>Every time I read stuff like: "Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today."
I feel taken for a fool. Every damn body knew that the last 2 years were not representative of the future. Everybody knew that free-money, COVID and related phenomenons were a phase.
How are they taking you as a fool? The point of a company is not to maximize employment, it’s to maximize profit.
That means hiring up in growth periods, and downsizing in contractions.
> The point of a company is not to maximize employment, it’s to maximize profit.
Rant: If most people in our society simply decided this wasn't true -- and that, no, the point of a company is not to maximize profit, we could solve so many harms.
And frankly, believing this is optional. It's like saying the point of a person is to live as long as possible. Sure, you can choose to think that, but if you do, it would be easy to paint you as a villain. And, of course, thinking that way is completely optional.
And...just because many people do think that way doesn't mean we have to. We can choose to apply a different meaning to the idea of a company.
As someone that helps run a company, I very much think our company exists to serve our customers in a very specific way. Most of our economic success, actually, comes from many of the choices that would seem to fly in the face of short-term monetary gain.
Companies don't exist to maximize profit. Villains do.
Pretty funnily, quite a few companies in the US seem to exist not to maximize profit.
Some, like Amazon, immediately reinvest the profits into their growth and avoid taxes on the profits.
Some, like Uber, seem to exist to only sustain an illusion of future possible profits. Most of startups in the era of cheap money were manifestly unprofitable, and spent more and more attempting to achieve growth and grab the market share.
Beside these, there is a number of barely profitable companies that just exist to sustain their business and give the owners and a few employees some daily bread. Most small restaurants and small stores are like that. They maximize not the short-term profit but the probability to keep earning something in foreseeable future, a bit like subsistence farming.
You are free to believe something else and go off and do whatever you want with your life. Nobody is stopping you, and more importantly, nobody is calling you a villain for believing differently.
And yet here you are, painting everyone who disagrees with you as some sort of maniacal evil-doer because what they believe is different than what you believe.
"Help, my quest to maximize profit at the cost of human misery has people painting me as an un-empathetic, maniacal evil-doer! Why can't people understand that its actually just like, my opinion that causing societal harm for short term quarterly gains is good, is just like my opinion and every opinion is valid!"
I think it is maniacally evil to put peoples housing, healthcare, and ability to remain in the country at risk. It is inherently throwing 12,000 households into sudden insecurity. There better be a better reason than “whoops economic headwinds that we didn’t budget/prepare for”. Peoples access to food, housing, healthcare, and not being expelled from the country should be valued way more than this.
These are people making 3, 5, 10 times the median household income on their own. People with in-demand skills, with good resumes, and access to a remote pool of positions.
With even the slightest bit of foresight or financial planning, they'll be fine for months or longer.
I don’t really care if they’ll be fine for “months”. Months is not a lot of stability! Especially if you have dependents who need healthcare, or have a visa that requires you to find employment immediately or risk expulsion! Or just went into debt because everyone bought a new house with the low rates recently!
It shouldn’t be an individual family’s responsibility to plan for its massively growing, massively productive, massively profitable employer to treat them like a wrapper to be used and tossed in the trash when done.
It’s evil to treat being depended upon to provide a means of food, housing, healthcare, and continued residency as something that can just be shut off without warning, to no fault of the dependents.
The purpose of a company is not to maximize profits because that would mean you have to pay taxes.
The holy goal instead, is to maximize shareholder value. A small, but important difference (and helps explain the existence of companies like Uber and Twitter who have barely turned a profit in the past decade).
As soon as this sentiment prevails, not only during times of personal loss, but also in times of personal prosperity, you can start to think of most humans as being part of the solution instead of this particular problem.
A company is a legal thing that is owned by shareholders. Like if I own a car, I want it to take me from A->B as expediently as possible. I don't want my car to have a social mission. I'm not sure why a company should be different. Now I do think that the disbursed profits to shareholders from the company should be used to fund many social missions, via charities and non-profits and the like.
I'm inclined towards your argument, but to play devil's advocate, I'd say you are making a false equivalence between a car and a company.
A car is exclusively a tool, and a company is a tool from some perspectives, but involves humans. Hence why ethics are involved and there is no clear answer.
If instead you replaced car with horses, or worse yet, with human powered transportation would your answer be any different.
If you own a car you don’t just want it to take you from A->B expediently. You should also want to do it presumably safely, without killing people, following laws, in a way that also keeps the car maintainable. If you want cars to slow down in school crossing zones that’s a social mission.
Breaking the law is not expedient in the larger sense. What I meant is let's not hobble the car by for example like the sibling poster says giving away free rides or having to drop off free meals. These can be better achieved by Charities or Soup Kitchens.
I agree with you. I think the purpose of a company is to help ensure social stability by providing productive and meaningful employment. If the government is doing its job and ensuring an environment in which firms can thrive (financial stability, infrastructural stability, social stability), then the firm's responsibilities should mirror those: take care of employees and customers by treating them fairly (financial, social stability) and the physical environment (infrastructural stability).
Just because Milton Friedman claimed that it is the main objective of a company to maximize shareholder value[1], doesn't mean it is true. Milton Friedman was a bad dude, and part of a bad school of economics[2].
I think this is aligns with Simon Sinek's philosophy in The Infinite Game[0], which I really enjoyed reading. I totally agree with your point: business mindset is a choice.
The only 'harm' in question is that the other evil profit seeking villains are losing their source of profit, left to go back to do wonderful volunteer work at charities or whatever it is that is considered more virtuous. Crushing 12,000 villains in one fell swoop, perhaps Google is the superhero here?
I agree with you, but companies exist in an evolutionary environment where—broad strokes—anyone who doesn’t do this gets out-competed. You can have 99 companies that behave well, but just one that doesn’t can drive them all out of business if it’s willing to do what they won’t. The solution is not to chew them out, but to pass policy and vote with your wallet.
Maximizing profit should be the main signal of creating value, if you have a lot of revenue but no profit - you are actually destroying value.
There are dynamics where profit chasing can be perverted (eg. monopolistic pricing, fraud, etc.) which is why we have regulations. But profit chasing in itself is the best signal of value creation we have.
I've lived in a post socialist country transitioning from socialist to capitalist system and I don't want to live in a world where politics define value, profit chasing can lead to pathologies, but political value system is based on flawed principles.
+1 for your sentiment. Thank you for articulating it.
Feels like so many people in the US has taken the Adam Smith self interest sentiment to the extreme, to the point that people seem to forget we are living in a society - a very interdependent entity that functions poorly if we don't work together.
I don’t think you can choose to apply a different meaning to Google, though. Ad tech is the Platonic ideal of a profit-focused enterprise, and even someone who’s not personally working on ads has to understand that’s where their salary and benefits are coming from.
Successful and well-regarded companies will indeed arithmetically maximize profits if they're around in the long term while they are likely to see short term profiteers fail. Maximizing profits entails rather more than making a quick buck.
The idea is that if you pit those villains against eachother on a level playing field, they'll improve society on the whole.
To a certain extent it's true, and it's only failing in the case of Google/etc because we've allowed mega-companies to become a thing (which distorts the playing field). OTOH we're rapidly heading towards total planetary extinction, so something huge needs to change.
This perspective, implemented broadly, would considerably reduce the pools of available financing accessible to a given company. This in turn would reduce employment levels as companies contract in a more difficult capital environment.
If you are an investor, activist or otherwise, you benefit from the current practice that managers have a fiduciary duty to shareholders.
"Oh, corporations have to be massively harmful entities that crush people under their feet in order to enrich their investors" is a choice. It is a system created entirely by humans.
This is what people say when they talk about how capitalism has so thoroughly won. People speak about it like it is a force of nature or a property of physical reality itself. There is no alternative. If megacorps don't abuse their employees and vacuum up dollars from their customers in every possible way then the line will go down, and we can't have that.
This approach doesn't make sense when it comes to software. Expanding your dev team during a boom year to only contract it in the future bust year - will leave you moving slower in the bust years. While tech has never been known for it's stable job market, seeing the most profitable corporations in the world conducting layoffs doesn't sit well.
How is this any different than any other industry? In manufacturing, slowing reduces the risk that supply will outstrip demand. In software, slowing down means reducing the risk that time is spent producing software that won't have an economic payoff. The effort is focused on the business lines that add to the bottom line and less on the speculative ones. If you look at where a lot of the tech industry layoffs are coming from, they tend to be the not-yet-viable moonshot ideas.
Imagine you had a factory. During the boom years you hire extra engineers to improve the factory. These engineers busy themselves adding new production lines and creating more complex manufacturing processes to support products. 2 years later you sack the engineers.
You are left with more complex product and extra assembly lines. You aren’t sure which ones you need or are obligated to continue - so you run them all.
Is this meant to be an analogy for software production?
It seems like the crux is here:
You aren’t sure which ones you need or are obligated to continue
This is essentially saying leaders/managers don't know how to prioritize. What much of tech is doing right now is prioritizing by cutting back on the programs that aren't particularly successful. It's the same thing done in manufacturing.
This is such a bean-counter MBA perspective. It’s tech, if you want real growth, you need moonshot ideas. If you want to just become a GE style dependable divided stock, then fine, but your shareholders aren’t going to triple their wealth again.
Nobody is saying reduce moonshot ideas to zero. There's a difference between "throwing everything at the wall to see what sticks" to having a risk/reward way of prioritizing what to fund. What you're alluding to is the "grow at all costs and find a way to be profitable later" strategy that is prevalent in SV, but tends to not work so well in real economic downturns. Sometimes I think people either forget, or are too young, to remember that the pre-2021 decade+ of near-zero interest rates are a historical anomaly.
Put differently, take a look at the R&D costs of google[1]. Note how, despite a constantly increasing amount of investment, they still derive 80% of their revenue from ads. Granted, some of the R&D will contribute to ads revenue, but it may also be indicative of a moonshot strategy that isn't contributing much in terms of "real growth" in alternative revenue streams.
Does a moonshot mean funding a team of 50 without tangible goals for ten years? The original google moonshots leaned heavily on individual engineers producing Herculean results eg gmail.
We are still finalizing annual reviews. It couldn't have been current performance ratings. I know of some low performers on nearby teams who weren't laid off.
Some (many?) teams were entirely unaffected, so somebody up in my management chain decided my team was less critical. No clue how the individual people decisions were made.
Agreed. In this case, google isn’t even claiming this change was unexpected, just that the reality has changed. Seems way more honest than the other corporate-doublespeak layoffs we’ve seen.
They're taking me for a fool in that they say BS with a straight face, pretending that either they couldn't have foreseen or that I couldn't. If they'd phrase all this as "we surged in a hiring race to the bottom, with the intention of scaling back" that'd be the plain truth and no faked stupidity would be required.
Also it's beaten down that the purpose of companies is to make profits. Perhaps in some specific legal context or interpretation it might be, but the purpose of a company is mostly to do whatever the people in charge of it want it to do. A ton of companies' purpose is to principally do other things than just money. People running Apple and making phones like to make money & design beautiful consumer devices. People making rockets like mostly to go to space and hope they can also make some money. People running machine shops like to make moneys and they like to cut metal. People running industrial machinery like to make money and building CNC machines. People making cars like to make money and making cars. People running biotech companies like to advance life sciences and make money. And so on.
Firstly, the sole purpose of maximizing shareholder value is a recent myth. Before that, it was understood that corporations are chartered to serve the public interest.
A few may argue that corporations are super-persons imbued with super-rights which outweigh the rights of actual persons. Please note that's a minority viewpoint.
Secondly, corporations are not the only cast members with agency in this narrative.
Our government, the source of all that free money, acting on the goals of full employment and bountiful future tax revenue, probably has some agency.
Us individuals, whose blood and entrails lubricate the gears of the machine built from our bone and sinew, also have agency. Stuff like get fat and happy and watch our grandkids grow up, have enough excess wealth and time to travel a bit, to not bleed out in a ditch, cold and haggard, after a lifetime of toil. And most of us aren't particularly invested in further enriching the latest cohort of robber barons.
It's not a recent myth, saying that the purpose of an organization or class of organization "is" something depends on legal and social context.
Friedman popularized the idea of fiduciary duty in the field of economics, and even popular left economists like Keynes didn't foundationally dispute that premise.
You can think it shouldn't be popular among economists for moral, aesthetic, or even empirical reasons - but to suggest somehow that the 1880s model of companies is "more correct" and assert it as truth is just as much a "myth" if you are framing these ideas about institutional purpose as "truth".
The robber barons you speak of have created the single largest reduction in poverty in human history. Most of the west, and even poor Americans are living truly historically blessed lives - and by letting the robber barons loose, the CCP was able to lift nearly 1b people to a standard of living unimaginable to Chinese people in 1970.
Capitalist thought and action is not immune to criticism, but the empirics are on capitalist ideas. Most of the common areas where Americans complain about "capitalist" processes are not capitalist under the hood at all.
First, just because we understand that Google wants to maximize profit doesn't mean they need to lie about it — it means they have no need to lie about it, because nobody's fooled. Either they consider at least some of us fools who would believe such an obvious lie, or they're engaging in a ritual of futile lying whose purpose I cannot grasp.
Second, why must the point of a company be to maximize profit? Why can't it be to make enough profit to remain stable in the long term, instead of growing rapidly to a size where it will eventually either have to engage in monopolistic behavior to survive or else, having extracted all available profit in its sphere, die?
How are they taking you as a fool? The point of a company is not to maximize employment, it’s to maximize profit.
That means hiring up in growth periods, and downsizing in contractions.
That’s exactly what they said they have done.