Comment by bbor | Hacker News Reader

Comment by bbor | Hacker News Reader

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  Aside, why not link the original video instead of a reddit post?

It's a compilation, but regardless, Reddit seems about as "original" as any other platform. I'd certainly rather see Reddit links here than YouTube links, all else being equal!

  the vast majority of equity of companies are held privately

That's an good intuition, but it turns out to be false globally (TIL!): "There are nearly 25x more PE- and VC-backed companies than public markets [globally], but the total capitalization of private equity and venture capital is just 12% of public equity markets." per https://www.harbourvest.com/insights-news/insights/cpm-how-d...

  vulture PE firms do exist but are not as prevalent as people make it seem online. It's a meme that many people seem to have latched on when the vast majority of PE firms and companies work perfectly fine

...source? It's certainly possible that I'm suffering from confirmation bias, but "company goes through PE acquisition" headlines seem to be followed by "brand dissolved" headlines in way too many cases. Even if it's not a literal majority, the problem seems A) widespread, and B) behind many of the most harmful symptoms of the rot beneath the American(/global?) economy!

My mistake, I should have said vast majority of companies, not equity in companies, are privately held.

If you're seeing it in the media, of course it's confirmation bias. Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it? Yet that's what happens in the majority of cases. Those in the media are the exceptions that prove the rule.

>> "brand dissolved" headlines > If you're seeing it in the media, of course it's confirmation bias.

It's a huge mistake to narrow down the problems of private equity firms (PEFs) to the dissolution of the companies they buy.

> Do you think it makes a good headline to say that a firm bought a company, grew it over 5 years, then sold it?

How is that different from what the video said? They buy all the hardware, grow the price of it by the mere fact of buying it up, hoard it, and then they sell it back to you at even higher prices as cloud services.

They make a profit but you are robbed. It's the strategy of scalping which has been going on in the GPU market for quite some time, but now it's used by corporations on an industrial scale.

The problem is precisely in the normal operation of PEFs, or rather, in the regulations that allow them to operate that way.

> It's a huge mistake to narrow down the problems of private equity firms (PEFs) to the dissolution of the companies they buy.

I'm not sure I ever said this, certainly there are some problems attributable to their companies but not all.

> but now it's used by corporations on an industrial scale.

You mean, buying raw goods? It's not "scalping" if a company is buying what they need to integrate into their finished goods. That is to say, they are not buying them with the express purpose of reselling those same items back to you, as is, which is the case with actual scalpers of concert tickets or GPUs for example (and which is the actual definition of scalping, no economist would call this scalping). That's like saying I'm being "scalped" when a construction company buys timber to build into a house. Oh no, I'm being "robbed" of being able to buy my own wood, and the company is increasing the price of the wood by mere fact of buying it up, and then because the house costs more than what I would've paid for the wood.

If it's taking away your ability to buy your own wood and build your own house then it is robbery. If I bribed the government to sell me the water rights under your house and then started charging you for water, would you say that is fair?

It's not taking my ability away, I just have to pay more, same as anyone else, according to the laws of supply and demand. The water rights under my house are my own property so your analogy doesn't work.

> I just have to pay more, same as anyone else,

No, it's not same as anyone, the AI and datacenter companies have long term supply agreements at lower prices, essentially front-running the retail market. These agreements redistrict the volume available for retail and we end up scalped.

At every step the corporate purchases happen at lower price points, like this:

Price at 10 ->

corporate, high volume, buys at 10, hoarding of hardware ->

price up, retail buys at 20 due to a starved retail space ->

corporate, high volume, buys at 20, more hoarding ->

price up, retail buys at 30 due to a starved retail space ->

... etc.

It's not really any different from wholesale vs retail, of course a seller would prefer higher volume higher margin customers over lower ones. That is in no way scalping as defined. Just because you're not a high volume customer does not mean you are getting scalped. It's like saying because Sysco doesn't sell directly to you and only to restaurants that the restaurant is "scalping" you when you buy their food. Your explanations really are not very convincing because the behavior you're describing is how wholesale works in any field.

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