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Net profit is virtually useless for modern companies as it doesn’t benefit founders, shareholders, or employees. This might sound a bit counterintuitive, but it’s the case with basically every tech company and startup. Even more legacy companies like Disney are starting to adopt this mindset when it comes to new products. The only thing that these companies actually care about is revenue growth and user growth. As long as these two aspects are growing rapidly, the stock of the company also skyrockets. Historically, this would only benefit founders and shareholders, but in recent times, employees are given larger stock awards than ever, especially in tech. Most tech employees nowadays actually care more about stock compensation than cash compensation. They simply want a comfortable cash wage and everything else to be paid in stock. This creates this unique situation where the company making net profit is basically useless. This video explains how the importance of corporate profitability went down the drain and why modern companies don’t care about profit.
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Timestamps:
0:00 - Money Losing Giants
3:01 - Founders Succumb
6:59 - Shareholders Succumb
11:02 - Employees Succumb
13:10 - Modern Companies
Resources:
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Disclaimer:
This video is not a solicitation or personal financial advice. All investing involves risk. Please do your own research.
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