4 ms·

Here's an HBR article that addresses some of the misunderstandings in maligning buy back programs: https://hbr.org/2018/03/are-buybacks-really-shortchanging-inv

by Jun8 7y ago

Here's an HBR article that addresses some of the misunderstandings in maligning buy back programs: https://hbr.org/2018/03/are-buybacks-really-shortchanging-investment https://hbr.org/2018/03/are-buybacks-really-shortchanging-in.... They comment that: "... when we look at CAPEX and R&D as a percentage of revenue ... over the past 25 years, we see that the overall investment intensity of S&P 500 firms, while quite volatile on a year-to-year basis, has been rising over the past decade, and is now near peak levels not seen since the late 1990s." If you had $25B to start a company what idea would you tackle?

bjelkeman-again 7y ago
I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them. I’d would attempt at investing in such a way that I create an ecosystem of companies that can learn from each other and support each other. I’d focus on climate resilience. Lots of current practices will be disrupted by changes we are already seeing. Easy? Probably not, but I think it could work well.
- johannes1234321 7y ago
  If Y Combiantor is doing that already why should Google? They can observe the development and then buy the winner (with a premium) If Google/Alphabet does too many investments which fail shareholders will cry.
- nostrademons 7y ago
  Google's done that repeatedly with Google Labs, GMail Labs, Google X, Area 120, department-internal projects like Search Demo Days, 20% time, Google Ventures, giving high-performing employees a charter to work on whatever they want for a couple quarters, etc. It never seems to work, and it never seems to work for the reasons outlined in The Innovator's Dilemma. Big companies are held hostage by their customers. A new company needs to a.) find new customers b.) be hungry and c.) have total freedom to configure the market around oneself. None of these exist within the cushy environment of a big company - a.) is contradictory with maintaining Google's brand image, b.) is contradictory with continuing to pay the people involved in these efforts, and c.) is contradictory with Google getting first dibs on the spoils of these efforts.
  - petra 7y ago
    Google seem to solve that by spinning-out while keeping significant(probably) equity. What's wrong with that ?
  - bryanrasmussen 7y ago
    I thought that was what the creation of Alphabet was meant to solve.
- scarface74 7y ago
  I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them There are only two YC companies that have gone public and both of those are still losing money -- PagerDuty and Dropbox and as far as I know, none have reached profitability.
  - chrischen 7y ago
    Profitability=tax
    - scarface74 7y ago
      Are you really saying that these companies are losing money so they don't have to pay taxes?
      - chrischen 7y ago
        Yes most companies do that on the books, including movie productions, Amazon, etc. It’s not because their business model still doesn’t work, it’s because the point of corporate income tax is to make sure the corporation doesn’t hoard money and instead reinjects it into business expenses such as payroll.
        scarface74 7y ago
        I realize that, but the companies I’m referring to - the VC backend companies and the YC backed public companies aren’t cash flow positive.
        chrischen 7y ago
        Yes but my point is that if they're reporting profits it'd mean they'd have run out of things to spend money on (R&D, employees, product dev, etc). The whole point of VC funding is that so much money will go towards product dev that they'd need external funding.
bsder 7y ago
> If you had $25B to start a company what idea would you tackle? Medical. I would provide FDA approval process funding and indemnification for medical devices. Medical is rife with areas that could be disrupted by startups. The blocking limitation is that you can't afford the funding to get clearance for your product.
- ludicast 7y ago
  Great idea, not sure why you're bored down. The slow as shit FDA has killed more people than Stalin.
  - bsder 7y ago
    And yet the FDA was the reason why thalidomide didn't get approved and affected the US much less than elsewhere. While I have lots of beef with the FDA and could easily write encyclopedic tomes on the subject, there is practically no other agency anywhere that actually makes sure before the fact that drugs or devices are actually better than nothing and actually fit for purpose. The biggest problem is that the FDA could move much faster if they had a way to do detailed monitoring on things after approval. Alas, there is no incentive or system to handle that.
- vardump 7y ago
  Very nice. Dealing with FDA is very painful.

by Jun8 7y ago

bjelkeman-again 7y ago

I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them. I’d would attempt at investing in such a way that I create an ecosystem of companies that can learn from each other and support each other. I’d focus on climate resilience. Lots of current practices will be disrupted by changes we are already seeing. Easy? Probably not, but I think it could work well.

johannes1234321 7y ago
If Y Combiantor is doing that already why should Google? They can observe the development and then buy the winner (with a premium) If Google/Alphabet does too many investments which fail shareholders will cry.
nostrademons 7y ago
Google's done that repeatedly with Google Labs, GMail Labs, Google X, Area 120, department-internal projects like Search Demo Days, 20% time, Google Ventures, giving high-performing employees a charter to work on whatever they want for a couple quarters, etc. It never seems to work, and it never seems to work for the reasons outlined in The Innovator's Dilemma. Big companies are held hostage by their customers. A new company needs to a.) find new customers b.) be hungry and c.) have total freedom to configure the market around oneself. None of these exist within the cushy environment of a big company - a.) is contradictory with maintaining Google's brand image, b.) is contradictory with continuing to pay the people involved in these efforts, and c.) is contradictory with Google getting first dibs on the spoils of these efforts.
- petra 7y ago
  Google seem to solve that by spinning-out while keeping significant(probably) equity. What's wrong with that ?
- bryanrasmussen 7y ago
  I thought that was what the creation of Alphabet was meant to solve.
scarface74 7y ago
I wouldn’t start one company. I would take a leaf out of Y Combinator’s book, and start funding lots a small startups, as well as advising them There are only two YC companies that have gone public and both of those are still losing money -- PagerDuty and Dropbox and as far as I know, none have reached profitability.
- chrischen 7y ago
  Profitability=tax
  - scarface74 7y ago
    Are you really saying that these companies are losing money so they don't have to pay taxes?
    - chrischen 7y ago
      Yes most companies do that on the books, including movie productions, Amazon, etc. It’s not because their business model still doesn’t work, it’s because the point of corporate income tax is to make sure the corporation doesn’t hoard money and instead reinjects it into business expenses such as payroll.
      - scarface74 7y ago
        I realize that, but the companies I’m referring to - the VC backend companies and the YC backed public companies aren’t cash flow positive.
        chrischen 7y ago
        Yes but my point is that if they're reporting profits it'd mean they'd have run out of things to spend money on (R&D, employees, product dev, etc). The whole point of VC funding is that so much money will go towards product dev that they'd need external funding.

bsder 7y ago

> If you had $25B to start a company what idea would you tackle? Medical. I would provide FDA approval process funding and indemnification for medical devices. Medical is rife with areas that could be disrupted by startups. The blocking limitation is that you can't afford the funding to get clearance for your product.

ludicast 7y ago
Great idea, not sure why you're bored down. The slow as shit FDA has killed more people than Stalin.
- bsder 7y ago
  And yet the FDA was the reason why thalidomide didn't get approved and affected the US much less than elsewhere. While I have lots of beef with the FDA and could easily write encyclopedic tomes on the subject, there is practically no other agency anywhere that actually makes sure before the fact that drugs or devices are actually better than nothing and actually fit for purpose. The biggest problem is that the FDA could move much faster if they had a way to do detailed monitoring on things after approval. Alas, there is no incentive or system to handle that.
vardump 7y ago
Very nice. Dealing with FDA is very painful.