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Should we normalize ephemeral businesses?

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Re: Should we normalize ephemeral businesses?

#91

Post by sircastor »

JohnFen wrote: post #69

The normalization of ephemeral businesses would be harmful in at least one respect -- customers wouldn't be able to know who they're doing business with and avoid the ones that they would prefer to avoid.

I’m not confident that is the case anyway. Modern business has a level of complexity that a given customer has to prioritize the levels of avoidance they can tolerate. You might avoid businesses that have a bad reputation of workers rights, sustainable resourcing, customer privacy, humane treatment of animals, responsible security disclosure, etc. but can you avoid all of those things if you wanted?

Re: Should we normalize ephemeral businesses?

#92

Post by pclmulqdq »

rcme wrote: post #88
pclmulqdq wrote: post #74

Earlier quoted context omitted.

I know this was intended to be sarcastic, but it is the exception that proves the rule. The big East India Companies (both the Dutch and English ones) only really lasted so long because of governmental charters that granted them valuable monopolies on trade, and they later became models for Standard Oil and other similar monopolistic businesses that really kicked off the era of the perpetual company. However, they we…

"Exception that proves the rule" requires the example to be notable specifically because the example violates the rule. In this case, the East India Company is not notable because it was long-lived.

It certainly is notable for its longevity, outliving most of today's companies. And there is a good reason for that longevity: its special arrangement with the crown.

Re: Should we normalize ephemeral businesses?

#93

Post by cperciva »

Animats wrote: post #47

There are finite-life businesses. Venture capital funds are finite-life, usually about ten years. Then they return the profits to the investors. VC firms , if successful, create new funds and have them overlap. Sometimes a VC firm just runs down, and the remaining funds eventually mature and are dissolved. Single-film production companies are finite-life investment vehicles. They put up the money to make a movie, and…

A construction consortium is a true finite-life operating company. These are companies established to build some big project, and shut down when it's finished. The first big one was Six Companies, created to build Hoover Dam.

Not just large consortia like that. At least in Canada, it's common that Foo Inc. will create Foo 1234 Main Street Inc. as a wholly-owned subsidiary to construct a single condo tower. I think it's a matter of limiting their liability (or at least keeping potential liabilities from one project from affecting other projects). A few years later once the construction is finished, the company is wound up.

Re: Should we normalize ephemeral businesses?

#95

Post by syntheweave »

retrocryptid wrote: post #76
pclmulqdq wrote: post #74

Earlier quoted context omitted.

I know this was intended to be sarcastic, but it is the exception that proves the rule. The big East India Companies (both the Dutch and English ones) only really lasted so long because of governmental charters that granted them valuable monopolies on trade, and they later became models for Standard Oil and other similar monopolistic businesses that really kicked off the era of the perpetual company. However, they we…

So if you countered with a list of companies in the 1830s that lasted only 3 months, that would be great.

You can definitely find diaries from the Gold Rushes of the 1800's where the author will write something to the effect of "me and twelve other men formed a company last night", matter-of-factly. This is among reports of various threats to life and limb that were normal to that time and place.

The companies usually failed within a few weeks because of infighting.

Re: Should we normalize ephemeral businesses?

#96

Post by retrocryptid »

munificent wrote: post #79
retrocryptid wrote: post #76

Earlier quoted context omitted.

So if you countered with a list of companies in the 1830s that lasted only 3 months, that would be great.

Surely you understand the obvious survivorship bias problem with that demand.

But if your assertion is "we used to have a lot of business in the past that failed quickly," I would hope you would offer some data to backup that assertion.

Re: Should we normalize ephemeral businesses?

#97

Post by retrocryptid »

foolswisdom wrote: post #89
rcme wrote: post #88

Earlier quoted context omitted.

"Exception that proves the rule" requires the example to be notable specifically because the example violates the rule. In this case, the East India Company is not notable because it was long-lived.

I understood the point to be that they were exceptional because they were arms of governments.

I think they were extensions of the state, not the government.

Re: Should we normalize ephemeral businesses?

#98

Post by caconym_ »

groby_b wrote: post #82
vkou wrote: post #29

Earlier quoted context omitted.

> But who wants a 70% chance at being a millionaire, when there's 0.01% chance at being a billionaire on offer? Literally anyone in the world will take the first deal.

Nope. There's an entire income/asset range where the former isn't enough to justify passing up the latter. E.g. if you already have $3M+ in the bank, the marginal utility of that extra million is starting to diminish. Now, a roll with a decent chance at $1B sounds much better. And, flip side, if you have almost no money and almost no experience, you might also take the first one - because it leaves you with a 100% ma…

If you have $3M in the bank then you are already a millionaire and the choice as framed above doesn't make sense anymore. It's not a 70% chance of being a millionaire—it's a 100% chance of being one already with a 70% chance of making another million which, as you say, looks a lot different to somebody who already has $3M than to somebody who has < $1M.

Re: Should we normalize ephemeral businesses?

#99

Post by zamnos »

haliskerbas wrote: post #60
Swizec wrote: post #32

Earlier quoted context omitted.

And yet here we all are on HN not taking that deal playing pretend that any day now our lottery tickets will turn into billions :)

I actively look for sales of car washes, laundromats, and other such businesses. Most of the time it’s more than the amount of money I’d have, and I’d have to get lucky to make the numbers work to even break even. And I’d only have one shot. I don’t know which deals you’re finding but everything I find is more than just a 70/30 risk.

I mean, who among us hasn't scrolled through Loopnet and dreamed about switching careers?

Re: Should we normalize ephemeral businesses?

#100

Post by zamnos »

ehershey wrote: post #90
mlhpdx wrote: post #39

Around 2000 I was in Stanford’s executive education program and the discussion at hand was a case study about a company that faced a disruption with a large cash reserve on hand. The question was what the leadership team should do, and the answers were all variations of “spend the money”. Except one - a lone voice allowing that the company could return the funds to investors and call it a day. Pure heresy. Return the…

Why would it?

Because this piece made the rounds recently https://www.bloomberg.com/opinion/articles/2023-05-08/oil-co...
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