> Provide the names of ten companies of non-trivial scale who have operated with zero or near zero profit for, say, 25 years, without external donations or other financial inputs to make-up for the lack of profit.

Most restaurants. Many did, indeed, "instantly lay off massive numbers of employees, shut down operations, cancel leases and contracts, etc." during the pandemic as a result.

Amazon made basically no profit for two decades, as a fairly notable example. Every penny earned got plowed back into the business. Lots of revenue, lots of expenses, no profit. It wasn't until recently they turned the profit spigot on. https://www.ben-evans.com/benedictevans/2014/9/4/why-amazon-...

Uber didn't make its first profitable quarter for a decade. https://www.reuters.com/technology/uber-posts-first-small-ad...

I think you're mixing up profits with revenue. A charity that brings in $1M and spends $1M has no profit, but they can (theoretically) remain a going concern indefinitely at that rate.

Your example is a precise representation of just how little people understand business.

Restaurants: Shitty business. Most are constantly gasping for air. Yet, they do make a profit, which they use to hire people, pay for supplies, rent, etc. and keep the doors open. If they do not make a profit their choices are reduced to two simple paths: Close the doors or go get money (loan or investor). A lot of restaurant operators are up to their necks in loans, second mortgages, etc.

In many ways restaurants are the best example of why good profits are important. Those who do not generate substantial profits are nothing but a brutal slog. Those who do, thrive, grow and expand.

Amazon: C'mon. Please. They plowed PROFITS back into the business. Their annual net revenue was zero or near zero for a long time. It should be way beyond self-evident that you can't grow a business like Amazon without profits. Are you suggesting Amazon grew WITHOUT PROFITS? Seriously?

I think you're still confusing revenue and profits. This guide is a good overview of the difference: https://www.investopedia.com/ask/answers/122214/what-differe...

I have self-funded, founded and run multiple businesses in the last 40 years.

What I post does not come from a 30 second google session. It comes from having had significant skin in the game, succeeding and failing. Most people think they understand business. And most people have never run a non-trivial business. It's like trying to explain what it is like to fly like a bird without being a bird. Most simply can't get it because they have no context whatsoever.

When things go bad and you have to mortgage your home and top-off your credit cards to keep people employed and keep the doors open, you understand things you cannot possibly comprehend any other way. I've been there.

Be well.

OK, but none of that really qualifies you to arbitrarily redefine the term "profit" to fit your argument.

https://www.google.com/search?q=uber+first+profit

https://www.google.com/search?q=amazon+first+profit

make it fairly clear how people use the terms.

Simple example:

A nonprofit wants to donate $600K to feed children.

It will cost $400K in operating expenses to be able to do this.

They need to generate $1MM in revenue and $400K in profits in order to be able to make use of $600K in support of their cause. Without this "profit" there is no nonprofit and no support for the cause. It is profit.

One way to define profit is something like what you have left after delivering a product. This hypothetical nonprofit takes in $1MM, delivers $600K in product and has $400K in profit that is used for operating expenses and (likely) to put money away for future needs, growth, etc.

Profit is necessary. We might not call it profit when it comes to these types of organizations, yet they cannot exist without this part of the equation. Call it what you want. They have to make more than they spend --a lot more-- or they cease to exist.

Also, in the US nonprofits are not banned from making what one might term conventional profit. They just can't distribute it. This means they can put money away and grow like crazy. Look at the mega-churches in Texas as a perfect example. If that not profit, I don't know what is.

Profit (especially as people commonly use it) is the stuff left over after you pay overhead, not the overhead.

Salaries of people doing the work are costs, not profits, and so on.

This is something I fundamentally disagree with. In the case of nonprofits, the profitable venture ends-up being positions that are highly paid and have huge benefits. People tend to have this idea of scrappy, idealistic, ramen-eating organizations when it comes to nonprofits. They are some of the richest companies in the land.

Here's an interesting article on nonprofit pay:

https://www.causeiq.com/insights/highest-paid-nonprofit-ceos...

From the article:

"The highest-paid nonprofit leaders — CEOs, Executive Directors, etc. — all earn at least $900k per year, and into the tens of millions for the largest of hospitals and health systems. While the highest-paid nonprofit CEOs are in healthcare and financial services, things get more interesting when we look at normal charities."

It's interesting that Financial institutions and categories such as "Promotion of Business" are listed in their survey. Nobody imagines an entity promoting the use of petroleum as a nonprofit. Most people think of churches and benevolent community organizations ("feed the X") as nonprofits. Nobody thinks hospitals, oil companies, credit unions, insurance, etc.

I call a lot of their overhead "profit" because, in this day and age, It feels obscene that an organization purporting to "help the X" would need to consume 40% of revenues, own/lease lavish buildings, etc. to deploy the capital they receive. How many on HN could setup a system that could administer, say, a hundred million dollars in donation while consuming just, say, 5% of that to run the show? My guess is many.

If you read through the list of nonprofit CEO salaries on that page you should get a good sense of where my perspective come from. This is profit. We call it something else. Fine. To me this is the individuals running the organization extracting profit from an organization under the cloak of a legal classification with a benevolent sounding name. Who doesn't have a soft spot for anyone who operates without making a profit? Right?

Well...let's look at CEO pay:

    Christus Health:  $13MM with a $5MM base pay
    Star One Credit Union:  $12MM
    NY Presbiterian:  $12MM
    Banner Health:  $11MM
    American Petroleum Institute:  $11MM
    Electric Power Research Institute:  $2.5MM
    Jazz at Lincoln Center:  $2.3MM  
        -The CEO takes 9% OF REVENUE as compensation!!!!
    University of Minnesota Foundation Investment Advisors:  $1.5MM
        - This represents 36% of revenue!

The point is, these are profitable pursuits. The profit goes to the people who work there, likely mostly to upper management. If they were scrappy idealistic not-for-profit organizations they would not be paying CEO's and the first layer or two under them tens of millions of dollars.

Another way to look at it:

Profit is what you use to run the organization. It's a percentage of revenue available for this purpose. It is important to understand the difference between gross and net profit.

I buy a blender from a wholesaler for $10 and sell it at retail for $20. My gross profit is $10. My net profit takes into account all the other costs, the ones that are required for the organization to exist. If that boils down to $5 per unit, the net profit is $5 per unit or, 25% of gross income.

In the case of an organization classified as a "nonprofit", things are different. They don't generally sell anything (well, hospitals and others do). They get a million dollars gross income from whatever activities. It could be donations. In the case of the company that promotes the use of petroleum, it is likely to be large membership fees paid by oil companies. For hospitals it is whatever they bill for services. Etc. That's their gross income. From that they have fixed costs in the form of buildings, leases, loans, etc. And now we come to what I am going to term the murky water portion: Salaries and other expenses. Million dollar compensation for executives and advisors. Lavish trips. In the case of the church my mother in law worked for, a couple of top-tier Mercedes Benz cars for the pastor and his underlings. Fully paid luxury vacations all over the world. Fully paid conferences at top tier resorts and hotels (think Waldorf Astoria), etc. Profit? I think so.

Anyhow, we can agree to disagree. I think the nonprofit category is deeply abused and a lot of people are getting incredibly rich through this mechanism. Frankly, had I understood this mechanism when I was a young man I probably would have figured out how to start some kind of an engineering nonprofit. I am being a bit sarcastic, of course, but I can imagine some kind of a scheme where someone creates a nicely profitable engineering consulting firm, pays themselves 40% of revenue and laughs all the way to the bank without paying taxes for decades. I am sure this already exists. That's why I call it profit. These are not poor little innocent organizations. They are some of the richest in the world. Let's start with the Vatican as a prime example.

EDIT:

To be clear, I am not saying all organizations legally classified as "nonprofit" are evil. What I am suggesting is that the classification is likely often abused for profit in various forms. One form would be lavish salaries and benefits (cars, trips, etc.). Another motive could be generating profit for allied or supporting organizations, a good example being oil companies financially supporting the American Petroleum Institute a "nonprofit" that likely generates billions for oil companies and whose top management is showered with multi-millions dollar salaries and benefits.

Here's another one: The NRA (National Rifle Association) is legally classified as a nonprofit organization. Technically, from an accounting perspective, I am sure it is. Does it exist for profit? Absolutely. Does anyone doubt that at all?

The category, the classification, is being abuse for profit disguised as something else. Not by all, yet likely by quite a few.

If you had just Googled for 30 seconds to learn the definitions of literally the most basic business terms when someone told you you were wrong, maybe you wouldn’t have had to mortgage the house.

I truly do not know how to respond to this other than to say that the only kind of person who can make such a mean-spirited comment is one who has never experienced the deep dark hole some entrepreneurs experience when things go the wrong way. Some don't come out of the other side. What happened to me took place during the 2008 economic implosion. To put it in the simplest possible terms: All business came to a grinding halt. The music stopped and there were no chairs.

A friend of mind died in 2009 from the sheer stress this moment in history caused him as his business crumbled. That December I penned an email from the darkest place I have ever been. One that was prompted by a revelation I had that day: I experienced a level of clarity I had never before experienced. In a moment, I understood, in no uncertain terms, why someone would commit suicide, jump off a bridge, walk in front of a train or shoot themselves due to undue business pressure and financial troubles. I emailed a friend to let him know I now understood this. I wasn't quite there, but, for some strange reason, I had to share. He drove to my office and spent the rest of the day with me.

So, yeah, I don't know what to say to someone like you. My less-than-intellectual impulse is to deliver the most vile insult I could. Yet, that would mean descending to a level I am not interested in visiting.

I'll leave you with this: I hope you never get to experience some of what many entrepreneurs have to live through when things take a turn for the worse. If you do, I hope the experience humbles you and you become a nicer person.

Be well.

> you have to care about them making a profit or watch them evaporate.

There is a difference between making a profit and maximizing profit. A publicly traded company is legally bound to do the latter.

> There is a difference between making a profit and maximizing profit. A publicly traded company is legally bound to do the latter.

That's a lie.

There is NO such legal requirement at all. None.

Google it.

Here's a starting point:

https://www.google.com/search?q=Are+U.S+companies+legally+ob...

From your search, which contradicts your point:

https://apexlg.com/are-the-managers-of-traditional-corporati...

> Even charities have to operate at a profit. Without this they would not have people, offices, marketing and the means to perform their stated charitable objectives.

This is factually incorrect. Charities (at least in the UK) are legally prohibited from making a profit.

How do they pay for salaries, operating expenses, building rent, vehicle purchases, electricity, marketing, etc?

They take a percentage of their income and use it to cover these expenses. Right?

Well, this is semantics. A conventional business does exactly the same thing. They take a percentage of their income and use it to cover the cost of doing business.

Laws for non-profits generally allow for such things. Which makes sense, because they would not be able to survive without being able to slice off some "profit" to stay alive and grow.

If you've ever seen the massive church campuses in Texas you'd get a sense of the idea that this is, in fact, profit.

The range a typical nonprofit spends on administrative or operating expenses is wide. I would say that 40% isn't rare, with 25% being fairly common. This tracks with the profit margin of small to medium for-profit businesses. In fact, there are millions of for profit businesses that do not enjoy such margins.

The key legal distinction (at least in the US) seems to be that nonprofits cannot exist for the benefit of shareholders (no distributions). Other than that, they can easily spend 40% of what comes in on operations, grow cash in the bank and more.

> How do they pay for salaries, operating expenses, building rent, vehicle purchases, electricity, marketing, etc? They take a percentage of their income and use it to cover these expenses. Right?

Sure. Revenue minus expenses = profit/loss. "Net income", "bottom line", etc.

Make more than you expend, and you've got a profit. Spend more than you make, and you've got a loss. Equalize them, and you've got no profit and no loss.

Businesses can optimize for profit. Charities are allowed to have a profit, but they don't get to distribute it to shareholders like a business can; it stays with the charity. It's legal for a charity to have a rainy day fund and a positive bank balance, but their legal purpose is not to run it up.

Churches in the US get funky at times, and I'm of the opinion that the IRS should be empowered to crack down the abuses of the non-profit status you highlight, but if they're spending their revenue on buildings, staff, etc., they're eating into their profits when they do so.

Absolutely on point. My argument is simply that, as you put it, making more than you spend is a necessary element for any organization to exist and grow. In the case of a conventional business everyone calls this profit. Somehow, magically, in the case of "nonprofits" we don't.

The term "nonprofit" is a misnomer that might be the reason for this distinction, at least in the US. The term implies the idea of zero profit, which could not be farther from the truth.

You are right to highlight churches. I remember the first time I went to Texas on a sales call at one of the mega churches. The only way I can describe it was a campus with several buildings the size of a Home Depot and more. You do not do something like that without profit. People might want to bury their heads in the sand and pretend that it isn't, because we legally call them "nonprofits". All we are doing is lying to ourselves. They make a ton of money. And we don't tax them.

I am sure there are churches and religious organizations who do a lot of great value for their communities. I also know there are tons who are there for "management" to live the life of the rich and famous. Not to go too far, my wife's mother worked for a church for a while. The head pastor owned several luxury cars, went on amazing trips to expensive resorts all over the world --all paid by the church-- and more. Profit.

Note I am not saying profit is inherently bad. We would not have most of the things we enjoy in modern life without profitable business pursuits. From clothing to medicine and everything in between, without profit, it would not exist. Can it be abused and misused? Of course. That is true for almost anything that is part of the human experience. We abuse food, power, the environment, other people, position, etc. All good things until they are abused, including profit.

Your definition of "profit" doesn't seem to match anyone else's. If an organisation spends what revenue it has on its own operations, that is not profit. You might not agree with the way that money is spent, but that does not change the technical definition of a well-understood and widely agreed accounting term.

Rather than repeat myself, I'll refer to a comment I just posted and then ask you a couple of questions:

https://news.ycombinator.com/item?id=29404841

Do you think the Vatican is profitable?

Do you think that a nonprofit that pays their CEO 36% --yes THIRTY SIX PERCENT-- of revenue is profitable?

Do you think that the American Petroleum Institute, which pays their CEO $11MM in salary (4.5% of revenue on $238MM in receipts) exists with a real non-profit objective despite what their balance sheet might say?

You see, we get lost in this legal "nonprofit" classification and fail to understand that a lot of these organizations exist for the profit (the enrichment) of either the individuals running them, associated commercial enterprises (oil companies) or both. If we refer to them as "X4132 organizations" (made-up name) we would have no emotional attachment or a mental model to go against what they actually do. When people hear "nonprofit" they think something like "feed the X" scrappy entities with idealistic workers and managers all eating ramen noodles to conserve every dime for their worthy cause. That is FAR from reality. Very far.

And that's why I tend to call it "profit". Yes, sure, this does not fit the technical definition of profit, but it is hard to argue that a CEO taking 5%, 10%, 30%, 40% of revenue isn't actually the profit element of the organization. I give the example of the lavish cars and trips for the pastor and management paid for by the church my mother in law used to work for. That's profit. We might classify it some other way, but it isn't charity.

> Do you think the Vatican is profitable?

No idea. I'd have to take a look at their accounts.

> Do you think that a nonprofit that pays their CEO 36% --yes THIRTY SIX PERCENT-- of revenue is profitable?

No idea. I'd have to take a look at their accounts.

> Do you think that the American Petroleum Institute, which pays their CEO $11MM in salary (4.5% of revenue on $238MM in receipts) exists with a real non-profit objective despite what their balance sheet might say?

No idea. I'd have to take a look at their accounts.

> Yes, sure, this does not fit the technical definition of profit,

It is the opposite of profit. It is what you structure if you want to reduce your profit so you don't get taxed.

> I give the example of the lavish cars and trips for the pastor and management paid for by the church my mother in law used to work for. That's profit.

No, it isn't. It might be embezzlement, from the sounds of it.

I get the point that you are trying to make, but doing so by redefining common terms and hoping anyone is going to take it seriously strikes me as remarkably unlikely to succeed. The word you are looking for is not "profit", it is "enrichment", as you say here. They are not the same. Words matter.

> No idea. I'd have to take a look at their accounts.

Well, then you lack a sufficient exposure to business that is required to understand what I am talking about. It's like someone who never built a brick wall arguing with a master mason and actually believing they understand the craft because they googled a few things. That's OK, most people are in your shoes. As my wife loves to say "A google search isn't a substitute for my medical degree". The same applies to understanding business. No worries.

I am not in the habit of posting comments about things I don't know anything about. I just don't do that. I have done business with people with direct experience working with and through the Vatican, either as direct customers or intermediaries. The only thing I'll say is: The Mafia are amateurs compared to some of the shit that organization has in its history. And I am only talking about the financial part of their closet.

Anyhow, here's the good part.

Ready?

You don't have to agree with me.

Done deal.

Have a great day.

> Well, then you lack a sufficient exposure to business that is required to understand what I am talking about.

Incorrect. I understand perfectly what you are talking about. You do not have privileged knowledge. You just aren't saying what you think you are. Your words and your meaning are misaligned, apparently intentionally.

You came into this thread with this:

> You cannot have any kind of a company without profit. Period.

That was your opening gambit. It was factually incorrect then, it relied on your being able to emotionally manipulate readers into taking a different understanding of "profit" than any of them likely did, and all you've done since is alienate people from your core point by talking nonsense and claiming to be better than them.

Where did you expect this comment to go?

> Provide the names of ten companies of non-trivial scale who have operated with zero or near zero profit for, say, 25 years, without external donations or other financial inputs to make-up for the lack of profit. Just ten companies. If I am wrong, it should not be too hard to present such a list. > Hint: Even charities have to operate at a profit. Without this they would not have people, offices, marketing and the means to perform their stated charitable objectives.

It is literally, trivially, obviously wrong, and you've said nothing prior or since to change that other than try to crowbar in irrelevancies about what you think a specific form of legal entity should be allowed to do.

> I am not in the habit of posting comments about things I don't know anything about. I just don't do that.

And yet here we are. You may have a point. I may even agree with it. But the way that you are expressing it does not come across as good-faith in the slightest.

> I have done business with people with direct experience working with and through the Vatican, either as direct customers or intermediaries. The only thing I'll say is: The Mafia are amateurs compared to some of the shit that organization has in its history. And I am only talking about the financial part of their closet.

So what? That makes precisely zero difference to the definition of profit. It does not answer the question of whether the Vatican makes any. Is it a grasping, rapacious, self-aggrandising, amoral organisation? You probably have an answer to that. It is utterly irrelevant to the question of profit.

> You don't have to agree with me.

Quite. As someone once said: you are entitled to your own opinions. But you are not entitled to your own facts.

Here's the difference: I am open to thinking and looking outside the box and not be bound by definitions that limit thought.

Yes, of course, the accepted definition of profit does not align with what I have presented. That much is obvious.

And yet, "nonprofits" like the American Petroleum Institute, the National Rifle Association and many others exist precisely for profit in two forms. In some cases it is for the enrichment of those who run the organization. There, I used a different word. Happy? In other scenarios, they exist to generate massive profits --sometimes in the billions of dollars-- for supporters. If I remember correctly, the American Petroleum Institute generates some $250 million dollars a year in revenues. These are not $25 donations from Bernie supporters. These are massive membership fees paid for by the oil companies for which this organization works to generate billions in profits.

Disagree as much as you'd like with my out-of-the norm take on the realities of how nonprofits have devolved. The difference is you are bound by the dictionary definition of a word. I am looking at the realities on the street.

Seriously, it is naïve to actually believe these companies are not for profit. The mechanisms abound. A church purchasing manager gives a lucrative multi-million dollar contract to a contractor in exchange for under the table kickbacks. This crap happens all the time. The Vatican has done this kind of thing in transactions worth tens of millions of dollars while servicing as the financial arm for the buildout of television stations in Africa. The problem is you don't know what you don't know and a single-point dictionary definition of a single word is the extent of what you will look at as evidence to fight the idea that the nonprofit thing is seriously broken. But, hey, you are right, the word is defined precisely as you indicate. Good job.

Some guy gets paid ten million dollars to sign over checks to feed the children and you think that's overhead. I think it is an abuse of the system that, while not currently legally defined as such, should be classified as profit. And taxed accordingly. Better yet, it should be capped and the children should get more money.

Since you seem fond of little intelligent-sounding sayings, here's one that's applicable:

"In theory, theory and practice are the same. In practice, they are not."

Nonprofits: In practice, they are not. Not all of them.

BTW, I actually help run a small --real-- nonprofit. We setup a legal nonprofit organization to fund a local high school robotics team. We take-in donations and spend the money to pay for anything the kids need (usually tool, parts, etc.). Fully 100% of the money we receive (about $25K per year) is spent on what the kids need. 100%. Not a single penny goes towards anything else (OK, the occasional bank fee is another expense). Every mentor is a volunteer and most of us are actually donors as well. That's a real nonprofit, in the full sense of the word. Because nobody within the organization derives any kind of financial profit from it. There are no conflicts of interest whatsoever, no murky lines. Not sure what "nonprofits" who consume 40% of revenues should be called.

> How do they pay for salaries, operating expenses, building rent, vehicle purchases, electricity, marketing, etc?

> They take a percentage of their income and use it to cover these expenses. Right?

> Well, this is semantics. A conventional business does exactly the same thing. They take a percentage of their income and use it to cover the cost of doing business.

Yes, and in neither the case of the charity nor of the conventional business is that profit. That is operating costs, and gets deducted from revenue before tax is paid on what's left precisely because it is not profit.