My takeaway is that working hard to build quality products is more likely to be profitable than working hard to make money.
Brand loyalty takes a while to fade, there seems to be a cycle with a large number of successful companies that goes
work honestly to build a good product
-> generate brand loyalty
-> people with integrity get replaced by people who would have had no chance of building that successful product/company in the first place
-> cut as many corners as possible while riding the brand loyalty to more short term profits
-> eventually, on the scale of decades sometimes (because people take a /long/ time to realize that 'well known brand' !== quality), get out-competed by a small company building the same thing as you with integrity
-> return to step one with new company.
But there has been at least 1 good printer, and HP made it: - https://en.m.wikipedia.org/wiki/HP_LaserJet_5
Also, 9-pin dot matrix printers were workhorses.
At home I have an Epson ET-M3170, it's not a laser but one of those epson thing where you don't have cartride but just empty bottles of ink into a tank when it's empty, and it works great too (it's much slower, but then again it's a lot cheaper).
It's mostly inkjet printers that are always terrible.
Those things are tanks. Perform a maintenance kit on one of those, and it's good for another 150k pages no problem. The main thing that needs attention is the rubber feet that pick up the paper get dry. Some rubber rejuvenator on a q-tip goes a long way.
I have a 4050 for home, and I have no reason to doubt its future longevity. :-)
The firmware, though, is ancient (telnet, and a web interface that requires IE 5 IIRC). Now if there was open source firmware for these things...
They also made some great RPN calculators.
Then they killed off the calc division, not because it wasn't profitable, but because it wasn't as profitable as ink. Years later they decided to upgrade the calculator (TI had won the market in the meantime), instead of doing something innovative they bought a new arm chip and ran an emulator of the old chip and used the old software stack with minimum polish under the emulator. Not surprisingly Texas Instruments laughed all the way to the bank.
Their laser printers were starved as well, again not as profitable as selling ink for ink jets. So the print engine was killed off and now uses the same print engine that you get in a Dell printer. Which was sad, they weren't nearly as durable.
It was sad to watch
Tie their compensation to real goals and require them to hold for the next 10 years.
Perhaps people who are interested in building great companies, like the regulars of a tech startup-centric forum
It would be much worse if the big incumbents all remained at the top and dug themselves into the regulators and politicians and crowded out others (they already do to a great extent but it could be a lot worse).
Uncertainty and risk are big reasons why people fear change, I completely understand. I'm not saying the feeling or desire for stable incumbents is invalid, although maybe my comment could have been worded a bit better.
That's the sort of bespoke governance that Eric Ries' Long Term Stock Exchange is meant to enable and support.
- short term-ism leads to great financial results in the short term so the stock price goes up making a buy out expensive. Anyone that can see the internal issues will know it's not worth that price.
- very few groups can make an offer on companies as large as Intel and Boeing. Those groups are not known for deep engineering expertise.
- companies use poison pills and other measures to prevent take overs
You have more faith in public markets than I do.
When the board members taking their gains and re-investing them in other companies to then repeat this strategy.
Perhaps you could get a longer-term effect if you had another, lower tax level at 5+ years, or raised moderately the 1+ year cap gains rate and moved the current one to 5 years.
With that incentive severely reduced as your plan proposes, you’ll see much Miles’s incentive to hold and more volatile markets.
https://www.investopedia.com/articles/personal-finance/10151...
There's still an agency problem between the shareholders and board members, but at least the shareholder votes will be weighted for the long haul. Locked shares would have to be held in a way that prevents wrapping them in a salable derivative.
This would have a significant impact on encouraging long-term investing for investors and long-term planning for companies.
This should apply only to shares in individual companies and not index funds or mutual funds.
It would also encourage a shift away from short-term speculation and to long-term investing in great companies.
Where I live stocks profits are taxed at 20% at first, then 5% less for each 5 years you hold them, down to 0 taxation after 20 years.
Also, this kind of progressive tax reduction should only apply after the company is public. So the clock for VCs, founders, etc only starts at the time of the IPO.
This would ensure all the early stakeholders are also aligned in investing in the long-term success of the business.
Currently, these early stakeholders are more likely to be focused on cashing out and having a liquidity event.
Now it's in the interest of a CEO to take a performing company carve out the middle so profits go up in the short term, shareholders get more money, he gets fat bonuses and the company dies.
Though there were problems with the old style too - they became very conservative and couldn't adapt among other things.
Boards often want the same thing because members usually own stock in the company. Make a lot of money in the short term, pump that into stock buybacks, profit. Shareholders want the same thing - they often aren't looking past the next 1-4 quarters, they want fast returns.
Maybe that's the root of it and long-term capital gains should take longer than 1 year. The owners have a shorter horizon than employees!
If companies inevitable self-destruct from short-term management, that creates space for new companies to emerge with new approaches. Sure, there will be some noise/churn but overall I think it makes the overall ecosystem stronger.
The 1,000-year monopoly is a terrifying idea.
Very difficult to align long term incentives unfortunately, unless the company is founder led.
These are not what I would call super gains, they are definitely good gains, but they are what anyone would expect from a blue chip company like Intel.
So the point is this isn't people looking at the short term, this is a company that used a strategy to optimize growth over a 20 year period. Yes they hampered future growth after those 20 years, but this is a technology company, most technology companies don't even exist after 20 years. I don't think there is really any policy or attitude or anything at all you can implement to get people to maximize revenue over a longer period than 20 years, especially in a technology company. No one would invest in such a company because, because such an investment would be extremely risky.
Over time lack of domestic supply chain becomes and security and economic stability problem, and domestic inflation rises after trade deficits grow too large, and various supply shocks occur etc.
The only way to prohibit this would be to cap the maximum size of a corporation. My guess is lawyers would just come up with some legal novelty to work around this in no time at all.
but that's the point of the early-enough forced bankruptcy - to salvage value and re-internalize the downside risk to owners only.
i'm totally down with limiting corporate size, not via a direct statute to that effect, but via a high-functioning antitrust department along with severely progressive taxes. you can get as big as you want, as long as you can internalize all the downside risk of being 'too big to fail'.
As it is, we keep some of these giant companies on life support for years or decades, allowing them to crowd out competition with their sheer size, while also failing to really produce good products that serve their customers.
Real world doesn't work that way. Real world looks much more like the deindustrialized parts of the UK or the US, or the collapse of Soviet economy after switching to capitalism. Companies go bust, taking the whole supply chain with them, workers are laid off and disperse. After a few years, the skills atrophy and the experience vanishes - you cannot put humpty dumpty back together again. More often than not, the workers stay unemployed, underemployed, or just cheat disability. In high-end consolidated markets like semiconductors or aircraft manufacturing, we're not talking about an infinite reservoir, it's a handful of corporations per continent
i’m totally good with throwing out the senior leadership and letting new leadership grow from within though. claw back their bonuses and golden parachutes too.
Take over, investigate, prosecute, replace corrupt management with people of integrity.
Basically, what the FDIC does with small banks that fail.
The US media furiously ignored it.
AMD is not the competitor they need to worry about.
The future will belong to manufacturers that can produce powerful CPUs that power a device for a day on a single charge, without needing fans for cooling (like what we see with the ARM-based M1 from Apple).
Low power/reduced heating costs will also be a big draw for cloud providers.
If Intel can't compete there they'll be in trouble.
It did catch up with AMD with Alder Lake, but it is also committed to very large R&D capital expenditures.
So anyone holding it hoping for higher dividends and more buybacks is dumping, which is pretty much everyone that bought it before Pat Gelsinger took over.
If they stay focused on the path they are on, they will turn it around. Anyone buying in now should be prepared to hold until 2025.
For foundry to be successful, they need one of the big clients - Apple, Qualcomm, Mediatek etc. If they find one of them, they'll pay for the fabs getting up to speed.
It's brilliant building up the gpu segment alongside. They are building internal demand, so they can be their own "trailbrazer" client for foundry.
There are supply chains disruptions. Some car manufacturers have been heavily affected by them. Some have not. Unless you think that these supply chain disruptions will continue for the next 20 years, it's bit too early to declare the firms hit by them dead in the water.
Intel’s downfall can be tied back to an org structure that made up for bad gate-level architecture choices with proprietary fabrication techniques. All that customization crushed intel’s ability to compete with TSMC in foundry and the lack of architectural discipline prevented them from even coming close to fast-following QCOM SoCs or NVDA GPUs.
Keep in mind, for all the talk of Intel’s bad management and over-financialization, BK was a foundry engineer and he oversaw the worst period of decline.
Except that it isn't.
"Manufacturing" has known limits. You need this many people to make this many things and your things sell for this much. There is growth, but the values are limited. And, if the company is dying, it is a very slow process and can still generate a remarkable amount of cash while doing so.
"Financialization" has no such limits. The sky is the limit and can do so really quickly. So, it looks great. Your gains can be close to infinite.
Unfortunately, quick and infinite can also describe your losses from "financialization".
This killed Westinghouse. It also crippled GE quite heavily. There are many other examples.
Speaking with no manufacturing experience, but having read some books (Diamandis' Abundance).
You can reduce long-term costs by automating. If each week you buy a robot replacing a human, your operational costs go down permanently. That is because robots are fundamentally cheaper than human time.
Of course, you have to foresee the demand that would make it possible to recoup the costs.
But ISTM that the thing with constrained environments like manufacturing is that the constraints are physical, so everyone is constrained, which means that in a highly competitive environment, all viable players should be optimising and striving to work on the edge of what’s possible, in order to maximise competitiveness and profitability.
So in such an environment, it’s absolutely necessary to “work hard to build quality products”, just to remain in the game. If you instead direct your resources to something else (like financialisation) at the expense of building great products then you will fall behind the leading edge and become uncompetitive or, perhaps worse, a commodity player.
This certainly seems to be what happened at Intel, and also Boeing, both of whom appear to have fallen well back from the edge of what’s possible.
I think the main reason financialisation is easier to do than engineering, is because money is a universal language, and Verilog is most certainly not. Shareholders seem to invest in order to make money from transactions, rather than dividends, and this seems to be a structural flaw in the financial system.
The current definition of a "profitable company" is all about the stock price increase.
The problem is that manufacturing has a hard, fixed, upper limit on how much you can manipulate your company. Your Thneed(tm) sells for $X--you can't dramatically increase the price per unit (barring monopoly status). You probably can't increase demand dramatically either. You can only reduce labor and R&D to zero. So, the maximum amount of cash you can earn is completely constrained and straightforward to compute. Your stock price has some relation to this and thus also has a limit.
However, if you switch to "financialization", there's no limits. You have margins. You have multiplers. Things are easy to hide and difficult to compute. The stock price goes gangbusters for a while and you have a great "profitable company". Then something goes wrong and suddenly the business needs cash rather than "financial instruments". Then the "financialization" unwinds and kills the core of the company.
The problem is that the "stock market" has become "lottery tickets" instead of "corporate ownership". People demand stock price increases even if the business is quite profitable--this means that "financialization" will always triumph.
I agree with all your other points though. The goal has changed from "running a good business" to "shareholder benefit at any cost". I don't think that's in the spirit of capitalism, somehow.
Maybe true, it's business profitable, successfully extracting money from airlines and government contracts.
No company is safe. Boeing is exactly the type of company that won't know they're dying until they are dead.
Yes, but they're in a sufficiently protected region of state space guarded by landscape difficulty, moats, massive contracts and cash flows, the government, you name it.
You can't just build a better plane from zero and immediately start taking orders. You have to start with something small, tangential, and then grow into that market. That's still very hard to do in aerospace because the requirement is "don't kill people" yet the problem involves putting people in mortal danger.
I don't doubt that it could happen, but I think it's a very tall order.
A few years ago, Bombardier introduced a new plane, the C-Series. Even though it did not immediately compete with Boeing's own offering, Boeing successfully lobbied for an extravagant 300% import tariffs to be be applied which killed the primary market (US) for it. Canadian government folded and essentially gave the otherwise technically successful project to Airbus in the hope of salvaging any industrial returns on eventual mass production. The airplane is now known as the A220.
Any would-be competitor will not only be fighting Boeing, but the whole US government.
Doesn't this violate NAFTA?
> On 10 January 2018, the Canadian government filed a complaint at the World Trade Organization against the US.
> On 26 January 2018, the four USITC commissioners unanimously determined that US industry is not threatened and no duty orders will be issued, overturning the imposed duties. The Commission public report was made available by February 2018. On March 22, Boeing declined to appeal the ruling. While the USITC had determined there was no threat, the ruling came too late for Bombardier, as the dumping petition by Boeing had already paved the way for Bombardier to relinquish a controlling interest in the CSeries to Airbus in October 2017.
This is just a repeat of the Avro Arrow story. US demanding free trade from everyone and then just bullying its weight around when someone comes along with a better deal than what they can manage.
And ... Putin has a significant aviation industry. For a while they were the only country able to launch humans into space. And as far as I know, they're flying MiGs in Ukraine.
But my comment was really intended to say that the "freedom" we are supposedly entitled to is actually a gift, with limits, and there are few better ways to discover those limits than to threaten a very large company.
In the long term. But in the short term, you can make more money by not caring about the long term. And given the way US CEO tenure has declined over the years, for a lot of execs the long term is somebody else's problem.
This seems like a short-term vs long-term thing. You are often going make more money in the short term by chasing the money (e.g. financialization); but if you aren't careful you will undermine the core value of your company.
It's pretty clear that people have made many companies more profitable by this sort of approach, at least for a while.
"Manage the top line; your strategy, your people, and your products, and the bottom line will follow.”
-Steve Jobs.
It makes me feel like a sucker. Why am I even trying to create something when these literal sociopaths are making more money than me destroying years worth of other people's work? Maybe I should be like them instead. Why create when destruction is easier and more profitable?
For big companies. For individuals it might not be the case. Hence why we see this happening.