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"Profit" is a strange and ambiguous term here. I've been running an open source, libre project for closing in on 24 years now, and generating revenue from it f

"Profit" is a strange and ambiguous term here. I've been running an open source, libre project for closing in on 24 years now, and generating revenue from it for about 17 years. There's never been any "profit", but there has been revenue. I regard profit as what's left of the revenue after you pay the people who work on the project and any expenses, which is the way most corporations and accountants would view it. The only sort of open source project that needs "profit" defined this way is one funded by a capital investment of some kind, where the investor expects a "return". While there are some open source projects that fit this description, the vast majority do not. Also, as is typical for things linked from HN, this whole article seems very web-y and SaaS-y. There are other kinds of open source projects, believe it or not.

deaddodo 3y ago
I mean, you answered your own conundrum here. Profit is an overlay of Revenue, minus some other overlay. In this case, your profit is 1:1 with your revenue. But you certainly have profit.
reverius42 3y ago
Are you in the US? Do you report that revenue as personal income on your taxes? If yes, then I think it’s fair to call it profit (since you’re also presumably deducting expenses).
- danans 3y ago
  That's true if it is a sole proprietorship, but not if it is a corporation of some kind. A corporation holds the profits (after expenses) on its books and they may (or may not) be distributed proportionally to shareholders. If it's not distributed, it is part of the value of the company.
- PaulDavisThe1st 3y ago
  Yes, sole proprietor, all revenue reported as personal income ... hence I consider it income. It would be profit if I was organized as an LLC that agreed to pay me $X/year and took in $(X+Y) in revenue.
  - hcks 3y ago
    Like what’s your point really
    - SenHeng 3y ago
      Bikeshedding the meaning of profit.
      - PaulDavisThe1st 3y ago
        Perhaps you think it is trivial. I don't. Open source has the potential to bring lots of benefits to society, but if coupled to a particular conception of what "profit" is and the way in which companies "doing" open source should relate to it, I believe that a lot of those benefits will be squandered.
  - mdavidn 3y ago
    Huh? “Profit” is not ambiguous, even in your business. It’s a value you calculate each year on Schedule C.
  - aatd86 3y ago
    Positive income is profit. Negative income is loss. I'd rather profit. :p
  - Ir0nMan 3y ago
    The Net Income you report on your Schedule C is your businesses profit whether you like to think of it that way or not. The opposite of this would be a loss where your business generates negative Net Income.
dazed_confused 3y ago
> Also, as is typical for things linked from HN, this whole article seems very web-y and SaaS-y. There are other kinds of open source projects, believe it or not. You mean the rest of computing...
- TeMPOraL 3y ago
  However little that is. What isn't implicitly a SaaS these days anyway? :/
  - thfuran 3y ago
    What does being implicitly a saas mean?
    - TeMPOraL 3y ago
      Everything. Like e.g. my robot vacuum that I couldn't operate between 1600 yesterday and noon today, because the Internet was down and the robot insists on being able to talk with servers in China to be able to vacuum the floor. Same with my A/C and floor thermostats, except those at least have IR remotes or wall panels for local control. Of course, I am operating all those via an Open Source HomeAssistant app, connecting to an Open Source HomeAssistant instance running on an Open(ish) Hardware Raspberry Pi. But all of that means fuck all, when the malicious vendors make a cloud server a required control intermediary. Despite all that Open Source, my home appliances are still run as a Service. That's one of many cases of what I mean by "being implicitly a SaaS".
      - thfuran 3y ago
        Oh, yeah. There's a lot of iot webshit out there.
        TeMPOraL 3y ago
        Worst thing is, you have little choice. In my case: - There's approximately zero non-SaaS robot vacuums among the newer models. I gave up on this after a long search for something free of this insanity. - With my A/C unit and thermostats, the brand and model choice was made by the people doing the installations. I'm not sure if there are non-cloud, network-controllable options anymore, and even if they were, I'd have to look for local HVAC companies that actually offer them. - I spent much more time and money than is reasonable to have a fully-local networked baby cam, that doesn't leak videos to the cloud. Specifically, I had to buy a camera and two pieces of expensive network gear from Ubiquity (per HN advice, thank you), because that's apparently the only option in Europe (US folks have Amcrest), other than hacking something together from a spare Android phone, or webcams and Raspberry Pi. There's literally no other cloud-bullshit-free option I could find. (The "baby cam" is at least made of professional, high-quality gear, so that's a silver lining, but I doubt normal people would be happy to spend €500+ just to keep the video stream in-house.)
bruce511 3y ago
The article is talking about businesses being on Open Source foundations, not the myriad of other possible Open Source projects. In that context profit is what's left once revenue is received and expenses paid. Implicit in those expenses are (fixed) salaries, employee contracts, payslips and so on. What a business does with the profit can be varied. Firstly it can be added to cash reserves, which can contine to pay expenses through poor-revenue months. It might be spent on assets, like new hardware. It might allow for another hire. In some cases, although less often than you might think, it pays out dividends to owners. You don't mention too many details, so I can only presume your situation. I suspect it's a different kind of setup. If you are man-alone, and the project is small, (ie you have no desire or need to add a employee) then basically the revenue is just income to you. Some months you get more, some months you get less. In this context there isn't "profit" but revenue. This is especially possible for software where other overheads are trivial and the effort of tracking expenses for tax purposes meaningless. You may not even keep a set of books. If you are indeed in this space, then I understand why the article feels unrelateable. It's discussing a very different situation. As with all articles of this nature, context is important.
- PaulDavisThe1st 3y ago
  TFA said: > To be clear, I’m talking about open-source projects that compete with popular paid solutions. [ ... ] > Excluding non-profit projects that are sponsored by donations or parent organizations, a typical open-source business needs profit to be the ultimate north star. So, I think you've somewhat misinterpreted the space the author thinks they are referring to. Ardour is a small project in terms of man-power - 2 full time paid developers, other individuals paid for media and other work, various commercial collaborations along the way, certainly dreaming of being able to use more paid development hours. We absolutely compete with at least a dozen popular paid solutions, with at least 3 on Linux alone. The main reasons I think this article feels so unrelatable to me is (a) it's strange focus on profit (b) it's web/SaaS centric nature (c) it's B2B centric nature. It just doesn't have much to say about the "space" of writing native/desktop applications for individuals involved in creation workflows, free of VC influence.
  - 3y ago
brabel 3y ago
I am kind of amused to see someone here on HN, of all places, who allegedly runs a business use scare quotes around the word profit and make it sound like there's something ambiguous about it.
- deleted 3y ago
  [deleted]
- deleted 3y ago
  [deleted]
- zogrodea 3y ago
  Is the word "allegedly" meant to cast doubt on the story? The user mentioned working on "Ardour" in the comments, and it wasn't hard to find what he was talking about from a quick Google search that led me to Wikipedia [0]. I think the quote marks around "profit" are appropriate here because the comment was about defining that specific word. [0] https://en.wikipedia.org/wiki/Paul_Davis_(programmer) https://en.wikipedia.org/wiki/Paul_Davis_(programmer)
  - brabel 3y ago
    Allegedly because I don't have time or interest to check it, and because if you're running a for-profit business and you need someone to clarify for you what profit means, I feel like there's something weird going on.
    - Applejinx 3y ago
      There is, but it's not where you think it is. That's the guy who runs Ardour. It's a fundamental DAW on Linux, as familiar as Excel on Windows: it is the foundation of Harrison Mixbus. He's also fundamental to the JACK audio subsystem. It's possible you've heard of him as one of the two first programmers at Amazon. His objection is mighty valid, here. You cannot say profit is a basic principle of open source. The whole point of open source is communication of ideas in the form of software and the ability to reformulate those ideas freely, leading to an empowering of communities of software users and the ability to DO THINGS. That's the point. Making wealth for individuals isn't in the equation.
Nevermark 3y ago
You don’t need VC’s to be organized as a corporation and/or have a growth/profit mindset It removes a lot of pressure to not have pure investors expecting constant returns. Easier to do the right thing for the project. But growth is likely to be necessary, and sensible, in any product space competing against ambitious corporations who are going to be strongly growth oriented. Booking profits so you are prepared for downturns, opportunities, or large expenses isn’t just reasonable. The more people & customers involved, the more reason not to burn through all revenue as it comes.
- Applejinx 3y ago
  The basic problem here is HN posters unable to conceptualize the idea 'right thing for the project'. They're stuck in 'investor mode' so to them, anyone interacting with the project (or the world) can only be interested in extracting profit from the system, rendering what the project does, meaningless. Not a good way to get work done. At the end of the day you have to have done something.
  - Nevermark 3y ago
    My view, for ambitious projects likely to be in a competitive space, is that “right thing” converges in the long term for profit-seeking and non-profit-focused paths. I.e. aim for maximum growth of happy customers/users in the long term to best grow and thrive in the long term. Short term worries about quarterly growth can seriously inhibit long term potential. Often without this huge opportunity loss being recognized. Alternately, a rejection of profit as healthy can limit the ability of a non-profit focused project from achieving more also. The key is, aim long term, for best positive impact, then work back from that to now, and use all constructive positive-sum tools available.
    - Applejinx 3y ago
      That's fair. Good luck selling investors on this 'long term' thing. Better to, like Bezos, retain control and COMPEL them to deal with you over the long term. That guy is somebody who understands the value of power over profit. Never underestimate the amount of chaos a homo economicus can run into when they're dealing with a fanatic, a prophet, or a vindictive businessman with a taste for vengeance. You don't only need to worry about self-interested idealistic hippies. You might also run into someone who is able to take a position using open source against you specifically to undermine you, and who can take a loss if it's for the purpose of taking you out. This too is 'long term' in a sense. I like your 'long term' better, mind you. I'm just saying.
beremaki 3y ago
Profit is one of the least ambiguous term possible. If you pay yourself 100% of your revenue as income you don't make any profit which is your choice. Profit is needed to sustain periods when revenue decreases and to act when an investment is needed (for pivoting, adapting to evolutions in the market, scaling or whatever move the business has to make). I don't see what is controversial here for a business, profit is like capitalism 101.
- jameshart 3y ago
  If profit was completely unambiguous, accountants wouldn’t have had to invent the word ‘EBITDA’. The article rather ambiguously says: > Profit is what allows the company to hire employees, grow, and sustain itself—it is quite literally what funds ongoing development There’s a key distinction between reinvesting profits - using accrued money to develop or acquire capital assets that can grow the company - and expenses. Cash used to ‘sustain the business’, ‘grow’ (increase sales) and ‘hire employees’, as well as ‘ongoing development’ in the sense of business development, is largely going in the ‘operating expenses’ bucket. It doesn’t come out of profits, it comes out of revenue and it reduces your profits. But in the case of a software focused organization, engineering staffing costs and ongoing product development can absolutely be reinvestment into developing software assets - but with a lot of caveats. So it’s certainly a little ambiguous for the original article to claim that all those things are ‘what profit is for’. Often they are preprofit expenses.
Kiro 3y ago
I presume you pay yourself, so you rely on profit. The profit is nullified in the books but in practice it's no different than using the profit for dividends.
- PaulDavisThe1st 3y ago
  This runs counter to every definition of profit I've ever read.
  - deleted 3y ago
    [deleted]
  - Kiro 3y ago
    You use the profit to pay your salary. You could choose not to, or use the money for other things. That's no different than any other company.
    - CrazyStat 3y ago
      Money used for business expenses like salary is not profit. Profit is (roughly speaking) what's left over after you deduct all your business expenses from your revenue.
      - Kiro 3y ago
        And if you don't take a salary that money becomes profit, so the profit is effectively used for salaries. Claiming my company is not profit-driven because I use 100% of the surplus revenue for my salary is of course nonsense.
        PaulDavisThe1st 3y ago
        Were your company (partially or wholly) owned by capital, there would almost certainly be different decisions made (in many different areas) because of capital's desire for a return on its investment. If you were lucky, capital would be interested only in long term value (i.e. eventually selling it, and making a profit on the stock at that time). If you were unlucky, all the short term decisions would be made with an eye to generating profit that can be returned to the shareholders as dividends. Either way, that scenario would be a "for-profit" company. As it is, your company (like mine) is just trying to generate as much revenue as it can within whatever other parameters matter to you. What would you call the difference between a capital-dividends-driven organization and one that only cares about actual revenue?
robertlagrant 3y ago
> as is typical for things linked from HN, this whole article seems very web-y and SaaS-y I see loads of variety in things linked on HN.
andai 3y ago
>as is typical for things linked from HN, this whole article seems very web-y and SaaS-y Is there some sort of Hacker-er News that filters that stuff out?
- pif 3y ago
  It's not really a matter of filtering. Web and SaaS are interesting topic. But it is irritating and frustrating how many articles, and commenters, refer to web programming as the whole universe of software development.
GuB-42 3y ago
If you don't make profit, you are a non-profit organization, or at least, you should be. Companies of all kinds, including open source companies are for making profit. Now you can make money running a nonprofit, by having the organization pay you, but few people do that, even in open source. Usually, you want your company to be worth something. A company often requires personal investment, and if you want to stop, you want to be able to sell the company and get some return on that investment, or at least, not lose everything. But in order to do that, you need profits. On a nonprofit, because obviously, you can't make profit, you can't get anything back from what you created.
- PaulDavisThe1st 3y ago
  In the USA, a 501c3 organization that sees revenues of over about $10k needs a fairly extensive board, officer insurance (to protect board members from claims about misappropriating funds) and other legal stuff. I considered this years ago, but decided that it was not worth the effort. > On a nonprofit, because obviously, you can't make profit, you can't get anything back from what you created. I do not agree with your assessment. I do not want the "company" to be "worth" anything. The software is the value, and in keeping with the open source license, the software is a gift to the rest of the world. There merely has to be sufficient revenue associated with it to allow people to work on it at an appropriate level. Profit and "value growth" is not part of the goal.
  - GuB-42 3y ago
    Ok, I don't live in the US, I didn't realize a nonprofit involved so much paperwork and bureaucracy. I shouldn't be surprised, it is a way to avoid taxes after all and governments like taxes. But clearly, your goals are in the spirit of a nonprofit, and I think you are part of a minority.
  - FireBeyond 3y ago
    You can be a non-profit and not a 501c3. A 501c3 is an exempt purposes non-profit, specifically "charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals."
dalbasal 3y ago
Profit is an accounting term, so ambiguous. To be actually clear, it would be useful to qualify it as "taxable profit" or "investor profit," for example. In practice, these are two unrelated numbers for most big companies. Each one is defined by who you are communicating to, and what the rules are for this communication. You might also have "management profit," a catch-all term for unstandard & unregulated metrics. For example, A business graduates from "cash accounting" for tax and investor purposes... but it's still useful for the old management to track the old definition of profit. Maybe because habits. Maybe because it tracks cash flow or is useful some other way. It's one of those pomo problems. The SEC, IRS or bank manager will not stand for "SEC Profit." They want "real" profit. It's like a naive local politician demanding to know what the hospital "really" cost the contractor. Anyway.... like the SEC, IRS and such... author is using terms from their own perspective. When they say "Open Source does not win by being cheaper," "open source" specifically refers to an open source business modeled after MongoDB or similar. So yes, investors, growth goals and such are implied. He clarifies himself on this point and there's no real point taking it into semantic growling.
ozim 3y ago
That is how Wikipedia doesn’t have a profit while it’s CEO takes 6 figure bonus.

deaddodo 3y ago

I mean, you answered your own conundrum here. Profit is an overlay of Revenue, minus some other overlay. In this case, your profit is 1:1 with your revenue. But you certainly have profit.

reverius42 3y ago

Are you in the US? Do you report that revenue as personal income on your taxes? If yes, then I think it’s fair to call it profit (since you’re also presumably deducting expenses).

danans 3y ago
That's true if it is a sole proprietorship, but not if it is a corporation of some kind. A corporation holds the profits (after expenses) on its books and they may (or may not) be distributed proportionally to shareholders. If it's not distributed, it is part of the value of the company.
PaulDavisThe1st 3y ago
Yes, sole proprietor, all revenue reported as personal income ... hence I consider it income. It would be profit if I was organized as an LLC that agreed to pay me $X/year and took in $(X+Y) in revenue.
- hcks 3y ago
  Like what’s your point really
  - SenHeng 3y ago
    Bikeshedding the meaning of profit.
    - PaulDavisThe1st 3y ago
      Perhaps you think it is trivial. I don't. Open source has the potential to bring lots of benefits to society, but if coupled to a particular conception of what "profit" is and the way in which companies "doing" open source should relate to it, I believe that a lot of those benefits will be squandered.
- mdavidn 3y ago
  Huh? “Profit” is not ambiguous, even in your business. It’s a value you calculate each year on Schedule C.
- aatd86 3y ago
  Positive income is profit. Negative income is loss. I'd rather profit. :p
- Ir0nMan 3y ago
  The Net Income you report on your Schedule C is your businesses profit whether you like to think of it that way or not. The opposite of this would be a loss where your business generates negative Net Income.

dazed_confused 3y ago

> Also, as is typical for things linked from HN, this whole article seems very web-y and SaaS-y. There are other kinds of open source projects, believe it or not. You mean the rest of computing...

TeMPOraL 3y ago
However little that is. What isn't implicitly a SaaS these days anyway? :/
- thfuran 3y ago
  What does being implicitly a saas mean?
  - TeMPOraL 3y ago
    Everything. Like e.g. my robot vacuum that I couldn't operate between 1600 yesterday and noon today, because the Internet was down and the robot insists on being able to talk with servers in China to be able to vacuum the floor. Same with my A/C and floor thermostats, except those at least have IR remotes or wall panels for local control. Of course, I am operating all those via an Open Source HomeAssistant app, connecting to an Open Source HomeAssistant instance running on an Open(ish) Hardware Raspberry Pi. But all of that means fuck all, when the malicious vendors make a cloud server a required control intermediary. Despite all that Open Source, my home appliances are still run as a Service. That's one of many cases of what I mean by "being implicitly a SaaS".
    - thfuran 3y ago
      Oh, yeah. There's a lot of iot webshit out there.
      - TeMPOraL 3y ago
        Worst thing is, you have little choice. In my case: - There's approximately zero non-SaaS robot vacuums among the newer models. I gave up on this after a long search for something free of this insanity. - With my A/C unit and thermostats, the brand and model choice was made by the people doing the installations. I'm not sure if there are non-cloud, network-controllable options anymore, and even if they were, I'd have to look for local HVAC companies that actually offer them. - I spent much more time and money than is reasonable to have a fully-local networked baby cam, that doesn't leak videos to the cloud. Specifically, I had to buy a camera and two pieces of expensive network gear from Ubiquity (per HN advice, thank you), because that's apparently the only option in Europe (US folks have Amcrest), other than hacking something together from a spare Android phone, or webcams and Raspberry Pi. There's literally no other cloud-bullshit-free option I could find. (The "baby cam" is at least made of professional, high-quality gear, so that's a silver lining, but I doubt normal people would be happy to spend €500+ just to keep the video stream in-house.)

bruce511 3y ago

The article is talking about businesses being on Open Source foundations, not the myriad of other possible Open Source projects. In that context profit is what's left once revenue is received and expenses paid. Implicit in those expenses are (fixed) salaries, employee contracts, payslips and so on. What a business does with the profit can be varied. Firstly it can be added to cash reserves, which can contine to pay expenses through poor-revenue months. It might be spent on assets, like new hardware. It might allow for another hire. In some cases, although less often than you might think, it pays out dividends to owners. You don't mention too many details, so I can only presume your situation. I suspect it's a different kind of setup. If you are man-alone, and the project is small, (ie you have no desire or need to add a employee) then basically the revenue is just income to you. Some months you get more, some months you get less. In this context there isn't "profit" but revenue. This is especially possible for software where other overheads are trivial and the effort of tracking expenses for tax purposes meaningless. You may not even keep a set of books. If you are indeed in this space, then I understand why the article feels unrelateable. It's discussing a very different situation. As with all articles of this nature, context is important.

PaulDavisThe1st 3y ago
TFA said: > To be clear, I’m talking about open-source projects that compete with popular paid solutions. [ ... ] > Excluding non-profit projects that are sponsored by donations or parent organizations, a typical open-source business needs profit to be the ultimate north star. So, I think you've somewhat misinterpreted the space the author thinks they are referring to. Ardour is a small project in terms of man-power - 2 full time paid developers, other individuals paid for media and other work, various commercial collaborations along the way, certainly dreaming of being able to use more paid development hours. We absolutely compete with at least a dozen popular paid solutions, with at least 3 on Linux alone. The main reasons I think this article feels so unrelatable to me is (a) it's strange focus on profit (b) it's web/SaaS centric nature (c) it's B2B centric nature. It just doesn't have much to say about the "space" of writing native/desktop applications for individuals involved in creation workflows, free of VC influence.
- 3y ago

brabel 3y ago

I am kind of amused to see someone here on HN, of all places, who allegedly runs a business use scare quotes around the word profit and make it sound like there's something ambiguous about it.

deleted 3y ago
[deleted]
deleted 3y ago
[deleted]
zogrodea 3y ago
Is the word "allegedly" meant to cast doubt on the story? The user mentioned working on "Ardour" in the comments, and it wasn't hard to find what he was talking about from a quick Google search that led me to Wikipedia [0]. I think the quote marks around "profit" are appropriate here because the comment was about defining that specific word. [0] https://en.wikipedia.org/wiki/Paul_Davis_(programmer) https://en.wikipedia.org/wiki/Paul_Davis_(programmer)
- brabel 3y ago
  Allegedly because I don't have time or interest to check it, and because if you're running a for-profit business and you need someone to clarify for you what profit means, I feel like there's something weird going on.
  - Applejinx 3y ago
    There is, but it's not where you think it is. That's the guy who runs Ardour. It's a fundamental DAW on Linux, as familiar as Excel on Windows: it is the foundation of Harrison Mixbus. He's also fundamental to the JACK audio subsystem. It's possible you've heard of him as one of the two first programmers at Amazon. His objection is mighty valid, here. You cannot say profit is a basic principle of open source. The whole point of open source is communication of ideas in the form of software and the ability to reformulate those ideas freely, leading to an empowering of communities of software users and the ability to DO THINGS. That's the point. Making wealth for individuals isn't in the equation.

Nevermark 3y ago

You don’t need VC’s to be organized as a corporation and/or have a growth/profit mindset It removes a lot of pressure to not have pure investors expecting constant returns. Easier to do the right thing for the project. But growth is likely to be necessary, and sensible, in any product space competing against ambitious corporations who are going to be strongly growth oriented. Booking profits so you are prepared for downturns, opportunities, or large expenses isn’t just reasonable. The more people & customers involved, the more reason not to burn through all revenue as it comes.

Applejinx 3y ago
The basic problem here is HN posters unable to conceptualize the idea 'right thing for the project'. They're stuck in 'investor mode' so to them, anyone interacting with the project (or the world) can only be interested in extracting profit from the system, rendering what the project does, meaningless. Not a good way to get work done. At the end of the day you have to have done something.
- Nevermark 3y ago
  My view, for ambitious projects likely to be in a competitive space, is that “right thing” converges in the long term for profit-seeking and non-profit-focused paths. I.e. aim for maximum growth of happy customers/users in the long term to best grow and thrive in the long term. Short term worries about quarterly growth can seriously inhibit long term potential. Often without this huge opportunity loss being recognized. Alternately, a rejection of profit as healthy can limit the ability of a non-profit focused project from achieving more also. The key is, aim long term, for best positive impact, then work back from that to now, and use all constructive positive-sum tools available.
  - Applejinx 3y ago
    That's fair. Good luck selling investors on this 'long term' thing. Better to, like Bezos, retain control and COMPEL them to deal with you over the long term. That guy is somebody who understands the value of power over profit. Never underestimate the amount of chaos a homo economicus can run into when they're dealing with a fanatic, a prophet, or a vindictive businessman with a taste for vengeance. You don't only need to worry about self-interested idealistic hippies. You might also run into someone who is able to take a position using open source against you specifically to undermine you, and who can take a loss if it's for the purpose of taking you out. This too is 'long term' in a sense. I like your 'long term' better, mind you. I'm just saying.

beremaki 3y ago

Profit is one of the least ambiguous term possible. If you pay yourself 100% of your revenue as income you don't make any profit which is your choice. Profit is needed to sustain periods when revenue decreases and to act when an investment is needed (for pivoting, adapting to evolutions in the market, scaling or whatever move the business has to make). I don't see what is controversial here for a business, profit is like capitalism 101.

jameshart 3y ago
If profit was completely unambiguous, accountants wouldn’t have had to invent the word ‘EBITDA’. The article rather ambiguously says: > Profit is what allows the company to hire employees, grow, and sustain itself—it is quite literally what funds ongoing development There’s a key distinction between reinvesting profits - using accrued money to develop or acquire capital assets that can grow the company - and expenses. Cash used to ‘sustain the business’, ‘grow’ (increase sales) and ‘hire employees’, as well as ‘ongoing development’ in the sense of business development, is largely going in the ‘operating expenses’ bucket. It doesn’t come out of profits, it comes out of revenue and it reduces your profits. But in the case of a software focused organization, engineering staffing costs and ongoing product development can absolutely be reinvestment into developing software assets - but with a lot of caveats. So it’s certainly a little ambiguous for the original article to claim that all those things are ‘what profit is for’. Often they are preprofit expenses.

Kiro 3y ago

I presume you pay yourself, so you rely on profit. The profit is nullified in the books but in practice it's no different than using the profit for dividends.

PaulDavisThe1st 3y ago
This runs counter to every definition of profit I've ever read.
- deleted 3y ago
  [deleted]
- Kiro 3y ago
  You use the profit to pay your salary. You could choose not to, or use the money for other things. That's no different than any other company.
  - CrazyStat 3y ago
    Money used for business expenses like salary is not profit. Profit is (roughly speaking) what's left over after you deduct all your business expenses from your revenue.
    - Kiro 3y ago
      And if you don't take a salary that money becomes profit, so the profit is effectively used for salaries. Claiming my company is not profit-driven because I use 100% of the surplus revenue for my salary is of course nonsense.
      - PaulDavisThe1st 3y ago
        Were your company (partially or wholly) owned by capital, there would almost certainly be different decisions made (in many different areas) because of capital's desire for a return on its investment. If you were lucky, capital would be interested only in long term value (i.e. eventually selling it, and making a profit on the stock at that time). If you were unlucky, all the short term decisions would be made with an eye to generating profit that can be returned to the shareholders as dividends. Either way, that scenario would be a "for-profit" company. As it is, your company (like mine) is just trying to generate as much revenue as it can within whatever other parameters matter to you. What would you call the difference between a capital-dividends-driven organization and one that only cares about actual revenue?

robertlagrant 3y ago

> as is typical for things linked from HN, this whole article seems very web-y and SaaS-y I see loads of variety in things linked on HN.

andai 3y ago

>as is typical for things linked from HN, this whole article seems very web-y and SaaS-y Is there some sort of Hacker-er News that filters that stuff out?

pif 3y ago
It's not really a matter of filtering. Web and SaaS are interesting topic. But it is irritating and frustrating how many articles, and commenters, refer to web programming as the whole universe of software development.

GuB-42 3y ago

If you don't make profit, you are a non-profit organization, or at least, you should be. Companies of all kinds, including open source companies are for making profit. Now you can make money running a nonprofit, by having the organization pay you, but few people do that, even in open source. Usually, you want your company to be worth something. A company often requires personal investment, and if you want to stop, you want to be able to sell the company and get some return on that investment, or at least, not lose everything. But in order to do that, you need profits. On a nonprofit, because obviously, you can't make profit, you can't get anything back from what you created.

PaulDavisThe1st 3y ago
In the USA, a 501c3 organization that sees revenues of over about $10k needs a fairly extensive board, officer insurance (to protect board members from claims about misappropriating funds) and other legal stuff. I considered this years ago, but decided that it was not worth the effort. > On a nonprofit, because obviously, you can't make profit, you can't get anything back from what you created. I do not agree with your assessment. I do not want the "company" to be "worth" anything. The software is the value, and in keeping with the open source license, the software is a gift to the rest of the world. There merely has to be sufficient revenue associated with it to allow people to work on it at an appropriate level. Profit and "value growth" is not part of the goal.
- GuB-42 3y ago
  Ok, I don't live in the US, I didn't realize a nonprofit involved so much paperwork and bureaucracy. I shouldn't be surprised, it is a way to avoid taxes after all and governments like taxes. But clearly, your goals are in the spirit of a nonprofit, and I think you are part of a minority.
- FireBeyond 3y ago
  You can be a non-profit and not a 501c3. A 501c3 is an exempt purposes non-profit, specifically "charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals."

dalbasal 3y ago

Profit is an accounting term, so ambiguous. To be actually clear, it would be useful to qualify it as "taxable profit" or "investor profit," for example. In practice, these are two unrelated numbers for most big companies. Each one is defined by who you are communicating to, and what the rules are for this communication. You might also have "management profit," a catch-all term for unstandard & unregulated metrics. For example, A business graduates from "cash accounting" for tax and investor purposes... but it's still useful for the old management to track the old definition of profit. Maybe because habits. Maybe because it tracks cash flow or is useful some other way. It's one of those pomo problems. The SEC, IRS or bank manager will not stand for "SEC Profit." They want "real" profit. It's like a naive local politician demanding to know what the hospital "really" cost the contractor. Anyway.... like the SEC, IRS and such... author is using terms from their own perspective. When they say "Open Source does not win by being cheaper," "open source" specifically refers to an open source business modeled after MongoDB or similar. So yes, investors, growth goals and such are implied. He clarifies himself on this point and there's no real point taking it into semantic growling.

ozim 3y ago

That is how Wikipedia doesn’t have a profit while it’s CEO takes 6 figure bonus.