Losing Money is the Point
It’s mind-boggling how many in the general public don’t understand this, so let me rant about it for a bit: many companies are designed to lose money this year. That’s the fucking point.
Today’s main character energy is the news of WNBA players wearing Pay Us What You Owe Us shirts during the All-Star game. The knuckle-draggers on social media immediately clutched their pearls, saying “ohmygod the WNBA lost $40M last year so players should really be paid zero dollars, not given a raise!!111” You see this all over the place, like all the stories recently about Apple “losing” $1B a year on it new streaming service.
You’re not “losing money”, of course: you’re investing. (Yes, I realize that line sounds like a meme, but stick with me here.) The money doesn’t just go up in smoke- it gets invested in staff, infrastructure, materiel, and so on. It all comes down to a single bet: more investment in the organization today will mean larger returns tomorrow. That’s it; that’s the thing the average person seemingly doesn’t understand. You’re now smarter than average (which, depending on your take on the general state of the world, could mean a lot to you, or still be embarrassing).
The thesis behind that single bet is the important one, of course: you’re assuming you’re operating in a business where early success can be replicated in a later stage organization. If you can, the thought process is simple: invest in the business and you’re going to make more money, particularly if you have enough cash to grow the business in the meantime (either through your own pockets or through outside investors).
