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Does being publicly traded necessarily mean you focus on the short term nowadays? We've got companies like Snap who issue non voting shares. I imagine SpaceX co
by joshuas 9y ago
Does being publicly traded necessarily mean you focus on the short term nowadays? We've got companies like Snap who issue non voting shares. I imagine SpaceX could offer common shares that have no voting rights, accept all future dilution and require you punch yourself in the head on Tuesdays and they'd still have a pretty decent offering.
- jmtulloss 9y agoYour stock price still gets beat up if you don't meet earnings, which means you can't raise capital as efficiently (or even fairly) if you need to in the future.
- joshuas 9y agoI didn't say you could run a dumpster fire forever, just that you don't have to worry about your short term stock price because shareholders can't do anything about it (vote a new board in and vote you out) You'd make sure your ducks were in a row before any offerings of course.
- xadhominemx 9y agoAnd your employees are underpaid.
- overcast 9y agoBeing publicly traded means you become slave to shareholders. Their profit is ALL that matters.
- gozur88 9y agoWell, yes. That's the entire point of a corporation.
- joshuas 9y agoYou're only a slave to voting shares. We're about to watch this play out with Snap.
- dancole 9y ago"The idea that all of the world should be measured in dollars to stockholders is actually a relatively new idea. It used to be that we thought that businesses had their purpose. Your purpose was to be making newspapers or fountain pens or whatever. And now we act as though the only purpose of a business was to enrich the people who trade it on Wall Street… Of course you’ve got to have profit, of course you’ve got to support your ownership. But that’s not why we’re doing it. We’re doing it because publishing a newspaper is a crucial thing to be doing." ~Andy Barnes Companies use to be temporary, created for the public good (like building bridges) and did not exist to make a profit.
- refurb 9y agoSounds like a great quote, but when exactly were businesses just about "making stuff"? Look at the Hudson Bay company back in the 1600's. That was about profit, not making stuff. And what is this "we act as though the only purpose of a business was to enrich the people who trade it on Wall Street"? No, the purpose is to make profit for shareholders, including the average everyday Joe with a 401k or pension.
- gozur88 9y agoHow many centuries ago was that? Do we really want to go back to a world where the biggest threat to your life was starvation?
- 9y ago
- overcast 9y agoYou can be incorporated without going public. The ability to raise needed capital is a great thing, but it also comes with a lot of negative aspects as a result.
- taneq 9y agoSure, but on what timeframe? That's why small family businesses are some of the longest enduring - because their owners want them to generate earnings indefinitely. Investors who buy shares are often looking for much shorter term gains (1-5 years) and will put pressure on the board to sacrifice long term viability for a short term boost in share price.
- erikb 9y agoConsider a world where your company always dies after 1-5 years. But for each dying company there's a new one. Investors still make profit, people still get products, employees still get jobs. In that kind of scenario do you really need a long living company? I'd argue you don't. Long life is an arbitrary factor that in itself has not much value. And the longest living companies may actually be the biggest ones. At a certain size companies don't die anymore. They get merged with other big companies, restructured, or renamed.
- taneq 9y agoSome (all?) products need more than 1-5 years of active development to really become awesome. Every time a company dies, a huge amount of knowledge is lost.
- gozur88 9y agoIt's not that simple, though. The value of a company's stock is based on future earnings. If the company starts eating the proverbial seed corn you may get more profits disbursed, temporarily, but the value of the stock will go down to reflect the loss of future earnings. There's no free lunch, even for investors.
- phkahler 9y agoWhy not have non-voting shares that pay dividends? Then the shareholders would be buying a variable annuity that they price based on their belief in management and the company can ignore them. If you're planning to make money on share price increase, you're looking for a greater fool - someone who is willing to buy when you think it's time to sell.
- mrep 9y ago4 letters: amzn
- gozur88 9y agoBeing publicly traded never necessarily meant you focus on short term. If that were actually true you'd never have seen Intel shelling out $15bn for a fab, or Westinghouse designing nuclear reactors.
- InclinedPlane 9y agoBad example. One of those companies went bankrupt recently.
- gozur88 9y agoI realize that, but it doesn't make it a bad example. Certainly the shareholders were taking the long view when they allowed such a massive R&D program to go forward. The fact that it didn't work out is neither here nor there.
- mtgx 9y agoSo then only the bad companies do it, right? I just want that to be clear.
- gozur88 9y agoI'm not sure how you got that from what I wrote. Is Intel a bad company?