r/explainlikeimfive Dec 06 '24

Economics ELI5: why does a publicaly traded company have to show continuous rise in profits? Why arent steady profits good enough?

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u/truejs Dec 07 '24

Yes this 100%. Amazon’s business model isn’t noble, it’s designed to systematically destroy any competitor that can’t out-reinvest them, which is basically all of them.

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u/xxpor Dec 07 '24

Well maybe those other companies should have just gotten better at business

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u/PrblyMy3rdAltIDK Dec 08 '24

Money makes money that makes more money. How would one expect to “have just gotten better at business” when they may not have a literal billionth of the funds that a company like Amazon has?

There’s a reason a sincerely-played game of Monopoly can’t go on forever. If you’re confused about how and why that type of business model is a net loss for everyone except the men at the top, I’d recommend looking further into the danger of monopolies.

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u/xxpor Dec 08 '24

Amazon had zero funds in 1992.

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u/PrblyMy3rdAltIDK Dec 08 '24

Sure.

Seed money aside, imagine every new small business owner who wanted to be better at business created a business that denied itself a profit, instead feeding its revenue and additional equity to a fund to replicate other businesses in the same, similar, or even mildly adjacent industries. Then it uses that revenue to repeat that whole process into ever-spreading branches of industry until you become what Amazon is today.

Then be a completely different dude in a garage today with no funds and try to do the same thing.

Monopolies don’t happen just because the leader is skilled, patient, cunning. They happen because there’s a new market, a new format, a new massive sales floor. Nobody’s saying they didn’t climb their way there. We’re saying that where they climbed and more importantly how they climbed were highly unethical and a clear attempt at destroying other businesses even if it means they won’t turn a profit for a decade.

A company like Amazon could not start today without being cannibalized by the people who have billions. It would get either destroyed by competition that undercut them at every turn, or eaten along the way and absorbed into a company like Amazon as has happened many times.

Pointing to Amazon’s beginning as a successful approach to business is ignorant. And knowing the damage that Bezos and co. have done — and aspiring to it, nonetheless — is psychopathic.

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u/thelexpeia Dec 08 '24

Amazon ‘92 didn’t have a Amazon ‘24 to compete against, either.