Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

No science, no startups: The innovation engine we're switching off

steveblank.com

Post reply on HN
Print view View original

321–330 of 528 posts

Re: No science, no startups: The innovation engine we're switching off

#321

Post by WD-42 »

UncleOxidant wrote: post #286
JKCalhoun wrote: post #273

Earlier quoted context omitted.

And yet when Jobs returned to Apple he blew up ATG (the Advanced Technology Group) that gave us Quicktime, etc. He also shutdown Apple's research library (and gave all the books to Stanford, I believe). He seemed to have little patience for "scientists" — preferred engineers that shipped shit. I think that at best he saw research as expensive, at worst he saw it as elitist.

And yet, he went to Xerox PARC and copied their research.

He also didn’t seem to have an issue borrowing Unix, which obviously has a rich history of research and academia.

Re: No science, no startups: The innovation engine we're switching off

#322

Post by bheadmaster »

smaudet wrote: post #292
twobitshifter wrote: post #48

Earlier quoted context omitted.

Not why it can’t be done so much as why it isn’t done. Share buybacks allow companies to reward executives directly as their compensation is tied to stock price. If we started not doing that, the priorities might shift, but those executives like things the way they are. Before Tim Cook Apple had never done a buyback - Jobs was always thinking Apple could do better with the money in R&D than paying off shareholders. W…

Maybe some of these 2-brain cell executives should consider that their "buybacks" will be worthless when US throughput starts to be equally worthless compared to the rest of the world... Of course, I'm being a bit pejorative, they aren't thinking big picture at all, just concerned with what happens tomorrow not the day after... However, they are in part responsible for the nonsense happening at the moment wrt to Amer…

It's a perfect example of a prisoner's dilemma.

Re: No science, no startups: The innovation engine we're switching off

#323

Post by bheadmaster »

smaudet wrote: post #292
twobitshifter wrote: post #48

Earlier quoted context omitted.

Not why it can’t be done so much as why it isn’t done. Share buybacks allow companies to reward executives directly as their compensation is tied to stock price. If we started not doing that, the priorities might shift, but those executives like things the way they are. Before Tim Cook Apple had never done a buyback - Jobs was always thinking Apple could do better with the money in R&D than paying off shareholders. W…

Maybe some of these 2-brain cell executives should consider that their "buybacks" will be worthless when US throughput starts to be equally worthless compared to the rest of the world... Of course, I'm being a bit pejorative, they aren't thinking big picture at all, just concerned with what happens tomorrow not the day after... However, they are in part responsible for the nonsense happening at the moment wrt to Amer…

It's a prisoner's dilemma, but with a large number of prisoners.

Re: No science, no startups: The innovation engine we're switching off

#324

Post by barchar »

triceratops wrote: post #189
Tuna-Fish wrote: post #156

Earlier quoted context omitted.

4. Those who intend to re-invest all returns in to the stock, who avoid a taxable event when their ownership of the company goes up without having to first pay tax for the dividend. A stock buyback rewards all stockholders equally . Those who sell, get their reward in cash. Those who do not sell, get their reward in the proportion of their ownership of the company going up.

> Those who intend to re-invest all returns in to the stock Sell the stock then use the gains to buy the stock? I'm very confused by this. > without having to first pay tax for the dividend Long term capital gains and dividends are taxed at the same rate. The only tax-free way to benefit from a higher share price (that I know of) is to borrow against it. > get their reward in the proportion of their ownership of the…

The other tax-free way to benefit is to sell while your in the (fairly generous) 0% capital gains bracket

Re: No science, no startups: The innovation engine we're switching off

#325

Post by barchar »

triceratops wrote: post #194
terminalshort wrote: post #119

Earlier quoted context omitted.

Yes. This is correct. Share buybacks are financially equivalent to a dividend from the company's perspective, and slightly better from the shareholder's perspective because they can choose when to take the dividend and pay capital gains tax instead of income tax on it.

Qualified dividends (stock held more than 60 days) and long term capital gains are taxed at the same rate.

At any given point in time for an individual yes, but your cap gains rate can vary substantially over time. Also trusts are taxed fairly punitively.

So it's still better for everyone since only those who need or want the income have to take it.

Re: No science, no startups: The innovation engine we're switching off

#326

Post by barchar »

triceratops wrote: post #222
nradov wrote: post #220

Earlier quoted context omitted.

The tax advantage of stock buybacks is that investors aren't forced to immediately realize gains. They have the freedom to time sales to minimize overall income tax liability, for example by harvesting losses in other investments in a future year.

This is true. I'd still file tax-loss harvesting under "advanced maneuvers employed by high net worth people". At a societal level, and I understand this is a completely different point, I also question whether it's prudent to allow tax dodging this way. We already tax labor heavily and at the same time we incentivize companies to improve productivity (read: use less labor). How do we pay for society without taxing s…

Even folks who are just saving for retirement benefit, since they need not take any income on top of their normal employment income. They may be in a lower bracket when they sell.

Also the reality is that its somewhat rare for retirees to spend down their entire portfolios.

Re: No science, no startups: The innovation engine we're switching off

#327

Post by matwood »

terminalshort wrote: post #3

> In the 20th century, U.S. companies put their excess profits into corporate research labs. Basic research in the U.S. was done in at Dupont, Bell Labs, IBM, AT&T, Xerox, Kodak, GE, et al. This changed in 1982, when the Securities and Exchange Commission ruled that it was legal for companies to buy their own stock (reducing the number of shares available to the public and inflating their stock price.) Very quickly B…

Ah yes. The share buyback boogie man. If only companies couldn’t buy back shares then all that extra money would flow into research, except not. Shareholders would be demanding dividends.

Re: No science, no startups: The innovation engine we're switching off

#328

Post by hlfshell »

terminalshort wrote: post #3

> In the 20th century, U.S. companies put their excess profits into corporate research labs. Basic research in the U.S. was done in at Dupont, Bell Labs, IBM, AT&T, Xerox, Kodak, GE, et al. This changed in 1982, when the Securities and Exchange Commission ruled that it was legal for companies to buy their own stock (reducing the number of shares available to the public and inflating their stock price.) Very quickly B…

What's missing from this explanation is that the corporate tax rate was also much higher, but R&D dramatically cut down profit that would be taxed and was taxed lower. So large corporations like Bell Labs and co would basically say "do we give the government X in taxes, or do we spend X on research?". They chose research, so we got the technology that powers our world.

That, combined with stock buybacks and the general take over of Friedman-economics resulted in a far more focused short term thinking and outsourcing research as much as possible due to uncertain horizon risks.

Re: No science, no startups: The innovation engine we're switching off

#329

Post by barchar »

triceratops wrote: post #188
overrun11 wrote: post #153

Earlier quoted context omitted.

This is just nonsense. Anyone can sell the stock if they wish, there is no privilege for the high-net worth. Additionally, shareholders benefit from reduced share count because it increases their claim on future profits thereby increasing compounding.

You're mixing up points 2 and 3. Anyone can sell, but buybacks benefit mostly sellers. Borrowing against stock is mostly something for HNW people. > shareeholders benefit from reduced share count because it increases their claim on future profits So...dividends? Or when they eventually sell? What if I never want to sell?

Actually, normal people can do the borrowing thing. It's not really as necessary since you have normal employment income but you can do it and it can work. If you continually add more principle to your pile-o-stock than your monthly spending the growth will outpace your interest and you won't accumulate an unbounded amount of leverage.

At least if your broker offers decent margin rates or you sell boxes.

Well, also, your 401k and IRAs are probably superior to this strategy and can't be used as collateral as they're protected in bankruptcy. So it's not worth it until you fill those up.

Re: No science, no startups: The innovation engine we're switching off

#330

Post by bayindirh »

wombatpm wrote: post #296
bayindirh wrote: post #57

Earlier quoted context omitted.

...and there's 3M and Würth.

The story with 3M and PostIt Notes is that the idea was originally rejected my management. The inventors created a batch and distributed them to all the executive admin assistants. When they went back a second time, they had the assistants speak up otherwise there would not be any more.

I didn't bring up 3M because of the Post-it story, but because they're being a "general research" company. From open reel tapes to sticky tapes and everything in between.

Würth is also similar. They make seemingly everything in a segment (lubrication, fuel additives, cleaning, restoration, protection, etc. etc.).

Post reply on HN