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Comment by mapleoin | Hacker News Reader

I like this bit:

If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence. Indeed, if you aren’t certain that you understand and can value your business far better than Mr. Market, you don’t belong in the game.

Makes me think of all the CEOs who are firing and slowing down market acquisition atm just because of "market conditions", even though they should presumably know their company better than the market does. Either they all think their companies are scams or they don't know their companies enough to say and convince their investors otherwise.

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We recently had a new CEO come on board, and within 60 days they cut 3 product lines and all the people associated with them. We were making a profit, albeit less than usual due to "market conditions", but not anything that wasn't predicted to turn around in the foreseeable future. These were leading-edge products in our market, fulfilling a niche that our competitors weren't looking at in any meaningful way, and of great importance and interest to our biggest customers - and somehow this one person could predict the future and adapt to that better than legions of decision-makers in the organisation?

Maybe it's just me, but I don't think someone can reasonably come in and in such a short time make such sweeping decisions in an informed manner. I simply think it's impossible to do more than guesswork in that time frame. They're gambling with people's lives to make themselves look impactful, nothing more. These products were maybe 2 or 3 years in development too. I honestly feel like most CEOs spend a couple of days looking at a balance sheet for the next quarter, and make it all up from there. It's insane.

Sounds like the Hertz CEO and his Tesla fleet. I'm an EV proponent but that was a huge strategic shift and in a short time it became obvious it wasn't well thought through or prepared for at all.

Hertz's mistake was not offering free charging for all rentals.

EVs just don't seem a good fit for short term rentals. Maybe ultra short term, less than a day, where there is no expectation that the renter will need to charge it.

My EV(model Y) is the only car I ever had where I need to give a tutorial to someone who wants to borrow it. Hell, most passengers need a lesson on how to open and close the doors.

> Hell, most passengers need a lesson on how to open and close the doors.

Everything I read about Tesla's doors make them sound like a deathtrap. Call me old fashioned, but I want doors and hood/trunk latches to work even if the vehicle is unpowered.

They do - there is a physical latch you can pull (at least in the Model Y) that opens the door even when the car is totally unpowered.

I never actually knew about them, but I had passengers find them because people don't think of pushing a button to open a door. And when the latch is used, the car beeps at you and says something along the lines of "Your windows might be broken now when you do that".

This is true too but removing the recharge hassle would’ve gone along way. Drivability is a valid concern as well. I always have some trouble in most rentals beyond the common interface controls (steering wheel etc..)

> They're gambling with people's lives to make themselves look impactful, nothing more.

They laid people off, they didn’t send them to the gulag. It’s just business, no lives were gambled in the remotest stretch of the imagination.

Livelihoods, then.

Eh. Tech people are usually financially self-sufficient enough to bounce back, but I've definitely heard of people being laid off very shortly after a difficult and expensive relocation. And it always incurs further costs on the individual to get back into the job market. It can be extremely stressful. That misery is real and should be weighed on the other side of the scale of these decisions.

This is one reason high income/wealth disparity is corrosive to society. I suspect many executives have "let them eat cake" thoughts even if they don't voice them when it comes to layoffs. Being laid off when you have millions in the bank would just mean free time to perfect your short game and it's hard to understand the stress layoffs cause people who depend on regular paycheques for food and shelter.

With the exception of people living right at the poverty line (which is hopefully not that many people), saving up an emergency buffer is within the realm of possibility for just about everyone. It’s not only prudent, it’s practically required.

To pretend it’s the employer’s fault that someone in a skilled trade is living paycheck to paycheck is to misattribute responsibility.

> They laid people off, they didn’t send them to the gulag. It’s just business, no lives were gambled in the remotest stretch of the imagination.

Please, it's an hyperbole and a regular one. Nobody read that and picture people being shot behind the garbage bins.

Their lives are definitely heavily impacted.

No. It's definitely better to make the people get in the garbage bins before shooting them. Otherwise you have to do the lifting. ;P

Indeed, indeed !

I think it could simply be that CEOs and business leaders in general are often just uncreative, and constantly looking at their peers in other companies and things like Harvard Business review for clues and hints about what to do next. They read somewhere that we are in “bad market conditions” and their Wharton buddies at other companies also say they heard about these “market conditions” and there we go: that’s their justification to take action. What action do they take? They call their Wharton buddies back and ask them what they are doing. Oh, you’re laying off and canceling projects? Then that’s what we will do too.

Same thing happens when the meme is “good market conditions.” What are all my Stanford CEO buddies doing? They’re hiring?? Then, we must hire, too!

>” They’re hiring?? Then, we must hire, too!”

They’re forcing people back into the office? Then, we must RTO too!

This is a common theme throughout life. It seems like people are wildly uncreative and just follow the crowd at every possible venture. I’ll point to the Stanley cup craze as a prime example.

> We recently had a new CEO come on board, and within 60 days they cut 3 product lines and all the people associated with them.

Too bad you didn’t have Lou Gerstner, recruited from Nabisco (a biscuit company) to turn around IBM in the 80s. He was definitely a celebrity CEO. Famously he spent a couple of months traveling around talking to people throughout IBM and at the end announced his grand strategy: “people basically know what needs to be done and we should let them get on with it.”

Mr Market, and the employees, approved and IBM survived its malaise.

Perhaps if you are not as famous as Gerstner you can’t pull that off.

The CEO may have been instructed by the board to do exactly what they did.

If you bonus CXO's mostly on equity prices, then this is rational (but stupid) behaviour.

If you were a shareholder, you're probably pretty interested in having the CEO's pay aligned to your investment value.

Trying to fix this in a way that has shareholders working against their own interest is difficult from an incentive perspective.

What is this "shareholder" creature?

Does hollowing out a company for a temporary bump in valuation one quarter count as against or for shareholder interests?

There are MANY institutional shareholders who buy/sell based on quarterly financial results and never extrapolate except by fitting lines and exponentials to past quarterly results. The C-Suite knows that this bottomless pool of money is available for pump & dump, so they do. If you can see what they are doing, you can ride along too.

I mean, as a shareholder, I think you'd be more concerned with the long term value of the company rather than short term results.

As an example, if the CEO has an earnings per share target which is only met using all spare capital for buybacks then that may be rational for the CEO, but I think that a lot of investors would prefer less buybacks if it supports longer (10+ years growth). But most CEO's will be gone by then, and their comp methods predispose them to take the short-term bump rather than invest for longer term gains.

Like, I agree that this is a difficult problem to solve, but we are definitely not near a local or global maximum so its probably worth trying radically different approaches.

A buyback and a dividend are closer in effect than many people think. Both are returns to shareholders, while the second allows shareholders more control over the timing of their tax exposure.

Yet people seem to complain loudly about buybacks while treating dividends as "yeah, of course companies have to provide financial returns to shareholders... Otherwise, there would be no shareholders."

Long-term shareholders would prefer to optimize for, well, the long-term. Short-term shareholders flip that. Most companies have a mix of both.

> Yet people seem to complain loudly about buybacks while treating dividends as "yeah, of course companies have to provide financial returns to shareholders... Otherwise, there would be no shareholders."

I'm one of those people!

Fundamentally, to me the difference is quite large. If I believe in a company, I don't want to sell my shares, rather I'd like a steady stream of income from their operations. Granted, it ends up being more tax efficient to use buybacks, but I think that's a flaw in our current model rather than a reason to prefer buybacks.

I understand that viewpoint (and agree with it way more than not). My governing beliefs are similar to "I'd like to invest in companies with strong leadership. Strong leadership tends to be rational. All else being equal, rational leadership tends to do things that are optimal under the taxation scheme in place. Therefore, strong leadership is somewhat more likely to be using share buybacks rather than dividends. Therefore, I'm happy/willing to invest in companies doing buybacks."

If you want to allow something like 1031 exchange for dividends or let investors decide when to withdraw dividends from their investment account and only tax them on withdrawal, you can fix the tax difference, at which point rational leadership would be more likely to pay dividends, which I think would be more transparent for all and better [at least no worse] for long-term investors.

Labor hoarding when money was cheap and returns expectations were low. Now money costs money, returns expectations are higher, and labor hoarding is less advantageous.

It could be that they all respond to the same signal.

It’s also plausible that they are colluding to get better rates on employees.

Another explanation is that the behaviour of other CEOs is in itself a signal.

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