Businesses should try to be the best, not the biggest • Hacker News Board

Re: Businesses should try to be the best, not the biggest

#161

Post by Ekaros » Fri, Jan 29, 2021, 2:13 PM UTC

trestenhortz wrote: post #10

Ugh. This person is kinda suggesting that companies should have some noble higher purpose. Companies are entities for making money for investors and employees and maybe having fun doing it. The irony is this person is suggesting companies should be “changing the world” a la Silicon Valley TV show. The author probably had no idea.

Companies are there to make money to shareholders. Still I see huge difference in paying dividends and having growth in tune of general economy and massive VC funded growth with end goal of pawning it all of to someone else or being last player on the market and hiking prices up. The later one might not ever actually be net positive.

Re: Businesses should try to be the best, not the biggest

#162

Post by A12-B » Fri, Jan 29, 2021, 2:14 PM UTC

Diggsey wrote: post #148

dm319 wrote: post #108

Earlier quoted context omitted.

There is a growing body of thought that capitalism and, more specifically, continued growth, is unsustainable. A lot of the literature focuses around the environment [1], but we should also think about businesses that perform a useful community service or product to their community - must they always grow? If not, must their competitor? [1] https://www.tandfonline.com/doi/pdf/10.1558/jocr.v5i2.197

Continued growth: absolutely. Capitalism itself only exists because resources are finite though. It's the most practical method we have right now for efficiently allocating those resources. Allocating resources is a hard problem to solve. If we had infinite resources we would not need to solve it.

Unfortunately, a transition to a more planned economy is going to be necessary, because individual actors working independently of the needs of others might be a surprisingly good way to allocate resources, but it's not smart enough to be done sustainably.

Re: Businesses should try to be the best, not the biggest

#163

Post by dcx » Fri, Jan 29, 2021, 2:14 PM UTC

koonsolo wrote: post #109

I once worked at a company where I didn't understand why they took certain decisions. In the end, it all became very clear. My mindset from "these guys have no idea" shifted towards "wow, they are smart, I didn't get this part". Basically, they were acquiring customers faster than anyone could follow. Our development goal was "fast and opportunistic". As you can expect, the product was full of bugs, and customer supp…

That's so interesting! I wouldn't have the first idea how to pull off a plan like this; is this what people learn in the field of M&A?

For example, how can you be confident that someone will be interested in acquiring you, and for a good price, instead of one of your competitors, or just building their own? How do you know your customers will be happy to switch to the replacement product that gets put in front of them? (I'd be quite interested to know what they did to make themselves an attractive target for acquisition, as a practical example)

With reference to the main topic - I think there is a place in the market for both stable long-term and high-growth shorter-term businesses like this example. Sometimes the market is hungry for a solution right now, not something perfect in five years. Satisfying this demand is what causes high growth. And it's natural that we see a lot of this in the tech industry, since we're closer to the cutting edge than most.

Re: Businesses should try to be the best, not the biggest

#164

Post by koonsolo » Fri, Jan 29, 2021, 2:16 PM UTC

llarsson wrote: post #131

chii wrote: post #120

Earlier quoted context omitted.

> I didn't see how this would ever turn into a success story. We were digging a grave. But I didn't realize 1 thing: we were not selling a product, we were selling the company. why don't the executive making this goal clear to the "underlings"?

If the underlings know their product is intended to be trashed, do you really think they will suffer through the late evenings and weekends of gruelling overtime to patch ugly bugs in production? I don't.

Very good point. It was a very good lesson for many, that the company you work for is not your company, but theirs.

Most companies always talk about "us" and "our company". But once it gets sold, it will be very clear that it's not "us".

Re: Businesses should try to be the best, not the biggest

#165

Post by mromanuk » Fri, Jan 29, 2021, 2:18 PM UTC

Matticus_Rex wrote: post #127

hh3k0 wrote: post #118

Earlier quoted context omitted.

"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough

One thing this argument misses is that much of economic growth comes not from increasing consumption, but from making that consumption more efficient.

When efficiency is achieved, the economic growth is later converted to "everybody should use this new efficiency".

And more importantly, efficiency in the consumption is not translated in efficiency in the use of resources (which is the important one): transporting goods by horse vs faster transportation with combustion engines.

Re: Businesses should try to be the best, not the biggest

#166

Post by A12-B » Fri, Jan 29, 2021, 2:18 PM UTC

Matticus_Rex wrote: post #127

hh3k0 wrote: post #118

Earlier quoted context omitted.

"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough

One thing this argument misses is that much of economic growth comes not from increasing consumption, but from making that consumption more efficient.

But the result is more consumption, because you spend the money saved on inefficiency on more consumption. If coca cola produces 1m bottles of coke in 1 year and finds a way to produce that many in half a year, they're not going to produce 1m bottles a year anymore, they're going to produce 2m bottles a year.

Re: Businesses should try to be the best, not the biggest

#167

Post by wpietri » Fri, Jan 29, 2021, 2:19 PM UTC

soVeryTired wrote: post #102

I think one interesting way of looking at a company is as a power struggle between - the owners - the employees - the managers - the clients - (and sometimes) the government / general public Companies can benefit all of these parties, but a good system should have forces in place to prevent any of them from getting the upper hand. Some of those forces include competition, unionisation, labour mobility, fiduciary duty…

I'm definitely with you on the last bit. As are plenty of others. Jack Welch famously called it the "dumbest idea in the world" and it has been widely panned: https://www.google.com/search?q=dumbest+idea+in+the+world+sh...

If I squint at it from the right angle, it's not terrible, in that in theory many of the other kinds of value should roll up to long-term company value. E.g., healthy employee relationships are a real asset. Being a good community member should pay off in the long term. Etc, etc.

But in reality, when you crossbreed this with the "efficient markets hypothesis" [1] and managerialism [2], it becomes dangerous. Mix in a live stock ticker plus ways for executives to cash out and a declining CEO tenure and you get an excuse for doing anything that boosts the share price long enough to unload the shares on a sucker. Or, at lower levels, anything that boosts a metric that drives stock price gains.

So instead of building long-term value, the "maximize shareholder value" mantra ends up doing the opposite. E.g., cutting long-term R&D spending to fund stock buy-backs. Laying off long-term employees in favor of an outsourcing deal that cuts short-term costs while raising them down the road.

[1] https://en.wikipedia.org/wiki/Efficient-market_hypothesis

[2] https://en.wikipedia.org/wiki/Managerialism

Re: Businesses should try to be the best, not the biggest

#168

Post by revax » Fri, Jan 29, 2021, 2:20 PM UTC

belval wrote: post #134

hh3k0 wrote: post #118

Earlier quoted context omitted.

"We have a finite environment—the planet. Anyone who thinks that you can have infinite growth in a finite environment is either a madman or an economist." David Attenborough

That quote always bugged me because it disregards that our economic growth is not really tethered to natural resources. Sure a company like Coca-Cola can only grow so much before it effectively covers the entire planet, but they can still reduce costs to improve their profit margins and displace existing drinks from other companies with a new product. The cloud as a business is mostly about building products that add…

>That quote always bugged me because it disregards that our economic growth is not really tethered to natural resources.

I really think the opposite is true, what makes you think that?

Re: Businesses should try to be the best, not the biggest

#169

Post by jack_riminton » Fri, Jan 29, 2021, 2:20 PM UTC

koonsolo wrote: post #109

I once worked at a company where I didn't understand why they took certain decisions. In the end, it all became very clear. My mindset from "these guys have no idea" shifted towards "wow, they are smart, I didn't get this part". Basically, they were acquiring customers faster than anyone could follow. Our development goal was "fast and opportunistic". As you can expect, the product was full of bugs, and customer supp…

Startups are sometimes not even doing the customer acquisition bit. I was part of an accelerator where the most common exit was acqui-hiring i.e. some big corporate is going to want to hire some smart ML types in the future with a cool brand behind them

Re: Businesses should try to be the best, not the biggest

#170

Post by digitalsushi » Fri, Jan 29, 2021, 2:20 PM UTC

cgriswald wrote: post #18

sunstone wrote: post #3

To push the metaphor a bit further isn't humanity itself a kind of cancer of the earth?

That remains to be seen: It’s possible we are the reproductive system.

This is like a frame of reference thing. Your response is fascinating. It could spark hours and hours of debate. What an amazing response.

If life is growth, the goal is to spread as far and wide as possible. Life will spread to Mars, the moon, and beyond. (Or die trying, and inevitably, literally).

If life is balance, the goal is to exist as long as possible. To which we are not the reproductive system, but the cancer attacking it.

I believe there is a reasonable chance that the existing human generation is the one that will have a global discussion about this as a way to frame balance as a possible goal of humanity. And maybe that discussion will not go well, but simply to have it would be noteworthy.