This was over a year ago but, never saw anything about it so here it is. Some segments are," Growth in this case is not necessarily about being bigger or better, it is simply more. It means that the company is generating more revenue, higher valuations, gaining more market share, and then finding more ways to generate these things. Businesses are expected to be - and rewarded for being - eternal burning engines of capital that create more and more shareholder value while, hopefully, providing a service to a customer in the process.
In the public markets, that means that companies like Google, Meta, and Microsoft were rewarded for having unfocused, capital-intensive businesses that required mass layoffs when times got tough, because the market loved the idea that theyd found a way to save money. They werent punished for their poor planning, their stagnating products, their mismanagement of human capital, or their general lack of any real innovation because the numbers kept going up.
They repeat a very specific cycle - company is the next big thing, company is now worth over a billion dollars, company is experiencing unheard of growth (with no question as to whether they are sustainable or profitable), company is now challenging the big dogs of industry, a little M&A, an absolutely insane valuation, and then a sudden realization that actually, perhaps this wasnt a good business at all? I am hammering on TechCrunch links here because I am being lazy - they are far from the only outlet to assume that a company like Brex would not simply run itself into the ground through virtue of existing - but the path is always the same - growth, growth, growth, legitimization, growth, growth, acquisition, and then an eventual reckoning with real life.
As my friend Kasey put it in a recent conversation, growth is a fire. If you build a nice, sustainable fire, itll keep you warm, cook food and sustain life. And if the only thing you care about is how big your fire is, then itll set fire to everything around it, and the more you throw into it, the more itll burn. Eventually, youll have nothing left, but if you desperately desire that fire, you will constantly have to find new things to burn at any cost.
And we, societally, have turned our markets and businesses - private and public - over to arsonists. We have created conditions where we celebrate people for making big companies but not good companies.
Venture capital and the public markets dont actually reward or respect good businesses or good CEOs - they reward people that can steer the kind of growth that raises the value of an asset. Elon Musks success with Tesla didnt come from the inarguable point that he ended the monopoly of the internal combustion engine - it came from his canny manipulation of the symbolic value of a stock through lies and half-truths, meaning that there was always a perpetual reason that Tesla was a growth company and a good stock to buy. Sundar Pichai isnt paid $280 million a year because hes a good CEO. After all, Google has all but destroyed its search product. Hes paid because he finds ways to increase the overall growth of the company (even while their cloud division still loses money), and thus the stock goes up.
The consequences are that these companies will continue to invest in things that grow the overall revenue of the company over all else. They will mass-hire and mass-fire, because there are no consequences when the markets dont really care as long as the company itself stays valuable. Venture capitalists certainly dont mind - after all, its less burn to get you through tough climates that were arguably created by the poor hiring decisions of a company that was never incentivized to hire sustainably or operate profitably.
Until we see a seismic shift in how major investors treat the companies they invest in, this cycle will continue. I guarantee that we will see each and every one of the companies doing mass layoffs do mass-hirings in the next few years, and then do another mass layoff not long after, because they are simply treating human capital as assets to be manipulated to increase the value of a stock. They are not structured to evaluate whether the business is sustainable, because their only interest is seeing their current profits grow by multiples that please Wall Street.
Good companies should not have to repeatedly lay people off. They should not be mass-hiring for fear that the demand they are capturing is temporary, and those new employees will soon find themselves at the receiving end of a pink slip.
The lens through which we evaluate businesses is cracked, and until we fix it, we will continue to experience these punishing cycles of binging and purging on human capital.
This is the problem at the center of almost everything Ive written. Why are bosses mad they cant bring people back to the office? Because their alignment of business success isnt really tied to profit or success, but rather the sense that they are big and successful, which requires a bustling workplace and ideas.
Why did billions of dollars get pumped into cryptos countless non-companies? Because success as defined by capital has been reframed to mean number go up. As a notion, it is divorced from any long-term thinking, fiscal probity, or even what you and I would call morality.
Why did these companies never seem to get blamed for hiring and then quickly firing tens of thousands of people? Because at the heart of the business media and the markets, workers were necessary casualties of the eternal struggle for growth. Layoffs are inevitably reported as a large number (10,000 employees at Microsoft), which makes it all too easy to remove the human element. When confronted with numbers of this scale, its easy to ignore the individual human agony that comes with losing a job. The uncertainty and shame that follows a firing.
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.
A product may be profitable for a while, but there is a line at which profitability comes at the cost of functionality, and your company may simply not be able to grow more. A business that cannot generate profit is not a good business, and a business that can never generate a profit deserves to die.
And the net result of all of this is that it kills innovation. If capital is not invested in providing a good service via a profitable business, it will never sustain things that are societally useful. Companies are not incentivized to provide better services or improve lives outside of ways in which they can drain more blood from consumers. And the street doesnt care either - just look at Facebook and Instagram, two products that have grown endlessly profitable and utterly useless in the process.
If capital wishes to call labor entitled, capital must acknowledge that it is the most entitled creature in society, craving eternal growth at the cost of the true value of any given service or entity.
Google, Meta, and Microsoft crashing and burningsounds too good to be true
Corpos are not supposed to be bigger than governments.
Corpos are not supposed to be bigger than governments. They way to strong and they're only going to get stronger, we're heading to corporate slavery.
In a corporatocracy, corporations are the government.
Corpos are not supposed to be bigger than governments. They way to strong and they're only going to get stronger, we're heading to corporate slavery.
Eventually somethings gotta give right? Right??Nah, we're heading to a Cyberpunk 2077 future with literally none of the cool parts and all the bad ones.
Eventually somethings gotta give right? Right??
it's the part we're not supposed to talk about when it comes to late stage capitalism: When profit is the goal, all things, all innovation, eventually becomes a race to "how do we make the most money for the least work"
"but it's a perfect system because people don't like when that happens and the infallible market will correct itself!"
yeah and now look what's happening. People don't like it. And the people with all the capital don't care because they can buy their way out of any proper correction. Wow. If only all competing ideologies and regulations weren't yelled out of the room in favor of this notion that a company that wants money and only money -won't- just be evil at the first opportunity where being evil provides more money
In France, they speak French.https://gamefaqs.gamespot.com/a/forum/4/4ccedc80.jpg
This is a better thought out and reasoned post and argument than the quote in the OP.
Businesses are firing people to stay cash flow positive wahhhhhhhh lol. What a shit take. (The article in the OP, not what I quoted).
do you know how to read
if so use those skills and try again
OP actually walks through how and why people's lives are being ruined, not just handwaiving how terrible it all is
Its all based on a shitty and unrealistic premise.At this point, most people don't care about that. People don't care about the company, they care that the companies policies and operations are making life miserable at the moment. People are tired of number goes up. That's more or less the point of this. That and how the entire innovation sector is basically focusing on how to remove the human element from the economy so these companies can just print money theoretically, although that's not really how that works unless they start recycling it.
For profit companies exist to make money. They don't operate a charity by offering guaranteed salaries. Public companies have additional legal and ethical standards to their shareholders to maximize profits.
A company should not over hiring or overpaying to the point it leaves the company in bad financial position. If they continue to operate in a way that lessons their profitability they are mismanaging the company, failing to uphold their duty to the shareholders, putting the future life of the company in jeopardy, and all the great things that the author of that piece thinks they should be doing will never happen.
Its all based on a shitty and unrealistic premise.
For profit companies exist to make money. They don't operate a charity by offering guaranteed salaries. Public companies have additional legal and ethical standards to their shareholders to maximize profits.
A company should not over hiring or overpaying to the point it leaves the company in bad financial position. If they continue to operate in a way that lessons their profitability they are mismanaging the company, failing to uphold their duty to the shareholders, putting the future life of the company in jeopardy, and all the great things that the author of that piece thinks they should be doing will never happen.
Yes, and if you got to the point that the article is trying to make, it's arguing that even from a practical-minded business perspective, these unsustainable business practices are resulting in unstable economies and worse products/services, you know, the two things capitalism is "supposed" to be good at.
Like, you do realize workers are consumers too, right? If workers are constantly being laid off, they're not buying as much stuff.
There is nothing unsustainable about keeping operating expenses in check though. The opposite is what is unsustainable.
As my friend Kasey put it in a recent conversation, growth is a fire. If you build a nice, sustainable fire, itll keep you warm, cook food and sustain life. And if the only thing you care about is how big your fire is, then itll set fire to everything around it, and the more you throw into it, the more itll burn. Eventually, youll have nothing left, but if you desperately desire that fire, you will constantly have to find new things to burn at any cost.
There is nothing unsustainable about keeping operating expenses in check though. The opposite is what is unsustainable.
There is nothing unsustainable about keeping operating expenses in check though. The opposite is what is unsustainable.
In the public markets, that means that companies like Google, Meta, and Microsoft were rewarded for having unfocused, capital-intensive businesses that required mass layoffs when times got tough, because the market loved the idea that theyd found a way to save money. They werent punished for their poor planning, their stagnating products, their mismanagement of human capital, or their general lack of any real innovation because the numbers kept going up.