Hush hush... the startups that aim to "disrupt" running on burning VC funds will definitelly improve our lives! Pinky promise! /s
No science, no startups: The innovation engine we're switching off
371–380 of 528 posts
Re: No science, no startups: The innovation engine we're switching off
#372Earlier quoted context omitted.
There is supply and demand to consider. Buybacks create a tendency toward higher share prices, but only while they continue. That demand cuts off when the buybacks stop. If the buybacks are at a discount to whatever the stock turns out to have been worth at the time, then that benefits all the shareholders. That can be a great use of money for all shareholders. But buybacks at inflated prices benefit only exiting sha…
> Buybacks create a tendency toward higher share prices, but only while they continue. Buybacks increase the share price because you have a company that is worth (for sake of argument) the same as it was worth before, except now there are fewer shares available. A fixed market cap divided by fewer shares equals a higher share price. In the limit case imagine buying back all but 1 share. Now that 1 share represents th…
The company is worth a bit less after the buyback, because it's given away some of its money, which was part of its valuation. But the effect should still be positive on the share price.
Re: No science, no startups: The innovation engine we're switching off
#373> 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…
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…
> 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.
This isn't right but it's adjacent.
Executives don't need buybacks to get whatever compensation. Their compensation is negotiated and you can write the contract to make it whatever.
However, paying dividends is a taxable event, which means shareholders don't like it. You have to pay the tax on the dividend immediately instead of when you sell the shares, even if you just use the money to buy more shares. Buybacks don't work like that unless you're the one who sells your shares in the buyback. Which you can be if you'd rather have the money immediately (and pay the tax) than de facto increase your holdings in the company.
If transferring money to shareholders as dividends forces them to realize taxable gains before they want to then they'd prefer the company keep the money and invest it in something internally instead. Buybacks give them away around that.
But that's not necessarily bad. The shareholders (the ones who sold their shares) get the money instead and then invest it in something else, ideally a different company so that the existing large company doesn't get even bigger.
Also, when the company keeps the money, it doesn't have to use it for R&D at all. Companies often use it to acquire other companies, which is the worst.
You don't really want a tax incentive to make big companies bigger.
Re: No science, no startups: The innovation engine we're switching off
#374Earlier quoted context omitted.
Nothing against research universities as good stuff does occur there, but it just seems like it was such a a huge loss seeing those corporate labs disappear. I think it helps to have scientists and engineers closer to the problem and who don't have to spend a huge amount of their time writing grants and training grad students.
Yeah if you go check almost any major scientific breakthrough of the past century it usually starts with "some guy was working in a corporate lab with an unlimited budget". We're stagnating as a species a lot more, but at least the shareholders got a payout for their hard work of doing literally nothing. Rent seeking at its worst.
Umm, no. Maybe they have better PR departments than universities but this is clearly nonsense.
Re: No science, no startups: The innovation engine we're switching off
#375There's something odd in this argument. If you come at it from a Canadian perspective Canada seriously spent on neural network computer science when almost no one else did (many in AI considered the entire thing discredited and impossible), now the (financial) gains from that are almost entirely in a foreign country. The US science establishment was all about buying and utilizing Russian rocket engines until he-that-…
That's purely an issue of living next to the USA and Canada's system not rewarding risktakers/startups like the USA does. If you have the next billion dollar idea would you rather get rich in Canada or the USA?
I'd rather get rich in Canada, but I will still find it much easier to fund my pursuit of a billion dollar idea in the USA.
Re: No science, no startups: The innovation engine we're switching off
#376Just seems a very idealistic and almost simplistic view of how a thing should work best because it feels like it should work but the reality is academia gets completely outpaced by private companies. SpaceX, GPT4, Ozempic, list goes on.
> academia gets completely outpaced by private companies
Outpaced? What does that even mean? The whole point is they have different roles and goals. And you need them all, if you cut basic research all the downstream stuff will suffer.
Re: No science, no startups: The innovation engine we're switching off
#377So is gender research or feminist queer dance theory studies a part of basic or applied science?
> feminist queer dance theory studies
I dunno, but how many % of research in terms of money and effort do you think is spent on that? 0,0001 % ?
Re: No science, no startups: The innovation engine we're switching off
#378> 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…
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…
The whole point of owning shares is to share in a company’s profits. In simple terms, you make money through dividends or buybacks. Without that, there’s really no reason to own the stock. Sure, prices go up and down, and you can try to profit from that, but if a company never plans to return money to shareholders, there’s nothing real behind the price. Eventually you’d just be holding on until the company fades away or goes bankrupt.
Buybacks are just another way of giving profits back to shareholders—an alternative to dividends with different tax implications. Their purpose isn't to "allow companies to reward executives directly", they are just an alternative way for shareholders to share in the profits.
A company could tie executives compensation to the amount of dividend if it wanted. That might be a good idea.
Re: No science, no startups: The innovation engine we're switching off
#379Earlier quoted context omitted.
Nothing against research universities as good stuff does occur there, but it just seems like it was such a a huge loss seeing those corporate labs disappear. I think it helps to have scientists and engineers closer to the problem and who don't have to spend a huge amount of their time writing grants and training grad students.
> it was such a a huge loss seeing those corporate labs disappear. A loss for whom? Society? Of course, and that's exactly why they don't happen anymore -- because while they were a boon for society they were a terrible bet for the company. And when a company has a choice between doing good for their bottom line or doing good for society, 100% of the time they choose their bottom line. I mean, look at the legacy of X…
This implies Xerox got no return on their research, and simply let Apple take their research, which isn't true. Rather, it was part of the investment deal they made with Apple [1]:
> Apple was already one of the hottest tech firms in the country. Everyone in the Valley wanted a piece of it. So Jobs proposed a deal: he would allow Xerox to buy a hundred thousand shares of his company for a million dollars—its highly anticipated I.P.O. was just a year away—if PARC would “open its kimono.”
Xerox clearly undervalued the research they were producing, but it wasn't like they just gave it away entirely. Per [2] the valuation of those shares in 2018 would be $1.2 billion had they not sold them - undervalued in hindsight, but not nothing.
Xerox's lack of capitalisation was a problem of their own making, not something inherent about investing in basic research.
[1]: https://www.newyorker.com/magazine/2011/05/16/creation-myth
[2]: https://researchnarrative.com/thinkerry/the-company-that-cou...
Re: No science, no startups: The innovation engine we're switching off
#380So is gender research or feminist queer dance theory studies a part of basic or applied science?
> So is gender research or feminist queer dance theory studies a part of basic or applied science?
People's ideas about how humans should live together can be beneficial for the wealth and well-being of whole societies and its members. Was Rousseau part of basic or applied science?
We can wonder about how useful certain efforts are, of course, especially in all their extent; but I don't know how wise it is to dismiss things _wholesale_, just because their application is not immediately apparent and the rejection fits into the political current. The unnecessary snark is just sad to see here.