Beyond spez (and the fact that he is a greedy little pig boy), I’m curious about the corporate dynamics that prevent a company like Reddit from being profitable. From an outside perspective, they make hundreds of millions per year via advertising, their product is a relatively simple (compared to industries that need a lot of capital to build their product), and their content is created and moderated for free by users. Could any offer some insights or educated guesses? Additionally, I’m curious how this all ties into the larger culture of Silicon Valley tech companies in the 2010s.
Tbh it depends. Usually it is like you say, but it depends on the goals of the owner. Steam is private for years and they make profits. Also if you have smaller business and you treat it like your business, you just want to get sallary for what you do. “Dumb” is too strong word as it depends on your position and goals
First of all, Steam being profitable doesn’t mean anything, because Steam is not a company. Company is Valve Corporation. Also please don’t confuse profit with revenue. Valve Corporation has a very high revenue, but their profit is not disclosed anywhere. I don’t live in the US, so I don’t know how to check what their tax man knows about them, but I don’t think they have much profit and pay much taxes.
Also if you actually have a small business, then you would know, that you don’t want salary or anything that incures taxes. You will buy yourself a car without VAT from company profit, you will fill it up with petrol from company profit, you will buy yourself new laptop from company profit, etc. But you’ll keep your salary as low as possible and you’ll avoid paying any taxes, including VAT. Everything that can bought through your company legally will be bought through your company and then some.
It is stupid to buy something just to avoid taxes. If it helps you grow a business - sure. But not to avoid paying taxes. As I said it depends on your goal. If you want your business to grow, have the best seed round or in general company valuation - yeah, reinvest. But if it is business that you do to make a living, it is stupid to spend everything just to not pay taxes
No, wasting money on taxes is stupid. That’s how you end up bankrupt in a few years later.