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Comment by bwing | Hacker News Reader

I was at Lambda when they announced the switch from 9 to 6 months and the elimination of paid team leaders. The feedback was universally negative. In a channel for open student discussion, Austen Allred deleted a poll from Slack because of how lopsided the reaction was. He explained the deletion by saying the poll was "misleading."

Students then got a survey "explaining" why the change was actually a good thing by asking questions such as "Do you understand why companies value mentoring experience?" Not just failing to reveal the truth (these were cost-cutting measures), but not even taking the effort to come up with a convincing lie.

It was destabilizing: Austen's twitter account would read ambitious, hyperoptimistic; meanwhile, drastic changes would be made within the program with vague rationales ("after speaking with hiring managers, we've made these changes..."), and probing further simply got deflections or gaslighting surveys.

There were a ton of good people in the program, and I learned a lot there. But fundamentally there needs to be trust between institution and student when you're asking people to make this level of time and financial commitment. And at no point did I feel like Lambda at its top level prioritized student wellbeing over PR, costs, or metrics to be sold to investors.

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Interestingly enough, all of these comments could have been said about my experience at $BOOTCAMP that I attended and then was later hired at as a mentor.

The degradation of quality from the removal of human presence is a common narrative, and the students react to it so much more than management ever realizes.

> at no point did I feel like Lambda at its top level prioritized student wellbeing over PR, costs, or metrics to be sold to investors.

This is exactly how I would describe it. $BOOTCAMP was around for a few years, was purchased by private equity, immediately doubled it's prices, gutted the mentoring team, and "revamped" the curriculum, which really meant they were just pushing everything to video learning.

They have made some minor curriculum improvements as of late, but they have a long way to go to get back to what the program was when it was just starting out - which was ironically much higher quality in my opinion.

I have a guess at which bootcamp you mean, but I'd love to talk to you more - me@vincentwoo.com

Just going to add a positive anecdotal example since most of this thread is negative. I finished App Academy back in 2015 and 6 years later, most of my friends are a top tier software companies. In general our cohort did well, although there were definitely people who did not succeed. The experience was truly life changing for some of the folks.

I do agree that I've seen a LOT of bootcamps try to "scale" out their programs by removing human teachers and using video/written content or by increasing student to teacher ratios. I'm curious if the experience I had still holds today at any bootcamps or if the drive to "scale" has messed up the industry

> do agree that I've seen a LOT of bootcamps try to "scale" out their programs by removing human teachers and using video/written content or by increasing student to teacher ratios.

I wouldn't be surprised if this is how every bootcamp pitches to their investors. "We're just starting out with an MVP. Once we've nailed the curriculum we're going to scale our instruction without increasing labor costs".

Every time I’ve seen a company bought by private equity, it spells the beginning of the end. The strategy always seems to milk every last drop of cash from the business, without any long term sustainable plan. As an anecdotal case, I visited Sea World over the summer and half the concessions and shows were closed. It was still expensive and crowded and and there were service bottlenecks everywhere. Long lines for a bottle of water. Midday I said to myself, I bet this place was bought out by private equity. I looked up Sea World’s ownership structure when I got home and low and behold, private equity is involved.

It's an issue in market information where regulation can't really work [1]. Vendors have a brand. They establish the value of the brand such that purchasers have a signal that they aren't going to be ripped off. For example you can be pretty sure coca-cola isn't going to cut costs to the point where they don't care about putting poison in the bottle - and you don't need regulation to know they won't do it. Zeus-Cola? Brand means nothing. On holiday in an unregulated land when it's only just launched do you advise your family it will be completely safe to drink?

An entrepreneurial team comes along and puts their hearts and souls into setting up a business and establishing the brand with some high quality product. That brand becomes worth something. The easiest way to monetize that brand is to use it for a con job. It sucks.

You thought you were getting quality, it's what you paid for, well you're getting cheap and nasty and we're taking excess profit for as long as the brand lasts. You took the bait and got the switch. Usually (but not always) the original entrepreneurial team is unwilling to do this, because they believed what they were doing was something more than just making money. Private equity is just making money and are extremely willing to do this.

[1] I prefer unregulated markets as far as the alternative is usually worse. There are obvious exceptions at the extreme ends (monopoly, health and safety, fraud, adverse externality etc.) How far away from the extreme you think regulation stops working is a lot of interesting case-by-case discussion where intelligent, reasonable and informed people can disagree in good faith improving their understanding and the quality of suggested policy in the process. It would be nice to see a bit more of it in the media!

I keep redrafting a blog post in my head about this cycle and how it means that even though the world is getting better, every specific brand is getting worse. (There was a wonderful post about Starbucks specifically that I now can't find, talking about how they grew their reputation by having hand-made coffee that people loved before switching to machine brewing that required less skill and people wouldn't hate).

I suspect we're politically rather opposed, as I see this as a consequence of capitalism putting a price tag on everything, and something that regulation is appropriate for (some way of forcing brands to publicise when they've changed something, so that customers can know whether a review they read still applies, although the details of how to do that would be difficult). Indeed I'd argue that the only reason customers can trust a brand like Coca-Cola is strong regulation in the form of trademark law.

Yeah it's a reasonable point of view. The other way to go on that is you're in an country whose culture you don't understand which as a wildly corrupt, crony-riddled military dictator and nobody has any rights at all.

Do you want locally bottled Coke(tm) with the red label and dynamic ribbon for your very thirsty child or locally bottled "Odin's Thirst Quencher! (est. 2021)"?

Coke are going to enforce quality control and safety to protect their brand or get out of that market. There is no regulation you can rely on in this mythical country - but there are quite a few countries like that which you may know yourself from having visited them. In France, say, you have regulation that safety is not a concern. When you don't have it you have brands - the owner has the incentive to protect them. So it goes also in France, or the USA or other wealthy countries to the parts of commerce that are not regulated (whether they could be or whether that's because it's not feasible).

But the higher issue is information. Should you be able to sell the same product with a very different quality under the same name? Let's say we agree the answer is ideally "no, you can't do that." Now we want to regulate that you can't do that. How is it enforced? There may be ways. There may be grey areas. The cost may be prohibitive in many instances or there might be new solutions to mitigate those problems.

What is isn't is easy which you can see as soon as you apply it to the industry and case under discussion. Intensive industry training schools.

> Do you want locally bottled Coke(tm) with the red label and dynamic ribbon for your very thirsty child or locally bottled "Odin's Thirst Quencher! (est. 2021)"?

> Coke are going to enforce quality control and safety to protect their brand or get out of that market. There is no regulation you can rely on in this mythical country - but there are quite a few countries like that which you may know yourself from having visited them.

I'd argue that in a lawless country people have no faith in the brands either. Look at the fake Apple stores in China, or at parents importing identically-branded baby formula from abroad because they (justifiably) didn't trust the locally produced version.

It's obviously not a panacea. You may not be able to trust the brand is what it claims to be. You frequently can't in wealthy countries with low corruption indexes.

There are plenty of times what you trust is the interests of the brand holder to defend the value of the brand where regulation can't help you. Coke in a sealed bottle is extremely likely to be coke in a sealed bottle in Mogadishu. The brand "Coke" gives you some information about the probability of not drinking poison. Obviously it isn't perfect. I think it's evident that it isn't something to be dismissed as inconsequential information either. Coke will be trying very hard to make sure nobody impersonates them and kills their customers anywhere in the world because it would be an advertising disaster. Better that than nothing.

(Just quietly I hate the coca cola company and think they are pretty evil. Diabetes. Obesity. They're similar to a cigarette company. Meh. Useful points can still be made using their business as an example.)

>But the higher issue is information. Should you be able to sell the same product with a very different quality under the same name?

Barq's famously does this and doesn't seem to have any issues.

Barq's make their product garbage and sell it for the same price with the same name as product they sold before? With no issues? Really?

Barq’s used to sell a different product in Louisiana due to preexisting bottling/distribution relationships

I've have had this theory for years-- that restaurants start out, and the ones that survive and multiply do something unique. And then at some size, where economy of scale is involved, they cost reduce to the point that, they've reduced out whatever made them special in the first place. Then you end up with these giants that exist on momentum but are unable to produce a quality product.

It works for any business really.

Starbucks in particular-- there's not enough quality coffee in the world for them to serve it at any price.

They've even gone so far as to redefine the term "blonde" to something that's more like full-city--lighter roasts imply higher quality beans--full city is several shades darker than blonde, and blonde should almost always come with at least some chaff. I've never seen chaff in a bag of Starbucks beans, but it could be possible they're taking extraordinary measures to remove it... But I doubt it.

Not every brand is getting worse. Some are staying the same, and some are improving.

The regulation you suggest seems a bit silly. If transparency is good for a brand, companies can already implement it. (And if customers don't care enough to pay for transparency, why force them to?)

What's the externality that your proposed regulation is trying to internalize?

Also keep in mind that disclosure regulations put an undue burden on smaller companies and upstarts, as they don't benefit from economies of scale. (You need roughly the same amount of lawyers and accountants etc to comply here, no matter how big your business is.)

> What's the externality that your proposed regulation is trying to internalize?

The externality is the cost of staying informed. The theorems about the efficiency of a free market assume perfect information. If someone reads Consumer Reports and decides that brand XYZ is making a good product they want to buy, but brand XYZ switches to producing lower-quality products in between when the review is written and when the reader buys the thing, then we lose all the benefits that the free market was supposed to give us.

> The theorems about the efficiency of a free market assume perfect information.

Huh? That comparatively freer markets make people better off in the real world is an empirical observation, and doesn't rely on theorems. (You can make a few assumptions and prove a few theorems, if you want to. But it's not essential.)

> If someone reads Consumer Reports and decides that brand XYZ is making a good product they want to buy, but brand XYZ switches to producing lower-quality products in between when the review is written and when the reader buys the thing, then we lose all the benefits that the free market was supposed to give us.

Eh, there's a simple fix that people intuitively implement already: trust brands more that have been around longer.

Assume the delay between the review being written and you buying stuff is eg a quarter of a year. Then, simplified, someone who goes only for brands that have been around for at least ten years only runs at most a 1 in 40 chance of getting duped like this.

By the way, the name for the scheme you are describing here is an 'exit scam'. See eg https://en.wikipedia.org/wiki/Exit_scam

I challange you to find some econ papers that describe exit scams as externatilities.

> The externality is the cost of staying informed.

Btw, that's not an externality. That's just a regular cost.

> Btw, that's not an externality. That's just a regular cost.

It can be either or both. Information discovery can simply be a cost of transaction, sure, fine. Find out about the stuff you're thinking of buying. Regular transaction cost.

Where there are markets and methods of transacting in those markets where one can assume the product that was being sold previously with a given name is precisely similar to the one being sold when you want to buy it there is some information acquired without additional cost. If it becomes more popular for some market participants to start messing with that such that everyone has to double check everything all the damn time even when purchasing from people who would not tolerate selling like that because of the uncertainty that is now in the marketplace. That is clearly a cost imposed on people not involved in those messed up transactions. The honest sellers have an additional cost to demonstrate they aren't crooks. The buyers have an additional cost to find that out. The sensible buyer buys from the honest seller with an additional transaction cost that has nothing to do with a change in policy or behavior of either party, it's a result of some other transaction they were not party to and had no control over. That's an externality. One usually enforced via social norms first ("I've come back because you lied to me!" - we've all seen someone, somewhere taking out their fury like that) and regulation second (because yelling at shop attendants is a rubbish thing to do).

Pretty sure such externality, while undesirable in itself, does not render useless all the benefits of a marketplace. The idealised form of the microeconomic model known as "perfect competition" has perfect information as an assumption. As soon as you apply the model to a real market that assumption has to be somewhat relaxed. The relaxation may make little difference (eg there's not much to know, it doesn't change much and we all basically know it) or an immense difference (eg insider trading on the stock exchange). Such models are for positive economics (describing what is happening) rather than being prescriptive about what should happen (normative economics).

I hope explaining the jargon doesn't come off as being a condescending idiot here. The jargon is used for gatekeeping in many of these discussions and it bothers me that this is how it works.

I know the jargon. (But explaining it doesn't hurt.)

The 'perfect competition' model is indeed not applicable here. But that's not a problem: we know empirically that markets work (and work better the freer they are). The theory just gives us the intellectual tools to investigate why that is so.

What you are describing is still not a proper externality. In the same sense that eg having a competitor is not described as an externality.

(Or similarly, given your logic, the existence of shops where people have to pay for stuff would be an externality, because now they have to make sure that they are not in a 'shop' where everything is free first. The example is admittedly a bit silly, but if you substitute 'hospital' for 'shop', it's somewhat applicable to the UK.)

About 'perfect competition' about real world competition: you might like to have a look at https://econfaculty.gmu.edu/bcaplan/compet

> That comparatively freer markets make people better off in the real world is an empirical observation, and doesn't rely on theorems.

It's not empirically true in all cases; lemon laws are broadly in the same category as what I'm advocating, and empirically make people better off.

> Eh, there's a simple fix that people intuitively implement already: trust brands more that have been around longer.

> Assume the delay between the review being written and you buying stuff is eg a quarter of a year. Then, simplified, someone who goes only for brands that have been around for at least ten years only runs at most a 1 in 40 chance of getting duped like this.

That's a lot less practical now than it used to be; the pace of innovation is higher, which is good, but has brought a lot of churn and it's hard for reviewers to keep up.

Hertz is currently cannibalizing their brand and customer base by charging outrageous fees (cleaning, late) and refusing the refund them even when proven wrong. https://www.latimes.com/business/story/2021-06-11/column-her...

Fascinating. U-Haul was/is famous for this too.

A decade ago I rented a large U-Haul for a move. I knew how crappy they were and purchased the insurance just figuring it in as the "true" cost of the rental.

I pick up the truck at like 4:00pm. The truck they gave me had some serious damage to the box, it had been painted over. I documented everything and went on my way.

I return the truck at ~12pm the next morning. I get a call a few hours later from U-Haul saying I'd damaged the truck to the tune of $1700 or so. I told them, "So whats your theory? That I drove the truck 100 miles, damaged it and had time to paint over the damage and for that paint to dry in 16 hours? And, I bought the insurance anyways SO WHY THE F** ARE YOU CALLING ME?!"

Some businesses are so routinely corrupt its unusual if they're not trying to cheat you.

Another time, I took my vehicle which had very expensive tires (think $650 each) to an Allen Tire for a slow leak in one of them (would deflate once a week). I took pictures of my tires bcause I had been dreading this and putting it off for months because-- I knew what would happen. And it did:

They called me a few hours later and said one of my tires had been slashed and that I would have to replace both rear tires. The guy was a great actor. He genuinely sounded distressed over my misfortune. I told them to put the tire back on and I'd pay a reasonable fee. They refused, "Sir we can't do that, the car is unsafe to drive."

I am livid at this point. I made probably a poor decision... I calmly explained that I was missing my regularly scheduled shooting practice (which was true) and I am coming down there, with the guns that I intend to take to the practice, so I hope my old tire will be on the car so I won't be late.

When I got there (no guns of course), they had magically discovered a nail in the tire and they were sorry for the mistake. The same bastard trying to scam me was outrageously apologetic for the "mix-up."

anyways, if you made it through this slog of a post thank you! Little bored this evening...

In a sense, this is all about interest rates.

If capital becomes abundant enough that rates of return become low enough, then the long term becomes more and more important in corporate planning.

If interest rates are high, then short term gutting of the business _is_ the rational move.

(Interest rates have been rather low in the last decade or so. Not sure if that had much of an influence?)

Disagree with that.

The decision is between a higher probability shorter realization, bigger annualized result vs longer realization, lower annual return (possibly bigger return if things go particularly well) with a bigger probability of things going wrong, especially a few years into the future where the crystal balls get less sure of themselves.

I can get a real 30% return this year and I'm out with high probability. Vs I could get 150% in 7 years time but not much this year or next and maybe it won't work out because the unknown unknowns etc?

If you're pretty sure you're on a winner you take option b and hold. If you're less sure, a bird in the hand is worth two in your dreams... Your bonus this year is on this year's results, will you still work there and get the bonus in 7 years? The decision is probably not made by the owners of captial but their professional agents.

The interest rate really doesn't figure in that calculation (real returns rather than nominal). It's all about the return probabilities and good enough with more certainty can win out where you might not like that and think more highly of the longer term prospects.

Factoring in interest rates, when they're high its because inflation is high. At that point an inflation hedged investment (which most equity is) becomes relatively more valuable than money in the bank (bonds) because money in the bank is a sure, steady loser. Capital has to go somewhere and its owners will want to put it where it can "lose the least" Get it invested in some kind of business equity, diversified as hell, across industries, business sizes, geographically, startup vs established, precious metals, Art, all of it. Just get the hell away from bonds which will hemorrhage value from the inflation. Where capital is having trouble finding investment because all captial owners are looking the incentive becomes to hang on and hold, let the business run rather than rip the value out now and have to find somewhere else equivalent to put it which may not be easy at all.

You are right that a more nuanced analysis needs to take risk into account.

Sorry, I was talking about real interest rates. Inflation doesn't make a difference to them. Real interest rates _do_ make a difference.

> Just get the hell away from bonds which will hemorrhage value from the inflation.

Bond interest rates already price in expected inflation.

Real interest rates are the growth rate in the overall economy, which doesn't change much or at least shouldn't in the absence of a crash and recession. For a country getting much above the world economy growth rate is a short term thing that doesn't last. You hit oil (norway) Your capital stock was low (post ww2 germany & japan, pre economic liberalization of china) but you have an educated and entrepreneurial population and you can catch up fast by investing, then reinvesting in capital. Then it tails off when you get back to parity).

The world economy growth rate is set by population growth and technical progress. (Both new technology and new ways developed to use existing tech better).

>Bond interest rates already price in expected inflation.

Look at the incredible growth in the S&P500 during a pandemic with all the economic carnage going on with that vs the bond rates. Then if you still think so, bet so, but against my strongest feelings, which are obviously not any kind of investment advice. There are cashflow timing tax effects to consider there as well. Bond returns are depressed by central bank policy and some capital is forced to allocate there when its a bad deal. (Pension funds mandated to invest in bonds and nothing "risky" like equity). Look at the number of ways an investment in bonds can surprise on the downside. Look at the lack of room with interest rates where they are to surprise on the upside. Unanticipated inflation is a redistribution from lenders to borrowers (can pay it back with worthless currency while the asset it bought appreciates). It's always "unanticipated" in most of the yield curve when it hits.

20 Year US Govt Bond yield is 2.07% sayeth the search engine [1]. That's anticipating basically no inflation at any point for the next 20 years and a 2%ish economic growth rate in the economy. Seem like a reasonable assumption? Bond income (coupon payment) is taxable as you get it. Capital appreciation of equity isn't taxable until you sell it. In times of inflation that really matters and causes you to make a small fortune out of a bigger one.

[1] https://ycharts.com/indicators/20_year_treasury_rate

No, real interest rates are not (necessarily) the growth of the entire economy. Interest rates are the cost of borrowing capital.

Eg if we discovered that an asteroid was going to hit earth in ten years, you can bet that interest rates would go up like crazy---without any growth nor growth expectations.

Of course, real interest rates can be related to real growth in the economy.

> Look at the incredible growth in the S&P500 during a pandemic with all the economic carnage going on with that vs the bond rates.

I'm not sure what you mean here? Econ 101 says that the price of stocks is the discounted present value of all expected future dividends (and stock buybacks etc). If you follow that simple model, it would already predict that a short term disruption to the economy should not impact stock prices.

Of course, reality is more complicated. But even this simple model captures the phenomenon of robust stock prices while a pandemic is still going on.

> Bond returns are depressed by central bank policy and some capital is forced to allocate there when its a bad deal. (Pension funds mandated to invest in bonds and nothing "risky" like equity).

Yes, regulation makes things more complicated here. Also keep in mind that in most jurisdictions companies pay bond or loan interest with pre-tax money, but they pay dividends or stock buybacks with post-tax money.

The wider context of the discussion was about junk bonds from private equity. They benefit from the difference in tax treatment, but don't benefit from pensions funds' mandates to invest in safe assets or central bank purchases of government debt.

I'm not sure why you would cite 20 Year US Govt Bond yields here? If you are interested in inflation expectation in the US, just look at TIPS spreads https://fred.stlouisfed.org/series/T10YIE which give you that information directly.

TIPS spreads are the difference in price between inflation adjusted bonds and non-inflation adjusted US government bonds.

> It's always "unanticipated" in most of the yield curve when it hits.

Eh, there's also unanticipated lack of inflation. The risk goes towards both sides. (A risk that only goes in one direction would be rather strange, if you have at least a few smart market participants who can benefit from correction prices.)

How do you know you prefer unregulated markets?

I'm coming up on 45 and through my whole life, markets have been regulated in favor of corporate officers and the government agencies and officials paid to represent them.

Could be an expression problem on my part. Perhaps I should have written "less regulated" as opposed "more regulated" markets. There's a regulation that when you buy something you can't shoot the counterparty and take your money back in most parts of the world so yes clearly "wholly unregulated" is largely fiction. In the same way that a (fully) regulated market such as a soviet style command economy usually has more than a few loopholes. Eg inmates in prison have a market that is as tightly regulated as anything in the world yet they work around it and it seems nobody has ever succeeded in keeping the drug trade out of jails.

The regulatory capture you refer to is one of the downsides of over-regulation. De-regulating is not necessarily a panacea for regulatory capture. Sometimes the regulatory body that has been captured has power of regulation that is in some way completely necessary and that is use as an excuse to institute an abusive barrier to entry or similar. Or just regulated to grow the career, influence & power of the persons who are charged with advising and enforcing the regulation.

Whether two people looking carefully and sensibly at a market see it the opposite way, one as over-regulated the other as under-regulated can be largely ideological and a good faith disagreement, both of whom can achieve a better understanding and policy prescription through sensible exchange of ideas - especially with regards important details like enforcement, corruption, abusive practice that is or could happen etc.. There isn't nearly enough of that about.

There's lots of different markets around the world in different goods and services.

If you are sufficiently purist, none of them is free or unregulated. But they are regulated in different ways and to different degrees.

You can learn a lot by observing how these varying degrees impact outcomes.

Beginning of the end happened before that because most healthy companies don’t need private equity unless they need a lot of cash for an expansion.

Part of the reason they got in that position is that they were charging to little to make money. It only follows that prices will go up and probably service down as the company stressed customer service in the hopes of attracting better future capital.

I'd assume the most common reason is that the owner wants to do something else, like retire or start another company. You can't really do that without selling, you can hire a CEO but you can never fully delegate the responsibility.

Too many companies end up in a leveraged buyout by PE that is ultimately based not on unprofitability, but just insufficient profitability to satisfy shareholders (some of which are buying in just to force the issue and then unload the stock before the bill comes due for the short-term thinking).

Eh, that's fine, I guess?

Bob founds a company that makes widgets. Bob sells the company to a PE company. The PE company runs the company into the ground. That opens a gap in the market for (a new) Bob to open a new company that makes widgets.

If shareholders or private equity or private equity's debtors are willing to subsidise Bob this way, who are we to complain?

I would guess most of your SeaWorld experience is covid economy related. Even the big parks like Disney aren’t fully staffed.

> Every time I’ve seen a company bought by private equity, it spells the beginning of the end.

I regularly work with PE firms.

You can't paint the whole industry with one brush stroke. I've seen more than a handful of companies get bought by PE to become very successful for everyone involved (PE, management, customers)...and the opposite.

That being said - it's very common to see companies in the large cap space ($5B~$10B in enterprise value) to be repositioned to match the market dynamics or financially engineered. While you might have had a poor experience, the rest of the market may have been willing to wait in 15 minute lines for $10 bottles of water.

If you disagree with PE, the easiest way to "stick it to them" is to vote with your wallet. Simply stop going to Sea World and you'll see PE change their tune pretty quickly.

> the rest of the market may have been willing to wait in 15 minute lines for $10 bottles of water

Yep, I can definitely believe you've worked with PE firms.

> While you might have had a poor experience, the rest of the market may have been willing to wait in 15 minute lines for $10 bottles of water. If you disagree with PE, the easiest way to "stick it to them" is to vote with your wallet. Simply stop going to Sea World and you'll see PE change their tune pretty quickly.

Ironically this is exactly the sort of attitude that the parent is complaining about. You could never grow a business with this mindset, but you can coast and cannibalize one just fine. Nobody likes 15 min lines or $10 water bottles; they tolerate them because there are other experiences that are worthwhile along the way. You remove these experiences and you are basically just screwing people who are going off outdated information about the quality of the experience. Voting with dollars is fine but there is a big information asymmetry and a hysteresis effect of having a quality brand reputation (built over years of not trying to screw people). Any voting with dollars is years removed from the results.

Why? I've never been to SeaWorld, and it's really easy for me to look up up-to-date reviews before I plan a trip. Easier than ever, in fact.

The hysteresis effect you mention requires that people would stupid when spending their own dollars.

> Nobody likes 15 min lines or $10 water bottles; they tolerate them because there are other experiences that are worthwhile along the way. You remove these experiences and you are basically just screwing people who are going off outdated information about the quality of the experience.

Perhaps other people just have different preferences from you and make different trade-offs?

> Ironically this is exactly the sort of attitude that the parent is complaining about.

And this attitude would exist regardless of whether PE is involved. When you get the $1B+ market cap size, these entities are not benevolent entities - they are profit seeking machines.

In respect to Sea World the more realistic strategy is either run at a minor loss until the real estate is profitable or squeeze dry ASAP and sell. Or the timeless play of load it with debt, payout themselves and declare bankruptcy.

Of course there are other PE businesses that are ran with only minor changes. I have a friend whose firm invests in dermatology offices and has created a network of small offices nation wide. From my understanding they really do try to keep the same staff on and mostly do back office changes but that’s his word so take it for what it is. I personally find large scale PE work pretty soulless but there are definitely firms that care about the companies they take over.

> Or the timeless play of load it with debt, payout themselves and declare bankruptcy.

Well, as long as they sell the bonds only to consenting adults, what's wrong with that?

"consenting adults"

By that did you mean "the Fed"?

No, I did not mean the Fed. Why?

The Fed mostly buys government debt, don't they? Have they recently taken to buying private equity debt?

They started buying them during the pandemic but, looking into it in more detail, it looks like it was only a few tens of billions, so not that much.

This model is not good for society as a whole.

What do you mean?

Some people prefer riskier investments. Let them have it.

Other people prefer safer investments, let them have what they want, too.

There's nothing inherently sacred about bonds. It's just a contract that basically says 'either we pay you x dollars on time, or you get to take ownership of the company'.

The issue is that a company purchased by PE often has built up a positive image of their brand. Sea World probably has thousands of positive reviews online; by the time the online consensus catches up to the reality of the experience, it's very easy to be fooled. That's where the money is made: when costs are cut but the brand still has a positive perception.

PE doesn't have to change their tune; by the time consumers realize that the product has changed, the firm has already made their money.

Any business can do this regardless of whether PE is involved. What's your point?

The difference is incentive structure. Running a business successfully is hard, and getting one to profitability is difficult. The easiest way to make money on a purchased business is to cut costs while people perceive it positively, ride that wave until the business isn't perceived positively, then sell the remaining assets. This method, given that it happens frequently, seems to be the easiest and most reliable way to turn a profit from a business over a period of 3-7 years, with no regard for the survival of that business moving forward.

Given that PE is generally looking for profits over the 3-7 year time period, this would line up with their goals.

Other businesses could absolutely have the same incentives. We see similar acquisitions from Google, Facebook, etc. where products are absorbed into the parent company or otherwise shut down. However, there's a larger chance that the purchasing business has incentives that align with the company being purchased. An established and trusted brand is incredibly valuable; many parent companies would be content to let that business thrive as a semi-autonomous business unit.

Would you argue that PE is less or more likely to employ the strategy I've outlined in my original comment? My prior would be that PE is more likely to use that strategy than other businesses.

As always, I'm open to my views being changed on that. Clearly not all PE deals involve stripping a company down, and plenty of other businesses would be happy to strip a company down. As someone with more experience with PE, I'd be interested in your views and why you have different priors than me.

> This method, given that it happens frequently, seems to be the easiest and most reliable way to turn a profit

I think you're naively looking at the headlines of PE that focus on large cap buyouts. For every story about Toys R' Us, there are hundreds of PE buyouts that do no cost cutting and use PE capital to grow their businesses.

As I noted earlier, the big PE funds - Apollo, KKR, etc. - are notorious for stripping away large healthy brands and financially engineering them to leave them loaded up with debt. I can certainly appreciate why people think the whole industry is like this. For the record - not only do not I have access to these funds, I would politely decline working with them if I had the chance (we actually said no to biz with one of the big firms years ago). They easiest PE route is in fact investing in healthy businesses with good management teams and then selling them in 3~5 years when multiples naturally go up. The less work that is required to turn the business around the easier it is on the PE fund. Financial engineering and cost cutting is just a cheap trick that can only be used in certain situations.

There is a HUGE market of mid market PE firms that survive on growing both top line and earnings as a result of growth orientated initiatives, and don't leave the company hanging with swathes of debt. In fact, there is a category called Growth PE which has invested in many of the tech companies we discussed here. Look up Insight Venture Partners, TCV, Tiger Global, etc.

Happy to elaborate further if you're interested.

That makes perfect sense! I'll look into those firms, thank you.

I had a sort of similar thing with Udacity and their front end web dev nanodegree program. They would literally change the content of classes WHILE people were taking them. I got so confused and fed up that I just quit the program altogether, even though the only thing I had left to do was an exit interview. They weren't going to see another dime of my money.

Why don't companies just speak plainly about these kinds of changes? "We are doing this to cut costs, which we need to do to [Survive/Buy a Yacht/Whatever]"

People tend to be really understanding when you are brutally honest, and brutally cynical when you bullshit them even a little.

That might work if its a few decisions here and there that look like they're being taken with much gravitas.

But I'm not sure that would work if you're pivoting constantly and in a downward spiral. There are simply too many decisions happening for "we need to cut costs" to feel valid all the time. Lambda school appears to be in that category so far as I can see.

Lambda framed these changes as beneficial to students, for reason XYZ. I remember seeing a lot of student comments saying things like "Is lambda ok??" or "We're adults here, if lambda needs to cut costs they can tell us."

To be frank: I think the main reason is because explicit talk of cost-cutting was at odds with leadership's self-aggrandizing Twitter talk. (Disrupting the education industry, putting four-year colleges out of business, etc.)

Maybe in some engineering/phd bubbles that's true, but that most definitely doesn't work the majority of the time.

An organization that treats their students with a "your feeble minds won't understand, so let me put some spin on this for you" deserves all the eventual backlash they get.

That's more or less every large organization then.

For engineering or other pragmatic types? Definitely. For those who are used to hard reality and know how to make it fit in a nice way or move on like field sales? Often.

For most everyone else? There is often a need to provide at least some surface ‘here is why everything is not actually super terrible so you should stay’ sugar coating or it is not going to go down well.

The larger the group, the more apparent the effect and I suspect it’s due to lack of trust and/or familiarity with the speaker. If you’ve had your sleeves rolled up and been in the trenches with someone, you either know you can’t trust them already (and in which case, why are you still here?!?), or can trust them well and can see a positive outcome if it works.

If you can’t trust them, it’s just a signal that things are terrible and don’t know how terrible they really are - and what choice does someone have to anchor and assume it’s worse (or maybe a little better).

This is a little ironic...

  - We really don't appreciate bullshit, all it does is erode trust
  
  - No, no, let me explain how bullshit is actually good for you...

This is very close to the language Lambda School actually used. Here is a snippet of something Lambda wrote after a LOT of students complained about the changes the school made to the program (removing TLs, grades, code review):

- First, we need to clarify how we've changed the accountability model.

- Second, we need to clarify why we've changed the accountability model.

- Third, after we understand the bandwidth and instructor availability in this new model, we'll continue to tighten the proactive feedback on technical skills.

Oh I’m not saying bullshit is good! I’m saying in some situations, with large enough groups of people? The non-bullshit isn’t going to be good either.

There is a reason 99% of politics is bullshit. shrug

And it's working so great in politics. The party that's supposed to help the poor and downtrodden has managed to completely alienate them through precisely this kind of condescending manipulation.

As long as the other party alienates them even more, seems to still be working no?

Not like California is going Red anytime, well, ever, after all.

> ... For engineering or other pragmatic types?

This does not apply to people who chose to go to a coding bootcamp?

> ... For those who are used to hard reality

This does not apply to people who chose to go to a coding bootcamp to avoid a life of a menial, lower-paying job?

Because legal.

The students would understand, yes, but not accept getting something other than what they signed up for.

Probably because a startup's primary audience for information is investors, not customers.

Good executives do do this, Ben Horowitz addresses it explicitly in The Hard Thing About Hard Things, but I've also seen it personally from good executives I've worked for.

It's bad ones that think they can spin something negative into something positive. All it does is break trust and employees just think they're full of shit.

The urge to spin things positively is the common default though for new execs for some reason, telling the truth about bad news when it's hard to do so is part of what makes someone good.

It’s the default ‘easy’ answer - telling a bunch of people something that sucks is risky and scary and many times they don’t even know how to process it themselves, or that they will be ok if they do.

Yeah - I suspect they may be lying to themselves first.

It’s also possible they rationalize it in some way that they’re “protecting their employees” from the bad news. In practice people like to be clued in to the truth and are more likely to respond positively to honesty in my experience.

100% agree. I also think we're (maybe?) starting to come out of a period where selling bald faced lies and bullshit was a major way to 'make it rich'. Or at least I hope.

There was a period where it was a requirement for an executive that they be credible and have a solid track record of under promising, over delivering, before they would ever be considered for leadership. Part of that comes with the experience to know (as in know in their bones, from direct experience) how important it is to be straightforward while not causing panic, and to set a solid and realistic direction instead of lying about it.

People required that of their leaders because they had seen and felt the anguish and loss that doing otherwise causes when it is something important. We've had a insane run of peace and prosperity, and it's easy to forget that and take the fluffy fun face instead.

I'm extremely skeptical of bootcamps, especially after learning that some of the TA's at Lambda are hired to help with teaching as little as two months into the program as students[0]. I guess that counts toward their "placement" stats!

Not only that, but Lambda seems so desperate that they will offer a fresh grad at no cost to any company for a 4 week trial period. [1]

I don't think I've seen a single hire out of a bootcamp work out in the end. Except a few cases where the person actually came from a STEM degree from a good school (and more crucially, already had some exposure to programming during the degree) but it's unclear to me that they actually needed the bootcamp and not just a good primer on modern software development and something like the Missing Semester [2] or a few classes at their school covering software engineering.

[0] https://nymag.com/intelligencer/2020/02/lambda-schools-job-p...

[1] https://news.ycombinator.com/item?id=25138610

[2] https://missing.csail.mit.edu/

I'm a currently working software engineer from Lambda, who knows other people who succeeded at Lambda and other bootcamps.

The TA thing, a TA doesn't teach, a TA pretty much grades/code reviews. They answered questions. (I did this while I was hunting for a job).

They also don't count that towards placement.

I have an IS degree, but some other people I know succeed with pretty much anything you can think of. I don't have enough of a sample size to know if we're all just exceptions or not.

> The TA thing, a TA doesn't teach, a TA pretty much grades/code reviews. They answered questions.

That sounds like... teaching doesn't it?

I guess I should have used the word lecture. Maybe they do lecture now, it's been awhile since I was involved.

Many would argue that lecturing is (/should be) the least important or impactful part of teaching.

Man, in college I designed the curriculum for, led 7 other TAs, graded and lectured the introductory CS course with 300+ students for two semesters. Clearly I should have told them I was the teacher (Ha!) and should have been paid more than 23/hr but nope my title was Head TA while the professor, who admittedly I hold in high regard supervised to make sure things didn't go off the rails. Honestly it was a great learning experience but yeah sometimes I think about that and laugh to myself.

We definitely have a few career changing bootcamp grads working out for us (no STEM background, nothing to indicate they were "almost there" on their own, turned into fine employees).

That said, the hit ratio from bootcamp graduate to productive hire is incredibly, incredibly low. I think there's a place for bootcamps, but I'm not sure most bootcamps are operating in that space.

I don't know how to fix it, but I did think the Lambda School income share arrangement at least served/tried to align incentives for the school to actually help the students transform themselves.

Lambda isn't aligned with students though, their goal is to sell the ISA for maximum value while minimizing instructional costs.

There is some natural overlap there, but that isn't the same thing as alignment.

A friend of mine hired 5 bootcamp grads and said they had no backgound in programming/CS. He said 4 worked out well and the 5th ended up taking an internship across town.

So there is 5

I've worked with and hired a bunch of fantastic bootcamp grads without STEM degrees. There are plenty of them out there.

My own brother is one such story, and within 5 years in the industry, he became a manager and now runs engineering at a small startup. He did have programming familiarity before his bootcamp, which helped him make the most of the bootcamp, but zero prior formal training or professional experience.

That said, my brother also reported that the majority of his class didn't seem to be really on top of the material, and I wouldn't doubt that that's typical.

Maybe the failure of bootcamp grads not working out is on your end? We've seen plenty of bootcamp grads succeed at our company.

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