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I believe that many business indeed operate at a loss for extended periods of time, by deliberately spending more money on future developments or obtaining cust
by sharperguy 3y ago
I believe that many business indeed operate at a loss for extended periods of time, by deliberately spending more money on future developments or obtaining customers than they take in revenue.
- edgyquant 3y agoThis was definitely true for tech in the last cycle, but how true is this both outside of that industry and historically at all?
- toyg 3y agoAny big business lives on loans. Which is why you see, for example, retailers going bust right before Christmas - which "surely" should be the busiest and most profitable time of the year...? But to go through it you need to buy inventory, which requires loans - if you can't raise money, because the market thinks you're already in bad shape, you have to close up shop. Most significantly-sized businesses rely on credit week-in week-out, and tend to implode very quickly if the market turns off the tap.