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." -> 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.
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.
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.
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.
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.
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
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.
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.
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.
> 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.
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...
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?
> 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.
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.
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.
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.