> Meta argued that the regulator was “sending a chilling message to start-up entrepreneurs: do not build new companies because you will not be able to sell them.”
This overlooks the traditional and perhaps now unpopular reason to start a company: making money by selling something useful. No need to sell the company. By the way, Facebook buys, does not sell.
Ironically, that statement is the strongest argument in favour of blocking the acquisition I've heard.
Any company so arrogant about its market dominance it assumes that the only way for an entrepreneur to succeed in building a company in its market is to sell to them deserves to be broken up.
Not to sound too obvious, but that is precisely the current state that is also ever increasing. As with seemingly most things, we are witnessing a reemergence of a system similar to what existed before the American Revolution, the feudalistic, aristocratic, monarchical system where you must show fealty to your vassal lord corporation.
Even the subject supposed effort to prevent monopolization is not understanding the underlying issue, that competition (a form of freedom) has for all intents and purposes been totally subverted because rather than monopolizing an industry or sector, today's monopolists/cartels realized they should just totally supplant the whole market so people have no choice but to kiss their royal ring. That is something that has effectively been accomplished and society may just have not understood yet what's going on, or likely those who would be expected to ward this off were also totally compromised and corrupted ($$$).
What we need is reinstatement of conditions that lead to are allow competition. That may take on several different forms, e.g., (not to pick on Apple, but to use a recent example) that Apple must provide the same access to core integration (based on reasonable technical specifications anyone can meet) that AirTags utilize to competitors like Tile, including the whole apple device network (AirTags are real reason that SARS-CoV-2 "contact tracing" was snuck in to save us all, btw). Another example; Apple and Google, may not block or ban any user or any app that meets its general and public technical specifications and are not a violation of law and human rights like free expression, whether out vassal lord corporations like what users have to say or if an app is a competitor or does something they don't like or not. The alternative should simply be that Apple and Google can just build their own internet if they wish to violate people's rights on the public internet and communications … at the very least.
> As with seemingly most things, we are witnessing a reemergence of a system similar to what existed before the American Revolution, the feudalistic, aristocratic, monarchical system where you must show fealty to your vassal lord corporation.
This is not something new, but has always been the case. Capitalism is the 2nd iteration of feudalism. When the French revolution threw feudalism into jeopardy, the feudal lords - conservatives who sat in the right wing of the French parliament- hoped capitalism would rescue feudalism and help maintain social hierarchies. Democracy is seen as anti feudal and anti capitalist in its genesis, by giving everyone one vote independent of wealth. Earliest proposals for elections were only for Male land owners.
The founding fathers were capitalists for the most part.
> "While constitutionally given the right to vote by the Fifteenth Amendment in 1870 and 19th Amendment in 1920, the reality of the country was such that most African Americans and some poor whites could not vote until the passage of the Voting Rights Act of 1965."
Most of them owned rather than rented their labor, but yes they did start the US with the idea of suppressing mass universal democracy, calling it mob rule.
The US was the first modern democracy. Were they supposed to go from dictatorial monarchy to universal suffrage in one day or be condemned forever?
If you want to criticize something, criticize the fact that we still don't have universal suffrage. In many states, felons can't vote. Which is cynically claimed as denying them something as punishment for their crimes, but in reality is done to prevent the victims of mass incarceration from becoming a large voting bloc to end it.
This isn’t really true. Before the declaration of independence the people of the American colonies couldn’t vote in British general elections, yet the Parliament of the United Kingdom of Great Britain (as it was known then) had full legal rights to legislate for the colonies. This is due to the way the British constitution works, where Parliament has supreme power over everything, including the the Monarch, the Monarch’s government and any territories outside of the United Kingdom. This remains the same for all existing British overseas territories such as Bermuda and the Cayman Islands where there is no representation in Parliament.
The individual American colonies had legislatures for their own territory, with limited powers as defined in their charters. One example is the legislature of Virginia which has had elected members since its inception 150 years before American Independence and still continues to hold elections to this day.
This is kind of my point. Should we condemn the Magna Carta as well?
We should spend less time whinging about the people who did better than their fathers and more time doing better than ours.
The people allowing themselves to be consumed by "hate your neighbor" propaganda and mistaking that for a protest movement are getting played. Fight who's above you, not who's beside you.
I take issue only with the characterisation of colonial America as authoritarian. It was democratic and the King and his Governors had limited power. The issues leading to revolution arose mostly from the lack of representation in Parliament and a series of unforunate blunders in handling greivences on the part of HM Government.
"the Parliament of the United Kingdom of Great Britain [...] had full legal rights to legislate for the colonies. [...] This remains the same for all existing British overseas territories such as Bermuda and the Cayman Islands [...]"
specifically "Following the Lords' decision in Ex parte Quark, 2005, [...] To comply with the court's decision, the territorial governors now act on the advice of each territory's executive and the UK government can no longer disallow legislation passed by territorial legislatures."
and the sections sketching the legislatures in Bermuda and Gibraltar.
e.g. "Individual overseas territories have legislative independence over immigration"
That is referring to the executive functions of the Crown. In some cases it was possible for a Government to create or block an ordinance for a territory without legislative approval.
There is no limit over Parliamentary power. The House of Lords had judicial functions (now The Supreme Court) which allowed it to act as the second highest court in the land under the Privy Council. No court can revoke an act of Parliament. Any limits on Parliamentary power over these territories is by convention. Another interesting aspect of the British constitution is that institutions generally follow agreements even if they lack a legal basis.
Something that might confuse Americans in particular is the use of the term “government”, which, within a British context, refers only to the executive branch of government. Also the idea of a strongly defined clear constitution is rather alien… as are checks and balances on the legislature.
The US was the first of the series of republican revolutions of that era and the most conservative of all of them (compare with the radicalism of 1789 France for example). There are things to admire about it, but I think it is better to call it a war of independence than a proper social revolution.
The reason to be critical today is we are _still_ living in that framework! We have to do better.
What would a better structure look like? And I don't think things like national healthcare, less racism, etc. are included, because those could be implemented in the current structure. I think history shows that we have a demonstratively good system. We have high social mobility, high political stability (peaceful transfers of power, Trump notwithstanding), consistently strong economics, world-class institutions, etc. Our system has scaled fairly smoothly from 2.5 million to 325 million and has lasted almost 250 years. Which system has done better?
It's not clear if our system can survive the current polarization, which could be seen as city values vs rural values, and the system is specifically designed to balance those. So if the cities and the rurals both take up opposing, fundamentalist positions and refuse to cooperate, the system is not designed to handle that. But we've had a history of craziness, and so far, comes the times, comes the man. I'll bet on our system over a lot of other extant systems! And change is not always better. (And if the electorate has a lot ideological-driven motivations, as present, the odds of change being worse is pretty high. Ideological-driven change has historically been pretty bad.)
I do think that if you stay within the system of liberal democracy, at minimum we need to implement a more modern constitutional order. We've learned a lot about liberal constitutions in 200 years.
However, practically speaking, the political machinery is so ossified that I think only marginal structural changes within the framework are possible (like court packing, electoral vote compacts etc). Political radicals have to do a lot of organizing to build a mass constituency that can make really dramatic alterations without empowering the right wing.
Rest easy, we just want democracy that poor people can participate fully in. Unfortunately, that means the 30-40% right-wingers will be outvoted every single time.
..and don't act like the right isn't trying to build towards calling a constitutional convention if they can capture enough state legislatures. It's well documented. We can be assured that if that came to pass all hell would break loose.
Hi, ex poor person here. It’s called not being lazy or making up excuses. Very rarely is someone actually disadvantaged. But yes communism will some how make people less lazy. And judging by the votes here, you’re wrong.
It is true that the French Revolution and subsequent counter-revolution were not as successful as the American Revolution was, and that the non-democratic features of the American system are a major reason for that.
> that the non-democratic features of the American system are a major reason for that
It's unfortunately unpopular to point out that we have ample evidence, from history and contemporaneously, that democracy per se doesn't work. It devolves into a populist, majoritarian and often authoritarian mess as reliably as (non-monarchical) dictators fall into chaos.
The men who founded our Republic understood this, which is why they explicitly created a system that balances the strengths and weaknesses of monarchy, oligarchy and democracy. (Hint: they're our three branches of government.) At some point, we wrote that balance out of our cultural history, and we're partly paying the price now.
There are many liberal republics and socialist republics doing fine all over the world. This is just trendy neo-feudalist rhetoric. The US is dissolving due to inadequate democracy where people feel they have no control over their government or life's destiny.
Are there any democratic 'socialist republics' not social democratic (or social market economy) ones but actually socialist? Scandinavian countries are definitely not socialist they have strong social safety nets and high taxes which results in a relatively high government spending to GDP ratio (44% in the US vs 58%, 54%, 53% in Norway, Denmark and Sweden) but that's about it. And if we're talking about "neo-feudalism" Sweden for instance has one the highest wealth inequality coefficients in Europe, it's even slightly higher than in the US, so from a purely cynical perspective they are just giving their 'peasants' enough to keep them quiet while a huge proportion of all private wealth in the country is held by a few families.
The US and European social democracies are not that different.
Sure, the US government and the insurance/university lobbies screwed up education and healthcare prices - but all western countries steal an inordinate amount of money to profit creating citizens and waste them around giving little back to the country.
According to https://en.m.wikipedia.org/wiki/List_of_countries_by_income_..., the US is higher than Sweden now, before taxes and transfers, and that gap only widens if taxes and transfers, the primary mechanism governments have to reduce inequality, are taken into account.
Socialism is more of a process than a particular governmental form, but it does mean that the workers have control of society to the point that the capitalists are powerless (an inversion of the current situation). Other socialists would criticize me sharply for this, but I'm still trying to decide if stateless communism is practically achievable.
I was thinking in mind Cuba or Vietnam. I'm still trying to decide if China is still socialist or not, but there are good arguments in favor (they still control the commanding heights of the economy and are improving life for ordinary people at a rapid pace but things are far from perfect).
> liberal republics and socialist republics doing fine all over the world
These are policy preferences. One can have a liberal, conservative, socialist and/or capitalist monarchy, oligarchy or democracy. The latter talk to how power is divided. The former to how it used.
Naturally, some power divisions tend to lead to certain policy preferences. But that is a correlation
> just trendy neo-feudalist rhetoric
This is the cultural amnesia I'm talking about. These ideas aren't new. From Federalist No. 10:
"From this view of the subject it may be concluded that a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths. Theoretic politicians, who have patronized this species of government, have erroneously supposed that by reducing mankind to a perfect equality in their political rights, they would, at the same time, be perfectly equalized and assimilated in their possessions, their opinions, and their passions.
A republic, by which I mean a government in which the scheme of representation takes place, opens a different prospect, and promises the cure for which we are seeking. Let us examine the points in which it varies from pure democracy, and we shall comprehend both the nature of the cure and the efficacy which it must derive from the Union.
The two great points of difference between a democracy and a republic are: first, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.
The effect of the first difference is, on the one hand, to refine and enlarge the public views, by passing them through the medium of a chosen body of citizens, whose wisdom may best discern the true interest of their country, and whose patriotism and love of justice will be least likely to sacrifice it to temporary or partial considerations. Under such a regulation, it may well happen that the public voice, pronounced by the representatives of the people, will be more consonant to the public good than if pronounced by the people themselves, convened for the purpose. On the other hand, the effect may be inverted. Men of factious tempers, of local prejudices, or of sinister designs, may, by intrigue, by corruption, or by other means, first obtain the suffrages, and then betray the interests, of the people."
> these are the very ideas I've been complaining are part of the US's constitutional DNA in this thread, so we'll have to disagree
I think we agree. There is meat between the archetypal framework and the working, practical government. The framework is neutral. But the implementation details are not.
My core point is that more democracy = good is a misreading of American, and in fact world, history. We have a mixed system. Denouncing one system over another for being less democratic is thus a straw man.
> One can have a liberal, conservative, socialist and/or capitalist monarchy, oligarchy or democracy. The latter talk to how power is divided. The former to how it used.
I don't think you can make such a separation so easily. Legislative power is almost dwarfed by the power of capital. When you have a “liberal democracy”, the two parts are in constant conflict. (I don't mean to say socialist democracy wouldn't have similar problems, just that the structure of power is deeper than just elections.)
this is patently not true. It would do to remember that we are currently in version 2.x of the US, the US was started, mostly by the same framers, not with that idea of suppressing universal democracy (articles of confederation), and then they rolled back a tad bit on democracy (constituion).
Articles of confederation vs. constitution related to compact between the states vs the strength of the federal government. Most of the people who signed the decl. of independence owned slaves or were lawyers for people who do. I'll grant maybe a few more people in the constitutional convention might not have been slave holders.
However, it would be good to recall that during the era of good feelings, a huge number of presidents were slave holders from Virginia. That's who held the balance of power in the country. The constitution itself was a compromise over slavery, modeled after English government (house/senate -> commons/lords, pres/vice pres -> king/heir apparent). Voters were landed white male adults, senators were elected indirectly by the states, as was the president (and still is though we have papered over it!). Supreme court judges were given life terms to enable disruption from below to be smoothed out by prior appointments.
The whole idea of the country was to guarantee rights to the upper class and place the country under new management and diffuse lower class energy via grants of land in westward expansion. The "genius" of the constitution became apparent when the entire thing broke down only ~70 years later in a bloodbath over the issue, slavery, they papered over at the convention which was a direct affront to the rhetoric of the revolution.
By modern standards, we view their actions as morally wrong. Owning slaves is morally wrong. Only permitting white males to vote is morally wrong.
Yet, we also forget that the world then was not like the world today. Who received comprehensive education back then, the kind needed to run states and countries? Typically, the rich, and within that, men. The inequalities of the world in those times were immense and could not be mended in even one generation. Liberal countries such as USA fought against the powerful forces of British imperialism, with the promise of a better tomorrow for all citizens, however long that takes.
>The constitution itself was a compromise over slavery
If you've ever tried to make significant change in an organization of any type and size (including government), you MUST take inertia into account. What you claim was willful choice, I claim was inertia. Slavery was not banned in the Constitution because a few Southern states would have refused to sign it, their claim being such action would render economic devastation. The very day it became possible, the importation of slaves was federally prohibited by Jefferson. As slavery became increasingly restricted by the federal, the southern states dug in their heels and refused to change their labor practices. The eventual Civil War was one of economics, with the general population heavily propagandized by those wealthy slaveowners wanting to preserve their livelihood.
>diffuse lower class energy via grants of land in westward expansion
Your analysis is overly simplistic. Those grants of land to lower-class citizens ensured the new Western lands would be worked by citizens. It was great opportunity many lower-class citizens jumped on, especially those who didn't own land before. By relocating to a smaller community, a lower-class citizen became immediately more influential in their local community by numbers alone. Yes, it diffuses that energy, but that's not inherently bad. In different terms, I see that decentralization as an intentional, value-adding feature, not an unintentional bug.
> Yet, we also forget that the world then was not like the world today.
False. Contemporary preachers were regularly commenting that slavers were going to hell. They didn't have a different morality, just different economic incentives (i.e. they thought they could get away with it). Luminaries such as Jefferson even expressed that slavery was wrong, though he didn't actually free his slaves during his lifetime. Show respect for people of the past, they weren't stupid. It wasn't even that far into the future that the slavery abolition movement got going in other countries such as the UK.
> Those grants of land to lower-class citizens ensured the new Western lands would be worked by citizens.
The land was Native American land and this was only achieved via genocidal means.
>They didn't have a different morality, just different economic incentives (i.e. they thought they could get away with it).
Exactly, slavery was a significant economic factor in the world back then. It is no longer a significant economic factor in the world today. Also, don't think that preachers speak their message without understanding the nature of their congregation. The preacher chooses a message they feel the congregation should hear. Rare is the sermon which chastises the economic means of that church body's membership.
>The land was Native American land and this was only achieved via genocidal means.
Native American tribes were weakened by disease, defeated by technology, and subdued by law (the title of "Guns, Germs, and Steel" captures this point nicely, though I don't agree with all of Diamond's arguments). Would you judge one Native American tribe similarly should they commit genocide upon another tribe and take their lands? Based on your comments here, I suspect no, and I also suspect such is still considered morally wrong but less morally wrong than Western expansion through kinetic force.
Racist laws are morally wrong and must be eschewed. There is no doubt that Native Americans were eventually subdued by such laws, but it took decades of fighting for Native Americans to reach their low point. So, I submit to you a serious question to ponder: if two warring entities are technological equals, is their fighting "better" in some sense?
The Jeffersonian idea was to create a nation of self-sufficient yeoman farmers (they thought slavery would go away over time due to its heavy tobacco emphasis that was depleting the soil). The industrial revolution, the cotton gin, and other world historical factors made this vision (which was a vision of a faction, not the entire elite) implausible.
They wanted to do this to relieve popular pressure from below by creating "responsible" landowners that had a stake in the system. The landowners would continue to be white and male, but with an expansion of who gets to participate. The American system repeatedly does this under stress. A system that was actually liberatoratory would work in the interest of the people, not simply respond to threats.
> The landowners would continue to be white and male, but with an expansion of who gets to participate.
I also don't think this is quite right, either. There were black landowners, specifically in virginia, but other states too like maryland and louisiana, many of whom were yeoman farmers, and even a few who owned slaves, and were successful petitioners to suits heard at the house of burgesses, until the late 18th-century, but eventually it just became too convenient to be lazy and label "black == slave".
You could be a black landowner in connecticut and vote until 1814, well after the constitution was passed. It's kind of a common narrative that the US was born in racism, but I think it was more "the US did not know what to do with the issue of race and grew into racism" which is scarier, if you ask me.
correction: until the early 18th century, which is when the black codes were passed in Virginia. However, several other states allowed free blacks to vote around the time of the constitution.
Capitilism and feudalism share little in common. One is a means of exchange allowing basically any government to implement it. the other is an entire philosophy and implementation of governance and interaction.
The Communist Manifesto certainly sees things that way, but I don’t think capitalism has been like that in the USA since roughly Roosevelt’s New Deal. (I don’t want to suggest this happened everywhere at the same time: weirdly, my British history lessons don’t cover anything the British did or experienced between the two World Wars other than “Chamberlain was naïve”).
The iconic images of the downfall of Communism was the economic catastrophe, shops with empty shelves, etc.; Capitalism had a similar experience in the Great Depression, was changed by it, but the name remained.
> Capitalism had a similar experience in the Great Depression, was changed by it, but the name remained.
Unfortunately a lot of those New Deal changes were reverted since then. For one, the minimum wage was supposed to be a living wage one could raise a family on.
It's not capitalism, the reason we ended up with massive accumulation of wealth (which changed shape and form across time - Rockefeller is not Zuckerberg) is because of government corruption, intervention and monopoly creation.
New governments don't do anything but waste public money and create regulations which entrench the current lobbyists as the de-facto standard and prevent new competition from popping up.
All this is done in service to the capitalists, though. A stateless capitalism would be more direct, and do away with the few silly laws remaining that stand in the way of profits.
Option 3 is to become very profitable and then have Facebook create its own competitor and integrate it into their own apps, killing your business overnight.
But some businesses that take VC funding could pay out 1000% dividends every year, especially businesses that don't take much initial funding and manage to become a monopoly in some small niche market and decide not to expand further.
It's certainly possible in niche cases, but if you tell a VC that is your plan, I thin you are likely to find a luke-warm response. Aiming at an acquisition is in many ways a surer bet that aiming for niche market dominance with outlandish returns
It's not ironic at all, nor is it very persuasive.
It's pretty well established truism by now that start-ups are a business model where the founders and angel investors become wealthy once the business sells. It would be interesting to see the breakdown of how many start-ups sellout, continue as an independent entity, or completely fail. Regardless, just because Facebook recognizes the business culture in the SF Bay area is not a persuasive argument for why they should be broken up.
> It's pretty well established truism by now that start-ups are a business model where the founders and angel investors become wealthy once the business sells.
It's a pretty well established truism that startups in most markets would have absolutely no difficulty at all in selling their business via many different exit routes if one particular player wasn't able to go through with an acquisition for any reason. If it was too early to go public the could sell to Instagram Inc or WhatsApp PLC, or a private equity firm that wants to get into a sector where many, many firms have become stable and profitable. Facebook's statement that if they're not allowed to buy, entrepreneurs [in their market] won't be able to sell [to anyone else] is a truism specific to the social media market Facebook dominates, and a direct consequence of it having the sort of monopoly power that gets them scrutinised by the Competition Commission.
There isn't any other way to make money from something like a gif hosting platform. Plenty of new companies get started all the same without being acquired.
Too many people are trying to create a startup with short-term success in order to get acquired. Get that $500m acquisition in the bag and then retire. Boom, done.
Or ya know, that startups talk about having an exit that's either getting bought by someone or an IPO. Nobody in the startup world seems terribly interested in building a lifestyle business.
Businesses that don't prioritize winning in the market will be outperformed by businesses that do.
Let the government do the job of setting the boundaries on the market so they can do what's best for humans, and let businesses do the job of optimizing for victory within the market.
That's where their respective incentives lie, so that's what they do best at.
Ok. That's what your economics textbook thinks. What do you think?
Competition is not the only way to get things done. Humans are definitely capable of collective action. You may recall a few weeks ago where hundreds of millions of
Americans just said "fuck 2 AM, it's now 1 AM" early one Sunday. How would you harness that?
Those millions of Americans followed rules set by the government. That the game.
Make the rules do useful things. If you want business with social conscience, legislate it; don't whine for the uncaring hand of the free market to deign to suddenly show empathy.
Hey, here's a thought: why don't we get rid of such dehumanizing institutions and everybody just get along? How about we not commodify every single aspect of human existence, from birth to death?
How would you accomplish it using government as a tool? It's clear that most (all?) current governments are wholly inadequate to this task. What are the right rules, and how can government help the situation? What does society look like when you implement those rules and enforcement mechanisms?
Yes, it's a very funny book once you get past the droning sentences and start seeing the core absurdity of its ideas. The gushing praise it lavishes on the rich has to be read to be believed.
As the old joke goes, there are two novels that can change a bookish fourteen-year old’s life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs.
How do you think startups make money? We're talking about two different things -- one is the value the business provides to their customers which is selling goods and services, and the other is the value the business provides to the founders and investors which is profit.
Whether or not something is a lifestyle business is a shuffling around of who owns the business and gets the profit, not at all about how the business operates except as second order effects.
Do you think most modern startups actually do make money?
A great many don't, they lose it hand over fist. Especially those that intend to grow fast and get bought (or IPO) fast. It worked for a number of current big names, and many smaller names that those big names since bought.
You're just describing a growth strategy. The whole time they're burning cash they're still providing value to their customers. Nonprofits don't make money either and still provide value.
Or undermining other similar businesses that actually have to make more money than they spend. After said businesses are gone, and the investor cash dries up, what benefit is actually left?
How does that work with other kinds of investments like loans? You don't "save up" to open a restaurant, you put together a business plan and go to a bank. VCs are just doing that but willing to take on riskier businesses in exchange for equity instead of interest payments.
I suspect you'll find few restaurants opening up with the intention of opening as many locations as possible as quickly as they can be built, all providing food at under cost for years on end until the local restaurant scene is sufficiently disrupted that McDonalds buys them to make them go away.
I mean you're essentially describing DoorDash + competitors and HelloFresh + competitors. But in the restaurant industry proper it's the same thing except your exit isn't to get bought by McDonalds but to secretly dominate the mid-high tier dining scene in a given area and collect all the profits. So they won't build a bunch of the same restaurants but will take on massive debt to buy everything in a trendy area. I didn't really expect that in 2018ish that there would be a pivot from these companies to a real-estate play so they don't even have to own the restaurants anymore but can force them to use the company payment system and suppliers but it makes total sense in a boring dystopia way.
"Support Local Restaurants! (being puppeted by a massive hybrid restaurant/real-estate conglomerate)"
Are the providing value or reallocating it from VCs temporarily in order to obtain enough market share to then extort consumers for higher prices (less value per dollar) later on?
> obtain enough market share to then extort consumers for higher prices (less value per dollar) later on?
Are there many examples of this extortion?
Casper and Blue Apron plummeted after adjusting pricing because they weren’t providing sufficient value. Uber became profitable. It probably lost some customers. But nobody I know felt extorted by it—those who didn’t like the new prices stopped using it.
Uber is definitely such an example - a lot of taxi companies disappeared because they couldn't compete with the scale of Uber with its subsidised prices.
Now Uber have significantly increased their prices there are a lot fewer alternatives to turn to.
> Now Uber have significantly increased their prices there are a lot fewer alternatives to turn to
Can you give an example of a city where Uber has a meaningful monopoly? Hell, I’ll even give you Uber and Lyft. Where the alternative modes of transport—be it private cars, public transport or taxis—are non-existent to someone who would have otherwise made use of them?
It's not that the alternatives are non-existent, it's that their cost (in dollars or some other parameter) have gone up a lot. For example, if you don't use Uber or Lyft in San Francisco, it takes a LOT longer to hail a taxi on the road than it used to.
Which is also what growth companies do? They reinvest their own earnings along with outside investment, which is the same as nonprofits (via donations).
> businesses that made income by selling goods or services to customers were just called businesses, not lifestyle businesses
No, they were called shops. Where the business stops working without the owner-manager’s labor. “Business” referred to industrial-scale activity. (Before the industrial revolution, “commerce” was the broad term including trade merchants and shopkeepers.)
Similar to the industrial revolution’s change in nomenclature, the advent of modern computing has delineated small businesses, which include shops and shop-like tech firms, from enterprises, which are industry-like ones. Mom-and-pops thinking of themselves as businesses is a modern phenomenon.
If the owner-manager of Delphi goes home for the night, automotive parts do not stop being made. If the owner-manager of JBS goes home, McDonald’s still gets their hamburger patties. Semiconductors. Raw ore. Train wheels. All of those things were enterprise businesses, not shops, long before computers were heard of
Your response is through the same exact lens being critiqued. Even today there’s a vast economy of businesses, not shops, that fulfill key parts of the world economy and aren’t building for an exit. The idea that that’s weird/lifestyle is a modern, SV VC phenomenon and has nothing to do with computing nor the industrial revolution at all
This is obvious enough to most people that we sometimes wonder why we call startups businesses. Really they’re a new model of offshore R&D which often amounts to a hole into which to pour capital speculatively in hopes it will grow a tree
> “Business” referred to industrial-scale activity. (Before the industrial revolution, “commerce” was the broad term including trade merchants and shopkeepers.)
That sounds very weird to me because OED has plenty of meanings not related to industrial-scale activity that predate the industrial revolution. For example,
"In general sense: action which occupies time, demands attention and labour; esp. serious occupation, work, as opposed to pleasure or recreation.
c1400 Apol. Loll. 3 Hatyng to be enpliȝed wiþ seculer bisines. 1532 More Confut. Tindale Wks. 826/1 Occupied in honorable businesse. 1600 C. Percy in Shaks. C. Praise 38 Pestred with contrie businesse. 1653 Walton Angler Ep. Ded. 3 To give rest to your mind, and devest your self of your more serious business. ..."
And there's more of those where this came from, like "a task appointed or undertaken; a person's official duty, part or province; function, occupation" (dating back to Chaucer).
Yeah, that's one thing that's always bugged me about startups and VC.
There seems to be general agreement that two big problems we're facing in the economy are 1) a slow consolidation of businesses into a handful of mega-corps which span across many markets and 2) an obsession with short-term gains to appease investors and shareholders. Yet the startup world seems to be fixated on "exit strategies" which perpetuate those two problems.
Because founders and early stock-holding employees want to get paid out, move on to something else, and let someone else handle the long-tail maintenance of the business. This is valuable work in the economy because you want people who are good at starting businesses, proving markets, getting investors, yada yada to be doing that and people who are good at running businesses to do that once it has roots.
The intractable problem is that corporations with loads of capital are the ones equipped to run businesses long-term. I would love a world where an exit is turning the business over to the employees and a newly hired CEO in exchange for a payout from the business itself but massive corporations will pay more, have cash on hand, and won't default.
"This is valuable work in the economy because you want [...trimmed...] people who are good at running businesses to do that once it has roots."
In my experience, things tend to get dramatically worse for users when a business is acquired or sold, not better. Long-term sustainability also seems to be significantly decreased by acquisitions, not increased- even when the business isn't closed outright (e.g. Pebble). And, from your second paragraph, it seems like you recognize this too. So, yeah, you might want people who are good at running businesses to do that - but selling a business does not seem to put people who are good at running businesses in charge of it. If anything, it's the opposite.
There are markets where one potential acquirer being unable to do so doesn't completely scupper your chances of any exit though.
If the antitrust regulators came down on Microsoft again, I don't think we'd see their lawyers argue that there's no other route for B2B software vendors to cash out except to sell to them.
Or the intermediary making money out of the investors want exits, and only get paid when a deal moves through. For many investors they need neither exits, dividends or anything other than capital growth.
The intermediary is effectively invested, right? If you mean like a banker. IME, investors want a way to get their cash out. A private but successful lifestyle business isn’t going to get publicity.
Isn't there a selection bias going on here? The only entrepreneurs allowed in the club who don't fit the go-for-broke mold are those who make it there by being celebrities in other ways (thinking Fried/DHH or someone like Maciej Cegłowski).
Indeed, you have to wonder if the world might be a better place if mergers were just not allowed. There's a famous Adam Smith quote about people in the same business coming together to screw the consumer. Mergers are perhaps the ultimate collusion.
For instance, what if the default position was that mergers were banned, except where you could convincingly show that everyone is better off? For instance in dying industries where scale is necessary.
It's an interesting point, and ultimately kind of boils down to "Is a more profitable company good for consumers?"
To which the answer seems inarguably "Sometimes." Scale that reduces production costs (and therefore prices), yes. Or prices could be maintained and the increased profits given to shareholders, in which case no.
I think the broader question is "What systemic features exist that make giant companies more efficient than a network of smaller, independent companies?"
And to that, I'd argue that in the 21st century, not many. The market and communication B2B inefficiencies that drove conglomeration in the 20th century have most been reduced to zero.
The only reason to have a hyperscale company these days is to deploy capital at scale in loss-making enterprises in hopes of capturing market share... and I'm not sure that's something that's been healthy in aggregate?
> And to that, I'd argue that in the 21st century, not many. The market and communication B2B inefficiencies that drove conglomeration in the 20th century have most been reduced to zero.
There's still the efficiencies of mass production for physical goods. For digital services that include any element of social network, there's the network effect. I think these are still a significant factor in most markets today. For match-making services in particular, brand recognition is important; otherwise users have difficulty in _finding_ quality from a directory of smaller, independent companies. And arranging effective federation, while possible, is expensive and development of such systems is slow.
True. But I imagine what would evolve would be a few B2C "face" brands, backed by a web of unmentioned B2B companies that customers never directly interact with.
Which is essentially the dynamic now, except the B2C last mile companies can parlay their relationship and just buy everything high value upstream of them.
Which... I'm not sure is great for competition.
Anything that moved the market away from one in which all customers are "an Apple customer" or "a Google customer" or "a Facebook customer", with those companies unconstrained in their ability to leverage that, seems better.
A major reason to group companies together in a "hyperscale" company is to influence government regulation, which is where you can access real money and power.
The EU had a study that indicated that you need at least four competitors before price competition appears. Two or three act like a monopoly, almost automatically. The free market thing requires multiple players to work. So mergers that bring the number of competitors below four should be prohibited.
The US is down to three big banks, three mobile phone companies, and three drugstore chains, and they don't compete on price much. If an industry gets below four, maybe the companies should be given the choice of breaking up or converting to a common carrier or regulated public utility.
I think a world without mergers would cause a lot of trouble for companies nearing bankruptcy and especially their workforce. When a company is about to fall over because if cashflow issues, another can come in with its reserves and save hundreds or thousands of jobs. That's good for everyone.
I'd argue for a world with only limited possibilities for mergers, where mergers are a last resort rather than the goal of a startup. So many companies these days produce absolutely nothing of value in the hopes of being bought out by a big conglomerate.
What does this even mean? No business is allowed to buy another business? This would force economic activity to be centered around wealthy individuals (even more than it already is).
People feel that wealthy individuals having majority control over big businesses is a bad thing (Bezos, Zuckerberg, etc), but your proposal would enshrine this in law.
For example think about the case of Steel, inc. vs John Smith. Steel, inc. is a corporation with a broad set of owners (hell, let's make it employee owned). It makes steel. John Smith is a rich guy who has bought controlling interests in a number of privately held businesses which are all in the steel industry.
John Smith will easily be able to outcompete Steel, inc. Steel, inc. is encumbered by your law, while John Smith is not. If John Smith's empire needs an ore mine, he can just buy it. If Steel, inc. needs an ore mine, the only thing they can do is find a new ore deposit, and buy all the machinery needed on the open market.
Your law mandates that all business be controlled by rich individuals instead of groups of shareholders.
It doesn't seem like much of a stretch to also stop allowing an individual to buy up multiple businesses like that. Starting lots of businesses is one thing, buying them up like Pokemon provides very little value to the world.
John Smith could still buy up controlling shares in various companies, but it's also not a big stretch to regulate that sort of thing too. I don't really buy the idea that we need huge corporations to protect us from the rich.
"Why don't we just ban all <insert business thing>!"
People always want a simple answer. Intervening in markets can be done successfully in some cases, but as a random member of the public you're never going to come up with a silver bullet.
OK, so you hire an ad agency, which then needs its own IT department, it’s own HR and finance.. why not merge them in? If you ban mergers you’ll just have the people individually get poached
That doesn't really make things efficient because the different nature of the two industries will require some of the departments to stay different. Not to mention it removes a business that was previously providing marketing services from the market, and attaches it to a jet engine company.
I doubt that Giphy the Meta subsidiary uses the same IT department as Facebook.
FB doesn't claim selling the company is the only reason to start one.
But it is a top 3 "exit strategy" for startups, so limiting it would have a chilling effect on startup formation. How big that effect would be is probably a better avenue for counter arguments.
> Companies that can't afford to pay anywhere near $400M for a GIF sharing service
What makes a free GIF sharing service worth $400M dollars - apart from the data harvesting Facebook can do to better target users with ads.
We don't need to outlaw these sales, just outlaw the integration of data from purchased services, and then you'll see what the true value of the company is.
It’s not the regulator’s job to find other buyers for Gyphy. There’s a million companies who could buy it, doesn’t mean they will. But the goal here from FB is clearly to monopolise data aggregation, which regulators rightly have to stop.
> limiting it would have a chilling effect on startup formation
I'm okay with that. Startup culture is toxic, and the world would be a much better place if the only legal reason to found a business would be to make a steady profit selling your product. If your company only exists so you can sell it (as in the company as a whole) to someone else, your company shouldn't exist.
What does Giphy sell. They certainly do not sell GIFs. Looks like they sometimes buy (license) them.
Giphy does not produce the GIFs. It is someone else's work.
Thus the only thing Giphy could sell is its "service" of running a server on the internet that serves GIFs.
How much is that service worth.
But they are not selling that either.
They are collecting (meta)data about users.
Maybe they inject ads.
What an incredible business model. Produce nothing, use other people's work as "bait", collect data, get an inflated valuation and sell the "business". This is almost as good as patent trolling.
Now, with this amazing model, how much revenue does Giphy produce, how much profit. Not even enough to pay for the server costs. It is funded by investors.
Meta argued that the regulator was “sending a chilling message to start-up entrepreneurs: do not build new companies without a viable business model because you will not be able to rely on a competition harming sale to a dominant market player for an exit.”
But do you understand that being in business is not a right and that if your business relies on harming consumers to make a profit then maybe it shouldn't exist?
I think we should consider outlawing "most VC-funded businesses" then. The sole reason anyone should ever start a business should be to make long-term sustainable profit, and anything else should be illegal.
But it would take away any further excuses to the regulator like, 'who else are we going to sell to,' because the regulator could ignore that argument, it being unlawful to start a business just for the purposes of selling
what constitutes a market? Giphy hadn't generated any revenue it was operating off the $20 million of VC money. Or are you just trying to say big American tech companies shouldn't be allowed to buy companies?
The advertising market. Giphy has plans to make an advertising network which would compete with Facebook and force the latter to be more competitive (which at least may result in better outcomes for end-users of both products).
So, overall, fine. The few people that get hurt by this are the greedy VCs that invented this wasteful game, and the greedy founders who agreed to play it.
You can also sell them to the public. The real crux is that Facebook was the highest bidder, so it does lower potential valuations not being able to be purchased. All well in my books. I'm still salty about Red Hat optimizing the short term and becoming an IBM arm
It also screams their weakness: Facebook and its employees are so universally reviled that it’s politically tenable, perhaps even popular, to do things with them that one couldn’t with others.
Ordinarily, a British regulator telling two American firms what they can and can’t do would create backlash from the U.S. In this case, that would be shocking.
> This overlooks the traditional and perhaps now unpopular reason to start a company: making money by selling something useful.
Was Giphy even set up to be a business? It's just a database of gifs converted to video, for use in social media posts or Slack channels. Who would ever pay for that, besides a social media behemoth?
Agreed. I also think that once you grow beyond one employee (yourself) as a founder, you acquire a deep moral and ethical (although not legal) responsibility to the wellbeing of your employees. The very notion/term "exit" has always made my skin crawl, at least in the context of "serial entrepreneurs".
Treating a company - a thing that often dozens, hundreds, or even thousands of people depend on for their livelihoods - as nothing more than an assert that can be bought and sold at the whims of a founder is fundamentally gross to me. Sure, not every acquisition leads to layoffs, but many (most?) do and I think that's abhorrent.
I know it's how the world works, but I don't think the culture of starting a company to get acquired for a nice "exit" should be celebrated and I think policy measures that can stop or diminish this culture are fundamentally good.
> as a founder, you acquire a deep moral and ethical ... responsibility to the wellbeing of your employees
No, everyone knows what they are getting into this is a horrible concept and should be pushed back against at every turn. If you want someone to be responsible for another adult petition the government to do it.
something that is missing is a bunch of VC companies these days are built to be sold. they don't have to have sustainable business meant for the long run.
here's PG
> Our startup, Viaweb, was built to be sold. We were open with investors about that from the start. And we were careful to create something that could slot easily into a larger company. That is the pattern for the future. - http://paulgraham.com/bubble.html
and given YC is the arguably the largest and most influential accelerator - hence why most startups are build to sell to FAANG
Instagram and YouTube were failed businesses? They sold to big companies in order to scale to billions of users and millions of SMBs because they didn't have knowledge nor human and financial resources for such task.
Maybe if they hadn't scaled to, oh, I don't know, THE ENTIRE PLANET, maybe some MORE companies could come in and build successful businesses in the space, and, hey, maybe even figure out how to federate and interoperate. I know, I know. Crazy talk.
I wonder about youtube - I see people say it still loses money though I don't know if that's true, but if it is, then is it a successful business? It's an amazing feat no doubt, but other than that I don't know what to make of it as a business or a force in the world.
Youtube is printing money right now as traffic/computers are cheap which was not the case 10 years ago. It's a very successful (multi $B profit) business right now. They reinvest some profits into original content but it's probably peanuts compared to overall profits.
They were either failed businesses (if they couldn't have survived at all without becoming a worldwide phenomenon) or they were greedy (if they could have survived, but really just wanted it all).
Either way, the acquisition of either should never have been allowed.
Products that can't be profitable as a standalone business but can be as part of a larger company's portfolio isn't really a useful definition of failed unless you redefine the term.
Yes, but the stock market would be better as it would allow the public to invest. Funding rounds are just a way to let the rich and privileged get even richer.
You see, when you have 1000 million and you invest 500 million in chunks of 1 million into 500 different companies, practically guaranteeing a return of >500 million [1], then you're taking a huge risk! Almost like the Average Joe/Jane investing on the stock market :-)
[1] Since it's supremely unlikely all 500 companies fail, and it's much more likely that at least 1 of them comes up with a decent return on investment.
This is an unsustainable position that will simply retard free trade, cause companies to refuse to hire people outside their home country, to the loss of everyone. It also breaks the moment two different countries decide they want mutually contradictory things (which happens all the time), and would result in people being forced to use non-innovative and poorly executing local clone companies instead of the best available services.
As an entrepreneur this gives me absolutely zero pause. I don't care if the fed splits up the thing that acquires me once I get acquired. I just want to get acquired. It's on meta to decide if they are flying too close to the sun.
There are many problems in the world that only a handful of companies have. You could make money joining those companies and helping them solve the problem as an employee. You could potentially make much more money by creating a company that solves that problem and then selling it to one of those bigger companies.
Giphy wasn't even GIF based. They were WEBP(?). The name comes from public perception: a short animated clip is a "gif", not a "two second video file with no audio track".
"Gif" as a word has been redefined to mean more than the file format.
GIF is just a concept here, but if you upload an animated .gif to just about any large image sharing platform, they will convert it to a video format and serve in a <video> element to save on bandwidth. I'm not sure who was the first to do this, perhaps imgur with their invention of ".gifv" url suffix? [1] However right-click -> save image as... on "gifs" ceased to be an option long ago.
This is a catchy take, but a silly one. The quote didn't say that the only purpose of a new company is to get acquired, it just said that it's chilling to have one option less available, which isn't wrong.
That viewpoint makes sense, but I don't think really works against what I was saying. It seems like the OP was saying "this cost is fake/gross" and you're saying "this cost is worth paying".
I thought people built businesses because they had to eat, and selling something useful was an effective and morally acceptable way to obtain food-money. Sure, most people aren't sociopaths, but businesses don't exist primarily out of philanthropy.
This overlooks the traditional and perhaps now unpopular reason to start a company: making money by selling something useful. No need to sell the company. By the way, Facebook buys, does not sell.