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Comment by miragecraft | Hacker News Reader

On the surface that is the case, but once you're a publicly traded company you're beholden to your shareholders, not your customers, so your goals and incentives changes drastically and "bad management decisions" gets made.

You think the management made a mistake, I think the management (as a result of going public) is the mistake.

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That’s a simplistic view. “Beholden to shareholders” does not mean prioritising short-term gain at all costs. That’s not just my ideology, it is how publicly traded companies work a lot of the time, including the one that I work for.

To imply that there’s such a stark binary difference between a privately held and publicly held company misses a lot of nuance. Investors can want a quick out or be in for the long game in either case. The controlling parties pre-IPO have plenty of knobs they can turn to limit drive-by influence if they choose. If a company gets fucked by going public, it was already fucked before it went public, because the people behind the float either didn’t care about protecting the company, or didn’t know how.

Thanks for the insight.

So I guess the conclusion is that Unity was fucked pre-IPO?

The fact that the CEO was slowly selling millions of shares was an indication

I would expect any CEO to continuously sell shares as they are awarded. Diversifying investments is a very recommended and common investment choice.

The CEO's role though is to help make the stock attractive to other investors, not just optimize for their own personal finances. I personally would expect most CEOs to hold a significant portion of their stock awards as a show of confidence in the future value of the company - if the CEO won't hold the investment, why should anyone else?

Surely the CEO has both interests, and securing resources for themselves is of higher priority than securing them for others. They might be expected to hold proportionally more of it than others, but I also would not expect any half intelligent person to put all their eggs in one basket just for the benefit of others.

> if the CEO won't hold the investment, why should anyone else?

I don't think you understand how many shares a CEO has. There are directors at Unity throwing around hundreds of thousands of shares and I'm sure the C execs have an order of magnitude more than that. You never want all your eggs in one basket, if only because you don't want everything to be beholden to the power of your country's economy (something even a CEO can't control).

Sorry, it sounds like you're defending the system that doesn't empower the public good. I hear reports time and time again that private companies that go publicly are burned by the artificial and unnatural need for constant growth. Going public serves greedy individuals (shareholders) that have no connection to the service or product that real people depend on.

In theory, that's true. But what I see every day is the opposite. It's essentially what people are calling "enshitification". Mostly short term decisions that screw customers up for a quick buck.

I do agree that private does not mean good. It all falls under the CEO/Founders in my view. But there seems to be way more greedy short term thinking leaders out there.

I can probably count in my hands the amount of companies I follow that are not prioritizing the short-term. Maybe I just don't follow that many companies and I'm biased, but that's the impression I get.

Public companies seem to have an even higher rate of short-term profit seeking though.

It starts out noble. Once a company goes public, the first few town halls after the shareholder call the CEO or CFO will be like, "Don't worry about the stock price, we're better than all the other short-termist companies, we care about long term quality and blah blah."

But bit by bit, little by little, like Pavlov's dogs the employees get trained to peek at that stock ticker around reporting time. And over time they sync up their decision making with that schedule, and internal planning starts to reflect it. And new initiatives get created and judged by investor reactions. And it's all downhill from there :-(

Public companies see their stock rise when they fire thousands of people even though they are profitable. The entire system is perverse.

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