3 ms·

Please explain why it is bad for a growing company to turn a profit?

• kragniz 14y ago
  I assume one could say the spare money could be spent on growing the company, making more money in the longer run. (disclaimer: I have no idea what I'm talking about)
  • eldavido 14y ago
    Right. Good corporate governance points toward the maximization of long-term shareholder value, as measured by the present value of payments to shareholders (dividends, buybacks, etc.) http://en.wikipedia.org/wiki/Net_present_value http://en.wikipedia.org/wiki/Net_present_value Silicon Valley has a somewhat bizarre culture of viewing dividend payments as "defeat", as in, "We can't find anything better to do with the cash because we aren't innovative, so we're giving it back to our investors". This is where the (strange) logic of profit=evil comes from in these conversations.
• nikcub 14y ago
  because it indicates that you believe insting in your business will yield a greater return than leaving the money in the bank or with bonds. considering that Facebook are about to raise $5B it isn't unreasonable to expect them to ramp up spending with revenue as well.