one thing that I think was missed is the fact that you need to pay taxes on profits. Running at a loss means instead of giving the IRS 40%, you put the entire 100% back into the business
I see your point but all these companies would prefer to make profit than not, it’s just that their business model doesn’t really allow them to. You’re certainly right that running at a loss has significant benefits come tax time but in the long run these business cannot operate being perpetually unprofitable. It might help them in the short run in some regards but by no means are any of these companies intentionally trying to be unprofitable by inflating expenses to reduce their tax bill. That’s either fraud or horrible management lol
@@RaisedMedia While you are correct for a lot of startups, big tech is intentionally unprofitable. Any money left over is invested into innovation + growth in other areas, starting teams/projects, or buying the competition. I would argue it is the primary advantage and reason companies strive to be unprofitable. From an investor POV, money that would otherwise be lost to taxes is invested into further growth (monopolization) and assets. This inflates the valuation, allowing them a potentially insane ROI exit.
Totally valid point. What I mean is that in the long run even big tech needs to make a profit. They don’t need to do it right away (example Amazon intentionally being unprofitable to undercut the market) but eventually from a long-run economic perspective they can’t keep selling equity or taking on debt to fuel growth. The money has to come from profits. VCs and PE care about increasing revenues not profit for a massive monetization event and get a huge ROI (e.g. exiting from Uber on IPO) but now Uber is finally turning a profit because they want and have to.
@@RaisedMedia The problem with Uber is that its competition has the same exact business strategy, which limits the potential to monopolize like Walmart & Amazon. The reason that Warmart killed every local brick and mortar business in town was because only they had the funds to operate at losses for so long, effectively killing out the competition. You bring up a pretty good point, this type of strategy (starve, wait, & absorb your competition until you're a monopoly like Amazon and Walmart) only works when the competition doesn't have the same access to free money. I appreciate your thoughtful response, makes me ponder. It will be interesting to see how these companies duke it out, as Lyft and Uber are effectively at a stalemate.
@@MufflesUnderstandable. You’re correct that negative profit means you don’t have to pay any tax. However with public companies you can’t do this, investors want to see companies with growing profit over time. If a company doesn’t have good financials, investors will be sceptical and they won’t have good stock valuations.
Also: Investors make money from investing, by fees. They are not investing their own money. They want to invest as much as possible and not have the real world stop them. After the IPO the common man can catch the falling knife. But until then, ...
It’s unfair that those big companies don’t have to worry about profit, but most companies do. It gives those non-profit seeking companies an unfair advantage.
It's like playing StarCraft. Money is always more productive being used than saved up. Your economic growth will always be larger if you're constantly broke compared to a player who has thousands in the bank
I love your in depth content on VCs'. It answered a lingering question on VC pursuit of "growth" to "revenue" matrics. I am interested in getting the name of the movie clip @ 8.15....❤
It’s explained in the video but to some extent they can make up for that deficit with other peoples money. The company itself may operationally run at a loss, but as long as their revenues are growing, there are investors willing to purchase their stock under the assumption that eventually they will become profitable. If the company needs more cash they can just raise money by issuing more shares on the public market or doing another equity raise (if private). As their revenues grow, the price investors are willing to pay will increase. As long as that relationship is maintained they can basically operate forever
I didn’t understand the word brainroot until this video. The memes are too much, but his commentary is pretty good. I would be okay with 1-3 memes, just keep the most funny and the video is informative while funny. Also, informative clips like 8:10 were pretty good, I would keep all like this.
@@123bishopb Simply not watching rather than commenting this as they did would rob the creator of valuable constructive criticism. I don't see the benefit in suggesting to simply stop watching. Making a criticism of the video doesn't imply the creator _has_ to change anything. It's only a suggestion that, if the creator made this change, it might help the video's performance and could make the video easier to understand for more people.
It requires a business that can scale at extreme multiples. Most companies cannot do that. It also requires people to be willing to continue investing in the company believing that one day it will be profitable. Let’s say you owned a small store that sells really cheap furniture. If you weren’t profitable, you’re going to really struggle to find investors. How could you convince them that you will become profitable? You’d have to tell them that eventually you will get the finances in line but even then, cheap furniture stores are highly competitive and scale slowly. It’s not an attractive investment and therefore that company will likely go nowhere. These tech companies make crazy amount of revenue but just need to reduce costs to become profitable. They can make up a bunch of ways how they will eventually get there. Maybe they will, maybe they won’t.
🇨🇱 Way too superficial ‼️ First, better define "company". As none these "companies" produce a real "product". The produce a service. But while the end product is a service, the "company"'s essence [let's say Uber, por examples sake] isn't but a administrative coordinating and transaction software, running on a couple of worldwide servers. Once setup, it basically runs by itself. So, what are the costs or "expenses" ⁉️. A set of servers and a couple of operators... Probably millions in absolute terms, but peanuts in relative terms. So you need to more clearly define "expenses" !, in order to separate distinguish real loss from fake loss, in order to properly evaluate "profit". Your starting equation is just way too simplified in order to reach reasonable conclusions ☹️. Saludos de 🇨🇱
Yeah honestly this video feels like a fed explaination to get people off they back. It's just profitable to inflate costs and keep from paying investors as long as you can, and avoid tax to an extent.
It is not about they intentionally do not make money(profit) but it is about they are unable to make money due to their unprofitable operation and senseless business model and they are financed by “someones” to continue raping the market, many times useless or even harmful products which are in normal market circumstances would not be viable at all business wise. But this is the age where we have been living in 2 decades now… totally aberrated.
this ideas in the video are common knowledge by now and don't justify the question you asked in the beginning of the video, why so many companies worth billions in the stock market are still finding stupid investors to fund their money burning machine and why are these companies still worth billions in the first place? the Answer is from my point of view is money laundering, if you gained your money by hardworking you'll never invest in one of the so called growth companies but if you have an infinite money supply and this money is dirty then you are ready to put it anywhere if you get 50% of it few years later, this is my explanation and let's not forget the money printing machine in the Federal reserve bank, this money is distributed to people as salaries then must of this money is collected back from the market by paying the bills and spending money in stock gambling which is continuing on to climb up to the pockets of the elite.
What if we un-invented money, and the only reason people worked was because they wanted to? Plus the more good you do for others your reputation would increase. As for there no longer being money it’s simple; the government provides everyone with free food, shelter, internet, and all survival necessities. If you want luxuries like nicer tv, bigger car, etc you need to raise your reputation, so only good people who help the world get to enjoy being “rich” 😎👍
People might have tried it before past 1000s of years. Money is here because simply it works, Other methods didn't work. If people get basic necessities, Most won't bother to work for luxuries as most people you know prefer cheaper goods rather than good quality ones. Government will run out of money, economy will crash then everyone will get on road instead of few people and bam. We've lost 1000s of years of growth in few days (Yes you won't last days without money). Also if government provies free food, necessities. You have no power, If you didn't get your money, No one will bother to investigate as they already have bare necessities and won't care for luxury apart from few...
@@prateekpanwar646 I see, so what is the real problem and what could fix it? Most people are struggling to pay rent, eat healthy, and are generally unsatisfied in life and I’d like that to change. What realistic changes could benefit the 99% of non extremely rich people?
@@TheNoorVIGThe rich and powerful want to maintain their status. They won't allow it. Although with AI coming that may lead to a lot of jobs, UBI or universal basic income may become a thing. Although the people at top may not have the incentive to provide a good enough living conditions or even basic necessities like a house. Except for people to continuing to buy goods and services through those AI enabled conglomerates.
Problem is, there's no such thing as free. Someone is gonna have to work. Food, buildings, tvs, sewer systems, computers etc all didn't just fall from the sky. It was through working that we've evolved. Work is necessary for survival.
@@TheNoorVIG Honestly you can't do much, We're a part of world which people who came before us made for us. We can't modify, We can just understand how it works well and in that process keep our humanity and empathy alive. if you build successful career and help others with kindness (help doesn't mean doing their work, Rather it's sometimes just being kind). So you'll become example for people around you. This is still not easy to achieve, It's way easier to become a jerk due to people around you.
Eventually, but these tech companies can be unprofitable for far longer than most realize. As long as they keep raising money in the public and private markets and there is some amount of positive investor sentiment assuming they will eventually figure out how to be profitable, they can ride out losses for a long time.
Most big players don't allow the bubble to burst by injecting more and more money and then often floating an IPO for us common folks to say. They wash their hands off of it.
![Coheed and Cambria - Searching for Tomorrow [Official Video]](http://i.ytimg.com/vi/hDsYGLbmadg/mqdefault.jpg)
![BRASIL vs. URUGUAY [1-1] | RESUMEN | ELIMINATORIAS SUDAMERICANAS | FECHA 12](http://i.ytimg.com/vi/-hWBAuxF1eY/mqdefault.jpg)
one thing that I think was missed is the fact that you need to pay taxes on profits. Running at a loss means instead of giving the IRS 40%, you put the entire 100% back into the business
I see your point but all these companies would prefer to make profit than not, it’s just that their business model doesn’t really allow them to. You’re certainly right that running at a loss has significant benefits come tax time but in the long run these business cannot operate being perpetually unprofitable. It might help them in the short run in some regards but by no means are any of these companies intentionally trying to be unprofitable by inflating expenses to reduce their tax bill. That’s either fraud or horrible management lol
@@RaisedMedia While you are correct for a lot of startups, big tech is intentionally unprofitable. Any money left over is invested into innovation + growth in other areas, starting teams/projects, or buying the competition. I would argue it is the primary advantage and reason companies strive to be unprofitable. From an investor POV, money that would otherwise be lost to taxes is invested into further growth (monopolization) and assets. This inflates the valuation, allowing them a potentially insane ROI exit.
Totally valid point. What I mean is that in the long run even big tech needs to make a profit. They don’t need to do it right away (example Amazon intentionally being unprofitable to undercut the market) but eventually from a long-run economic perspective they can’t keep selling equity or taking on debt to fuel growth. The money has to come from profits. VCs and PE care about increasing revenues not profit for a massive monetization event and get a huge ROI (e.g. exiting from Uber on IPO) but now Uber is finally turning a profit because they want and have to.
@@RaisedMedia The problem with Uber is that its competition has the same exact business strategy, which limits the potential to monopolize like Walmart & Amazon. The reason that Warmart killed every local brick and mortar business in town was because only they had the funds to operate at losses for so long, effectively killing out the competition. You bring up a pretty good point, this type of strategy (starve, wait, & absorb your competition until you're a monopoly like Amazon and Walmart) only works when the competition doesn't have the same access to free money. I appreciate your thoughtful response, makes me ponder. It will be interesting to see how these companies duke it out, as Lyft and Uber are effectively at a stalemate.
@@MufflesUnderstandable. You’re correct that negative profit means you don’t have to pay any tax. However with public companies you can’t do this, investors want to see companies with growing profit over time. If a company doesn’t have good financials, investors will be sceptical and they won’t have good stock valuations.
Super practical script with no fillers. Great video. Came across your channel today. Hooked!
Thanks for checking it out!
Whats a Filler?
@@princemc35 content that means nothing to fill in the blank until the main point
a
Thanks!
Man the meme work was great
It’s just an endless pursuit for growth over profits. Why make profits when you can apply that money into new projects and grow even more?
Sounds like a contrived ponzi scheme. When population shrinkage sets in it all comes crashing.
Sounds like a Ponzi scheme
In a way, it kind of is!
That's because it is 😂😂
Nope. Issa a CVNT™y scheme. Look it up~
a
Also: Investors make money from investing, by fees. They are not investing their own money. They want to invest as much as possible and not have the real world stop them. After the IPO the common man can catch the falling knife. But until then, ...
Another great video! Ive always wondered why it seems like every company hemerages money
Thanks for coming back!
Amazing video, your channel will be massive in no time
Thank you!! I appreciate it
Yea thats what I was thinking. This whole thing will one day blow the internet the fuck up. It's all just speculating on future profits.
It’s really just to defraud the IRS 😂
Making Russ Hanneman seem like a wise sage was a hell of a trick. 😂
A very informative video and great clips too. I subscribed.
Informative yet concise, no background music made me like this video
Lemonade stand, good metaphor!
It’s unfair that those big companies don’t have to worry about profit, but most companies do. It gives those non-profit seeking companies an unfair advantage.
It's like playing StarCraft. Money is always more productive being used than saved up. Your economic growth will always be larger if you're constantly broke compared to a player who has thousands in the bank
whats up with the meme hate in the video? branding really must be dead...
Underrated channel
Underrated viewer
The random movie clips are annoying cut them out 😀
100% agree
100% disagreed
200% agreed
Disagree
Great video.
Glad you enjoyed it!
keep going. it's a great video.
Thank you. I will!
They purposely increase Operating Expenses and under those Expenses ( income statement) they put themselves...
I love your in depth content on VCs'. It answered a lingering question on VC pursuit of "growth" to "revenue" matrics. I am interested in getting the name of the movie clip @ 8.15....❤
The clip is from the show “Silicon Valley.” Season 2, episode 3 to be specific.
you explained this perfectly!
Thank you!
What I want to know is, how they make up for this deficit, more money can't just come from thin air, or could it?
It’s explained in the video but to some extent they can make up for that deficit with other peoples money. The company itself may operationally run at a loss, but as long as their revenues are growing, there are investors willing to purchase their stock under the assumption that eventually they will become profitable. If the company needs more cash they can just raise money by issuing more shares on the public market or doing another equity raise (if private). As their revenues grow, the price investors are willing to pay will increase. As long as that relationship is maintained they can basically operate forever
Pleasently surprised by the quality of the video
Thank you :)
please stop with the memes its very distracting imo
I didn’t understand the word brainroot until this video. The memes are too much, but his commentary is pretty good. I would be okay with 1-3 memes, just keep the most funny and the video is informative while funny.
Also, informative clips like 8:10 were pretty good, I would keep all like this.
If you don’t like how he makes his videos don’t watch them he don’t have to change shit he do cause you can’t remember 20 seconds ago
@@123bishopb Simply not watching rather than commenting this as they did would rob the creator of valuable constructive criticism. I don't see the benefit in suggesting to simply stop watching. Making a criticism of the video doesn't imply the creator _has_ to change anything. It's only a suggestion that, if the creator made this change, it might help the video's performance and could make the video easier to understand for more people.
Shut up.
Tesla released new cyber cab
2:56 which movie is this???
breaking bad
Another banger video from the OGs! Thank you for this wonderful video.❤
Airbnb is not really a tech company it's real estate company with a smooth application interface
How about depreciation? Use depreciation to make the profit disappear
I think half the memes would be good especially removing some are too long. But I like the idea and was interesting video
Thank you I agree! My more recent videos don’t have as many memes :)
except apple apple makes money
Everybody is bitching about the memes, keep goin
You get a thumbs up for the Just Friends clip
Thanks!
Wow… ’ve never got a super thanks before. Thank you so much!
@@RaisedMedia it was the "support the little guys" right at the end of the video that really pulled my heart strings☺
@@dorkusmaximus3033 haha well I hope you know I genuinely appreciate it.
I thought if they can pull thaf strategy why can’t others.
It requires a business that can scale at extreme multiples. Most companies cannot do that. It also requires people to be willing to continue investing in the company believing that one day it will be profitable. Let’s say you owned a small store that sells really cheap furniture. If you weren’t profitable, you’re going to really struggle to find investors. How could you convince them that you will become profitable? You’d have to tell them that eventually you will get the finances in line but even then, cheap furniture stores are highly competitive and scale slowly. It’s not an attractive investment and therefore that company will likely go nowhere. These tech companies make crazy amount of revenue but just need to reduce costs to become profitable. They can make up a bunch of ways how they will eventually get there. Maybe they will, maybe they won’t.
Summary Burn to get market share / monopoly but never get profits
I want to invest in your investment into investors' investor investment company.
Retail invester is called biggest full😂
Great video
very useful video
1636 tulip mania bubble all over again. Capitalism will never change.
They are watching you now.
🇨🇱 Way too superficial ‼️
First, better define "company". As none these "companies" produce a real "product".
The produce a service. But while the end product is a service, the "company"'s essence [let's say Uber, por examples sake] isn't but a administrative coordinating and transaction software, running on a couple of worldwide servers. Once setup, it basically runs by itself. So, what are the costs or "expenses" ⁉️. A set of servers and a couple of operators... Probably millions in absolute terms, but peanuts in relative terms.
So you need to more clearly define "expenses" !, in order to separate distinguish real loss from fake loss, in order to properly evaluate "profit".
Your starting equation is just way too simplified in order to reach reasonable conclusions ☹️.
Saludos de 🇨🇱
Yeah honestly this video feels like a fed explaination to get people off they back. It's just profitable to inflate costs and keep from paying investors as long as you can, and avoid tax to an extent.
It is not about they intentionally do not make money(profit) but it is about they are unable to make money due to their unprofitable operation and senseless business model and they are financed by “someones” to continue raping the market, many times useless or even harmful products which are in normal market circumstances would not be viable at all business wise. But this is the age where we have been living in 2 decades now… totally aberrated.
All because of near zero interest rates in the developed countries.
this ideas in the video are common knowledge by now and don't justify the question you asked in the beginning of the video, why so many companies worth billions in the stock market are still finding stupid investors to fund their money burning machine and why are these companies still worth billions in the first place?
the Answer is from my point of view is money laundering, if you gained your money by hardworking you'll never invest in one of the so called growth companies but if you have an infinite money supply and this money is dirty then you are ready to put it anywhere if you get 50% of it few years later, this is my explanation and let's not forget the money printing machine in the Federal reserve bank, this money is distributed to people as salaries then must of this money is collected back from the market by paying the bills and spending money in stock gambling which is continuing on to climb up to the pockets of the elite.
Ok... maybe capitalism is broken
a
Reduce some memes ,other than that video is ..🔥🔥🔥
Thank you for the suggestion!
What if we un-invented money, and the only reason people worked was because they wanted to? Plus the more good you do for others your reputation would increase. As for there no longer being money it’s simple; the government provides everyone with free food, shelter, internet, and all survival necessities. If you want luxuries like nicer tv, bigger car, etc you need to raise your reputation, so only good people who help the world get to enjoy being “rich” 😎👍
People might have tried it before past 1000s of years. Money is here because simply it works, Other methods didn't work. If people get basic necessities, Most won't bother to work for luxuries as most people you know prefer cheaper goods rather than good quality ones.
Government will run out of money, economy will crash then everyone will get on road instead of few people and bam. We've lost 1000s of years of growth in few days (Yes you won't last days without money).
Also if government provies free food, necessities. You have no power, If you didn't get your money, No one will bother to investigate as they already have bare necessities and won't care for luxury apart from few...
@@prateekpanwar646 I see, so what is the real problem and what could fix it? Most people are struggling to pay rent, eat healthy, and are generally unsatisfied in life and I’d like that to change. What realistic changes could benefit the 99% of non extremely rich people?
@@TheNoorVIGThe rich and powerful want to maintain their status. They won't allow it.
Although with AI coming that may lead to a lot of jobs, UBI or universal basic income may become a thing. Although the people at top may not have the incentive to provide a good enough living conditions or even basic necessities like a house. Except for people to continuing to buy goods and services through those AI enabled conglomerates.
Problem is, there's no such thing as free. Someone is gonna have to work. Food, buildings, tvs, sewer systems, computers etc all didn't just fall from the sky. It was through working that we've evolved. Work is necessary for survival.
@@TheNoorVIG Honestly you can't do much, We're a part of world which people who came before us made for us.
We can't modify, We can just understand how it works well and in that process keep our humanity and empathy alive.
if you build successful career and help others with kindness (help doesn't mean doing their work, Rather it's sometimes just being kind). So you'll become example for people around you.
This is still not easy to achieve, It's way easier to become a jerk due to people around you.
Won't this end up being a house of cards?
Eventually, but these tech companies can be unprofitable for far longer than most realize. As long as they keep raising money in the public and private markets and there is some amount of positive investor sentiment assuming they will eventually figure out how to be profitable, they can ride out losses for a long time.
Most big players don't allow the bubble to burst by injecting more and more money and then often floating an IPO for us common folks to say. They wash their hands off of it.
The constant interruptions of those cut scenes drove me nuts. Just stay on topic
Don't include blasphemy in your content. God's name is holy, and should not be used in vain.