It also suspicously starts to look like planned economics, once the mono-duo-poly stage is reached.
Rare goods, long queues, no choice, bad products and the leadership is off, chasing its own tail in some basebal metric detached from the world. It even features market-libertarians having to defend practices like shredding perfectly fine goods in ware houses.
The moment the ussr was gone, the race horse finally could binge and become something very similar to the ussr economy, but instead of obsessing on tanks & steel, it focused on excel sheet virtual wealth wankery, disguising the slide back into the gilded age feudalism.
I mean if you look at the astronomical levels of defense spending the US greatly resembles the USSR even in terms of the "tanks & steel". Broadly this kind of waste and stratification is characteristic of just about every fading empire.
Yet US defense spending vs GDP is nearly the lowest it has ever been in the last fifty years. If defense spending v GDP is a sign of a falling empire, we fell in 1960.
Plus seriously, if you think spending 4% of GDP will cause a country or "empire" to collapse you need to read some history books.
> What are we getting via VC-led industrial policy?
Oh, its much worse than that, it exposes the hyporacy of hustle culture, and entrepreneur porn entirely if you're paying close enough attention with things FTX.
The covertness of ivy leagues parents leaning on the VC heavy hitters (Sequoia et al) and making this Sam and his girlfriend to be a super genius' while operating like 2-bit clowns with almost no oversight or due diligence and bribing politicians to get favourable legislation in place for them to corner the market.
I wish it were just crumby ad jobs, but it goes way deeper.
There are some compilations on TikTok of people showing China's public infrastructure to America's (including the ~slums many neighborhoods have become)....not a good look. If the general public had a clue any of this was going on I think they'd be livid.
What is the point of power if not to abuse it. Start a business, it's new and good and you penetrate the market, you grow and grow and... are you willing to let the next better product put you out of business? No of course not, you will throw all the weight you have to squash the competition disregarding fair play and ethics - that's why you grabbed that power, so that you can use it!
The USSR collapsed and 3 decades have past. Except Venezuela there is no menace of worker revolution at the horizon anywhere in the world. There is absolute zero menace to corrupt capitalist governments who run a two-party turnist democracy.
> It also suspicously starts to look like planned economics
EU certainly is, or we have all signs of it: Most funding for French startups come from the BPI, so the BPI drives everyone to the AI Blockchain TechHR and whatsnot, while…
…while, as an example, and I underline it’s just one example of broader customs, French people regularly take hostage managers in factories for 2 to 10 days, until they sign off an agreement, provided limited supplies of water and food. None of those agreements was cancelled for duress. So we put all public funding into having the next Apple, while not letting actual customer demand drive the economy, and still preventing middle class people from actually going big.
I’m already rich so I try to remain emotionally detached, but when the state drives what should be built (Macron putting 500m into AI, and a billion into Intel chips of the previous-previous generation), it really is a state-driven economy.
Well, a couple of things: France =|= EU, which should be obvious. Also, you have to put 500 million in context: Liquid Death (canned H2O) has a valuation of 700 million USD, MS dumped 10 billion on OpenAI and Germany burned 500 million on a road toll system that cannot be built because the whole concept is illegal. Someone else already brought up Adam Newman. And now put that in relation to the budget of an entire nation state. Peanuts, actually.
Regarding those Intel chips: Which chips exactly caused the chip crisis? High end latest gen ones or older tech? And now you can guess on which chips the vast, vast majority of national defence hardware runs. That idea actually isn't to bad.
> I’m already rich so I try to remain emotionally detached, but when the state drives what should be built
This is simply ahistorical, every developed country got there with the help of the state.
Did the interstate highway system get built by venture capital? Did the power grid?
Western governments are no longer capable of these kind of major projects.
London is running out of water.
United Kingdom has huge canals connecting manchester, London, and Birmingham. They were dug without industrial machinery. With shovels.
When I propose to English people that there is plenty of water in scotland and maybe they should expand canals network and repurpose it to redistribute water, they think its madness. Some kind of unachievable, socialist plan.
China has built a canal network to redistrubute water. That why they will be earing our lunch - actually its their own lunch. We arent making lunch, we are wondering why market didn’t bring us lunch.
If you are rich you could have done your part. It is really easy. All you have to do is read some books and then start a fintech (expected budget: 20 million USD, less if you can find a cooperating banking partner) and then all the things you complain about will disappear and you will even earn money in the process. I am dead serious.
hah. okay, in the US, in the "good" old days only very poorly informed or suckers would pay MSRP (manufacturer’s suggested retail price). you would normally have to go to multiple dealerships, figure out what you want vs options that were actually on the car, haggle a lot and usually you would get a [way] better price than the MSRP. Dealers had inventory and cars to sell, so selling a car was better than not selling it.
in the brave new world (where we had a pandemic + supply chain shock + shortages of all kinds) you no longer have an option. Dealers do not have the car or if they do it goes away instantly. You have zero leverage and they will 1/ get whatever price they want for it (usually above MSRP) and 2/ will wait and be happy you managed to work something out.
I'm going to buy a used car you say? Well, you'd be shocked to learn how much used cars are going for (and there used to be a time during the pandemic, not too long ago where, for certain brands you could actually sell your car for more than you bought it new - which to me it's crazy)
Hot take: these are the kind of issues you'd expect if there is a significant amount of capital accumulation. There's always going to be dumb money doing things that make the news. How many failed railroads were made during the industrial revolution? How much money was squandered on tulip bulbs?
Intelligent investments take more time to culminate than unintelligent ones take to fail, so things would look pretty bad in any savings rich economy.
I wonder if this has any measurable effect of reducing wealth inequality. Do the rich eventually just give their money away via stupid investments? It flows from the ignorant VC to this joker to a bunch of overpaid consultants and marketing execs to the poor schmucks who do something like actual labor?
It's galling to have it work so inefficiently, and much of it just transfers from one rich yahoo to another. But maybe there's a ray of hope somewhere under all that BS?
Yes, they lose their money and make new smart people rich. 80% of millionaires are fist generation.
Wealth tends to collapse over generations in an ultra wealthy family just because the kids aren’t passionate about whatever made the original money and they squander it on half-baked businesses or “bad investments”.
That "80% of millionaires are first generation" stat is a bit misleading - most of those millionaires are older folk who have reached that status via retirement savings and the explosion in real estate. Those people are not the people being discussed here.
Americans that became millionnaires by doing nothing other than chucking a bit of their paycheck into a 401K each month, are likely to have spent their working lives in a period when financial markets were growing as more and more Americans joined the labour force.
The growth of your portfolio then wasn't entirely dependent on earnings and growth, like it is now. Portfolio values grew by a lot simply because more and more people were being added to pension plan contributions each month. Things were so good that pension plans used to be "defined benefit"-oriented, meaning a certain return % was guaranteed.
The new generation of workers on the other hand get "Defined contribution" where the only thing guaranteed is how much of your paycheck they can take.
There was an LA Times article about this that was discussed here:
It's also questionable how much of that will be passed on at least for Americans. My dad and step-mother are in their mid to late 60s and have ~1 million net worth but a lot of that is wrapped up in their house and retirement accounts, which will probably be taken by the state when they require care in their old age. Nursing home care will eat through all of that without blinking. There's a huge difference between 'retired with a 500k paid off house and about 1 million in net worth' and a 900 million net worth even though both are 'millionaires'.
There's more to it than "irrational exuberance," IMO.
Take Google. Their one, core cash cow is an oil strike. If you strip away all the unrelated and unesesarry.... It's an 80% profit business that represents most of www's monetisation.
Google already have all the market share. It takes >$10bn to meaningfully affect their bottom line and share price. Few of Google's many investments have an obvious chance of achieving this.
Still... The market (and Google's board) consistently prefer to retain (or avoid realising) earnings.
The fact that Google's growth requires almost no capital also generates an inward capital flow.
Google's culture was a good fit for this. First they let a thousand flowers bloom. Then the cultivated university-like subcultures. They alway knew how to spend big on blue skies.
FB is a little more awkward. They know where the bread is buttered. They invested more tightly around the core money maker, but they get to the same place as Google. Way more capital, credit and discretionary spending than they possibly need. Nothing more to invest in.
Well... All this is resources that aren't spent on manufacturing, tooling, energy, construction, etc.
Take chip fabrication, or computer hardware broadly... It's capital intensive. Factories change slow. Markets change fast. Prices continuously fall. It's a nightmare, comparatively.
I say "capital" but the real shortage is risk. Google/FB/etc are "hoarding" all the risk allowance. Where they can invest in highly speculative projects because the money is just there, analogue businesses are still backed by banks, bonds, specialised investment firms and tightly controlled payback schedules... Not an easy world to innovate in.
The modern system now reaches bedrock very quickly. When we can dig no longer we start depleting all our resources trying to dig anyway.
Reality is that were not getting more out of Google no matter how much resources they draw. That's what capital is to firm, resources. Over resources X and under resourced Y.
It looks like the article could have been divided into two separate theses. The Adam Neumann problem is general unproductive investment of savings.
The Google/Meta problem is different: the challenge of investing in the context of an individual corporate identity and its configuration of human and intellectual capital. Amazon would be a nice contrast to the companies mentioned here. It's a good marriage of the more ephemeral and short term tech capital and traditional physical capital that can have bigger and more stable long term yields. Apparently it sucks to work in most orgs there :/.
At least the tulip mania was purely derivatives. So loss to real economy was probably rather minor. The people could have gambled that money in other ways and it just moved around.
I don't think they wasted huge amount of any resources back then. Just time of people who had too much of it anyway.
I also had this thought, but perhaps in a slightly different angle: All this spare capital to splash on vague nonsense, looks like a symptom of a worsening rich poor divide. It's a concentration of wealth in a segment that is too small to spend it wisely.
Plus people are basically spoiled brats when it comes to this question.
As if the medieval peasant had it better. The average person lives the highest standard of living in the history of humanity with a life so easy that the biggest problem is being able to afford the Apple Vision Pro or not.
A metaphoric society of complainers about how they only got a BMW 5 series for their sweet 16 from daddy when their friend got a 7 series!
Personally, I am thankful for capital accumulation and that I have been able to live the amazing life I have instead of picking potatoes on a farm all day and then eat potatoes for breakfast,lunch, and dinner. Get married to your cousin and life is basically over at 30. That could have been anyone reading this but you basically won the life lottery instead.
Why Adam Neumann still gets money for a startup that cannot even fully define what he is trying to build after running we work to the ground is exactly why most people in this country are angry at the current state of things.
Normal people have consequences for the smallest of the mistakes they make in their lives. You can go to jail for failing to pay a parking ticket and have your life ruined if a medical bill goes to collections because your insurance wrongfully denied your claim.
Meanwhile corporations and connected individuals see little to no consequences of their direct actions. Ceos and founders mess up, and workers face the consequences. Real estate companies can literally walk away from their obligations and surrender buildings to lenders, and can still operate with no consequences. Banks can shut down and the executives can keep their millions in bonuses, while you who put your money in, should’ve known better about FDIC insurance limits.
Whenever I want to get really angry, I convert the funding the latest Uber But For Pets On The Blockchain Using LLMs into "R01s" - the standard $1.250 million dollar NIH grants that are considered career making in the biological sciences.
You could change the world with the amount of money he's been given to...do whatever it is he can't even articulate.
Yeah, but you can change the world, and it doesn't necessarily mean you'll make a lot of money, and that's all anyone cares about, so what are you gonna do?
I think one of the problems is there are ludicrous amounts of money to be made changing the world, enough to make whatever's happening for 99% of most hype-fueld ventures today look like drops in an ocean. So if what I'm saying is to be believed then why doesn't the market optimize for it? Like, if there's so much money to make why doesn't it happen?
I think the answer is in two parts. One, there is a political environment that is very much interested in preserving itself regardless of whatever so-called benefits could come from actually changing the world, and two the market isn't really some kind of god like oracle that always does the "right" thing.
I'll give you an example to better explain what I mean to say.
The Roman Empire had a lot of good things going for it. They had many of the necessary ingredients for an Industrial Revolution to take place more than a thousand years earlier. So why didn't it? Clearly there was a lot of money to be made in hindsight, but in their political environment it was never going to happen.
Rome, as impressive as it was, had a small political class of movers and shakers who owned most of the wealth, and to those people if given more money they'd just buy more farmland. That's it. Literally, to them, the Roman political elite, the only way to invest money was buy farms.
I think in today's day and age we're in a similar conundrum. Obviously it's more nuanced and sophisticated than where the Romans were at, but most of the people who have power today can't understand or imagine the benefit of improving the world. The market isn't magically selecting for those things because they are a large part of the market.
Humans are the ones who own and deploy capital. It's ordinary people's savings and pensions. But people like to invent boogymen so that they don't have to take responsibility for their action, so they blame wall street and conveniently forget that its their own money that wall street is managing.
Why does there have to be anyone held responsible at all? Couldn’t it be possible that given the present day’s circumstances everybody just does the best they can, and, nonetheless, it leads to regrettable results?
My example of Rome earlier want meant to point to their political elite as a Boogeyman. I meant it more like despite their best efforts an Industrial Revolution was virtually impossible in that environment.
Funny enough having slaves and oligarchy was exactly the kind of thing that held Rome back. I mean only to imply that in todays day and age, we have our version of that same situation, and similarly there is untold prosperity forever waiting to happen until the status quo changes.
Note that by "capital" meant material, not financial (although the latter reflects the former). Corporations are growing in power at a rate faster than people are. B2B grows faster than B2C.
Even then, private pension funds are a scourge indeed. State-managed PAYGO systems are far less destructive.
Beside, the distribution of economic power is heavily lopsided. Most people have close to none.
Those who have the brunt of it are setting up the system for their own benefit. Under the guise of FreeMarket™ we end up with an economy planned by the wealthy so that they can grow their fortune.
*can manage on its own well. The market manages - explicitly or through regulatory capture and toadies - a hell of a lot of things that the state probably should, like the Texas power grid. Markets are rarely efficient except in the very short term and very small scale.
> - Health => the sector should be working on planning its own obsolescence, not on growing.
That's what it was before government intervention, at least in UK and US. Worker's organisations had employed their own doctors and managed very good, driving medical professionals wages down. Doctors associations asked governments to intervene, license their profession and used this licensing to punish doctors who would work for such organisations.
And now people see broken systems and think that even more intervention would improve things.
Technology itself has an emergent will that is independent of humans who create and operate it. A global technological system is not subject to rational human control.
Please see the book Technological Slavery by Dr. David Skrbina and the books of Jacques Ellul on this matter.
No, Kaczynski compiled his own writings. He also wrote a second book, Anti-Tech Revolution. In Kacynski's latest edition of Technological Slavery Skrbina's introduction doesn't even appear. It was a shitty introduction anyway.
That sounds like an argument that someone with an unusual amount of wealth and power might make to downplay the unusual amount of responsibility that wealth and power confers on them.
In today's economy power and wealth are not even close to evenly distributed.
Claiming that responsibility should be evenly distributed is therefore a highly disingenuous argument.
Ps I just want to be clear that I don’t use the word “political” in its normal, toxic and conspiratorial way. I just meant to say the present combination of policies and their incentives for the various stakeholders.
Indeed. The investors and boards care not about total amount od wealth a venture could generate, but about the amount they can capture. A $100B benefit to the world, of which the people involved can capture only $1K is useless, compared to $10M world benefit of which they can capture $9M (and the preferred one is the one which earns them $100M while giving the world negative $1B).
With the amount of money I spent on my car (which is not a lot compared to what most people spend) I could have saved several people by donating to givewell, at a comparatively trivial inconvinience of having to bicycle/take the bus to work.
But I didn't, because the money is mine to do with as I please. Just like the billionairs money is theirs to do with as they please.
Technically correct, but can be applied to a lot of things that were technically correct:
- Land was the Lord's to do with as they pleased
- Slaves were the owner's to do with as they pleased
etc.. if the wealth is gathered through exploitation, I think it is appropriate to criticize how that wealth is being used. Hell, it's appropriate to just criticize the wealth, I think.
But these things are shades of gray and rarely as clear-cut as slavery. For example, let's say you're the only job in XYZ town. People aren't forced to work there, but they kinda gotta. Things are not so simple in most cases.
>...he is trying to build after running we work to the ground...
I do not disagree with your thesis, but Adam Neumann got paid close to $1 billion to leave WeWork. Sounds like he ran it in the most personally profitable way possible. Although, still well short of his trillionaire goal.
The overarching point is that the way market capitalism is structured today increasingly incentivizes these kinds of decisions.
That is not to say that Softbank completely dropped the ball on monitoring and oversight. Under no circumstances should Neumann have been allowed to self-deal by purchasing buildings with WeWork share collateral and leasing them back to the company.
I think it's because he seems like that God,-like man who is going to lead you to the promised land! He's like a TV preacher, he's got that charisma and you went to follow him! And give him a billion dollars.
To paraphrase Matt Levine: the fact that you lost a billion dollars means someone else trusted you with a billion dollars, and that’s reason enough for financiers to trust you with yet another billion, thinking surely you’ll get it right this time.
Yup, you see this pattern elsewhere whenever it comes to credentials.
Oh they went to __ school, they must be good.
Oh they worked at __ co, they must be good.
Oh they worked under __ [team/manager], they must be good.
Oh they launched a [fund/startup] before, they must be good.
Once you get the foot in the door once, it's easier to get your foot in the next 10 doors.
This is true, but it's a two-edged sword. If you don't continually open new doors it becomes, "Oh, they haven't done anything new in N years, they must be bad."
That would perfectly explain why such people pursue short-term gains over everything else and once things start to look bad, take the golden parachute and start another initiative to repeat all of it again while being lauded as "serial entrepreneur".
Reminds me of the story about not firing the programmer who just caused a million dollar bug in production. Why would I fire him? I just spent a million dollars training him.
You really do learn a lot with these big mistakes though. I mean you can read all the books you want, until you’ve actually lived through a major outage on a high traffic system I think there’s certain things that are just really hard to understand.
You can also distinguish Chinese Catholics from Caucasian ones genetically, doesn't make a religion a genetic trait.
This casual form of anti-semitism displayed here, is somewhat bothering me.
Edit: Out of curiosity, since you seem very knowledgable, what's the exact gene sequence identified as being "Jewish" between those groups you mentioned? Honestly, I really thought actual genetics would be the end of that stupid eugenics crap, and not be used to sell the same shitty ideas in new disguise.
Yeah and I never said the religion was a genetic trait. There are ethnic Jews who don't practice the Jewish religion, and there are practicing Jews who aren't part of the "classical" Jewish ethnic groups (Ashkenazi, Sephardic, and so on). "Who is a Jew" is a big and complicated enough question that it has its own Wikipedia article. "Jewish" does not just mean religion. I don't see how knowing these basic things has anything to do with "antisemitism".
> what's the exact gene sequence identified as being "Jewish" between those groups you mentioned?
There's no exact gene that is dispositive. Human ethnic groups aren't genetically divergent enough for that. But there are alleles that are more or less common across groups.
You might have some SNP that's 70% prevalent in group A, and 40% prevalent in group B, and 10% prevalent in group C. That SNP alone isn't enough to tell you what group someone belongs to. But there are millions of SNPs, each of which has its own frequency distribution. There is structure within all that variation. When you aggregate that information you get a pretty strong signal, enough to reliably cluster the genotypes, and those clusters correspond with identifiable ethnic groups. You can estimate how much Jewish ancestry someone has, or indeed how much ancestry from any ethnic group that we have enough data for.
So, there is no "Jewish gene" (or "Chinese gene" or "Scottish gene"), but ethnic Jews are nevertheless genetically identifiable, from having higher or lower probabilities of having many different genetic variants. And this is not some academic matter, it is very important for human health. There are a few genetic disorders that, while not exclusively found in Jews, are unusually common among them. For example, Tay-Sachs disease:
For decades now, there have been Tay-Sachs genetic screening programmes among Jewish communities. This reduces the probability of two recessive carriers marrying one another. It has been very successful:
>Screening for Tay–Sachs carriers was one of the first great successes of the emerging field of genetic counseling and diagnosis. Proactive testing has been quite effective in eliminating Tay–Sachs occurrence among Ashkenazi Jews, both in Israel and in the diaspora.[13] In 2000, Michael Kaback reported that in the United States and Canada, the incidence of TSD in the Jewish population had declined by more than 90% since the advent of genetic screening.[14] On January 18, 2005, the Israeli English language daily Haaretz reported that as a "Jewish disease" Tay–Sachs had almost been eradicated. Of the 10 babies born with Tay–Sachs in North America in 2003, none had been born to Jewish families. In Israel, only one child was born with Tay–Sachs in 2003, and preliminary results from early 2005 indicated that none were born with the disease in 2004.[15]
Would you describe this as "stupid eugenics crap"?
Oh man thank you for that. Just the other day I was thinking about this stuff, I mean you can literally make no mistakes for years, but it only takes one weak moment and your life can be ruined. For example I am currently unemployed and teaching myself programming after a few bad years I turned my life around, but last year I had a weak moment and I bought some stuff that I couldn't really afford and also don't really needed (it was a Nintendo Switch, so I could relax a little after learning all day), it was something around 1000 Euro. Was it my fault that I bought it?, of course, but man, resisting is so hard when you can buy this stuff everywhere, even when you're sitting on the toilet you can buy it, I mean that's crazy. Like I said, it only takes one weak moment.
> Banks can shut down and the executives can keep their millions in bonuses, while you who put your money in, should’ve known better about FDIC insurance limits.
Man you just made this up. They do lose their equity and nobody lost their bank accounts.
At least, we can be confident that no one put anything like 120B into those stablecoins. Sadly, the real underlying amount is probably greater than 10% and even THAT'S a very depressing number
They absolutely don't believe what they're saying, they know it's political kayfabe. That was one of the findings during the deposition phase of the Dominion Voting Systems legal case.
Okay, maybe their bullshit doesn’t make sense even to them, but I believe fully in my ideology which you’d deem the most backwards and right-wing of them all: Islam. Sorry, my mistake to generalize my experience to American conservatives. Still I’d say a great percentage of them believe in what they are saying, maybe not Fox but their audience.
What does that have to do with anything? This was a court case brought on by repeated lying from Fox News anchors about the validity of election machines and thereby the 2020 election itself. Islam is nowhere is the picture.
Fox News doesn't care about other flavours of right-wing politics unless it directly helps their preferred candidates get elected.
I'm no Alphabet fan, but their sprinkling through this article seems out of place. There are so many good examples (like Uber), that picking on Google and Microsoft, or even Facebook seems unnecessary.
The bottom line us that these 3 businesses make money. Billions per quarter. It's coming in so fast they quite literally dont know what to do with it all.
The market is fine with billions lost on the metaverse because its a drop in the bucket. An EU fine doesn't move the needle.
Yes, Google and Facebook are ad companies, and yes they'd like to be more diverse than that, but the fact remains that ads on Google and Facebook work. People keep spending money there because it works. There's real value in efficient advertising and Google and Facebook have provided that real value.
MS already has a diverse business, from OS to Office, from Azure to Xbox, from Teams to Flight Simulator. Bing can afford to be a long-play and seems to be gaining traction.
I also cannot help but think that if this article was written in 2006 Amazon would have been the (legitimate) poster child for the point he's making. Billions spent, never profitable. But look at them now.
Of course there are failures. Of course most of the money is wasted [1]. This is not a secret , its not even a bug, its baked into the VC model. It's been obvious since forever.
The VC model is but one kind of business model, designed for a specific kind of business. And as a model it is applied to a vanishingly small number of actual businesses overall.
[1] money is not "wasted" in the sense that water can be wasted by leaving a tap on. It is spent. Salaries, infrastructure, rent, cars, food, whatever - its all "trickling down" to people or actual profitable companies. Selling shovels, and jeans, is more profitable than digging for gold, and less risky, but that one gold digger who strikes it rich keeps hope up for all the others.
It’s still very clearly wasted though? That money could have gone to more profitable and genuinely innovative businesses that benefit society, instead of startups that were meant to tank from the very beginning. And money isn’t the only resource being wasted here but time. There are also plenty of companies that fail so hard that employees, to whom you believe the wealth trickles down to, are left with nothing to show for what they have supposedly done there, and could even cost them reputation-wise in their careers. This arrangement is hardly anything that the working class should be thankful for.
We all know 90% of VC money will eventually generate no return. That's precisely the model. The problem us that it's hard to predict which 10% will win.
The alternative to VC funding is either traditional bank finance, or boot-strapping. Incidentally neither is terribly more effective at picking winner's- its commonly reported (although I don't know how accurate) that 90% of businesses will fail within 5 years. It kinda makes sense, most ideas kinda suck.
Selling equity to raise money is the worst kind of financing. Most businesses are better off getting bank loans, or bootstrapping. Learning how yo make do, how to build profit on a shoestring, how to be efficient is a good thing.
VC money is useful for a different kind of business. One which needs significant capital, but has potential for massive returns.
I find it hard to feel sympathy for employees who go to work for a startup, get significant salaries, know the risks, and squander their salaries well enough to have nothing to show from it. In an era of a pitiful minimum wage I don't think they're the "working class".
While individual time is certainly wasted either thus model (and indeed all models) societal time is not. By trying lots of things simultaneously we save time overall.
It has ever been thus. When airplanes were invented everyone and their friend started a plane company. Innovation exploded. There was consolidation and now we have a handful. There are startups in the aviation space, but nibbling at the fringes, not aiming to be "the Boeing killer".
Cars are interesting because there's a disruptive transition coming (well, 2 actually). This opens the door to a Tesla (Not to mention a bunch of other EV startups that failed.) In the long run I expect Tesla to either get acquired into an existing manufacturer, die, or become a niche brand. The bulk of EVs will be made by VW , Toyota,GM,Ford etc .
This doesn't mean Tesla money is wasted. It showed the makers there's a market for EVs. That changes the world.
> The bottom line us that these 3 businesses make money. Billions per quarter. It's coming in so fast they quite literally dont know what to do with it all.
Revenue might be going up, but are they actually providing additional value to users? Or just gutting them more thoroughly?
I look at the amount of utility that Google's products provided back in 2013, and I look at how much they provide now. Can't say the improvement has been anywhere close to stock price
Are you measuring utility to people who were searching or watching YouTube in 2013 and 2023?
Or measuring the utility to advertisers on Google’s platforms in 2023 and projected into 2033, many of whom weren’t using Google ads in 2013.
Google didn’t give me individually a ton more utility (arguably less in search), but I think it did give their actual customers (advertisers) a ton more utility in aggregate.
>> look at the amount of utility that Google's products provided back in 2013, and I look at how much they provide now. Can't say the improvement has been anywhere close to stock price
The stock price I'd not a reflection of utility. Its a reflection of future profit.
As a user, you are not Google's customer. Their customer is the advertiser, and the utility to them is just fine. Advertising on Google and Facebook delivers measurable returns, and if that measure is positive then people continue to do it.
Last I checked their figures (just now) I don't think Uber is a great example. Never yet made a profit, living off capital and their VC gamblers.
Agree they did have billions of income. But it cost them MORE billions to get there. They can't (yet, if ever) be considered a successful business - at best they are potentially successful.
I think you misunderstood. He is saying that Uber is a better example of such a failure, not that it is a better business.
Alphabet, Meta and MS at least have vast profits in the present, not just potential, so they are indeed "better" businesses than Uber, as you say, and thus bad examples to make this point.
When I wrote in October that Mark Zuckerberg was going to kill his company, the street responded in kind, savaging Meta’s stock for burning cash building a metaverse that was never going to exist
and now almost at $300 again. nuts. Yeah, so many people in 2022 got this wrong. I don't think Zuck was at much risk of killing his company. Meta stock keeps going up, and is one of the biggest performers on the Nasdaq by far, almost back to its old highs.
The metaverse may have been a dud and the company was fined by the EU, but so what. Instagram and Facebook are more dominant than ever, and it's an advertising juggernaut. CPMs and CPC rates at record highs due to record advertising spending. Go ahead and try to find a company that is at the perfect intersection of profits, size, market dominance, and moat like Meta...maybe Microsoft, Alphabet. Not many.
It was not just the job cuts...many companies have/had big layoffs , like during the early 2000s or 2008-2010, and did not see anywhere close to such a huge recovery that Meta saw.
The markets seemed to ignore the $410 million fine that Meta received for GDPR violations, along with the fact that European users will now have to deliberately opt-in to sharing their data
large occasional fines by the EU are bascially seen as a cost of doing business. see Alapbet, which has been fined many times.
Meta's CPC/CPM are actually down around 20% YOY according to the last 2 quarters earnings. They're just showing way more ads and growing user base a bit to make up for it.
I wish I had something more productive to add, but I want to say is that I love this article. It is absolutely the state of things... but I'm unsure what the solution (or solutions) are.
We know what the solutions are. Because they were implemented in the 1930s, and removed in the 1980s and 1990s as "deregulation".
- The US needs Glass-Stegall back. That's the requirement that banks and brokerages must be completely separate companies. The argument for repealing Glass-Stegall was that banks were now so smart that they didn't need such severe restrictions to prevent collapse from bad investment decisions. The banks were wrong.
- Companies should only be allowed one class of voting stock. The New York Stock Exchange used to require that, back when the NYSE had real power. Allowing multiple classes of voting stock is what gives us President for Life CEOs such as Google and Facebook have.
- No stock buybacks. Illegal in the US from the 1930s to 1981. The US recently banned stock buybacks for 12 months for companies which received coronavirus funding.[1] But that was a one time thing. During periods of low interest rates, companies tended to buy back their own stock with borrowed money to prop up the stock price. This mostly benefits executives with stock options.
- Limits on complexity of corporate organization. This was a thing for utility companies until a decade or so ago. They were limited to a tree depth of 3 in ownership. This was to make regulation easier and reduce the risk of bankruptcy cascades. See "Enron".
- Utility deregulation. Regulated utilities used to be standard. They got a monopoly in exchange for regulation. Since they were allowed a fixed rate of return on investment for rate-setting purposes, they were not hugely profitable but were very stable. The argument in the 1980s for deregulation is that utilities tended to overspend on infrastructure, building about 10% more stuff than they really needed. With deregulation, that money could go to stockholders. When Pacific Gas and Electric was deregulated, the company went bankrupt in only a few years, leaving the stockholders with nothing. And consumer prices went up in deregulated states vs regulated ones.[2]
- Tax law favors debt, where interest is deductible as a business expense, over dividends, which are not deductible. This encourages taking on too much debt.
- US bankruptcy law allows "secured creditors" too much security. Bankruptcy is too easy on lenders and too hard on accidental creditors.
What we need is a return to conservative financial principles.
While some of these solutions are good, I don't think any of them will make it through congress until well after Citizens United is appealed. TBH, trying to fix any problem of consequence in the US requires a functional Supreme Court, which we don't have.
In this you are likely correct. It's really anything that is allowing unlimited money (goods or services) to flow into campaigns from industries or unknown origins. It's also the court which is limiting voting rights. Those are two good starts which will help shift power back to the electorate.
I mean, it's bad that in our country we have to consider boycotting companies that donate to or support politicians/legislation which work to undermine democracy and such. This is plainly indicative of a broken system, where participating at the ballot box is insufficient to overcome corporate interests.
It seems nobody cares about that sort of thing anymore. Voters vote “my guy” / “my tribe” and ignore the rest. And as long as the GOP can be blackmailed by the Trump faction, it won’t move a whole lot.
Approval voting is simpler to understand, simpler to implement, and leaves people more satisfied on the whole. I think it's a better and more achievable goal than ranked-choice systems as a replacement for our utterly broken FPTP system.
Those are all really good points. Each one has a real impact and has influenced the market.
It does not serve society to have competition in negative sum games. These suggested changes would close off various silly tricks, and improve meaningful competition.
>Tax law favors debt, where interest is deductible as a business expense, over dividends
Taxation is another reason why buybacks are preferred over dividends: dividends are taxed as ordinary income but selling stock held for more than a year is taxed at the long term capital gains rate.
The IRA added a 1% tax to buybacks, but to equalize it fully either you'd need to reduce tax on dividends, extend the LTCG horizon past one year, or just eliminate the lower LTCG rate.
More than 60 days out of the 121 days centered on the ex-dividend date.
Your point remains/is even stronger: In the overwhelming majority of cases, dividends and long-term gains have been taxed similarly for the last 20 years.
Banning buybacks without banning dividends is pure stupidity. The only reason the former is preferred is because of the tax effect on the shareholders. If you ban buybacks it will just go back to dividends with the exact same outcome (companies giving money to shareholders).
Buybacks give money to shareholders who sell. Dividends give money to shareholders who don't sell. That's a big difference.
Furthermore, the primary reason stock is worth what it is, originates from actual or potential dividends (if they stopped reinvesting or hoarding) companies (could) pay.
That money has to go somewhere. Either it's hoarded or reinvested in infrastructure or spent frivolously on sweetheart contracts to friends of corporate management. But, crucially, without dividends, none of that can be recaptured by current shareholders. In theory, if shareholders of a company wanted an actual, not virtual, dividend, a stable material return on their investment, currently they could force a change in management that would pay out a dividend. In what you propose, that's not an option.
The value of a stock without dividends is almost purely speculative: who's going to be holding the stock when the company's assets are liquidated and returned (minus liabilities) to the stockholders, and what those net assets will amount to when the company is voluntarily or involuntarily shut down—neither of which is a particularly good sign for the state of the company when that happens.
Doing away with dividends seems like it would lead to more instability: all the craziness of VC-style investing, but for public companies that are no longer early-stage growth. How could you have stable businesses or an economy when stockholders are driven, not by the promise of a share of profits this quarter or even an easily countable number of years from now, but by a share of the company's assets when the company is no longer a viable entity? How are those kinds of shareholders going to make good decisions about corporate governance?
I'm mostly on board with the essay, and the need to change things. However, getting rid of dividends (along with buybacks) without radically restructuring everything else... how does that work? How could it? What am I missing?
"Buybacks give money to shareholders who sell. Dividends give money to shareholders who don't sell."
Interesting to model the effects of that. Buybacks tend to concentrate ownership among the shareholders that are most optimistic about the company's future. Since the only way to take your cash out is to sell, the most marginally-attached shareholders will sell, leaving only the shareholders who believe the company is worth much more in the future. This could have much more dramatic effects on stock price than is financially rational, because it decreases the liquidity of the stock and decreases the pool of people who might sell in response to rational analysis (because they already sold, and their stock is now retained by the corporation itself, which is not a disinterested party).
It also increases the ease of corporate governance but decreases the efficiency of it. Buybacks flush out the most marginally-attached shareholders, those most pessimistic about the company, and so they give company management a shareholder population that is largely on-board with company strategy and not inclined to exit, because they've already had plenty of chances to exit. But the whole point of markets is to aggregate the opinions of many independent parties and avoid groupthink. If the shareholder base is self-selecting, it's particularly vulnerable to groupthink, and by definition has a higher opinion of the company's prospects than the market as a whole.
Multiplied across thousands of stocks, that probably makes the market less efficient than without buybacks, also congruent with the declining liquidity. We don't observe declining liquidity, but much of that is because of market makers and passive investors that don't have an opinion or vested interest in the future of the stock itself.
> Buybacks give money to shareholders who sell. Dividends give money to shareholders who don't sell. That's a big difference.
This is incorrect. Buybacks appreciate the equity for everyone. The gains are real either way, just one (dividends) is immediately realized and is used to frequently invest in more of the stock.
The net effect is exactly the same. One delivers company capital to shareholders in direct cash, the other delivers it to them in increased ownership stakes.
The rest of your post is based on your misunderstanding that buybacks only help sellers, so I won’t dig into the details unless you’re still convinced of that.
I wasn't too concerned about secondary effects. Maybe I should have been, but I believe the way you consider it is incomplete as well, failing to account for the reduction in the company's liquid assets (and thus shareholder equity or ability to reinvest assets to grow) due to the buyback.
Suppose a company has 1T market cap, 10 billion shares at $100/share, and wants to buy back 1% or 100 million shares for $10 billion. They have a cash hoard of 100 billion, and another 100 billion in other assets. What happens, ignoring stock market changes from the buy back or reaction (i.e. hypothetically, this couldn't happen, but to isolate the effects assume OTC buyback at current market price, and no public announcement)?
Before: shareholders get a share of future potential profits. To avoid adding more hypothetical numbers for dividends, I'll simply index this notional dividend stream to 1, or 100%. In parallel they have a claim on the company's assets: $20/share worth.
After: shareholders get an increased share of future potential profits: 100/99, or roughly 1% more than without the buyback. In parallel they have a claim on the company's assets, but those assets have dropped the $20/share equity by 5% to $19/share, evaporating $1/share in equity (conveniently in this example, outstanding shares and buyback dollar amount are equal). Furthermore, the company has lost 5% of its assets, and even more than that percentage of its liquid assets, that it could've used to grow the company.
What effects dominate? That depends on how investors see future investment by the company as a driver of future profits, doesn't it?
So basically - capitalism is broken. The evidence of our current situation agrees with you.
And the US style of democracy, where the rules are written by the powerful, is broken and won't fix capitalism. Pity other (Euro) styles of democracy are so intolerable to the US style.
Why is there nothing on regulating all the investors that are supposedly buying and financing the wrong things? If the demand is unchanged, why expect much of a change in what is financed?
Investors wanted to buy CDOs, they want to be in VC and so forth.
A lot of really smart people are going to propose really intelligent, market-focused solutions, all or most of which are evidence-based. Without exception these proposed solutions will fail to address regulatory capture. Given one flavor or another of feudalism has been the norm for the majority of recorded human history, evidence suggests the only way to prevent the ultra-wealthy from owning everything (with ruinous results) is to delete wealth accumulation on this scale from society. How to best accomplish this feat is left as an exercise.
Every company above a certain employee count (100ish)/annual world wide revenue must be at least 51% [1] owned 1/n by all existing employees. Obviously taking care of loopholes like contractors is implied.
If you want the economy to serve the people, it must be controlled by the people.
[1] I personally would advocate 67% as the number. So the 33% capital owning class needs at least half the employees to agree that their plans are best for the company.
This is the definition of a Co-op. The model has been reasonably successful in some cases. There are co-ops with >$10B annual revenues, although it took them half a century of steady solid business to get there.
The main issue is that such companies do not attract large investment, so they cannot really take advantage of modern capital markets. It would lead to slower productivity growth, with fewer crisis, maybe that's better, maybe not. But co-ops are not immune to spectacular failures either (see Fagor).
The do not attract large investment, but they can also be an effective solution to a lack of capital. Mondragon (linked above) was a collective grassroots venture in post-war isolated Spain, were regular workers got together to bootstrap employment for themselves. Oddly enough, led by a young Catholic priest.
It doesn't really fit cleanly into the Capitalism vs Communism worldview. On the one hand, it is definitely about collectivism and labour rights. On the other hand, a co-op is a lot like a modern neo-liberal startup, just with a large and flexible group of founders, where the shareholders and the most productive workers are one and the same.
Again, the piece that doesn't fit nicely: investors. That's the main weakness. Bootstrapped by design. Successful members of society cannot help others accelerate their ventures. They just use their wealth to aggressively consume, or just save a lot. Neither of which is great for efficiently improving the world.
Hard to tell if this is a better model, might be slow but sustainable. The promise of equitably distributed rewards (as in Communism), while still having individual incentives for productivity (as in Capitalism), is rather attractive conceptually at least.
1. Unlike Co-ops, what I am proposing [1] allows for companies to still sell part of themselves to investors to raise capital. There is just a proposed limit on this by law, so the capital owning class can't exploit workers. So, these companies can still raise medium amounts of money. Sure, this will limit growth in some ways, but in others it will improve things. Uber, would long ago be profitable and stable business than it is now, for instance in this world.
2. This has nothing to do with communism. Communism advocates for the collective ownership of the means of production, i.e. the entire society owns all means of production. Here, every company is still owned by a limited number of people, and there are markets and competition. People are free to join whichever company that will take them. I am simply proposing a fix to imho the worst feature of capitalism.
Real co-ops have similar structures as you describe. There is a large variety, since their structure often depend on regional regulation, the companies own "constitutional" rules and the legal category they fall onto (worker collectives, client-customer co-ops, co-ops related to banking or credit, agricultural co-ops...).
There's often:
* Minimum ratios of owner workers (never 100%, often more like 30%)
* Maximum difference between lowest and highest salaries (they often have difficulties offering competitive salaries to executives).
* Limits on how much of the profits are reinvested or shared as dividends.
* What happens during crisis times: regulated salary reductions, more executive control...
There can be configurations that can work very well, with a good compromise between worker ownership, openness to investment and global competitiveness.
It's always been niche though. In reality (from personal experience) if the first few founders are able to get minimal capital, it makes much more sense to hire instead of get more co-founders. Even if you can't, it tends to be preferable to keep the founders pool quite small.
Individual shareholder-hires can bring in little capital, have a disproportionate influence on how things are done and are hard to get rid of if things don't work out or if the situation changes (which always does frequently in a startup). There's a reason why this has only been done seriously when workers were desperate to revive an economy, or when they are being exploited by monopolistic corporations. Collective ownership tends to be very hard to organize at the beginning and can be quite inflexible due to the inevitable internal politics. When things are bad, everyone tends to be more aligned towards making things better together. And it only tends to scale when this culture becomes deeply ingrained in the organization.
It can get a bit cultish, Mondragon has their own (rather good) university where they train the type of employees they need (mostly talented hardware engineers, but many other degrees too) and educate them on their culture early. It's just a normal university, you can go anywhere afterwards, but you do end up quite connected to their network in practice.
In communism, all of the people collectively own all the means of production. What I am suggesting is very different from that. Companies are owned only by their employees and the capital investors. There is still competition, there is no central planning as in the USSR, people are free to work in whatever field and company they want to (unlike the USSR), etc. This is barely different from modern capitalism.
I have a suspicion that the solutions would be incredibly radical to how we as humans are socialized to perceive justice, worthiness, and equality, such that we would immediately reject it as immoral, unethical, or otherwise unacceptable. [Consider for example that, not too long ago, many of us were socialized to oppose the idea women should vote.]
I also wish that the status quo is different, but I actually have no idea if I'd be able to stomach what different looks like based on my current upbringing which is thoroughly enmeshed in the systems that enable this.
Modern monetary policy has failed. Tying the currency to something real and finite - say, gold - is the only way to rein in the nonsense. The value of things becomes much clearer when you can’t simply conjure up money out of thin air.
I mean, what else would anyone expect after capital started siphoning off larger and larger amounts of money from labor in the 70s.
Repaying labor with a relative pittance due to growth and simultaneously lowering taxes, just to hoard capital at an ever increasingly more insane rate, while of course dismantling antitrust, will obviously just concentrate capital.
Exponentially concentrated capital will need to chase exponential returns…
The naive folly of the efficient market hypothesis is its childishly simplified view of the world; a given in a world of economists treating their social sciences as if it were as bound to nature as physics.
Although one would’ve hoped politicians weren’t so utterly and devastatingly easy to buy, but they clearly went a long with this insanity.
The idiocy of crypto is but a blip compared to the scam run by capital over the last 50 years.
It’s simple, just redistribute society’s gains, jfc…
This reads a bit like a complaint that markets are irrational.
Lots of people lose money in markets by betting on bad ideas, or companies that are obfuscating their underlying weaknesses.
That's part of the purpose markets serve: Moving money from things that suck value into things that add value. If the OP knows better than the market, hopefully they're shorting Facebook stock and, when that plays out, they'll invest their gains in something new that produces real value.
Of course, markets can remain irrational longer than it takes to write an embittered blog post...
Or you just have a hatred for criticism of modern-day capitalism. Also, the entire post is exactly about how money (specifically VC) is being thrown at things that don’t actually add value.
No, I just think markets are more complicated, fluid and flexible than critiques like this make it seem. I'm old enough to have witnessed numerous decades-long waves of hype pouring money into sclerotic companies that, at the time, everyone assumed were immortal no matter how corrupt and terrible their decision-making had become - only to watch over and over again as the giants fell. I feel like every wave is accompanied by a sense of hopelessness that things will never change, and then in seemingly an instant, they do change.
I'm relatively sanguine that Google and Uber will be replaced by something better (something that's not a con game), and that the people who invest in garbage will end up losing to newer, more agile players. That's how it's always seemed to me when you look at any given 5-10 year horizon. The short term is always frothy.
I almost never invest in tech companies... except if I'm looking to make a few quick bucks on some new hype (e.g. I bought Google with a 2-week horizon right after Microsoft announced Bing's AI bot, and after Google took a huge hit because the market overreacted; turned and sold it for a 10% profit). (The exception for me is medical tech which I'm willing to take several-years-long shots on). I sit on real estate and utilities and the odd manufacturer or retailer with a history of increasing dividends, and watch the wilds of the NASDAQ with a daily mixture of jealousy and schadenfreude - because I know my own risk tolerance.
Markets are made of people. Companies are made of people. Poor incentives and deception do indeed lead to catastrophic losses and inefficiencies. Corrections are made. Fools and their money are parted.
I don't have a hatred of criticism of any sort. I do however think there's a smell when someone walks away after losing at the table and complains about the game.
Of course there’s hatred involved here. What you’re essentially saying is that the market has always been organized in such a way that fluctuations and corrections happen, so why should anyone else complain and question that? And when you are attacking the author’s person by painting him in a market loser’s light despite not knowing anything about him (and I don’t, and many who read the article don’t), how is that not personal vendetta?
The market is a manmade system that we can control by regulation, and organizing any controllable system in such a way that it generates a lot of waste before self-correcting is not necessary. Real people become aggravated when corrections happen, e.g. immigrants on a worker visa, people who moved their entire lives, people who found it hard to find the very jobs that they lost, etc. You can’t act surprised that people complain because they are on the receiving end of these corrections (“market losers” to you, right?) as if they are supposed to just put up with bullshit that was not even necessary to begin with.
Among the people who don't know people in this story, you don't know me. You act as if a person who wrote an opinion you disagree with must (1) be operating out of deep personal emotions - hatreds and vendettas, and (2) be the very personification of everything you hate, indeed, responsible for every injustice by my very attitude!
Ascribing such levels of malice out of the gate is a radicalized, religious-like, conspiratorial response to things one disagrees with. It serves no purpose except to attempt to shut down debate. In fact it has, as I have no interest in debating someone who feigns to know my intentions and believes I'm personally responsible for their problems and the state of the world.
The difference now is that we have a lot fewer companies who have captured markets. New players can't come in because the big guys run the show. Walls have been established by big companies to make it too difficult or too expensive to start.
I agree with this sentiment which is why I'm in favor of strong antitrust enforcement... but I don't think that's the complaint I picked up from the article. Their complaint seems to be that it's too easy for "colossally stupid assholes" (direct quote) to enter a space posing as a "disruptor", raise an enormous valuation for an idea that doesn't really work, and then scam consumer investors into paying for an IPO based on hype and/or pure speculation. If that's true, then it makes sense that investors will ultimately get wise to it and either start investing in things that show a proven profitability, or else lose their money. The underlying FOMO behind all these bubbles contains the seeds of its own destruction - I don't disagree with the author about that.
Realistically, the answer to this problem is simple. More regulations on big tech, vastly higher salaries and less emphasis on stock gambling. The rot within the economy is because someone running a small business is almost impossible nowadays. Either you get destroyed by economy of scale and monopolistic companies taking losses to destroy your marketshare, or you take in venture capital and pray to the altar of growth. If salaries kept up with inflation then there wouldn't be a need to gamble on the stock market to achieve wealth, and that wealth could be fed back into the economy in actually useful ways instead of being accumulated in the hands of wealthy billionaires.
This was an extremely good article and captures why I feel (likely incorrectly) so uneasy investing in stocks.
These massive price swings have nothing to do with how the company is performing and everything to do with macro levers the government pulls. It feels like a big game of financial engineering rather than investing in a profit making enterprise.
The only reason growth is seen as good is because our population is increasing. As such growth has been coincidentally correlated with full employment and therefore prosperity. When the population levels out everyone will realise that we don’t need growth to achieve full employment and that optimisation is the new recipe for success. It’s a temporary problem.
As for private sector stupidity the antidote is stronger government and stronger institutions that can counter balance people making dumb decisions, not an attempt to regulate or shame away dumb decisions. The only problem is that the private sector has become too fetishised.
Yeah I don't think degrowth is a solution that fits with HumanOS.
Humans unfortunately are wired to feel change but not levels.
That is, standing still rarely feels good no matter how good the current state is. People are wired to seek a better lot in life, on average.
That is what growth is. (Growing by using more resources is not mandatory at all, and is more expensive.)
Degrowth is a bad idea invented by the British to make it look like they collapsed their economy on purpose instead of accidentally. Basically, you always need growth because that's what combats entropy.
If the population is steady (as it will be by 2050) then you don’t need to increase production unless it’s to meet needs not already met. So the growth imperative now is mostly focused on job creation because people keep getting born. Growth in terms of absolute economic activity becomes less important if more people aren’t being added to the population however there may still be some growth necessary in order to increase equity of outcomes (although we may also just need a redistribution of existing economic activity to meet needs of the many over and above the needs of the few).
What I meant by my comment initially is that in an economy where population is increasing rapidly one can just use growth in economic activity as a pretty good proxy for prosperity.
With steady population & increased lifespans, people better be ready to work til their 70s (at least) because you will have fewer workers per retiree to support them than in the growth model..
> Neuman is seemingly attempting to reinvent the rental market — a diseased, exploitative industry in its own right — in his own image. He’s replacing one cancer with another, only even more aggressive and metastatic.
Adam Neumann is the VC industry, he is just cooler and better-looking than anybody on Sand Hill Road.
Every VC thinks $industry needs disrupting, for the good of the consumer. What's left unsaid is that after the Soviet-scale subsidies run out, the disruptor will inevitably become as turgid and anti-consumer as the incumbent it sought to replace.
> This is the problem at the center of almost everything I’ve written. Why are bosses mad they can’t bring people back to the office? Because their alignment of business success isn’t really tied to profit or “success,” but rather the sense that they are “big” and “successful,” which requires a bustling workplace and “ideas.”
This is similar to the sentiment of Bullshit Jobs as posted here yesterday. There is a strong incentive within the modern market economy to value perception over reality. This often involves hiring people to look like they're doing something without any consideration as to whether they're doing anything valuable.
Maybe my feelings are a bit hyperbolic, but 2023 really feels like the year that the internet "died". That plus heatwaves, price increases, etc, it really feels like the death throes of neoliberal capitalism akin to what the 70s were for managerial capitalism.
It's insane to me that with the threat of climate change looming, the US spent trillions on foreign wars. In the aftermath of 2008, when money was free we spent trillions more on what? More efficient ways to sell shit people didn't need or couldn't afford?
We had two decades and trillions upon trillions of dollars to improve our system in so many ways and it was almost entirely squandered. Even the most politically and financially ignorant Americans can feel how crappy our system has been for the last two decades.
The question is, what will replace it? A human-centric economy that invests money into physical and human infrastructure? Or the meme of neo-feudalism with people working in Amazon cages and paying for Domino's pizza in installments.
A weird thing with this article and others: they shit on Google and Facebook, but they never shit on Apple?
Why? Is Apple just a serious company in comparison? At least, with Apple I get the impression that some of their products (e.g. mbp) are leaps and bounds ahead of the competition. I can't say the same for any Google or Facebook product
Meta makes $30 billion a year. It is not a shit performing business. In fact it is one of the best businesses in history. Their stock bounceback isn't because of the layoffs, it's not because investors were actually worried that meta's business was bad. It was because they worried Mark had gone rogue and since he's the controlling shareholder investors have no way to stop him. The layoffs were just the way for him to signal that he still has investors interest at heart.
For having half the world on it, it’s a shit performing business.
Ironically that part of the racket - everyone thinks they should be performing better in the future, aka growth. But objectively almost every bet for unlocking money failed (commerce, libra, web3, messenger, motors, real estate, sports, news) - the ones that didn’t were forced on them by Tiktok showing them how it is done.
It’s a badly run business, yes one that has a money printer, but badly run nevertheless
Apple makes their money from selling products and services rather than selling the user. At least that's the perception. Apple also gets their share of this kind of criticism, but it invites much less of it in this way.
Microsoft could be in the same category. They've both had some pretty bad periods, no doubt, but they have been smart and quite diversified for the last decade at least. Same generation of startups too. There might be some insight in that, what changed?
I don't agree. Microsoft is obviously transitioning into user selling pretty quickly and apparently with great pleasure. It's on a completely different level than Apple. (To be fair, it's not looking very great there either recently.)
I see this all the time. Not sure why. Personally the way this guy feels about over valuing companies I feel about the way apple over values it's products. But people still buy them though, same as the companies this article talks about the companies market share going up. There's something wrong there
> When I wrote in October that Mark Zuckerberg was going to kill his company, the street responded in kind, savaging Meta’s stock for burning cash building a metaverse that was never going to exist.
I can't help but this sentence got me triggered. Does the author honestly believe that his article affected Meta price?
"Responded in kind" means "moved in parallel with" | "with similar actions or in an equivalent manner" | etc.
The author doesn't claim the market acted because of their article, they mean that the market acted as though it also believed MZ was going to tank Meta.
It's not the idiom, it's poor structure; the object of the clause is ambiguous and could mean "responded to my writing" or "responsed to Mark Zuckerberg". E.g. "While I wrote" or "After I wrote" would remove the implication of causation that "When" has. But really it should just say "The street responded by savaging..." with no authorial preening.
That being said, it's a weird thing to get hung up on.
To my eye, as an Australian with decades of exposure to English Lit., long form essays, and technical writing (UK|Commonwealth English moreso than the central north american offshoot) it's a common idiom that describes other agents acting { in kind, in a similar manner, just as the first person voice did }.
I can see the confusion if that's your absolute first parsing of an unfamilar English turn of phrase.
For better of worse the language is riddled with such things and they can be very locale centric.
You say something in a certain way expecting people with a certain level of intellect to eat your shit and glean the meaning you want them to glean, making you more popular or sage-like to those people. Like Fox news.
This kind of criticism is unfortunately not new. VCs are routinely criticized for funding enterprises on little more than hunches, and history is replete with examples of investments that made no sense, from the infamous Tulip Mania onward.
It really speaks to a few things: 1) how irrational apparently intelligent people can be, 2) the importance of salemanship, and 3) that the value of capital to those who have a lot of it is much less than its value to those who have little, and so they are more willing to take bets such as those described.
Something about all of this reminds me of Joseph Tainter’s collapse theory of diminishing returns. Have we reached the point already where returns on investment have already become negative? For at least some sectors, I’d say yes.
A big point the author relies on is that Google has destroyed its search. And yet I am not seeing it, many people I ask don't see it either. I don't doubt that we all experience using the search engine differently, for me it's still working just fine.
It's an unreliable anecdata to hinge your main point on that, it would only make sense if its more widely noted to the extent that its share is dropping significantly and being regularly reported in general media.
I still hate this story. The difference is that the fisherman without a business empire is one bad week away from ruin and his entire family starving to death.
I read the article, and while it touches on a common issue, I don't think it goes far enough. When looking at these problematic incentives that are mentioned, notably the author doesn't really address the incentives like for example where does the money come from.
When you talk about venture capitalists, you often are referring to a bank associated with a venture capitalist. Everything in business after all, incentive wise, trickles down from the banking system.
We can't change the way we do business when the incentives are fixed, and banking in general is only marginally overseen by government; most of the regulation and praxis is done by the Fed which is not government; but a private institution.
> The truth is that nothing lasts forever. Companies can (and should) die — or, at the very least, understand that there is an inevitable limit to growth, and eventually they must reconcile with being a stable, albeit plateaued, business.
This point seems to negate the rest of the essay. It's true that nothing lasts forever, that includes human labour...
I wonder if the author of the article believes his own words.
>When I wrote in October that Mark Zuckerberg was going to kill his company, the street responded in kind, savaging Meta’s stock.
He seems a bit delusional.
It picks on the likes of FB, Google,Uber, Tesla and uses that to justify a whole host of things like he's the only sane one and the rest of the market is dumb.
FB, Google are money printing machines that will continue for years.
>Uber has not made a profit from its businesses
This is just a downright lie. Also, uber is still experiencing high revenue growth but it's costs have not been rising for years. Maybe investors can follow a trend line and understand Uber's not going anywhere?
>They had a net loss of 1.21 billion last quarter, yet the street fell over itself to praise the company because “gross bookings grew 19% year-over-year”
This quote seems especially dishonest. Ubers revenue grew almost 90% YoY... and he uses the 19% bookings as a reason investors liked it?? It's handpicked information to match his points, not reality. He must have searched really hard for the dumb metric.
There is simply too much money in the world, and too much of it is concentrated in the hands of a small elite that’s able to place increasingly outsized bets on “number goes up”.
On a semi-related point, I am interested in what alternatives there might be to the apparent "infinite" (GDP) growth target as a national/global economy, and the (Western?) assumption that companies should constantly "grow" to be successful.
There are things like "Doughnut Economics", but IMHO that seems a bit too much the other way (almost communist-like), and I'm not really sure there's any practical chance of going in that direction anyway.
When I wrote in October that Mark Zuckerberg was going to kill his company, the street responded in kind, savaging Meta’s stock for burning cash building a metaverse that was never going to exist.
No.. that "responded" is far too causative. you observed a state of being which others observed and acted on independently: your writing is gold but the street did not "respond" to your writing. That's chutzpah.
If your meaning is "when the market saw what I saw, the market responded" that's fine. You don't define the market.
I think we can take the more charitable view that you have identified. I read it as a bit of self-promotion more than hubris. Like, "I report on the market, and I saw what they were seeing, aren't I a good reporter?"
All the things listed would be deflationary if anything (since people would naturally rein in spending to have a buffer against uncertainty), but you're not supposed to ask about the causal mechanism.
Or not, since they didn't do that. Pandemics aren't the kind of uncertainty that makes you save, they're the kind that make you want to enjoy yourself before you died.
Literally every left leaning person since the dawn of time: "the world is a closed system so we can't have unlimited growth in anything". Literally every right leaning person since the dawn of time: "MOOOOONNNNNNEEEEEEEYYY!!!!"
Rare goods, long queues, no choice, bad products and the leadership is off, chasing its own tail in some basebal metric detached from the world. It even features market-libertarians having to defend practices like shredding perfectly fine goods in ware houses.
The moment the ussr was gone, the race horse finally could binge and become something very similar to the ussr economy, but instead of obsessing on tanks & steel, it focused on excel sheet virtual wealth wankery, disguising the slide back into the gilded age feudalism.