A smart finance person recently explained to me that American investors are unique in valuing a company's growth as much as (if not more than) they value its profitability, so there's really no incentive for companies to pursue profitability as long as the growth is sexy enough

So when companies like DoorDash drop these massive IPOs that enrich their investors to the tune of hundreds of millions (if not billions) of dollars, while never coming even remotely close to profitability, and also the murdering restaurants they rely on

—that's a feature, not a bug. Like so many startups, DoorDash's client isn't restaurants, or diners — it's DoorDash's investors.

The common argument against profitability as a goal for DoorDash or Uber or any of these other middlemen-economy co's is that if they were to pursue profitability, it would come at a cost of devastating income loss to their contractors

That's probably true! And it's also concrete proof that the business model is a failure. If these co's were rewarded for profitablity (i.e. the ability of the business model to sustain itself), these business models wouldn't survive.

Investing on growth isn't inherently flawed! But when a company has a near-monopolistic ownership of a market, is running numbers in the billions, and the lack of profitability has no end in sight? Yeah, that's a bad business.

But, again, the business doesn't exist to serve restaurants (or drivers) or diners (or riders). It exists to serve its investors. The enterprise goal is enrichment, not service.

This is a pattern we've seen over and over and over again. It's not new. (I've written about it before — remember that vending-machine startup Bodega?) But it continues to be INSANE.

Yeah! He was explaining that e.g. British investors only care about profitability, so some UK companies that forecast long growth phases might specifically court US investors https://twitter.com/zora/status/1336754533129740297

(The US/everyone else thing is specifically what he was explaining to me, to be clear. I've been aware of the startup scam for ... quite a while now.)

Oh good this thread has gotten just enough traction that men who do not follow me are telling me that actually I should have referred to speculators, not investors