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Comment by klik99 | Hacker News Reader

> Then it raised venture capital, hit scale, and needed to hit growth numbers and meet quarterly metric goals. The focus shifted from “authenticity” to “daily active users.”

Having spent a few years in the VC world I have been increasingly convinced outside investment is the biggest reason why companies lose their morals. The legal obligation to represent shareholders erodes morality. When the people running these companies feel they’re beholden to shareholders and can’t act on their own agency of course they will turn to addiction research not as a warning but as a guidebook. It’s Stanford Prison Experiment stuff.

I hate being reductionist, and I am posting this on a historically YC forum so of course there’s nuance, but there’s a pretty huge throughline of outside investment and addiction engineering. It sucks we’re seeing less grants and less security net to encourage risks under current administration, because it leaves investment as the quickest path to starting or scaling a company. Donate to open source, IMO

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I feel that it's even simpler: The company is the product.

When we have that mindset, we absolutely don't care about the thing that we call "our product." It's just food for the actual product, where we want to fatten it up, and sell it to the biggest slaughterhouse.

That starts almost immediately. You can't even get an A round, without an "exit plan."

I feel that the very existence of an exit plan, dooms the user. No one cares about them. It's all about fattening the company, and making it look good. When we do that, we'll feed it nothing but junk food, in an effort to make it as fat as possible, as quickly as possible, with absolutely no thought as to long-term viability.

I would love to see the tech industry return to concentrating on truly delivering good to the end-user. It's still possible to make a decent living, but maybe not at the insane rates we see.

> The company is the product.

If you've ever dealt with Investor Relations at a public company, this becomes very apparent very quick.

Core fundamentals as a business can be strong, but if you cannot craft a unique story or thesis (which does not have to be tangentially related with active initiatives) about your company, you will not succeed.

Usually, the onus should fall on PM, EMs, and Sales Leadedship to drive customer outcomes, but the hyperfocus on short term deliverables AT THE EXPENSE of a long term product vision makes it difficult to push back.

Very few newly founded or public companies can do the latter - the most recent ones I can think of are maybe Datadog and Wiz (not public but they did drive a customer centric mentality internally).

Of course, a lot of this is also due to the extreme bloat that formed in the tech industry in the late 2010s to early 2020s. Teams grew unrealistically large with limited financial justification beyond cherry-picked growth metrics, and this meant a lot of companies lost the ability to innovate frugally or nimbly. Unrealistically high valuations also played a role because towards the end, founders could end up demanding IPO-sized multiples in private markets even without the underlying fundamentals (eg. Lacework's $9 BILLION valuation on what was at most $90 MILLION in revenue).

A lot of the current AI products and stories are cost-competitive due to that bloat itself, so some amount of rightsizing will help the industry.

> if you cannot craft a unique story or thesis...about your company, you will not succeed.

Halfway true. There's a famous quote:

> In the short run, the market is a voting machine, but in the long run, it is a weighing machine.

At some point, strong fundamentals will catch up with you.

In the limit that might be fine, the problem is the amount of damage caused in the meantime and the constraints that puts on future trajectories.

Only for those left holding the heavy, heavy bag.

In the short run if you can get acquired then the long run fundamentals don't matter. They just become noise in some larger company's financial statements.

This is such a boring dytopia. Everything is just a grift at this point.

They might not matter anymore for you, but they still exist, which is the sentiment the relevant sentiment for the quote.

Isn’t all this company is the product stuff an obvious side effect of wealth inequality?

There is way way more money up top looking for investments than there is in the hands of customers, so it’s far more profitable to chase that money and make the stock the product than it is to care about the actual product much.

It’s a special case of the more general big dumb money problem that happens whenever too much money ends up in too few hands, whether those hands are a government or a few private rich citizens. You end up with this giant piñata of big dumb money and everyone whacking it.

In the old USSR instead of the stock is the product it was the appearance in the eyes of other bureaucrats is the product, but it’s kind of the same phenomenon. The customer isn’t the customer.

I would be willing to bet addiction in general (gambling, drug, dopamine, etc) is probably a symptom/side effect of wealth inequality. Desperation -> "relatively cheap method of short term emotional/sensory boost" -> Further Desperation not mitigated by outside forces -> repeat

Then rich people would never be addicted to things, but a history of musicians dying from drug overdoses says that's not true. Addiction is a deep topic that doesn't simplify into one neat little pet theory for it.

Well it's not a neat little pet theory though, it's an opening up of the conversation, thinking in binary.. It's a "poor vs rich" disease isn't helpful. Thinking in gradients is... "It's 50% more likely in people with this income level vs 10% in this other population", that's still a problem. The point is to address problems, not hand wave them away as "complicated" etc etc, something something engineering

the article is about digital addictions, and not gambling or drugs.

The point of saying it's complicated isn't to dismiss the problem, but to invite a deeper understanding of the problem itself so as to be better equiped to help solve the underlying issue, rather than show up, guns blazing, and then not actually fix anything.

Well maybe we can agree that addiction is a form of escapism, and the question then becomes why do people want to escape their current situations?

which you'll bring back to "in general, it's about wealth inequality", except that plenty of poor people aren't addicts.

> For every complex problem there is an answer that is clear, simple, and wrong.

-H.L. Mencken

H. L. Mencken? You sure about that one?

though the wording is different, https://quoteinvestigator.com/2016/07/17/solution/ says yes

You must not know many rich people if you think addiction is not an issue for the wealthy. The drugs of choice are less immediately destructive, but cocaine, pills, MDMA and ketamine are all wildly abused by the 1%.

All humans are susceptible to addictions and addictive behavior, but the 1% that you mention are mostly shielded from their negative effects. It's far less of an issue for them, and it's not even just about choosing the less destructive drugs. If we talk about just drug addictions, their wealth ensures that:

1. They always have a reliable supply of their preferred drug. No matter how much they need, many of them will be able to afford it pretty much indefinitely. They can just live with the addiction.

2. They have first-class healthcare to mitigate the addiction and lessen its side effects.

3. They have the power to never run into any legal trouble over it. How often do 1%s get convicted on drug possession? This often applies even to the harshest regimes.

So, referring to what the other commenter said, the wealth inequality also affects addicts unequally. The rich, excluding the most extreme exceptions, are immune to the downward spirals of addictions and many of their consequences. The poor addicts become increasingly desperate as their drug habit consumes most of their income and savings. The poorest turn to the cheapest, most dangerous street drugs. Many get little to no medical help. Many are charged with drug-related crimes, ensuring their criminality keeps them down for the rest of their lives. This varies by country, but the patterns are all similar.

There's always going to be an underlying layer of people who tend to gravitate towards addictions, rich and poor - the real question is if more and more people are turning to them as they get desperate, who wouldn't otherwise have.

That is a fundamentally different argument than the one GP was making.

Yeah, I agree, sorry. I went on a bit of a tangent, but still wanted to post it. But hey, I tried to bring it back in the last sentence.

A lot of the time I feel like the software economy is just a bunch of well-moneyed individuals betting on horses.

They are betting on whether richer people will bet on the same things so they can cash out. Repeat, all the way up.

The entire economy is to some degree a casino betting on itself. I think this is always true to an extent but the casino nature becomes much more dominant the more unbalanced things become.

> A lot of the current AI products and stories are cost-competitive due to that bloat itself, so some amount of rightsizing will help the industry.

The problem is, any amount of rightsizing has the potential to tank the entire economy. Too big to fail, just that it isn't banks this time but a bunch of companies who went all in on "AI".

Capitalism as we know it so far only reacts after a crash happens because of the fear of crashing the economy with any corrective action. My very personal opinion is this is more psychological than scientific.

No, the reason is because these "crashes" are very small so on average you lose more trying to avoid them than just staying invested. The emotional part is trying to avoid them, the rational part isn't.

> Capitalism as we know it so far only reacts after a crash happens because of the fear of crashing the economy with any corrective action.

Inevitable when you tie the pension of people to the performance of the stonk markets.

> I feel that it's even simpler: The company is the product.

As Action Jack Barker said, Pied Piper's product is its stock.

"The company is the product." -> When I'm feeling more optimistic I see this is how VC sees their portfolio and how you sell it to them, but not what the company is in reality. Like playwrights who write under authoritarian regimes selling it to the censor as promoting the regime while it actually satirizes and undermines them. But even if it's possible to walk that line, the data just doesn't back it up as common.

Side note, on "exit plan" - the most ridiculous thing about raising money is you need an exit strategy but you cannot explicitly say you have an exit strategy, you have to imply it while the whole time pretending it's not a focus for you. It's a very weird dynamic.

It helps to formally understand who is who. Every company has staff, customers, suppliers and product.

If you go the VC route then the VC is the customer. Since any good business is focused on customer satisfaction, a VC funded business is focused on VC satisfaction.

VCs want an exit. Which necessarily means switching funding model. The only switch that has worked so far is advertising. Advertising requires attention.

Of course a business can succeed with say SaaS subscriptions instead of advertising. This works well for B2B, but less so for B2C. Amazon is the poster child for B2C success, but makes most of its money from AWS (which is B2B).

The pattern is now well understood, and well demonstrated. If your business is B2C then figure out the funding model. If you can't do that, if you can't do it without VC money, then your path is predestined.

> Amazon is the poster child for B2C success, but makes most of its money from AWS (which is B2B).

Amazon still makes the most revenue from ecom.

But most of its profit from AWS

That's what you get when an expert financial trader makes a company. He wanted billions from the start ... so how to do it? There's only one way, really: a pyramid scheme. But an atypical one: get lots of sales, lots of revenue and change any profit into capital. This is quite a common plan in Western Europe, and that's why it doesn't work there.

Why would you do that? Well companies are taxed on profit. And the money you pay to investors ... is also paid out of the profit. No profit -> all the money stays in the company, under the control of management, ready to be deployed on yachts and castles for the CEO. Governments get nothing. Investors get nothing.

Jeff Bezos (and very early investors) get everything. If they get desperate there is a buyback (no doubt matched by a greater stock package for the top of the company).

This is a pyramid scheme because the whole company only works because it only makes extremely minimal profit. If it starts demanding profit it will be eaten alive by competition in no time at all. Money has to be invested in, flows to the top, and is taken out at the top. No doubt Bezos was utterly baffled by the success of it and therefore isn't yet out, but ...

> If it starts demanding profit it will be eaten alive by competition in no time at all.

At least until it becomes too big to fail and can build anticompetitive "moats" around itself to increase the amount of profit it can take.

For example, in the case of Amazon, they aren't just a retailer, they're a logistics and shipping company, too. And all of those are separate, itemized services that suppliers pay for, which increases revenue in a very opaque and difficult to understand way. On the customer's end that means higher prices and worse selection.

Any competitor to Amazon doesn't just have to get the same products for cheaper, they also have to build their own shipping company that can get products to people with <48hr turnaround. This provides a lot of room for Amazon to take a cut.

That being said, when you start building a giant business empire the direct profits matter less than the amount of control over the economy you get. In other words, you have the power to tax and subsidy, just like a government does. Amazon maintained minimal profit by deliberately subsidizing new business ventures until they could get big enough to become extractive on their own.

At no point does the business flip a switch and go from "deliberately burning money to avoid carrying a profit" to "extracting so much profit they get eaten by nimbler competition". They instead are always burning money, and always extracting, moving money to where they see fit.

When you really think about it, this also applies to very many publicly traded companies. Tech especially, always searching to present next growth area. And then often shortly abandoning it or wasting massive resources on it...

Really does make me cynical on investing...

We make fun of the state run businesses of old communist regimes, how wasteful they were, how mismanaged they were, how they produced stuff nobody wanted and so on. I'm increasingly getting a similar feeling for VC fueled tech. It's all smoke and mirrors of hype (was blockchain or web3.0 yesterday, AI and quantum today). There is so much wasted money, especially after quantitative easing and negative interest rates of the past decade.

Publicly traded is no better. Lets not forget whole Meta and Metaverse and VR "investment". Google basically launching entire physical products and then killing them and refunding everyone (Stadia)...

One might question would we as society be better off if that money was spend on more efficient factories or say nuclear powerplants?

How about public education and healthcare?

The difference is that VC fueled startups is a very small part of the economy while communist regimes are the entire economy.

Imagine if every company was as wasteful as VC fueled startups and life would be hell, imagine going to the new smart grocery store where prices changes by the minute and now you have surge pricing since many wanted to buy toilet paper this minute...

They may be a small part of the economy as measured in imaginary numbers being shifted around but still have a significant negative effect on our lives that cannot be easily escaped. This is even more true when you also count publicly traded companies which have similar incentives to sell out their "customers" in order to benefit the real customers and are often just the final form of VC funded startups.

Most companies are wasteful. Perhaps not as wasteful as a startup, but still incredibly wasteful, and it scales non-linearly with size.

> state run businesses of old communist regimes, how wasteful they were, how mismanaged they were, how they produced stuff nobody wanted

I'm increasingly convinced that this is pure western capitalist propaganda. From what I observed in the 8 or so years I've been an adult, Western Capitalist economies (especially US) are much more bloated and wasteful. Nothing demonstrated this more clearly than Crypto/Web3 Hype-Bubble.

Companies do this because growth is often possible. failed investments are the cost of growth. Overall, the returns are positive.

Is it growth itself you are opposed to?

> I would love to see the tech industry return to concentrating on truly delivering good to the end-user. I

How do you force an industry to ignore profit incentive? Seems a little pollyannish to hope for.

You force them to pay for the negative externalities they cause so that their profit incentives are not as misaligned with what is good for the rest of the world. This includes making companies pay for pollution but also for much more abstract damages like the reduced consumer choice from monopolies.

> You force them to pay for the negative externalities they cause

Surely Capital would just purchase more convenient terms from politicians.

in which case you just have a failed state. Just like Drug lords run Mexico, VC and investors run the US, and citizens suffer in both cases.

To be clear, business operators have extremely, extremely broad latitude in how they interpret their fiduciary duty to shareholders.

We actually need to combat this notion that somehow exclusive focus on short term returns is somehow legally, morally, or ethically required. It is actually antisocial and obviously destructive.

I have a better idea: let's combat the notion that putting shareholder value ahead of the common good is moral.

Great! You've convinced nobody of anything.

Businesses are powerful tools for the common good and the fact they produce returns for investors is absolutely critical to their continued existence and long-term viability.

But the point for businesses to exist at all is to produce positive externalities and they need to produce those externalities for more than just their owners.

It cannot be "either/or" and it's not immoral to pursue profits.

You can explicitly build the business to say "delivering shareholder value is not our highest goal, we must remember that we live in a society and upon a planet".

https://en.wikipedia.org/wiki/Benefit_corporation

Their purpose is absolutely not "to produce positive externalities" (whatever that even means). What makes you say that? You can, and people do, run a business doing all sorts of heinous things

You should read a history book about why corporations were invented and allowed to exist.

There's an old saying: The purpose of a system is what it does[1]. You can't (well, shouldn't) judge something by its intended purpose if what it ends up doing goes against it.

[1] https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...

And businesses as a whole produce positive externalities, as intended, which is why we continue to allow them to exist.

Only when accounting is done without calculating ecological cost, including human quality of life.

Human quality of life tends to be pretty shit without them though, and that is ignoring all of the competitively a necessity "choices" where not doing so is literally suicidal. Not adopting early agriculture and settling down leads to nomadic hunter gatherers being outnumbered and genocided by sedentary farmers sorts of necessity. Refusing to mine and pollute means bad things happen to you when you encounter metallic armed and armored foes.

> we continue to allow them to exist

Who is “we”? I can’t do anything about it. No more than peasants “allow” the king to exist..

Sure you can. You can vote to get rid of corporations, and you'll get outvoted. Ergo: we.

You don't understand how kings work if you think it's equivalent to your situation in a western democracy.

Capitalism has pulled more people out of poverty worldwide by an order of magnitude than any other competing system or ideology.

What capitalism does is apparent in its worldwide success.

Amazed that Hacker News has become such a bastion of socialism. The above comment is objective fact.

> The purpose of a system is what it does

This is a dumb saying. And if you start to apply it to everything capitalism still seems pretty ok. For example: "The purpose of Communism is killing 20+ million people"[1]

[1] https://en.m.wikipedia.org/wiki/Excess_mortality_in_the_Sovi...

I agree that when taken literally, it's a dumb thing to say: literally (i.e., the dictionary definition), the purpose of a system is the reason why it was built, not what it does. But it's a slogan, and slogans don't always make sense taken literally. The point of the slogan is to remind people of the (obvious, I hope) fact that, as I wrote:

> you can't (well, shouldn't) judge something by its intended purpose if what it ends up doing goes against it

If you check my Wikipedia link it shows that the original quote says more or less the same thing: "[this slogan] makes a better starting point in seeking understanding than the familiar attributions of good intention, prejudices about expectations, moral judgement, or sheer ignorance of circumstances".

In other words, it doesn't matter what's the historical context of why corporations were created, what matters is what they do now. You can argue, like it was argued, that corporations as a whole currently are a net benefit. My point is that bringing up the historical context of their original purpose adds nothing to the discussion.

As to your other point, I completely agree that it would be useless to try to defend the Staling regime by pointing out what communism was intended to be. That's more or less the point I was trying to make.

That line is blatant projection on the part of central planners. Both in the sense of how they see the world and it must be planned rather than arising from interactions of independent parties and random vatiables and because it is casting their own flaws onto others.

I'm curious to know why you see it that way, as I don't interpret it like that at all.

Quite the opposite in fact: if anything it's a reaction to people who do try to understand a system by looking at its original plan: it says that you should disregard that and look at what the system actually does (which includes "interactions of independent parties and random variables", as you say).

In any case, that's how I meant it: it's a bit useless to dig up the original purpose of corporations in history books to talk about how corporations work today, like the comment I replied to suggested.

Yes, I've heard the party line too. The difference is, I realized it was horseshit.

It’s pretty rare for businesses to produce positive externalities. Businesses create value and some of that value goes to others, but that normally happens through explicit transactions.

>But the point for businesses to exist at all is to produce positive externalities and they need to produce those externalities for more than just their owners.

I see little evidence that this is true. If anything, modern VC companies are "externality parasites". They produce positive externalities for some (ie. shareholders), by putting a lot of negative externalities on society as a whole (see for example the cost to democracy, societal cohesion, etc. that comes for Facebook and the like).

If I had to choose between common good and shareholder value all else being equal, I'd choose common good every time.

We should be suspicious of games that favor shareholder value over common good and repair them. Of course this is harder than it sounds, but letting the person with the most money in a Monopoly game also set the rules is absurd and and obviously wrong. Wrong even without having a consensus reality on what "common good" entails and this is important.

The "capital game" should serve us, rather than us serving it. A fatalistic lack of imagination is no longer an option. When we're more afraid of unintended consequences than accepting that we have a responsibility to the current consequences, our current consequences look rather intended.

I hear you but disagree. Who decides what the common good is? You end up with companies moralizing, forcing employees to adhere to those common goods in both their work and personal lives. Forcing people to get the vaccine was for the common good. DEI was common good and that in turn led to Trump being elected. The pendulum swings.

At least with share holder value, you know where you stand. The common good is a constantly changing thing determined by the moral authority in charge at a moment in time.

Common good: humans, according to systems theory, have the same needs and there's a finite set. We can map them & then design systems so as to satisfice all of them.

One of humans' needs is for status which is by definition zero sum. Same with mating.

If anything those two are probably the most important needs so it's not possible to build such a system.

If one of human needs is status and status is zero-sum, then why does it matter what economic system is in place at all? We could equally rely on feats of strength, or games of chess, or rolling dice for all I care.

Besides why can't one of human needs also be an economic system that doesn't have the failure mode of poverty?

> We could equally rely on feats of strength, or games of chess, or rolling dice for all I care.

Those aren't very productive, our current system makes people produce value for others in their chase for status. Older systems people destroyed value for others in that chase, creating wars or other miseries, we have much less of that today.

I'd much rather have another billionaire than another authoritarian warmongering dictator.

> our current system makes people produce value for others in their chase for status

I don't think most of the people who have extremely high status are doing anything remotely close to producing value

They just own capital which they use to pay other people to produce value, which they then take credit for, which boosts their status

So it would seem that we're pretty divorced from the idea of "produce value -> get status" these days, if you can just pay people to produce value for you instead

Billionaires are the warlords of the 21st century. The only difference is that we've switched the map. We don't compete on the land, we compete on economic territory. But the results are the same - they fill the same role.

Expansionism, cult of followers, dispensing boons, and absolute control over their territory? check. The only reason we don't recognize them as warlords is because they don't wave scimitars and wear turbans. Neolibrral warlords wear Patagonia vests and beige slacks.

We're terrible at mistaking asthetics for function. Fortresses have been replaced by platforms; trade routes replaced by data sharing agreements. Armies have been ursurped by legal teams and lobbyists. We barely escaped feudalism and it's not clear we're out of the orbit of neo feudalism.

If we're able to be honest with ourselves, we need to learn that asthetics and function are different things. Just because they look different doesn't mean they don't fulfill the same function.

If it's zero sum you can design a system where everyone gets three sane amount. That's what strict monogamy does for mating, and you can easily imagine some "everyone is equal" communism-like system.

In practice that doesn't work, and the most successful "common good" systems instead ensure the disparity is limited and access is as equal as possible (e.g. not everyone can be wealthy, but the wealthy are not too rich and anyone had a chance to become rich instead of needing rich parents; or everyone can only have one married partner at a time instead of people who can afford it amassing big harems and not leaving any partners for the rest; or anyone can become famous, and famous people pushing their kids into fame is looked down on)

Prove a need for status before building systems of oppression to meet it.

Over human history the best system we have come up with and implemented to ensure this has been capitalism. Nothing else has come close

This is capitalist mythology. You'll need to account for "best" here because millions of people under the thumb of large-scale genocide, such as the policy decisions to implement poverty (which capitalism requires), likely have something to say about what you think is "best".

Can you present me with an alternative that was implemented, ran for a significant period of time and resulted in a better quality of life for those under it? Also poverty is not genocide, if you are going to present an argument please make it factual. You insult victims of actual genocide and minimize what they have endured with this comparison.

I didn’t say perfect, i said best.

I'm going by how people in the global majority, victims of imposed poverty by empires through debt slavery, who also experience OTHER forms of genocide & recognize poverty for the genocide it is.

Check out the quality of life of the Aka, Baka, and Mbuti tribes. They're genetically and culturally linked to a mother tribe 150k years ago.

So a culture has kept these people going for 150k years. Capitalism has no such capability.

Collaboration, spontaneous improvisation, counterdominant play/decision making/protection, egalitarian, matrifocality, immediate return. Those are values that flourish in an infinite game theoretically and in real life. We just have been taught so many backwards ideas these ideas seem foreign & barely recognizable.

Friend you are comparing civilizations that support hundreds of millions of people to small tribes of pygmies that total maybe 30k people and survive on hunting and gathering. Additionally they only exist in little groups of 50 to a few hundred individuals. How do you see billions of people surviving as hunter gatherers? Or do you forsee the need to cull 95% of humanity? This is not a realistic comparison friend and you know that. The only system that can keep hundreds of millions or billions of people fed and housed is capitalism.

Friend, go run the simulations at scale and get back to me before you keep peddling the religious belief that capitalism is the only way to feed billions.

You have no idea how to scale up collaboration due to separation from indigenous cultures that were praxised for tens of thousands of years & cultivated food forests across America without price tags.

I am sure you know this due to your extensive research and simulations but the average life span of the tribes you mentioned is in the low 20s... Some of your examples are even less than that.

Only 40% of the Aka and Mbuti actually survive to age 15 or greater

I look forward to you explaining how this is actually a good thing. Because currently it looks like your argument is that the 9 billion people on earth should adopt the life style of tiny groups of hunter gatherers that for the most part don't make it out of childhood and those that do generally die in their early 20s or younger.

For reference, the average lifespan in the United States is 77, so more than 3x, approaching 4x. Per your prior arguments, this is a genocide...

I am sure you've looked at this through a nuanced lens that examines the impact of colonialism on each of those tribes. I'm sure you've taken into account what's causing the deaths.

There's no way this is a dismissive colonially racist take without depth.

Longevity is not quality of life. This is still a culture that, despite all the modern world has done to these people, managed to survive 150k years. If longevity is what you're after, there's your longevity.

You're talking about averages, which ignores all the white supremacy embedded in these systems, ignores the decline of US lifespan, and especially ignores quality of life of those living in poverty.

From here on out, any further disingenuous comments get an AI response.

Not really - in practice on paper capitalistic countries need tons of socialist policies in order to prevent the system from eating the people it depends on.

Humans don't generally have the same needs, and to the extent they do they're competing over limited resources.

At one extreme you get theories like communism or socialism that treat humans as disposable cattle to be murdered or starved when they stand in the way of whatever the party leaders decide is the common good.

The common good is something that has to be worked out deliberatively and is more like taking the resultant of a huge number of force vectors than it is like mass producing units of the same good for everyone.

The word "Common Good" has a specific meaning. It steams from the word "Common" which means the people that share common values at our most basic levels, and "Good" means whats best for the people that share these common values.

What you are talking about is imposed self-interest at the level of the population from one or a small population that do not represent the common good. Not the same thing IMHO.

That's not what common good is. Common good never requires that people share core values.

Common good historically was what's good for the city/polis/country/band/family. Basically, you make some (ideally relatively small) sacrifice to your own interest for the sake of a larger group you share fate with.

There are more formal/mathematical versions of it, for example in Bentham where the common good is essentially a weighted sum over the good to each individual. Rousseau described it almost exactly as the resultant of force vectors. There are more authoritarian versions like in historical Sparta and more recently in Marx and Engels where it's imposed through violence.

> imposed self-interest

I'm not sure exactly what you're saying here, but self-interest is almost by definition not externally imposed. In Marxism one particular vision of the common good is imposed externally via a "revolutionary terror."

Here is the etymology of the word:

common(adj.)

c. 1300, "belonging to all, owned or used jointly, general, of a public nature or character," from Old French comun "common, general, free, open, public" (9c., Modern French commun), from Latin communis "in common, public, shared by all or many; general, not specific; familiar, not pretentious." This is from a reconstructed PIE compound ko-moin-i- "held in common," compound adjective formed from ko- "together" + moi-n-, suffixed form of root mei- (1) "to change, go, move," hence literally "shared by all."

Your confusing political language with what came before this. Common good is the will of the people. It has nothing to do with cities, countries, or states. All of those things were created by people that wield political power. This is not the same as the common good. Common good directly relates to what is good for the people that share common values. You have been misinformed, by political society unfortunately.

I don't think quoting the dictionary is helping here.

The problem with common good is that it's hard to agree upon what is good, and if you find a good, there's often a group that's outside this "common".

In this context, I disagree. Its really clear what the good in "Common" means.

Its like principles of what the Constitution was written on. Life, Liberty and the pursuit of happiness.

Principles like these are qualities we all naturally exhibit and as such doesn't need any explanation or qualifications. I know in our modern world people have decided that everything is open to interpretation. But I believe this was indoctrinated into us, over a long period of time, not to consider the human value[0] aspect of our being that we are born with. This was done by watering down the direct meaning of words and slowly changing the perception that humanity doesn't have infinite value and has to rely on external power structures to give it meaning.

[0]: https://archive.org/details/end-of-all-evil/page/n1/mode/2up

The idea of common good is centuries older than the appearance of French or the English translation.

It has nothing to do with shared values. It's exactly as I described it above.

Notice the reconstructed PIE means to move together. Common good is about the interests of groups that co-move rather than groups that share values.

This makes sense even in family contexts. What is good for the family is often different from what any one person wants. Think about things like choosing dinner for a big hungry family on a long road trip.

Often the best solution is at best everyone's third or fourth choice because values and desires differ.

And avoiding orienting around needs makes all of us susceptible to desires & values we've larvely been indoctrinated into.

Yeah I am not sure what you mean by this, see my reply above.

So "Common Good" is directly related to "Common Law" which showed up in 509-27 BC Rome during the Republic period and it was a way to have a common understanding between the "Common People" when Rome's political state was trying to use political law against non-Romans. The common people needed a way to protect themselves from the rising emperors and their decrees.

So I understand that you think its about families, but in this context, its really not. It was a way or a method to protect commoners.

When I say value, I mean if we both value freedom then we have a "Shared Value". This is really about the rights of the people which differs what rulers, want for the people. And I mean rulers that want to wield power against the people, for self-interested purposes.

Again that is not what common good is and it does not originate in the Roman Republic.

I'm honestly not sure it's worth responding here or what you're trying to say about Rome. It sounds like you may be confusing the Roman Republic with the Roman Empire, which started much later in 31 BCE. For one thing the Roman Republic did not have an emporer. For another it wasn't expanding militarily or ruling non-Romans.

And you also seem to be confusing different uses of "common".

Common generally means something held collectively by a group. By extension it can mean "customary" as in common law rather than statutory law. By extension it also can mean "ordinary" or "plain", as in "common house cat". "Commoners" or "common people" are just "ordinary" people; that is, people without titles.

The only connection between the "common" in "common good" and "common people" is the use of the string "common". The word means different things in the two contexts.

No the original meaning of "Common Good" is related to "Common Law" And that actually originated in Rome between the Republic and Empire periods. Your focus on the specific dates have nothing to do with the actual originating use of the saying.

It can mean "ordinary" or "plain", but not in the context of "Common Good". I think you are trying to obfuscate the meaning by focusing on the peripherals of the context.

Rome most certainly was expanding militarily and ruling non romans far before it became an empire. The punic wars for example were more than a century before it became an empire.

> Humans don't generally have the same needs, and to the extent they do they're competing over limited resources.

Would you cite sources for this claim?

You're never going to be able to change the economic system for the entire population where you live. Better to vote with your feet and move to a country where all economic activity is arranged for "the common good". There are many, many such countries. You're not the first with that idea.

That of course won't mean that you will have the privilege of deciding for everyone else what counts as "the common good". It's unfortunately not like the Arch Linux terminal where you are omnipotent.

I say that sincerely, as somebody who had to do just that. It's easier for Mohammad to go to the mountain.

Edit: To say: I voted with my feet and moved to a place which better aligns with my values. From a "common good" society to a "freedom" society.

Please name a few such places

Off the top of my head, Costa Rica, Bhutan, Canada, Norway/Sweden?

A good read: https://www.project-syndicate.org/commentary/costa-rica-enli...

Any communist country of your preference.

Switzerland... the best actually long term sustainable and working capitalism I've seen.

All freedom US craves so much for (and much more) while stronger social state than next to nothing US has for its weaker part of society

Switzerland is not a good place for working moms. It is a very conservative country, for example working moms are systematically discriminated. The society, police, insurance, and banks enforce a conformity to a conservative, male-dominated society.

https://www.businessinsider.com/female-breadwinner-moved-swi...

One small question: how did those places manage to change the economic system for the entire population?

Most famously they did it by a "great leap".

Can you explain how that model isn't generalizable while avoiding describing the consequences? I want to know why it can't work not how it fails.

After Stalin's death, the Soviet union wasn't a total failure. And few can argue that China is a total failure today. But they paid a much higher price than what's acceptable. To make a somewhat successful "common good" society you first need to exterminate large swatches of the population. (This includes Scandinavian countries, which is less common knowledge). Then you can build on the new generation which won't resist - for a while. And the results are still lack luster, depending on your measuring stick.

There's no general way to model, only empirical evidence. Unless I'm supposed to enter the mind and soul of people and see their motives and reasoning.

But I'll give a one word answer: pride.

Kind of sounds like what is happening now in the west under our current financial/economic system, albeit slowly by manufacturing crisis's and health problems to whittle down the population.

>To make a somewhat successful "common good" society you first need to exterminate large swatches of the population

It sounds like you are conflating "common good" with authoritarianism.

Common good happens at the grass roots level and then spreads by consensus. Doesnt mean it will happen on a large scale, esp if there are larger forces at work.

It seems like this is a population size problem to me. Or at least a concentration of large populations in a small area (Cities). Maybe the trick is to spread out the population a bit more and prevent areas from becoming over populated somehow.

I don't have the data in front of me right now, but there are some sources that say when groups become to large people vie for attention which causes the most egoic people to try and dominate the areas that they are in.

Thus this creates social circles that try to gain power for powers sake and do not contribute to society.

> when groups become to large people vie for attention which causes the most egoic people to try and dominate the areas that they are in.

You may be interested in this essay from the feminist movement in the 60s: https://www.jofreeman.com/joreen/tyranny.htm. It describes how the lack of structure or process forces the group to be run primarily by social dynamics like friendship, charm and influence.

There are lots of effects that happen as groups scale. But this capture of consensus-based and flat groups by ego-centric charismatic members happens in even tiny groups.

That's why successful flat groups (e.g. parliaments) have structure (e.g. Robert's rules) and make decisions by majority vote rather than consensus.

Yeah I can see some truth in this. Structure and processes help us deal with this problem. And my experience has been that structures and process get corrupted, kind of like what has happens in or political systems over the years.

IMHO, it seems like it easier to deal with ego when the groups are smaller. When they get too large, we tend to use bureaucracies to manage decision making logistics. Bureaucracies make it easier for people that want power over others to hide.

> After Stalin's death, the Soviet union wasn't a total failure. And few can argue that China is a total failure today. But they paid a much higher price than what's acceptable. To make a somewhat successful "common good" society you first need to exterminate large swatches of the population. (This includes Scandinavian countries, which is less common knowledge). Then you can build on the new generation which won't resist - for a while. And the results are still lack luster, depending on your measuring stick.

What do you mean by exterminate large swatches of the population in Scandinavia? Yes the way the Sumi have (and to a degree still are) been treated is atrocious, but I'd argue that if anything this is not a feature of creating a "common good" society. I would argue that strongly capitalistic/mercetalistic societies have a horrible track record of treating (and still treat) indigenous populations.

They're called Sami, and I don't think they've been treated much worse than any other ethnicity in Nordic countries.

What I'm referring to are the eugenics programs in Sweden, where unfit people were sterilized and/or had their children taken from them. These kind of programs were also present in North America, for what it's worth. The complete extent of these programs will probably forever be unknown, in all countries. Scandinavian countries are probably the countries who are most open about this, just like with suicide reporting.

As for Finland, they had a communist revolution and a very brutal civil war about the same time as the Russians. So their "common good" society was also born from a bloodbath, although the communists lost the war.

Norway is probably an exception. They're building a "common good" society on oil fortunes, just like the Gulf states have no problem with giving generous welfare for all of their citizens.

Usually extremely violent revolt

I don't think the appetite is there in most places

Many EU countries are pretty nice places to live, and didn't need a violent revolution to make it happen. All it took was democracy, a population willing to stand for its rights, and an elite which understood that building a welfare state is preferable outcome over having a violent Communist/Fascist revolution.

A capitalist system with right amount of social democracy to prevent worst concentration of wealth is the best model there is, at least for the well-being of its citizen and survival of its democracy.

>and didn't need a violent revolution to make it happen

You really need to read more history about Europe.

There was no such revolt in the country where I live, and in many others. Also if you are talking about France it was to create democracy, not to change the economic system, with democracy you can change the economic system without a revolution.

> Also if you are talking about France it was to create democracy, not to change the economic system

I'm no expert on the French Revolution but I'm pretty sure that "We're all poor while the monarchs are all rich" was a huge driving force behind the French Revolution. "Let them eat cake", etc

It also didn't create democracy, they more or less immediately wound up under Napoleon, a self crowned Emperor

Democracy came later

> It also didn't create democracy, they more or less immediately wound up under Napoleon, a self crowned Emperor

It did create democracy, the French Republic, Napoleon did end that though but its much easier to reinstate democracy later than to create it from scratch.

> I'm no expert on the French Revolution but I'm pretty sure that "We're all poor while the monarchs are all rich" was a huge driving force behind the French Revolution. "Let them eat cake", etc

Revolutions to loot the rich happened a lot throughout history, but here the explicit goal was to end monarchy and create democracy not just looting the rich, that is a big difference.

I think the majority of European countries had a violent revolution. And the German invasion of many neighboring nations had the same characteristics, they were welcomed with their new world order by the populace in many places.

The war in general ushered in new economic systems.

> a population willing to stand for its rights

"Stand for it's rights" is just weasel words for "Was willing to use violence in order to obtain their rights"

Even if they never actually had to become violent, violence or the credible threat of violence is the only thing that has ever in history convinced "The Elites" to change things

I'm not sure this is true. My analysis shows that 75% of economic transitions are completed without violent revolt.

Just a quick glance at the 44 historic economic transitions in my dataset, most of them aren't well known. The most likely reason why we think economic revolutions are associated with violent revolt is due to selection bias - violent revolts are more memorable, take up a larger section of history books, etc.

Happy to take at look at your dataset and compare notes.

> If I had to choose between common good and shareholder value all else being equal, I'd choose common good every time.

Absolutely and me too. And that's why neither of us are actually CEO of anything (I assume)

It’s a question of time horizon.

...go on.

I wish it were that simple, I think capitalism works best when personal self-interested incentives are aligned with what creates common good - IE policy is like game design where you design the rules in a way that provides an overall good outcome. In this lens, there is a huge problem with PE right now (the rules incentivize buying out industries and gutting them), and something wrong with VC (the rules incentivize enshittification) so the rules need to be adjusted to align with the broader outcomes we want.

Would you put your money into a business which put common good above your return on investment?

Would you give to charity? You are pointing at the heart of the prisoner's dilemma endlessly recreated by the very existence of capital: why choose long-term public benefit over a short-term personal gain?

People give to charity what they don't need. If all businesses are expected to be charities, they cease to be profitable and thus cease to function, as no one will bankroll the initial investment required to set up a business without the prospect of making money on it.

Let's look at an example. In order to produce e.g. wind turbines, a large factory is needed, full of expensive machines. Let's assume that the buldings plus the machines all costs $500 million altogether. Where would that $500m come from, if the factory will never be profitable, so entities with money will never bankroll it? The only alternative I can think of is 100% socialism and centrally managed economy, where all businesses are owned and bankrolled by the state. However, in practice all such implementations so far (over probably at least a dozen different countries) has been terribly inefficient and corrupt.

Then don't make a company with shares. This is like complaining in a tennis court that it's better to play football. Anybody who makes his business a company with shares will be beholden to shareholders, even if he's the only shareholder. There are plenty of venues for any activity, which isn't structured in this way.

1. Nobody forces you to use a smart phone. 2. Nobody forces you to have social media or use it. 3. Nobody forces you to watch Netflix.

We all choose what we do in life.

#1 is rapidly approaching the practicality of “nobody forces you to have money.” Technically true but deeply impractical.

#2 is heading that way. Lots of official info is only available on social media. Travel to certain countries can be difficult if you don’t have any social media presence as they’ll decide you’re trying to hide something.

1 and 2 are simply false

#1, I’m forced to file taxes and use 2FA to log in to do so.

#2, I have to use SM for marketing.

To avoid these I’d need to basically be a homeless vagrant.

There are billions of people in the world who don't need to market on social media to survive. Are you genetically different from them?

The only way to make that happen is to have that common good be priced into the shareholder value, i.e., removing externalities that allow the privatization of profit and the public subsidies of the remediation of the damage done.

Easy peasy, no?

Even better idea is not to have shareholders. After all there are millions of business running without external shareholders.

Or to remove limited liability from shareholders.

There is no latitude. They have only one requirement: growth growth growth.

If you hit the growth targets, they will pat you in the back and will demand Hyperscale growth growth growth and will throw money at you to supercharge it.

If you refuse to chase the growth, they will simply kick you off the company via Board or fund your competitor that will chase the growth at all means

Your board firing you is not a "legal obligation".

The funding is raised to chase growth, otherwise no VC will ever give money.

If you get the money and then try to U-turn and refuse to chase growth, the board will start asking questions

The legal obligation is that CEO does whatever board tells him to, otherwise board can fire ceo

This still does not produce any legal obligation.

Ok but you’ve lost your mission, your tools to accomplish that mission, and effectively your company.

Yeah, but you not getting what you want, you not having own little imperium is not the same as "you having legal obligation".

This amounts to an argument that if doing something immoral gives you money and power, you can not possibly say no and no one can blame you. That somehow more money and power is good enough excuse.

So you don’t get sued, but you lose control or even your stake or even the whole business. Remember how Uber founder got kicked out? He had a strong hand.

Chilling effect is there one way or another, and even when that does not work adverse selection does.

You have to have a very strong market position to resist the investor pressure. Kinda like Google had twenty years ago.

Or you can have a diverse set of investors who can’t or won’t be swayed by activist investors. But that usually means being public at which point your employees are incentivized by RSUs.

I'm not arguing there isn't an incentive problem. I'm arguing that it doesn't have any basis in statute. The distinction is important because it points to a different solution and different moral culpability for the system's outcomes.

> To be clear, business operators have extremely, extremely broad latitude in how they interpret their fiduciary duty to shareholders.

That may be true legally, but practically it's only true if they control the board. Otherwise they will simply be replaced by people who are willing to do what the board wants.

The difference between getting fired and getting convicted of a crime is pretty important, actually!

The annoying tone is unnecessary. Yes, legally speaking operators can go against the board and get replaced, which they certainly should do if they feel they're being asked to do something unethical. But it's not going to change how the company is run.

On that level, on the quasi-feudal economy that is taking over the world, it's not clear which of those is more impactful.

For the executive, sure. Not for the impact of the overall incentive structure on the trajectory of the business. Which is what this discussion is about.

The discussion literally said "legal obligation."

That's what I was responding to.

The root comment this thread is in reply to had the implication that people are only acting this way because of an inaccurate idea of how strict the legal obligations are, and the other comments are about how that’s obviously not the only force producing the current outcome

Yeah, obviously that's not "the only force producing this outcome." Nobody claimed it was.

But it's important for founders to understand they are not legally obligated to do any specific thing for their shareholders. It is their responsibility to act morally. Yes, there are other incentives and forces at play. "Legal obligation" is not the cop-out excuse that executives claim it is.

The idea that executives have a duty to maximize shareholder value is a trope from business ethics class, not law.

I say this because you used the phrase "fiduciary duty" which does not exist in this context.

Correct, because GP said “legal obligation," which I agree: there isn't one.

Genuine question because I think I might be wrong on this one, or maybe misunderstanding what you're saying - aren't there cases of shareholders suing CEOs for not acting in shareholders interest and winning? If there was no legal obligation to act on behalf of shareholders how could they win those cases?

My understanding is those kind of cases aren't common because a) they are hard to prove, b) the people being sued if they actually have the money to make it worth suing them also have the money to fight it, and c) it's a really bad look for an investor to be suing a previous member of their portfolio and would a strong adverse affect on their deal flow

Unless you're saying there is no explicit legal obligation / fiduciary duty in law, but it does emerge from civil court cases, which is how I understand it, but short paragraphs are not a good place for the amount of nuance so I just said "legal obligation" as a shorthand for something real but very complex.

I think Matt Levine coined this phrase: "everything is securities fraud."

Activist investors will sue for anything alleging that executives broke securities law by doing anything that harmed their portfolio. It doesn't mean they win the cases, or that anyone is guilty.

There's also something worth noting that even if there isn't a legal obligation for executives to act on their shareholders interests, they have a really strong incentive when their compensation is mostly stock grants and the shareholders can fire them.

As far as I know, no there has not been a CEO successfully sued in the US for failing to maximize shareholder value.

Board not CEO but see https://en.wikipedia.org/wiki/Revlon_duties

For CEO see https://www.rgrdlaw.com/cases-in-re-dole-food-co-inc-stockho...

The first paragraph from the first source:

> The Court declared that, in certain limited circumstances indicating that the "sale" or "break-up" of the company is inevitable, the fiduciary obligation of the directors of a target corporation are narrowed significantly, the singular responsibility of the board being to maximize immediate stockholder value by securing the highest price available.

Seems to imply that under normal operation (i.e. no inevitable break-up) the fiduciary obligations are quite different though?

Yes, under normal circumstances, the "business judgment rule" applies which is much more favorable to boards. Satisfying it requires only that directors:

    - act in good faith;
    - act in the best interests of the corporation;
    - act on an informed basis;
    - not be wasteful;
    - not involve self-interest (duty of loyalty concept plays a role here).

https://en.wikipedia.org/wiki/Business_judgment_rule#Standar...

> from business ethics class, not law

Well, there was one case in the law over 100 years ago in the USA. A company had decided to sell itself for cash and go out of business. The Court ruled, that in that situation, it should sell to the highest bidder. This is long before Milton Friedman began advocating that corporations had a duty to their common shareholders that provided the only valid yardstick for evaluating corporate activities. Friedman was an economist, and a controversial one, not a lawyer, and how he got the lawyers behind him is itself a long strange story.

The idea that common shareholders own the corporation was not really obvious to anyone from the start. Common shareholders get from the corporation only what is their privilege according to the corporate bylaws and charter. There are now, and have been in the past, many different kinds of and classes of common shareholders. For example, some big corporations today have many common shareholders who do not have any voting rights. The thing that sets common shareholders apart from the other stakeholders who also hold pieces of paper from the corporation granting them various interests in the corporation, is that the common shareholders get to divide up whatever is left over if and when the corporation is liquidated and everyone else is given what they are owed first. They are more heirs than owners. It is more realistic to hold that the corporation, as an artificial person, is not and cannot be owned by other persons, and owns itself.

It’s incredible how many people don’t understand this. Google is an obvious example that has multiple classes of stock and only some are voting shares.

There is the “shareholder lawsuit” but that really is about enforcing a company’s stated goals to its shareholders, which can and often are things other than “try to make the stock price go up as much as possible”.

I am repeatedly entertained by the phenomenon of someone who reads a case, bothers to remember it, thinks it's important, describes it, but does not provide a citation.

Friedman deeply misunderstands agency law. Saying he got the lawyers behind him is misleading, because there are any corporate fiduciary duties owed by directors or officers to the shareholder other than 1) act informed 2) do not usurp corporate opportunity.

https://en.m.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

This is not statute, but it remains legally binding in Delaware so long as the courts uphold it.

It's not legally required in the state of Delaware (or Michigan where Dodge v Ford occured) to _maximize_ shareholder value.

It's that if you're going to make a decision that affects 1/3 of the companies value you need to actually claim it's in the shareholders interest that you do so.

I don't think maximization of shareholder value is really the interesting part, it's the mandate that they must be prioritized ahead of employees and customers.

> It's that if you're going to make a decision that affects 1/3 of the companies value you need to actually claim it's in the shareholders interest that you do so.

I'm not really sure where the 1/3rd ratio came from. Can you explain? To my layman's ear, "value" and "shareholder value" are the exact same thing.

> I don't think maximization of shareholder value is really the interesting part, it's the mandate that they must be prioritized ahead of employees and customers.

The problem is that Ford didn't try to claim that the factory was in the shareholder's best interest.

> I'm not really sure where the 1/3rd ratio came from. Can you explain? To my layman's ear, "value" and "shareholder value" are the exact same thing.

Nothing special about 1/3. It's the value of the dividend (19 M) / value of Ford (60 M). If you're going to spend 1/3 of the company on something you better at least claim it's in the company / shareholder's best interest.

---

To quote the wikipedia article

> Under some interpretations, the case also affirmed that the business judgment rule that directors may exercise is expansive, leaving Ford and other businesses a wide latitude about how to run the company, if management decisions can point to any rational link to benefiting the corporation as a whole.

And then to emphasis: "if management decisions can point to any rational link to benefiting the corporation as a whole."

> To be clear, business operators have extremely, extremely broad latitude in how they interpret their fiduciary duty to shareholders.

Legally maybe. The market and shareholders will punish you if you deviate from the current standard behavior.

We’ve all seen companies do layoffs just because “Wall Street” was concerned about the economy and then instantly see the stock price spike up.

These negative consequences are all results of bog standard prisoner dilemma issues that need government regulation to make sure everyone picks the good square, but the tech industry and this boards community as well is allergic to the idea that regulations can improve the situation for everyone

Yeah, I think it honestly lets founders off the hook too much.

In 95% of cases, the founder isn't smashing moral barriers because the VCs and shareholders are making them, or lording the threat of legal action or any some such.

In 95% of cases, the founder is smashing through moral barriers because their interests are aligned with the VCs: because they think what they are doing will lead to stupendous mega-wealth for them personally.

Like sure, I think the idea that corporate execs must be beholden to maximizing share price is a) corrosive to our society and b) not as true as often portrayed, but I don't think that's even a real factor here.

100% agreed, well put

It’s also survivorship bias. Given that a start up has explosive growth, it way more likely that they are amoral.

The ones who play the game with integrity and morals never have the type of growth that makes headlines. But I’m sure they exist.

That really doesn't follow. Explosive growth guarantees amorality? What sin is inherit to success? Has envy become so embedded in our thinking that success alone is proof of guilt? Or is it just Original Sin style bullshit where everone is automatically guilty?

Far from guaranteed, but to be a moral founder you now have a second goal alongside growth. Inevitably the two will be in conflict.

Didn’t say guaranteed, I said more likely.

To succeed, you have to execute many things well and avoid bad luck. Add to this an extra constraint that one also needs integrity or morals and it will drastically reduce your success rate.

My statement will be true as long as having integrity or morals could hinder growth in some way.

Maybe in theory, but in practice there is a strong power mismatch that causes investors to have a strong influence. Sand Hill learned it's lesson from Facebook/Zuckerberg and now always have a seat on the board. Only outliers like zuck/bezos/similar have the weight to push back against investors. Heck, even Dorsey couldn't for whatever reason.

And even if what you said is true, you can look at the results of years of this system, the difference between companies with outside investment vs without makes a strong case against what you're saying.

It's like saying educating people about their rights wrt police helps, but in practice police don't derive their power from actual laws and it comes at considerable personal expense to push it to courts, in the same way Delaware is very strongly biased towards shareholder rights.

Even focusing on short term profit would be fine, if you want to blow up the business go ahead, if those profits were actually shared fairly with shareholders. Too often companies can just dilute their stock over and over, which fucks over individual investors and benefits the 51% owners, and investors don't really get a say, yes there's a vote but if 51% is owned by a few it's not a vote.

Individual investors are largely operating on trust.

> The legal obligation to represent shareholders erodes morality

This "legal obligation" is an internet rumor that does not exist in the real world. Yes, if your company has competing buyout offers of $1m and $2m and the board takes the $1m offer because they received a bribe, it will come up. Otherwise, it never does.

The proof is in the pudding (please go find me even one case where shareholders have successfully imposed their will on a board or executives because of this obligation), but it doesn't even logically make sense. Other than the buyout example, it's hard to think of almost any action a company could take that doesn't have some justification that it is for the benefit of shareholders. i.e. if we make our app too addictive, we risk social backlash and regulatory intervention by governments which will hurt out shareholders. And that's all that is needed, because there is no associated time frame with this obligation.

To be clear, boards and executives might strive to please investors, but it is not based on a legal obligation. An executive that ignores the interests of shareholders might be concerned about their reputation as a capable entrepreneur, risk losing their job, or devalue their own shares, but they are no in legal jeopardy.

Just because the risk of getting successfully sued for making decisions against the interests of shareholders is low, it doesn't mean that it won't influence executive decision making. CEOs want to avoid legal risks above all else and thus the laws around fiduciary duty can have a chilling effect even if judges generally go along with the CEO's interpretation of what is in the interest of shareholders.

It’s not low, it’s zero. There are literally no successful cases ever except the buyout scenario already mentioned.

Find me a serious lawyer anywhere that says this is a legitimate concern.

I think its bigger. Morality and social contract have eroded and continue to erode.

Look at Mozila for the most insidious example. Take a privacy focused product. Rope in a bunch of suckers. Then literally delete the privacy focus from your mission statment and start the "slaughter"

Craiglist is proof it can be done at scale.. Its just that so few people with them means and morality exist anymore. The Sodom and Gomorrah fable is a warning not to let this happen or your society will destroy itself.

> Craiglist is proof it can be done at scale.. Its just that so few people with them means and morality exist anymore.

I don't think this is a good example. Back then, the internet was a new thing only a small cohort of people cared about. Something small could just stay small because none of the big players with money cared. Nowadays, if someone wanted to start something like Craigslist, they would be outrun by someone else going the VC route before the small company could get big enough on its own. I think it boils down to the difference between slower growth, boot-strapped companies vs. VC-backed.

Another reason is optimization for profit, combined with competition making it a survival necessity to do this.

Early in a nascent industry, you focus on the core product. You bring scale and scope economies. You make the supply chain more efficient. You improve the logistics. More abundant basic food stuffs for everyone, and more profits for agriculture shareholders. A true win-win.

Later on when the industry matures, the easy wins are all gone. Logistics and agriculture is fully optimized. The only scope for improvement is in marketing, adding sweeteners, and cutting out expensive ingredients. Now it's a lose-win, but from the shareholders perspective only, it's a win.

The problem is, you can't just ask companies to act nicely. While that would be a good start, even if they genuinely wanted to, competition largely forces their hand. The solution is careful and minimal regulation, to deter the pathological late-stage optimizations.

This is what always frustrates me: why do companies need to bother with "pathological late stage optimisations" at all, if not for perverse incentives in the fundamental economic and political structure of how companies operate? Why is reaching a growth plateau perceived as stagnation instead of success? Why must a company feel pressured to grow forever, without bound? What's wrong with building a business to sustainability and equilibrium? Why does this almost never happen? Why do we instead see enshittification literally EVERYWHERE?

Cause some sociopath name Friedman wrote something that the ruling class/ generationally wealthy loved. That business should only serve the owner to the expense of literally everything else.

Since the rich and powerful get what they want. This race to the bottom mentality has saturated anything where a company accepts outside investment. This means any public company and any investment into the company outside of a bank loan. Which is basically every company nowdays since private equity company have bought stake in literally almost everything.

> Stanford Prison Experiment

Just a heads up, the experiment was complete fraud and could never be replicated.[1]

I agree with you that outside investment can work as a strong accelerator for these things. It enables founders to externalize responsibility.

However, it is not the main reason. Exploitative companies have existed long before venture capital was invented. In the end every company exists to make money and so is inherently immoral. That is why the state is needed to regulate the market so companies don't hurt society too much.

Those founders didn't get corrupted by evil venture capital, they didn't have that strong of a morality to begin with.

[1] https://www.vox.com/2018/6/13/17449118/stanford-prison-exper...

It's incredibly simple, but it's also true

Show me the incentive, and I'll show you the outcome - Charlie Munger

It's the same with politics and money.

We don't get the leaders we want, because it costs money to buy people's attention. We get the people who have some way to pay for attention

(in recent years, one of those ways is increasingly corruption - e.g. senator of NJ, mayor of NY, etc.)

An article today talks about Cuomo following the "local TV buys" playbook, which WAS a fairly reliable way to win elections:

https://www.nytimes.com/2025/06/28/opinion/ezra-klein-show-c...

That didn't work this time, but the mechanism is simple and clear

> "local TV buys" playbook

Who watches local TV anymore? Probably not many people under 60.

The linked article is questioning why the Democratic powers-that-be thought that

A lot of people. Especially older people who go out and vote.

The investors don’t care about the morals of the company; they just want a higher valuation so they can flip it for a profit.

Either with a guy promising Mars while siegheiling or jeopardizing teens’ health or ruining the Earth. All that matters is the valuation.

And why not? Investors never get into trouble for the mess their investments cause. Worst-case scenario, they lose their investment.

I think the VC thing is indicative of the entire thing; the goal is profit and everything is subordinated to that. This is how the system works and how it is designed to work. When profit and some external thing like social responsibility are at odds, profit is going to win out every time. The mercenary mentality rules the scene.

In Magickal Faerieland, we have regulations to align those 2 things by incentivizing the "goodguy" path and/or disincentivizing the "cackling villain" path but we live in reality where money rules and regulatory capture is a thing. So a Facebook or other megacorp can get away with using neuroscience and psychology to engineer a virtual slot machine with a terrible payout and ExxonMobile et al can get away with being an architect of environmental degradation and the accompanying humanitarian disasters.

I wrote a couple pieces about how to take back control of your brain:

https://open.substack.com/pub/vonnik/p/how-to-take-your-brai...

Yes, the addictions are engineered in the service of shareholder value. There are many ways to fight it!

Fwiw, this dynamic goes way beyond VC and tech.

Douglas Courtwright writes about this in Age of Addiction:

https://www.amazon.com/The-Age-of-Addiction-audiobook/dp/B07...

Of course VC loan sharking is a major part of the problem. But it's also tiring reading blog after blog of people who say they want to do the right things and do them right or whatever the trendy thing is that month, all as a thinly veiled pretence to get as much funding from whoever wants to give it to them and try to make themselves the next Zuckerberg or Bezos.

If people actually believed in something they'd make it open source or a non-profit, not a convenient vehicle for personal enrichment. Imagine if Wikipedia was a for-profit startup, it would've eventually ended up as an unusable cesspool of advertising.

Yes, and there is a huge problem connected to that:

If you don’t play this game you’ll lose. Look at Europe for example, they haven’t played the VC game properly and thus have no really significant tech player compared to the US / China.

So what options are left? Play the game or be ruled by those that play it.

I’d rather play even if moral erosion is required.

I think Europe is moving g toward digital independence even more. They've still got Instagram and WhatsApp and everything, but I can see them moving more aggressively toward Facebooks core business model (ie, programmatic adverising) and essentially creating a European internet bubble. Would be nice for Europeans to be able to have their own social media sites which operate less aggressively on your attention span - like Facebook circa 2009 or even MySpace. Chronological feeds, less invasive advertising practices.

We are building a social network with chronological feed.

I am thinking how to make it sustainable without raising VC funding but not doing aggressive ad targeting. Obviously people are not going to pay for a social network. So maybe just very generic sponsered links?

Could do what redsit does and offer programmatic advertising targeted based on subreddits

Yeah.. simple keyword matching might work.

But one for the rare case of ours taking off

Maybe the model should be more like public roads - for-profit companies are involved in building parts of them but they don't control the whole system.

> I’d rather play even if moral erosion is required.

Gross.

Yes. But what’s the alternative?

Integrity.

Its not just shareholders, stock based equity also has all the employees pushing profit.

Engineering addiction is also probably more often than not intentional. When all the business metrics/KPIs are stuff like "engagement time", "$ spent", even AB testing of random features leads to manufacturing addiction

Well, yes. Encouraging people to avoid Marxism and all the successive schools of thought has done irreparable damage to this country (and likely the entire west). And I'm not even dogmatic about this: you can read Schumpeter, the father of VC, to reach the same conclusion. Private investment will eat the world and our childrens' lives, even at the cost of self-preservation.

Someone help out my memory here.

I'm pretty sure that there was a case before the Supreme Court (or other federal court?) back in the late 1980s, where shareholders of a firm sued for the firm to focus exclusively on profit, when the company had been taking a broader view of stakeholders (community, workers, etc.).

Reductionism is fine when a supermajority of available data paints the same picture, and that's what's happening here.

* Founders aren't trying to solve a problem, they're trying to grab table scraps from VCs and the already-wealthy to try and save their own skins. As a result, it's all about exit strategy, growth, and moat instead of business fundamentals and customer experience.

* VCs and their wealthy backers aren't looking for good business, they're looking for good profit. It's why they'll gladly invest into slop or outright grifts, and why they demand anything they invest into have an exit strategy (i.e., IPO) planned so they can cash out before the company collapses.

* Talent who wants to build a long-term career with a company - and accordingly focus on fixing its flaws, improving the customer experience, and saving expenditures - can't, because companies no longer fundamentally exist to provide long-term solutions and products, only short-term growth YoY. This ultimately ends up harming output and innovation, because why bother giving it your all when such efforts are counter to the "explosive growth" narrative and likely to get you PIPed?

* Retail investors and Business News are left feeding a monster that runs on Fairy Tales and ignorance, promoting big gains and huge losses rather than actual investing advice or corporate accountability.

It's all just a disgusting grift, is what I'm reducing it to, and I can't really fault Founders either since they're just trying to strike gold in an emptying mine shaft before it's closed off or collapses in. They're playing the game they think will net them safety and success...even though they may have better odds on some casino games instead.

I'm not raising money to prevent this for my new social network.

https://wonderful.dev/download

And how these shareholders materialize. I don't think show up at guileless founder's workplace with guns and make them offer they can't refuse?

> but there’s a pretty huge throughline of outside investment and addiction engineering..

Personally I don't doubt that. But if people are taking outside money while being aware of its effects I don't know what kind of sympathy they deserve.

It can end up being a more circuitous path than you might expect.

For instance, I took investment in my business, about five years in, from a very ethically and strategically aligned individual, as we mutually saw an opportunity to do something good together.

His life took a left turn. Two kids and wife in a horrendous car crash, all left extremely disabled, enormous medical and emotional costs. After a year or so he had little option but to sell his holding in our business, and we allowed it, knowing that his situation had become dire. He sold to a small PE consortium, who again, looked pretty well aligned with what we were doing.

The consortium all then had a falling out, as one member had brokered a deal with a large PE group to be bought out. This ground on for another year or so, us on the sidelines, until eventually the large PE group managed a hostile takeover.

And that’s how we found ourselves with blackstone as our corporate overlords.

It all went to shit over the following years as we were forced to squeeze margins, cut R&D investment, and depart from our original mission to instead gouge our customers.

I ended up leaving, as going to bat for the dark side every morning was beyond corrosive for me, and while it was a pretty terrible financial decision, it saved my life.

The company grinds on, a thing utterly different to what I founded. I don’t ask for sympathy, just… perhaps awareness that taking any investment, no matter how benign, can take you places you’d never wish to go.

It can happen even without investment. I’ve seen businesses where cofounders have had to sell out due to poor health or similar, and the outcomes have ended up pretty much the same.

Oh 1000%.

I once worked at a company where the founder had famously said many times that he would never take the company public. But then, he had a stroke. And within two years they had an IPO. Started doing what every other 'big company' did instead of their own thing. And from what I heard from folks on the inside, Enshittification happened pretty quick after I left.

The lack of addressing the loose ethics of 'Behavioral Psychologists' working in these fields, is TBH a bit of a stain on the whole profession.

While “maximizing shareholder value” is a huge problem, aren’t there other problems too? Founders wanting to get rich as quickly and as easily as possible, customers/users refusing to pay even for most important services (for example, how many people are willing to pay 5 bucks a month for something as important to modern life as email? But they’re happy to pay 5$ for a crappy Starbucks coffee), lawmakers too old or too corrupt to understand the negative effects of the products/markets they’re supposed to regulate, general public more interested in convenience and cheap entertainment than subjects like privacy, parents simply hooking their kids up with iPads so they don’t have to deal with tantrums (one of my colleagues told me he was raised by TV/internet, not by humans)… and on and on.

I suppose we’re living in an age of unchecked capitalism. But there are other issues too

You are what you earn.

If you construct your business model so that revenue is derived from attention, then your business will become a machine for consuming attention.

“Shareholder value” is what turned “we’re a family here” into a joke and cliche. It turns people into lines on a spreadsheet and strips leadership of their ability to care or treat people as humans. It’s represents the very darkest side of capitalism. Im very much a capitalist but it doesn’t mean I have to ignore the realities of it, both good and bad. I’ll take it over all alternatives though as it actually works and improves the lot of society as a whole

Why „historically“?

For the last 5-10 years I've noticed a lot of people here are more willing to question VC as the sole or even ideal way to start a company, and since a major chunk of YC is to train how to raise money and connect people via demo day or mentors to VC, I think that marks how the HN community has departed from the YC community. Obviously there's a lot of overlap, and HN clearly has it's roots in YC by it's literal founder, but I think it's wrong to say HN community is the same as YC community, which I say "historically"

YC parted ways with the broader HN community at some ill-defined moment coming up on a decade ago. YC started as an inspiring rejection of credentialism and cronyism and slick people jumping the queue in front of tech-focused problem solvers from diverse backgrounds. The values of HN around curiosity, technical meritococracy, tangible solutions to real pain points in the lives of real people underserved by big money tech establishment dynamics were completely aligned with early YC, they went hand-in-glove.

But it got captured by slick dealmakers who managed to cop the hoodie aesthetic and youthful ambition vibe but were the same born-to-privilege punks that have always ruined everything good in computing eventually. Now its messaging is vibe code and gladhand and suck up to whichever political party won last. Its a more insular, more inbred, less substantial network of the "right" kinds of people than the Ivy League was when it stepped on the scene.

And there's nothing inevitable about it, no "big money always goes to shit" story here: its 4 or 5 key people who abruptly had a serious seat at the table and chose very fucking selfishly.

HN is still here geeking out and being a gem on the internet.

It’s probably somewhat relevant that VC’s are the planet’s most rapacious sociopaths at this point.

I admit I don’t really know the cause and effect dynamic here. Is that what makes VC’s successful, or the reverse?

> Having spent a few years in the VC world I have been increasingly convinced outside investment is the biggest reason why companies lose their morals. The legal obligation to represent shareholders erodes morality. When the people running these companies feel they’re beholden to shareholders and can’t act on their own agency of course they will turn to addiction research not as a warning but as a guidebook.

As an outsider I don’t believe it. Morals? I don’t even see a nugget or trace of some elevated goal in all of these stories.

Shareholders or not, the companies have to make money. Now us users have been gaslit for years about us just being too stingy to “pay for the product”, therefore we “become the product”. But all of these gamification/social media platforms were made to be free. Obviously there had to be a path to monetization. Morals or not. And they all end up in the same place.

Duolingo was co-founded by the inventor of Captcha. One of the ideas was to use people as translators, similar to the Mechanical Turk idea of letting people do some chore and using the product. Anyway, they also monetized eventually. Now what has Duolingo actually done for langauge learning? According to many people now, nothing. Look on YouTube. People post about their streaks. I.e. the gamification. The last video I saw was barely about how Duolingo helped at all. They had the typical “of course you can’t use only Duolingo” and then they listed all the other approaches and techniques. Well, did Duolingo serve any role? They said repetition. Well the repetition is for very artificial and out of context words and phrases. That Duolingo learners are like fish out of water in a context where they have to apply their knowledge is a meme at this point.

Another fun, very SC thing[1] about DuoLingo is/was the volunteer community. Yes of course a volunteer community to boost the for-profit platform. That’s how you get Klingon.

The AI-fication, aggressive ads, and pay-to-streak (you can artificially pause a streak for a whole month apparently) has made people worry and complain. And not because they are making a good language learning app worse to use, even. It seems to be mostly that people are hooked to the streak and are now even more annoyed by the hoop they have to go through (the app itself) to maintain it.

So what did Duolingo (DL) achieve? It made people fret and worry about their streak. That’s it. I had a friend who was so glad that he was getting close to a one-year streak on DL. Why? Because then he could quit. I wrote like one or two sentences that I recalled in his target language. He didn’t understand it.

[1] See StackExchange. I remember Jeff Atwood’s very humble blog piece about how he made his millions. It was of course all him but he had a good upbringing and access to good schools of course. No mention of the employees, but that’s just normal capitalist things so that’s fine. But also no mention that he made a platform based on volunteer work. Hmm. Self-made man? In SC culture he is. Because getting users/fools to work for you for free is the ultimate disruption.

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