Remaining unprofitable is a part of maintaining the illusion that the company has huge upside in the future.
If they believe it just destroys the money it keeps, they will start demanding a payout.
Uber is accumulating… uh. Microservices? Negative goodwill?
They kind of are. It’s just a matter of timing. They are rolling future profits, bankrolled by VC.
Seriously, this argument doesn't make sense to me? How can them spending more money help them make more because of taxes?
I guess it's inspired by Amazon's history of reinvesting, but missing the point that Amazon's motive most certainly was to actually invest into growth.
There are of course many companies that engage in all sorts of morally bankrupt but legal tax optimisation strategies. But Uber is rather different from, say, Apple, in that Uber has absolutely no need for creativity to depress their profit. They are haemorrhaging money the old-fashioned and totally legit way.
Makes a huge difference long term, as one is filled with payroll taxes and high rates, and the other is 15%.
So if you consider getting all salary in cash and then buying GOOG (or any other stock) with it, you come off only a month or two late on the period for which you are holding the stock. And for that, you lose out on the diversity of the stock.
This also assumes that your GOOG stock starts vesting immediately and there is no cliff. Otherwise, you will be holding the stock for "cliff" period longer if you just get cash salary and buy the stock.
Disc: Googler but this comment doesn't have anything specifically to do with Google. Google is just an example here.
If you make 200k a year for 10 years, vs get no salary for a startup for 10 years and then its sold out for 2 million dollars, they are completely different tax conditions.
Im not an expert or have been through this, but if you sell 2 million dollars at 15% long term rate vs the 35~% + medicare of salary, the difference will be huge.
You should be already rich and structure your capital properly for this to work.