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by saas_sam
2620 days ago
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Profits equal the difference between what customers are willing to pay for a product/service minus what it costs to provide that product/service. When you find a new way to deliver something valuable at a lower cost -- meaning less time & material resources -- you enjoy profits. Profits are then used to do things like hire people, invest in tech improvements, and acquire companies like Touchtech. Without profits, people would pay for things at cost which sounds great in the short term, but would result in no money left for further improvements much less incentivizing hard work, which is very bad in the medium and long terms. |
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note that profit (without qualifiers) == net income (as opposed to gross profit or operating profit)
so it's not true that no money is available for further improvement. profit is what's left over after re-investment (and other costs).
it's also not strictly true that it doesn't inventivize hard work. if the owners take money out of the company as salary and benefits, or they derive satisfaction from the quality of their work and/or pride in building an organization, they may be very well incentivized.
to actually answer the original question, you'd need to understand how value gets distributed in a value chain (including customers). it depends on the relative power of the various actors in the chain. if customers have a lot of power, they'll extract most of the value of the value chain (likely in the form of lower prices). if suppliers have the most power, they'll retain most of the excess value in the value chain as profit. based on a quick read in this case, the supplier has lots of power, so stripe will likely retain most of the profits.