Comments by "Maxwell Benz" (@Tential1) on "Zillow losing money on home flipping: good" video.

Louis, it's extremely common for public businesses to lose money (and private) when they are in their growth phase. Just go look at financials from most companies. Remember Tesla, how you all complained that Tesla was an unprofitable business and it was going to go bankrupt? And now, it has the highest profit margins of any auto, with last quarter hitting 11.76%. There are COMPLETELY valid reasons to stay unprofitable in the early years of your business, it just doesn't apply to businesses like yours that are very small. As a person who has actually experienced this, but had your line of thinking, you can't think like a normal person when you are playing at this level. I thought like you, focused on short-term profitability at the expense of scaling the business, and got stomped out by competition. When you're playing with private equity backers, or can secure hundreds of millions/billions in loans, the game is played differently.
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@edrosales1520 (sorry, wall of text, you got me talking about my favorite part of finance, secrecy) "alright, put your money where your mouth is and tell me how you make money so I can do it too." dude, whether it's trading, m&a, or whatever, most things in finance work because it's not a widely known tactic. If I promised you I could tell you how it would work, I would create a "course " sell it to you, and then scam you, like EVERY money guru you see on YouTube. How do you know a person has a real way to make money? They won't tell you. Dude, you could straight up torture me. I'm not telling you any way I've learned to make great profits. I don't even tell my family or friends, to be safe about leaks. The second it's widely known it loses effectiveness. We call it, alpha deterioration. Go read about Renaissance Technologies(there's a good book on it too). If you work there and say any part of their strategy publicly, they will destroy your life. I'm not breaking NDAs. M&A tactics are things you can only learn working in the industry, and giving that away is neutering a multimillion dollar opportunity. Just use this info to help you point out scams. If someone promises they can make you rich, they're lying. Because none of us in the industry would give away a strategy, even for money. We use the strategies to generate money. If you want to learn this stuff you're going to either have to join a company that has access to this info or I guess like I said, find someone capture them and torture them for the info. Also, just to clarify, zillow is a public business, the strategy you'd use in this case isn't an M&A strategy. Since we aren't proposing a merger or acquisition. It's more of a capital efficiency strategy. And like I said, I may have just misinterpreted what he said, it's mostly right. You really should be able to figure it out from what he said. But if you can't implement it, I'm not going to just give it away. Go make enough money for me to manage, collect my fee and sure, I'll help you improve how fast you can generate wealth too. Main issue with this being that because you don't understand how it works, you have no ability to find the people that can actually do this correctly. Also, while what he said is mostly correct, it assumes the company is successful. If it is, it's gravy. If not, you accelerate your losses. Many people and companies have failed/bankrupted specifically because of this.
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@edrosales1520 then I'll give you the benefit of the doubt as well. I was not speaking about m&a. This is zillow. M&a is different. Seriously though, what the op said, buy borrow and die, go try and learn it or ask someone for help on it in your company. It's a legitimate strategy. I just said I wouldn't explain it like that, and I wasn't exactly sure if he was explaining it correctly but on second read, op clearly does get it. It's just, not the exact reasoning I'd give for zillow doing this.
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you're kind of close but not really. Probably because you don't actually do this(obviously) so you don't know exactly how it works but you kind of get the gist. Or maybe you just didn't explain it the way I would since I do actually do it.
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@edrosales1520 "I was teasing with my comment" aka trolling. So you trolled when you could have elaborated or clarified. But instead, you decided to reply and troll more, and pretend like alpha decay doesn't exist and that anyone who won't give away a strategy for free is lying. And for any person who is reading and doesn't know alpha decay. Basically, alpha decay is the concept that if you have a good strategy and you share it so everyone is doing it, it's no longer able to make good profits. Or, if you need a story, imagine you found a goldmine. Now if you don't tell anyone, you can mine all the gold yourself. Or at least, buy the property, whatever we won't get into the details. However, if you find a goldmine, and tell everyone you know about it, you may only get a small amount of that gold for yourself, and everyone else would get gold for free, even though you did the work to find said gold.
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@jeffshackleford3152 yes, he used m&a because he doesn't understand what he's talking about
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@youtubestolemyusername3419 ya....they're profitable. True. My guess is he looked at annual returns to give him benefit of the doubt. Zillow is profitable only in their most recent quarters. And nothing to be excited about. But you're absolutely right, they are profitable. Or maybe he means that from the article he read, it sounds like zillow may sell their current inventory at loss. But that's pure speculation. Again, you're right though, we have no proof zillow will sell at losses, just speculation based on them saying they are ending ibuying for now.
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@edrosales1520 I never said first mover is why it works.... Learn to read. And what you just said is not what the op was talking about. He mentioned dying for a reason. So you didn't actually even understand what we were discussing. Buy, borrow and die is what he said. He's referring to something very specific. It's an accounting thing and you clearly didn't pay attention in class. Don't bother now, you're not helping op. He actually understands way better than you. I specifically said I may have misunderstood op for a reason and I wouldn't describe it like that, but he is correct, he knows more than you do on this subject. Honestly just let the op respond to you, maybe he will elaborate. You're way off topic from what he was discussing.
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@edrosales1520 speculation. You don't know why he didn't say anything. Only reason I did was I'm waiting for Thomson Reuters to email me my report and want to kill time. I normally never respond, but I have notifications on in case someone answers a question I asked about macos. Accounting is part of the game... Read snowball. Warren is very good at accounting. You can't just be a good trader, good m&a, etc. Accounting is a huge part of the game either learn it or have a good friend who is very good at it that you can run ideas by. Accounting gets a bad rep in the industry for being "boring" but there's a lot of money in the boring part of the game.
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@edrosales1520 you're the worst kind of troll. You asked me a question, while being in the industry, so you already knew the answer, or lied about being in the industry. And rather than clarifying what I said and helping the op understand exactly how the strategy works, you decided to just go off on a tangent. I'm not disagreeing with what you said. But that's a completely different topic. If you're going to debate alpha deterioration and say you're in the industry, you're lying. I'm the one who got baited... I wrote you a real explanation. Uh no shit I'm not talking like I do at work. Alpha decay is a widely known thing. Go Google it for christ sake. All I did was explain alpha decay in way more words than needed. I actually responded in good faith. If you don't know alpha decay, you failed your studies completely. Which is another problem with finance. People like yourself didn't pay attention in class. It's such a basic and core part about financial strategies, it irritates me to even think a person who claims to be in the industry thinks it's a good idea to explain a strategy which would lead to alpha decay. You're not in the industry, stop lying. What you're saying is the equivalent of "if you don't open up you're safe and show me your treasure, you're lying about having treasure." no... I just am not going to lead you to my treasure. And if you're in the industry, you just trolled me completely, because you could EASILY have answered your own question, and explained it more thoroughly and chose not to. Proving you're not in this. If you really believe in democratizing this info go ahead, explain what the op said in more detail. But you don't. You're just fishing for info, and I'm not giving it to you.
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@UserNameAnonymous your secret diet can only be used to an extent by yourself. If you kept losing weight, you'd die, so you would sell your secret to weight loss. If someone has a secret to making 10% above the average market returns, why would they sell it? They would employ it themselves, because it's more beneficial. Your analogy is idiotic. This isn't rocket science, like I said, it's literally just the definition of alpha decay. Anyway, believe what you want. If the financial industry has no secrets, you've got no reason to complain. You've got all the tools the big boys do and can easily learn everything they know. If I can't convince you there are financial secrets not widely shared to the public used by wealthy people to generate wealth fast, I guess that's not a bad thing. Less chance of any of this stuff being found out and regulated away. With that, I'll turn off notifications and have a good day. Maybe I would have believed what you did too if I didn't directly work with high networth people/orgs, but thank God I did since now that I have some idea of the game, I don't have to worry about things like never being able to afford a house. Not even sure how that would be controversial to say that there is a sector of finance dedicated to the rich to helping them generate outsizsd returns that is kept secret to the public but I guess they've done a great job of shaping public opinion to make regular people believe it's not possible Good luck in your endeavors.
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I can name an insane number of businesses that were not profitable for the first few years of operations. It's such a common practice, I'm still surprised the normal public doesn't get it.
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Buy puts or short zillow if you think they're in trouble. We'll see how that works for you long term.
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If every company listen to you, then Amazon Apple Facebook Google Tesla, and Netflix wouldn't be here. Losing money in the beginning years of your business when you are trying to scale up to a multibillion-dollar valuation business is completely normal. That's why it's called path to profitability. Being profitable every year is something that smaller businesses can focus on because they're not going to get financed and Equity Investments to scale their business to multibillion-dollar valuation. Don't conflate what you do on a small level with what a multibillion-dollar business is trying to do
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I can name an insane number of businesses that were not profitable for the first few years of operations. It's such a common practice, I'm still surprised the normal public doesn't get it.
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