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Comment by nemild | Hacker News Reader

Because for shareholders, the stock price only appreciates if the company grows.

In many ways, it mirrors the issues for Hacker News entrepreneurs. To get VC capital, you have to dangle promises high returns on your equity — even if a consistent cashflow business is a great outcome for an entrepreneur (these businesses are pejoratively called "lifestyle businesses").

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Which is why dividends exist. Mature companies may grow less, but they produce profit, which can be distributed to shareholders in the form of dividends.

Dividends are not some magic; they are taken out of the share price. There's not really a difference between reinvested dividends vs. no dividends at all. And non-reinvested dividends are less optimal as you'll pay taxes on them, so you actually have less net worth from collecting and not reinvesting dividends vs. either reinvesting them, or investing in a company which doesn't yield a dividend.

It's a fallacy that many people fall for though. See Berkshire Hathaway for the prime example.

Some public companies choose to return cash to shareholders through share buybacks rather than dividends because it's more tax efficient.

But that would require me to own the stock for months or years rather than milliseconds

And this is why I oppose the current system of shareholders having control of companies.

What exactly do you oppose? Founders are the original shareholders, so I guess you don't oppose them having control of their own company? Since they are in control, nobody forces them to raise investment and give away shares in exchange for money. In other words, it's their decision whether to introduce new shareholders (either private or public ones).

I guess I oppose the system where we give control of companies to people who put capital into the company. As opposed to the people who run the company, or rank and file employees.

I've started two nearly automated lifestyle businesses specifically in areas where this exists. They are extremely low overhead and time cost and generally low revenue.

Any decent vc funded company could blow my product out of the water but they won't bother

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