this post was submitted on 21 Mar 2024
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No. His normal salary is around 300k a year. This $193 million figure was the presumed valuation of a stock/options package he received ahead of the IPO. It doesn't cost the company anything to pay him in stock, so it doesn't affect the profit/loss calculation.
Yes but where is the $300k coming from if they're losing $90.8m a year? How can they afford to stay in business? Before they went public, who was foolish enough to invest in a company that has never turned a profit? The money doesn't just come out of thin air. Someone has to be giving it to him.
If I was rich and started a company that lost $90.8m a year, I'd shut down after less than a year before I went broke and homeless. How can a company that never turns a profit make enough money to pay any employee, let alone the CEO?
You'd be surprised. The basic strategy of losing money hand over fist for years to grow yourself to as large a user base as possible, before finally aggressively monetizing that user base, is well established in silicon valley. Investors would not even raise an eyebrow at the loss numbers posted by Reddit because of how exceedingly common that is.
And it has worked several times, making some people ridiculously wealthy. Good examples are Amazon, Facebook, and Uber. So usually companies on this level have raised hundreds of millions to sometimes billions of dollars in investment capital, allowing them to operate at these levels of losses for years at a time.
Uber yeah, but the others are probably profitable overall.
So is Uber, since this year. My point is, all of these companies ran hundreds of millions of dollars in the red for years before turning a profit.