No Stupid Questions

Not all companies need to grow. Some do perfectly fine by just maintaining their current output like a owner operated single person plumbing company.

Another example can be Walmart, they don't need to grow but investors prefer growth so it becomes a focus.

There are some companies that need absolutely to grow to survive. This is seen a lot in tech where in order for the business model to make sense they would need some big quantity of users.

Let's say you got seeded 10M and managed to get to a minimal product with 10k users that get you $2 in revenue monthly but your cost are around 50k monthly. It means you're making a loss but with 100k users you'd make a profit. To get to 100k you need more investment but to justify that investment being sound you need show growth.

So in general if being bigger gets you economies of scale then making a loss early is fine as long as you can get the investor money you need to survive. So to survive as a business you need to grow.

Those are two ends of a spectrum and everything in between exists as well. So quick answer would be "Companies don't always need to grow but some really do because their business model only works at a different scale".

Year over year is what EVERY company looks at.

Making the same amount of money as you did last year is considered a failure in business.

I guess because otherwise you have something more akin to communism.

Which is a big scary monster and the biggest economies in the world would rather suppress a system the levels the playing field and helps everyone than give up their dollary-doos.

I think about this from time to time.

Its like, hey we make a product and it costs this much to make and we make this much profit, so that should be it. Thats how much this product makes. Dunzo. Next muffin. But it never works that way, once they have found the sweet spot where the product is useful and works well whilst also selling for a price that pays for production development and wages then it becomes about cutting costs to increase profits and that takes the form of using cheaper materials, paying lower wages, firing staff, incorporating planned obsolescence so people need to buy more. All in the name of profits and bonuses.

Its disgusting, it damages society, the environment and warps peoples minds so that people like donald trump exist and i hate it.

Growth stocks are worth more than mature stocks, because people are more likely to invest if they think they'll make money back.

Because the moment they go public the stock market demands they constantly have an improvement basis to keep their stock holders in a state of security to keep invested. So like get this: there’s a company that makes medical machines to keep people alive. A founder retired and the stock market dipped to half the price. Which only lasts less than a month and it recovers. Of course anyone who’s leading teams would then panic and get flustered

…like this is a company that should have its target about human life. And all the stock holders are worried about is the suit. Like it’s not even an improvement of a product. Improvements are all bullshit announcement for Wall Street.

That is..until crypto collapses it all.

Tax the rich and fix this shit.

Because they took the money. If you take the money, the path is inevitable

When you take on investors, you just invited in someone who looks at your company like a farmer does to their crops. They want you to grow as much as possible, but they don't actually care if you live or die - you're one of many using up resources

If your growth slows, they're going to demand more. They might demand you make cuts, they might push you to take loans and expand, they might try to sell to someone else. If your value isn't increasing faster than other possible investments, they lose imaginary money to opportunity cost

And by virtue of being an investor, they have plenty of money and want to gamble with it. A total loss probably wouldn't impact their lifestyle, they want invest in Apple at the ground floor and become a billionaire

You can start a company through loans, risk your house and build up slowly, and walk away clear. And people do.

But then they want to retire... And there's this neat trick you can do if you want to own a small business... You can make it buy itself. You can take out a loan to pay out the previous owner, say 5 years of profit, and make the business take on the loan. But now, just to break even, you've got to beat what you paid for it plus interest over the term. And both business and individuals can do this

So in short? The reason is debt. A small business can make you upper middle class, a large one could make your entire family insanely wealthy for centuries.

But once you take the money, the business has to grow, or it'll be harvested

Under capitalism, companies do what their owners want them to do. The owners can choose to try to grow, to shrink, to sell, or to close.

Publicly owned companies have shareholders, and the shareholders usually want the company to grow so their investment grows. Shareholders can have other values, but anyone can become a shareholder.

Under non-capitalist systems, the government might own some or all companies. Then the companies do whatever the party in power wants. The party in power probably doesn't have time to run all the companies, so they give some level of independence. They can reign that back whenever they like.

The most common motivation in non-capitalist systems is probably greed and growing personal wealth of party leaders via corruption under that system. Luckily, the people can vote in a different party and/or protest against party corruption except in all real-world cases, where that is banned or suppressed.

If you have competitors, they will develop and have better products / service than you

There’s always room for improvement, and improving requires resources

Shareholders are always going to demand more profits. There is no mechanism in a capitalist economy that reinforces the concept of having "enough."

If you have a company in a small town and everything is paid for and the size of the town isnt growing or changing, you actually do not need to grow. There is a company in Leadville, Colorado called "Melanzana". They make technical hoodies - they're pretty good. They actively shrank their business by closing their online storefront to reduce demand and reduce the burden of keeping up with that demand.

HOWEVER, if you have a business that is plugged into a larger marketplace and you have investors or have growing rents, etc. your investors expect a return on their investment and your growing costs need to be addressed so the only option is to grow to keep up.

Super interesting topic when you contextualize within a closed, limited, physical space. And by "super interesting" I mean dystopian.

There has to be some growth because inflation eats at the value of your capital every year.

Shareholder primacy. Thank you Dodge v Ford. Thank you Friedman Doctrine.

Profits about all. The size of the company itself, eh. But, profits must grow infinitely apparently.

Companies grow and shrink from a combination of market and internal forces. Companies sometimes need to shrink or grow. The economy and culture are constantly changing. That is why it is very hard to predict where things will go.

Your example of having a company with a set amount of employees that produce a set product happens pretty frequently. A lot of employee owned or family businesses are this way.

I think most of your post can be summed up with why do investors want more and more money. The answer is because they can. If your company owes money to investors then they will beholden to them in one form or another.

There is another worthy discussion here and it is about boards. Boards that do not contain equal representation for the employees and the public can be very destructive.

Most of the corporate abuses we have suffered come from having perverse leadership non-representative of these two most important influences.

Assume you're saving X amount of money each month for your retirement.

Your options for storing that money is either:

1. In cash which will "lessen" in value as time goes by due to inflation
2. In a savings account with middling interest rate
3. Or you could invest in the stock market which will typically offer better return.

Assuming you go for option 3, would you choose to invest in a company with zero growth meaning your retirement fund won't grow, or would you choose a company that is constantly growing?

Nobody would choose to invest in a company with zero growth or which doesn't return money back in the form of dividends.

You're objectively better off investing in companies that grow since those are the companies that will grow your investment.

Note that even if by all practical terms a business isn't growing, then it's still growing.

Part of the whole deal is that there's an intent for the money supply to change for a roughly 2% inflation. In an oversimplified sense, the idea being that everything gets 2% more expensive, everyone gets 2% raises, and investments at least generate 2% returns.

We've basically decided that we need to trick ourselves into feeling progress by making "standing still" look like growth. So if someone had flat income year over year, they actually lost in real terms.

Because we decided to play this fucking game. Not growing is stagnation, which is wrong of course.

So we keep on hoarding more money for smaller groups.