4 ms·

My rule of thumb: If a company is a public company, it can't help BUT be evil. Corollaries and commentary: 1) Evil arises from public companies' duty to gene

My rule of thumb: If a company is a public company, it can't help BUT be evil. Corollaries and commentary: 1) Evil arises from public companies' duty to generate as much money as possible for their shareholders. Private companies have more freedom to make less money and to not be evil--or even to choose to "die" while retaining their honor and that of their members. 2) A public company might not be evil now, but if it keeps growing, it will eventually be evil. 3) This applies regardless of the initial size, values, and idealism of the company; the choice to be a public company seals its fate.

CharlesColeman 8y ago
> If a company is a public company, it can't help BUT be evil...[this arises from the] duty to generate as much money as possible for their shareholders. That's clearly a very undesirable result. I do hold out hope that one day either alternative ownership styles (e.g. mutuals or cooperatives) or reform that gives other stakeholders a seats in corporate boards will mitigate the problem.
the_gastropod 8y ago
This is a good point, but I don't know if the public/private distinction is that relevant. Lots of private companies still take funding from VC's or other investors, who still generally demand a profit-at-any-cost approach. Uber is an easy example of this.
- domador 8y ago
  Private company have the OPTION of selling themselves out. Public companies have no choice but to do so. (I might be oversimplifying, but hey, it's a rule of thumb!)
squidbot 8y ago
I think the "borg" is actually a more fitting analogy. They aren't actually evil, it's just that their only purpose is perceived as evil even though they are really neutral, they don't care if you want to join them or not (e.g. C corporations have only one purpose, which is to maximize shareholder profit.) Also, there is another choice, which is becoming a benefit corporation. Google didn't choose this, likely because it means your shareholders are probably going to be fewer as you aren't primarily serving them. So really, the founders betrayed their values by wanting to become huge which beheld them to the "shareholder value at all costs" mandate. So this was a long winded way to say that a really idealistic software company should start out as a b corp.
geoelectric 8y ago
That's a little bit off. Read https://ssir.org/articles/entry/the_truth_about_ben_and_jerrys https://ssir.org/articles/entry/the_truth_about_ben_and_jerr... and skip to Legal Landscape. The article as a whole is about Unilever betraying the corporate values after buying the company and whether the sale was really forced, but that particular section goes into detail why what you're saying isn't universally true. The TL;DR is that a number of state laws (and possibly higher level, hadn't finished researching) specifically carve out room for companies to consider corporate values over investor money in fulfilling fiduciary duty. They establish multiple classes of people--including customers--to be constituencies being served, not just investors. So you can absolutely incorporate in a way that will run your company to make as much money as possible for public shareholders within the bounds of what makes the company that company, including value systems. If a company betrays their stated values, that's absolutely on that company, not an inevitable fate for going public. Relevant quote: Most state legislatures have resisted the tenets of Dodge v. Ford by enacting statutes that expressly authorize corporate directors to look beyond shareholder wealth maximization. Vermont enacted one, nicknamed “the Ben & Jerry’s law,” after the company had successfully lobbied Vermont’s legislature. Vermont’s “other constituency” statute, as these laws are called, is illustrative: It provides that when directors make decisions they may consider such matters as “the interests of the corporation’s employees, suppliers, creditors, and customers; the economy of the state, region, and nation; [and] community and societal considerations, including those of any community in which any offices or facilities of the corporation are located.” State statutes also give corporations wide latitude to donate profits to charities. Edit: having problems finding a clear list, but looks like ~35 states have them, including Delaware. California, interestingly, does not have one. Looks like one made it through legislature years ago when these were all popping up, but Schwarzenegger vetoed it.

CharlesColeman 8y ago

> If a company is a public company, it can't help BUT be evil...[this arises from the] duty to generate as much money as possible for their shareholders. That's clearly a very undesirable result. I do hold out hope that one day either alternative ownership styles (e.g. mutuals or cooperatives) or reform that gives other stakeholders a seats in corporate boards will mitigate the problem.

the_gastropod 8y ago

This is a good point, but I don't know if the public/private distinction is that relevant. Lots of private companies still take funding from VC's or other investors, who still generally demand a profit-at-any-cost approach. Uber is an easy example of this.

domador 8y ago
Private company have the OPTION of selling themselves out. Public companies have no choice but to do so. (I might be oversimplifying, but hey, it's a rule of thumb!)

squidbot 8y ago

I think the "borg" is actually a more fitting analogy. They aren't actually evil, it's just that their only purpose is perceived as evil even though they are really neutral, they don't care if you want to join them or not (e.g. C corporations have only one purpose, which is to maximize shareholder profit.) Also, there is another choice, which is becoming a benefit corporation. Google didn't choose this, likely because it means your shareholders are probably going to be fewer as you aren't primarily serving them. So really, the founders betrayed their values by wanting to become huge which beheld them to the "shareholder value at all costs" mandate. So this was a long winded way to say that a really idealistic software company should start out as a b corp.

geoelectric 8y ago

That's a little bit off. Read https://ssir.org/articles/entry/the_truth_about_ben_and_jerrys https://ssir.org/articles/entry/the_truth_about_ben_and_jerr... and skip to Legal Landscape. The article as a whole is about Unilever betraying the corporate values after buying the company and whether the sale was really forced, but that particular section goes into detail why what you're saying isn't universally true. The TL;DR is that a number of state laws (and possibly higher level, hadn't finished researching) specifically carve out room for companies to consider corporate values over investor money in fulfilling fiduciary duty. They establish multiple classes of people--including customers--to be constituencies being served, not just investors. So you can absolutely incorporate in a way that will run your company to make as much money as possible for public shareholders within the bounds of what makes the company that company, including value systems. If a company betrays their stated values, that's absolutely on that company, not an inevitable fate for going public. Relevant quote: Most state legislatures have resisted the tenets of Dodge v. Ford by enacting statutes that expressly authorize corporate directors to look beyond shareholder wealth maximization. Vermont enacted one, nicknamed “the Ben & Jerry’s law,” after the company had successfully lobbied Vermont’s legislature. Vermont’s “other constituency” statute, as these laws are called, is illustrative: It provides that when directors make decisions they may consider such matters as “the interests of the corporation’s employees, suppliers, creditors, and customers; the economy of the state, region, and nation; [and] community and societal considerations, including those of any community in which any offices or facilities of the corporation are located.” State statutes also give corporations wide latitude to donate profits to charities. Edit: having problems finding a clear list, but looks like ~35 states have them, including Delaware. California, interestingly, does not have one. Looks like one made it through legislature years ago when these were all popping up, but Schwarzenegger vetoed it.