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If you make $100k in profit, you pay 21% in taxes, so it turns into $79k. If you instead invest that $100k into growth (eg. ads, sales people, marketers, engin

by a13n 6y ago

If you make $100k in profit, you pay 21% in taxes, so it turns into $79k. If you instead invest that $100k into growth (eg. ads, sales people, marketers, engineers), you pay $0 of taxes, and can ideally generate an additional $200-300k revenue next year because of the investment. Would you rather have $79k now, or $200-300k next year? If you always invest, you'll grow faster and never pay taxes. With this in mind, why would these companies want to be profitable? The major assumption here is that you have a way to invest $x now into $x+ in the future. A lot of SaaS companies have this down to a science via metrics like CAC, payback period, etc.

shakezula 6y ago
But SEMRush says this, right there in their report > We do not know if we will be able to achieve or sustain profitability in the future. This is a little different than Amazon running at a deficit to avoid taxes while they're consistently growing YoY. Taken at face value, this is them admitting they haven't been profitable for years and don't know if they ever can be profitable.
- weird-eye-issue 6y ago
  Every single S-1 says that from companies like this. It doesn't mean anything
- nemothekid 6y ago
  The risk section of an S-1, should be taken with a grain of salt. Half the items there are simply cookie cutter templates that simply provide protection if their stock goes to 0 and they get sued. Here's is the exact same line from coinbase's S1 > Due to our limited operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any given period. [1] [1] https://www.sec.gov/Archives/edgar/data/1679788/000162828021003168/coinbaseglobalincs-1.htm#i86a9d9b35e45447ea6eb369e5dcf1e6a_1274 https://www.sec.gov/Archives/edgar/data/1679788/000162828021... You will also find "risks" such as "if we fail to add new customers, our business will fail."

by a13n 6y ago

shakezula 6y ago

But SEMRush says this, right there in their report > We do not know if we will be able to achieve or sustain profitability in the future. This is a little different than Amazon running at a deficit to avoid taxes while they're consistently growing YoY. Taken at face value, this is them admitting they haven't been profitable for years and don't know if they ever can be profitable.

weird-eye-issue 6y ago
Every single S-1 says that from companies like this. It doesn't mean anything
nemothekid 6y ago
The risk section of an S-1, should be taken with a grain of salt. Half the items there are simply cookie cutter templates that simply provide protection if their stock goes to 0 and they get sued. Here's is the exact same line from coinbase's S1 > Due to our limited operating history, it may be difficult to evaluate our business and future prospects, and we may not be able to achieve or maintain profitability in any given period. [1] [1] https://www.sec.gov/Archives/edgar/data/1679788/000162828021003168/coinbaseglobalincs-1.htm#i86a9d9b35e45447ea6eb369e5dcf1e6a_1274 https://www.sec.gov/Archives/edgar/data/1679788/000162828021... You will also find "risks" such as "if we fail to add new customers, our business will fail."