[Nemi]

This is overly simplistic. I don’t fault you for it, but it shows a lack of understanding how a business functions.

There is a lot of overhead that goes into running a business, as others have mentioned. Taxes. Rent. Utilities. Licenses. Certifications. HR, testers, project managers, product managers, people managers, directors, marketing, customer service, sales, C suite, and on and on.

I know right now you might be saying “those people don’t even do anything! Developers are the only people making the damn product!”. Again, a business is kind of like a product of its own. It takes many moving parts to take a usable product and get it to market, fight off competition, work with government for regulations (or keep from getting regulated), find and get customers, etc.

Once you try and “go it alone” you will realize that creating the product is only one small part of making a functional and profitable business.

I run a small business. I don’t use half of those roles I mentioned and there is still a lot of overhead. It is very easy to underestimate the amount of extra work involved.

[ever1337]

And yet you still turn a profit at the end of the day, i.e., money that's not going to 'overhead'. Let's not kid ourselves. Your interest as the owner is to maximize that profit and minimize expenses, and our interest as workers is to maximize our wage and minimize your profit.

[AdieuToLogic]

> Your interest as the owner is to maximize that profit and minimize expenses, and our interest as workers is to maximize our wage and minimize your profit.

Business owners are also responsible for ensuring their employees (and payroll taxes) are paid whenever revenue dips into the "L" part of "P&L".

Wise owners ensure some portion of profit is retained such that temporary market adversity does not immediately result in terminating their employees.

People who have never had these concerns make sweeping statements such as the one quoted.

[ever1337]

You are correct that the interest of a business owner is not to kill their firm.

[Nemi]

As it should be. I am not begrudging anyone of that. As a matter of fact, I often mentor employees on treating their career as a business, and build it accordingly. Just like a strong business, you should be selling your services for as much as reasonable, and if your employer is not paying the appropriate price then find another “buyer”.

To maximize the price you can sell your ‘product’ (you), you should be making career decisions that strengthen your offering. This can be taken too far (those that only look for promotions at the expense of real work), but it can be done ethically very easily.

[h2zizzle]

>As it should be.

No, this is just the (insane) status quo. Ideally, however, businesses exist to carry out a mission (beyond making money). Part of this mission is supporting the livelihoods of employees; part of it is giving a return to investors; part of should be some social net good (maybe within a larger societal context, if not unilaterally). Much as "maximizing" the price at which you sell yourself (ick) often ends in workaholism, broken personal relationships, unhealthy relationships to material goods, and a generally deleterious existence as the opposite of a happy, upstanding, and well-loved member of society, "maximizing shareholder value" usually ends in a business that is either a hated monopoly or a bankrupt shell (often both, in that order). In both cases, hyperfocus has lead to the loss of the entire reason for pursuing the venture in the first place.

Profit is just a KPI for something else that you're supposed to be doing (and often a bad one, depending on what that something else is).

[mrangle]

This is cringe idealism. It bears no resemblance to the way things work.

[SR2Z]

> Ideally, however, businesses exist to carry out a mission (beyond making money).

I mean, sure, but the defining difference between a business and a nonprofit is making money.

It's important for companies to provide value to society but the way we measure that is by how much they earn. Despite several hundred years of people trying to come up with better ways to do this, this is the only one that seems to work.

[h2zizzle]

Non-profit organizations are often colloquially called "non-profit businesses" in recognition of the fact that they are organized and operate as any other business would - in developing business plans, filing with the IRS, hiring employees, minding balance sheets, etc - except in ways related to their purposely not seeking a profit (though revenue is another matter).

>but the way we measure that is by how much they earn

Again, it's a flawed heuristic. Military contracting is wildly profitable. Value to society is questionable.

>this is the only one that seems to work.

Analysis of the subtle successes of social democracies and "Gross National Happiness" are just two examples that put the lie to this myth.

[SR2Z]

> Again, it's a flawed heuristic. Military contracting is wildly profitable. Value to society is questionable.

It's not questionable at all but if you don't already see that I'm not interested in arguing it with you.

> Analysis of the subtle successes of social democracies and "Gross National Happiness" are just two examples that put the lie to this myth.

GNH is cope from the Dragon King of Bhutan to justify the poverty and ethnic cleansing of his nation in the international community. The Nordic countries all have very high per-capita GDP.

If you wanna call my claim a myth, citing a few metrics which correlate really well with GDP is not very convincing.

[d0gsg0w00f]

> No, this is just the (insane) status quo. Ideally, however, businesses exist to carry out a mission (beyond making money).

Well, that's the beauty of the system. You can go and be the change you want to see in the world.

[dns_snek]

That's the standard conversation line that sounds oh-so optimistic but it's not actually true, is it?

As soon as you need to raise money, or as soon as you need to compete, the system will either beat you into submission or you'll get out-competed by companies that don't concern themselves with any missions other than making the maximum amount of money possible.

The most ruthless, dirtiest, immoral players can cut the most corners, grease the most political wheels and offer products and services at the lowest prices.

[Nemi]

This is true, and what Machiavelli was talking about in his book The Prince. He is not talking about HOW to be an asshole ruler, he was talking about what other asshole rulers WILL DO, and how you will need to deal with that (as a ruler that does not wish to be a tyrant).

[ever1337]

The whole world is a cartel. Not because it wants to be - quite the opposite. But because it is a necessity.

[ever1337]

I appreciate your frankness, and I am not an idealist who is proposing that the market 'should' be this way or that way for purely moral reasons. But the topic at hand is unionization. An aspect you neglect in this post is that another way to raise wages (or 'total compensation') is via collective bargaining. If tech workers really do care, and have a collective interest, and are able to overcome countervailing forces, this is an inevitability. No longer will the ball be purely in your court as an employer to solely determine the value of labor.

[collingreen]

I don't agree that the worker's interest is or should be in minimizing company profit - this is a very zero sum approach that doesn't really cover companies that aren't stagnant or dying.

I agree with your general point that a business CAN increase profit by reducing costs, including by reducing employee compensation (and there are lots of shortsighted, greedy people out there) but increasing revenue instead is often much more significant and, in theory, can increase both employee take home and company profit.

A business is a mechanism to turn labor and other resources into revenue and often aligns with paying for more expensive talent in order to provide more valuable revenue. Businesses that are failing or stagnant can't grow revenue anymore and have to cut costs instead.

I don't think the imbalance between workers and companies is in a zero sum, adversarial relationship. I think the imbalance is in who gets to decide what to grow and what to cut (which is one place where collective bargaining helps a great deal).

[ever1337]

The aim of the worker is not usually to kill the firm, I assumed that went without saying, as that would ultimately 'minimize' their wages. But the reason to work in a society where one needs money is to receive a wage, as maximal as possible. These incentives will always contradict whatever real but necessary need there is for 'genuine interest' or 'social tendencies'. Constantly businesses attempt to harness this value, (which is the source of revolutions in productivity beyond the daily rote labor) through trying to present the relationship as anything but transactional. But as their interest in this value is ultimately a monetary interest, what the worker returns to them will be done on a transactional basis. An inhuman force rules over all.

[Xmd5a]

>I don't agree that the worker's interest is or should be in minimizing company profit - this is a very zero sum approach

You misunderstood the post you're replying to. Workers vs CEOs (not companies).

[try_the_bass]

> Your interest as the owner is to maximize that profit and minimize expenses, and our interest as workers is to maximize our wage and minimize your profit.

Is it? I know a handful of small business owners, and generally their interest is running their business well and keeping their customers happy. Sure, they want to be profitable, but profit isn't their primary motivator.

Ditto on the worker side.

Your outlook on this is wildly cynical

[ever1337]

They may have a moral sentiment and so too do employees - but the market is the ultimate condition for any moral sentiment to survive. You have no company, you no longer 'satisfy' customers. I am not referring to a moral idea, but a cold reality of business.

[try_the_bass]

... What? I can't follow what you're trying to say here. It sounds like you're contradicting what I was replying to?

[ever1337]

It's not that profit is one 'motivator' among others, it is the sole and ultimate condition for the survival of a business.

[mrangle]

Before maximizing wages and minimizing profit, your interest as workers is to assure that the owner is provided with enough financial motivation to both stay in business and not find substitute employees or solutions for the work that you do.

[ever1337]

When I use the word maximization I am not referring to an abstract idea, I am referring to a negotiation with material necessity.

[musicale]

Can you estimate the actual overhead rate? Maybe 100%-200%?

[Nemi]

It varies greatly per company and industry. You are talking about Net Margin and it can vary a lot.

A company like google has a 28% net margin. That means that after paying all expenses for employees and rent and everything, they have 28% left over from revenue as profit. This is very good.

Amazon (being a hybrid retailer/tech company) has 9.29% net margin.

Target has a net margin of 3.84%.

Believe it or not, many public companies have a negative net margin, meaning they spend more than they bring in. Lyft had a negative net margin until just this year. A few years ago, they had a negative net margin of -70%! That means if someone didn’t keep putting money into the company they would have “ceased as a going concern”, as they say. Their most recent year they had a 0.39% net margin. Go Lyft!

[musicale]

If "employees" includes the CEO, then low net margin would not refute GP's claim that

> Almost all of the value they create goes into the pockets of their CEO