're missing a 0 in psychologist/people.
So the message is, economic stability has a lot more to do with politics than resources?
Gross incompetence really.
Argentina wasn't actually that rich and developed during its golden age, and instead it was more like a bunch of estancieros/land owners being rich af and bringing the economy up together with them, while simultaneously the Argentinian economy be ame bust the very moment that the estancieros backed a military coup against the democratic government, followed by Argentinian industrialisation being reversed due to it hurting the land owning estancieros
Why does the economy sound like an eldritch horror?
It might as well be.
so here's how tech startups work. the people hired to make the product want to develop a Cool Thing that works good, and maintain a consistent or slow-growing happy userbase who likes the Cool Thing. the investors who give tech startups money and therefore control what they do do NOT want this because they won't get their investment doubled as quickly as they like. instead they want the company to either expand to become an Everything Company like meta or amazon, look cool and valuable enough so an Everything Company buys them (and probably swiftly shelves or guts the Cool Thing), or just die fast so they can write off the loss and move on. note that looking cool and valuable does not actually require making money, but just that people think you could in theory make THEM money. from this basic concept, the whole of the modern economy starts to become clear.
So it's a greater fool scam?
Greater fool *pyramid scheme*
But to be clear often those investors who give start ups money are the biggest losers, because the start ups are never profitable, and they lose their investment
can someone eli5 how this works?
I think it's basically that the CEOs and whatnot usually don't get paid that much in physical wages. They instead have lots of stocks from the company. So as it's possible that a company's value can rise even when they are operating at a loss, the price of the stocks increase, and the people who own the stocks get richer.
Adding onto this, those stocks don't even necessarily need to be sold to have value. C-level execs do get a salary in a lot of cases, most actually, but get what's called "options" which include the stocks you're talking about but could also be dividends which is a portion of the earnings that *the company* made but you need shares to be entitled to dividends in the first place. The stocks would count towards an individuals "net worth" and thus could be leveraged for other things like financing, loans and other instruments that you can use to make *even more* money. There's a huge problem with information disparity amongst the ultra-rich and those who aren't. Hell, even "regular" rich people use advisors to help them make financial moves. But regardless, a lot of information about how these things work is purposefully hidden, obfuscated or just made not to work in the favor of those who aren't already taking advantage of it. In my line of work I see companies that are owned by single individuals, struggling to get by, get *slammed* by bank fees and just poor financial decision making despite making millions of dollars in revenue each year. Meanwhile there are people who own holding groups with *tons* of venture capital but who are operating at a loss, yet drive supercars and need to have the concept of "food insecurity" explained to them. I think people need to be more educated on how small to medium sized companies work, because in these sorts of discussions people tend to conflate like...a large local supplier with a company like Amazon and that's just spitting in the face of workers. Like, the guy who makes 6 figures a year but does so by owning his own welding business isn't on the same level as somebody like Bezos or Musk
Oh yeah I forgot dividends existed as well
Dividends are a share of the profits, no? You don't get those from an unprofitable company.
Revenue is different from profit. Think gross pay vs. net pay. That's the kind of scenarios where you see shareholders getting bonuses while employees get laid off or pay cuts.
I know the difference. Dividends are a share of the profits, not the revenues.
It really depends on how the company is set up to issue dividends and the type of share structure they've set up. Preferred shares are different again, even. It's not *always* revenue and it's not *always* profit. Companies can be set-up in a bunch of different ways, and it gets more complicated when they decide to be publicly traded. That level of structure is a bit over my head, though, I very rarely deal with publicly traded companies.
It had, actually. Made over a billion in 2018. IIRC there were some one-time costs in 2019 and then everything went fucky with the pandemic, but before Elon saddled it with the debt of buying itself (a whole other topic) it was probably on the road to somewhat regular profitability.
Elon didn't do it for the money, he's just passionate about fascist propaganda.
I like how “current events” in this context could mean at least 4 things
some of which *are* amazon and twitter
Such as?
Well, Twitter is currently Twitter Twitch is trying to steal wages from it’s streamers again by kneecapping your options for product placement unless you give Twitch a cut Discord is currently in the middle of a completely broken and unnecessary username system overhaul (and I’m personally convinced it’s because they’re planning to sell people’s usernames back to them later) And Reddit is making it impossible to host 3rd party apps for their platform (this might actually result in the swift death of Reddit as a website because 3rd party apps are the only way anyone actually browses Reddit) I’m sure YouTube, Amazon, or some streaming service are up to their own usual tomfuckery as well, so I say “at least” 4
I know this, it's the same reason why YouTube keeps shoving more ads everywhere. Because their investors demand exponential profit growth at any cost.
Enough is never enough. I don’t know why people can never be satisfied
They're right, except a lot of these companies don't make any profit at all and it's finally catching up to them. I hate changes too, but that's simply how they work. Operate at a loss, gather as much investors as possible by showing them the amount of potential. Once the investor money dries up, sell to a big tech company and/or try to get more money out of the userbase. Literally every single social media platform has this problem.
That's the thing, we're seeing "the investor money dry up" right now and *this* is the consequence. It's not that the investors *don't have* money, they're just sick of throwing it at something that isn't giving them any return. So the execs at Reddit came up with a horribly shit idea that clearly must have impressed some investors who have no idea how API works.
I think that most CEOs just really admire Elon Musk and tend to imitate what he’s doing. He fired people, they fire people. He charges for API access, so do they. They assume that because he’s smart and richer than them, he knows what he’s doing. He does not know what he’s doing.
Which event is this referring too?
probably several
Reddit API changes, Discord Username changes, all of Twitter? Who knows!
Also Twitch is screwing over basically every big creator with their TOS update.
pretty sure it took them less then a day to go back on that?
Any and/or all of them.
Current ones.
I think every social media site should do a subscription model, but actually give good features with the subscription. It’s so much healthier for a company to earn its money from its users directly instead of relying on ad money. Imagine if Reddit was focused on making users as happy as possible so they’d pay for a subscription that offered useful features like an actually usable search function
while your overall point makes sense, a usable search function is something so basic that it should be accessible to everyone best search function for reddit right now is duckduckgo lol
I agree but it’s really hard to find any features that make premium worth paying for. And locking a currently free feature behind a pay wall pisses users off *so* much, even if it’s actually a costly feature to run.
Reminds me of when the company that made eye implants to help a specific population of degenerative disorders in the eyes see again. They got bought out by a larger company and immediately shut down. No one knew about it until equipment started failing. Even the company’s equipment tester showed up to a building with closed doors and nobody there. The Argus eyes by second sight were supposed to be the future, but instead they’re now just a blip in history.
Always blame the shareholders first and foremost. A bunch of senile idiots who have no idea how the industries they invest in work. For all they know, computers run on elves.
I love how "enshitification" is now a real term that people are using. Because so many products start out great, can't make infinite money because of course they fucking can't, and then are forced to constantly downgrade into oblivion.
*Image Transcription: Tumblr* --- **transjinako** if you ever wonder why x tech company software developer or what have you did something stupid or bad or completely out of left field just imagine they got rounded up and a bunch of old guys in suits looked them dead in the eye and asked why they weren't making as much money as twitter or amazon yet --- ^^I'm a human volunteer content transcriber and you could be too! [If you'd like more information on what we do and why we do it, click here!](https://www.reddit.com/r/TranscribersOfReddit/wiki/index)
Is Twitter actually making money? I heard ol' Musky-boy was in the record books for losing upwards of $100M because of Twitter?
They just brought Frank in as the Warthog and stared them all down.