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> Are they in danger of running out of money? Have we been in a bubble so long that people have forgotten that the raison d'etre for publicly traded companies

> Are they in danger of running out of money? Have we been in a bubble so long that people have forgotten that the raison d'etre for publicly traded companies existing is not to simply exist, but rather make profit and ideally continually expanding profit for share holders? For a startup runway and growth of whatever nature are all that matter. You need to exist long enough for the exit event, and grow in a way that makes this more possible. If you have a two year runway, you have two more years to win your investors back their money and more. But this is not true for publicly traded companies. Simply surviving or, even worse, slowly burning reserves is not enough. I know so many post-IPO startup employees that dismiss layoffs because "the company has tons of cash!" Do you invest in a company because you think it won't go out of business for a decade? No you invest because their profit margins are healthy and you think they'll continue to grow in a sustainable, net revenue positive way. I still remember the dotcom bubble, which was much shorter than what we've been in, and the public debate among investors was about the "new economy" and claims that "things are different now". However those old fuddy-duddies that kept arguing that companies need to make more than they spend were proven right in just a few years. Today I see CEOs and executive leadership at companies genuinely surprised that they're being asked to prove that they can be profitable. I see generations of tech workers sincerely confused about the very idea of what it means to run a successful business. Amazon is doing massive layoffs because they need to show investors that the know how to create value, and become more profitable. At least Amazon has shown periodically that they can make profit. There are plenty of post-IPO startups that have never proven that they are even capable of not running at a loss.

mint2 4y ago
> “the raison d'etre for publicly traded companies existing is not to simply exist, but rather make profit and ideally continually expanding profit for share holders” Should be noted the ideology that the purpose of a corporation is to maximize the profits for shareholder above all else is a modern obsession, and always takes a short term view. Starving a company just for a few good years of share prices is is dumb but often what that ideology leads to. Making profit is part or what a corporation should do, maximizing it above all else is not. Similarly HOAs are supposed to maximize house value but funny how some of the highest property values are places like Palo Alto that aren’t known for HOAs.
- JackFr 4y ago
  The goal is to maximize shareholder value, which is not the same as maximizing short term profits. Amazon famously did not turn a profit for years as its stock price rose. It was able to do so because the market largely trusted the management. The reason why the stock market demands profit from most companies is that many, many managers and directors are bad at their job. Demanding profits is a way to keep management disciplined and focused, and avoiding years long boondoggles and fiascos. This is important since they are playing with other peoples money.
  - whatever1 4y ago
    What people’s money? People put money when amazon ipo’ed decades ago. These people got their money back in multiples. Now there are just speculators exchanging pieces of papers themselves. These have not connection whatsoever with the company’s cash flow.
- bumby 4y ago
  >the purpose of a corporation is to maximize the profits for shareholder above all else is a modern obsession It is not "modern", depending on how you define the term. Ford v. Dodge was a case about it over 100 years ago.

mint2 4y ago

> “the raison d'etre for publicly traded companies existing is not to simply exist, but rather make profit and ideally continually expanding profit for share holders” Should be noted the ideology that the purpose of a corporation is to maximize the profits for shareholder above all else is a modern obsession, and always takes a short term view. Starving a company just for a few good years of share prices is is dumb but often what that ideology leads to. Making profit is part or what a corporation should do, maximizing it above all else is not. Similarly HOAs are supposed to maximize house value but funny how some of the highest property values are places like Palo Alto that aren’t known for HOAs.

JackFr 4y ago
The goal is to maximize shareholder value, which is not the same as maximizing short term profits. Amazon famously did not turn a profit for years as its stock price rose. It was able to do so because the market largely trusted the management. The reason why the stock market demands profit from most companies is that many, many managers and directors are bad at their job. Demanding profits is a way to keep management disciplined and focused, and avoiding years long boondoggles and fiascos. This is important since they are playing with other peoples money.
- whatever1 4y ago
  What people’s money? People put money when amazon ipo’ed decades ago. These people got their money back in multiples. Now there are just speculators exchanging pieces of papers themselves. These have not connection whatsoever with the company’s cash flow.
bumby 4y ago
>the purpose of a corporation is to maximize the profits for shareholder above all else is a modern obsession It is not "modern", depending on how you define the term. Ford v. Dodge was a case about it over 100 years ago.