Hacker News Reader

Comment by ergothus | Hacker News Reader

As an outsider, I find myself disappointed everytime a company goes public, and VCs seem to be (1) a stepping stone to that and (2) motivated by the same concerns.

As a consumer, I find that the shareholders never have my interests at heart, not even indirectly (everyone wants to make money, but a private company seems more likely to decide they make money by actually providing me value). This feels like a massive failure on either (1) my understanding or (2) the market as a whole.

Am I wrong about VCs being the same basic issue, only with fewer players?

View on HN

I think what you're describing is really a part of the decision making process by founders and initial investors who are taking the company public or shopping equity to VC.

The default mode of a company is to increase shareholder wealth, but a company that clearly communicates to potential investors and the market as a whole that they have a different metric of shareholder value (e.g. social conscience, environmental concerns, customer experience) can still be successful in taking a company public or raising funds from VCs, they'll just be selling equity to a different, if overlapping, group of investors.

Companies that want to do good and don't think through how going public or taking investment will change the incentives on which the company operates are destined to end up in the default mode.

As always, try to put both your consumer and investment dollars in companies that understand that.

> a company that clearly communicates to potential investors and the market as a whole that they have a different metric of shareholder value (e.g. social conscience

You're talking about things like Ben & Jerry's social contract. I think those are great. But here I'm talking about values like "We want to make money by making great widgets people are happy to buy". Most companies say such things, but after they go public the value seem switch to "find every way to increase the margins and take the lowest thresholds of quality and customer satisfaction that we can have and still remain in business". Compare, say, what Comcast says about customer service and what customers say.

The ideal of capitalism is that you can have profit AND happy customers. And I know it's possible, I've seen it any number of products...but I also see tons of successful companies get "killed" by short term greed, even if that company sticks around and is profitable - compared to what it was, it is dead.

Reply on news.ycombinator.com