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Ah, okay. Thanks!

Do you mind explaining more?

I was under the impression that a corporation can take a tax deduction for charitable donations. There's a line item for it on Form 1120 (https://www.irs.gov/pub/irs-pdf/f1120.pdf)

I always assumed the reason was to generate $XXX million in donations for a tax deduction for the grocery store chain.

Nothing personal, but I find this kind of naive ideological sentiment to be one of the least endearing features of Hacker News. For whatever reason, a lot of technical people were sold on conservative ideas under the banner of libertarianism, and it permeates any sensible conversation you try to have.

The conservatives in the US are building concentration camps for children, yet people on this site want to lecture about how straw bans are "virtue signaling", or will cause toddlers to intentionally destroy things, or reduce freedom.

It's a straw. People are capable of getting over it. And to halt progress because some dude in a MAGA hat might make fun of straw bans or crying Indians is a terrible strategy.

Your liberty ends when your actions begin harming others. I'm not worried about a few trolls rolling coal. I'm worried about cynical libertarian rhetoric that gives political cover for destroying helpful regulations.

Well I think taken literally, "not maximizing profit" can't possibly be sufficient grounds for an action. Nobody really has any idea of whether any particular strategy is profit-maximizing, so it's hard to believe a company can be sued for not following a profit-maximizing strategy.

But shareholders can sue over alleged harm to a corporation. I'm not a lawyer, so I really have no idea what the standard is here. But purely speculatively, I suppose someone could be sued for repeatedly missing obvious profit opportunities because the executives objected to them on ethical or other grounds.

I get the impression, though, that shareholders are more likely to sue for committing an active blunder (like selling off a division for an insanely low price) rather than for missing an opportunity.

There's a list of some famous shareholder actions here: https://www.dandodiary.com/2014/12/articles/shareholders-der...

More charitably, I think what people like quadrangle are really meaning to say is that there is a significant legal framework that very strongly incentivizes and is inspired by the idea that the first obligation of a corporation is to maximize profit. And if that was the point, then I think that's pretty close to the truth.

Sure, you won't be arrested for not maximizing profit, but remaining in business without attempting to put profit first is sufficiently hard that it typically requires special legal protections (as in B corporations).

To have standing you need to show that you are an injured party. I believe the original commenter was saying that not attempting to maximize shareholder value is in some cases an injury that is sufficient for an investor to bring a suit. I don't know whether this is true or not, but I believe that's what they were thinking when they referred to standing. In the case of a fiduciary, investors do have recourse to legal action if the fiduciary fails to put your financial interests first.

In general, I agree that a company is not legally obligated to make a profit. For example, there are many little shell companies whose main goal is not to turn a profit but to do something else. There are also B Corporations that have special legal protections for investors pursuing goals that are not strictly financial.

So in that sense, wool_gather is correct. A company is not legally obligated to maximize profit. But as a practical matter, if you raise money from professional investors, the strength of agency theory and the norms of ordinary business suggest that you can get into legal or financial trouble if you don't put the financial interests of the investors over nearly all other interests.

With early stage companies, often what happens is investors subsidize an investment precisely because they know what the profit strategy is and because they think it's strong.

With Uber, Travis was attempting to undercut competition. Investors subsidize rides because when there is no competition they are in a better place to profit. Amazon (I believe?) was reinvesting the money in the business while subsidizing prices and package delivery to gain loyal customers. Many times an investor will subsidize a no-advertisement experience to gain an audience, and then switch on ads when the network effects are strong enough to retain the audience.

This is basically Machiavelli's advice that new princes should give favors to the masses when they rise to power, so that their positions are stronger later. But the real goal is always to turn profit aggressively, even if investors are patient for a few years while they maneuver into the right position.

Also just to be clear, no investor wants a business to pursue every profit opportunity. They want the business to focus on a strategy that will maximize profit given their strengths, and that always involves focus rather than being distracted by every possible opportunity.

It's true that investors can sell if profit isn't being maximized, but how often does that happen in privately held companies?

E.g. if startup X has the tech to take over a market, but is insufficiently pursuing a profit opportunity because of moral squeamishness, chances are relatively good that investors in X will simply replace the executives with somebody that will pursue those opportunities since that's vastly cheaper than building up competitive tech in a new investment.

Similarly with publicly traded companies, not pursuing profit opportunities can result in large sell offs of a stock. You see a lot of animus against short sellers that suggests that the "businesses must maximize profit" norm is thoroughly ingrained in investor communities even if it's not legally mandatory.

I think the parent meant something closer to legal standing (https://en.wikipedia.org/wiki/Standing_(law)) than an obligation.

The investors have actions available to it than can punish executives for not pursuing profit opportunities sufficiently aggressively. Many of these don't involve the court, but some may.

Conversely, a founder that loses his/her business because investors punished them in this manner has no legal basis to fight to retain the business.

I'll second this. Wikipedia is a great resource for this stuff.

Also, check out some of the common frameworks like Porter's 5 Forces, SWAT analysis, BCG Growth-Share matrix, and the GE-McKinsey matrix. There are a lot of free educational materials on these. I'd take it slow and steady, and try to focus on orienting your thinking to the questions asked by these frameworks.

Also, consider reading the Form 10Ks for some companies whose products you like. They have a section where they explain their market and their role in it.

Good luck!