4 ms·

Bell Labs was funded by a monopoly. I guess another interesting question is "Does the fact that companies are more shareholder-friendly now increase or decreas

by ethbro 7y ago

Bell Labs was funded by a monopoly. I guess another interesting question is "Does the fact that companies are more shareholder-friendly now increase or decrease innovation?" (that is to say friendly, in the sense of returning a larger portion of earning to shareholders via stock buyback or dividends) I'd argue it seems to have decreased it, but I'm hard pressed to come up with a reason why. The closest I could offer would be that retained earnings fund capital investments and corporate-managed R&D. Whereas distributed earning fund... investors. Which is the point, but this far investors don't seem very interested in funding long-term research.

tptacek 7y ago
The list of things we've gotten in the last 20 years of shareholder-friendly innovation seems like a strong rebuttal to that argument. 20 years ago it was amazing to think that I could get on the Internet from any room in my own house without plugging an ethernet cable in; today, I can run a 10 person videoconference on my phone, which also holds every song I could possibly care to listen to or have ever really cared to listen to, along with every book, from the bus stop.
- bb88 7y ago
  In tech, sure. But there's also a huge chunk of innovation driven by open source. If Google had standardized on MS Windows instead of Linux, then MS would still be at the top of the heap. The barrier for entry to tech is very low for technology, which means that competition is also higher, which then drives more innovation. With pharma there is a cash outlay required to research and manufacture a drug, even if it's off patent. Software just needs a computer and time. The problem With this tech vs pharma argument seems to be the comparison of two sectors which aren't apparently the same at all.
  - rayiner 7y ago
    The fact that Chrome is monetized by plugging into Google's ad network instead of charging users per copy isn't a difference in how Chrome is developed. For the most prominent open source projects, the basic development model is still throwing corporate money at very expensive engineers. That's true for Linux itself--for a long time, the vast majority of contributions have been from corporate sponsors.
- ethbro 7y ago
  I should have said shareholder-primacy vs -friendly. I was specifically referring to the change in the 70s and 80s from a diversity of stakeholders being valued to shareholders above all other considerations. It seems fair to argue that the much-maligned dual stock schemes popularized by tech companies is a reaction to and repudiation of this. Zuckerberg being able to spend money better than Facebook's shareholders, etc. And I don't think it's a clear-cut decision on whether shareholder-primacy or balanced-management has produced "better" for-profit companies.

by ethbro 7y ago

tptacek 7y ago

The list of things we've gotten in the last 20 years of shareholder-friendly innovation seems like a strong rebuttal to that argument. 20 years ago it was amazing to think that I could get on the Internet from any room in my own house without plugging an ethernet cable in; today, I can run a 10 person videoconference on my phone, which also holds every song I could possibly care to listen to or have ever really cared to listen to, along with every book, from the bus stop.

bb88 7y ago
In tech, sure. But there's also a huge chunk of innovation driven by open source. If Google had standardized on MS Windows instead of Linux, then MS would still be at the top of the heap. The barrier for entry to tech is very low for technology, which means that competition is also higher, which then drives more innovation. With pharma there is a cash outlay required to research and manufacture a drug, even if it's off patent. Software just needs a computer and time. The problem With this tech vs pharma argument seems to be the comparison of two sectors which aren't apparently the same at all.
- rayiner 7y ago
  The fact that Chrome is monetized by plugging into Google's ad network instead of charging users per copy isn't a difference in how Chrome is developed. For the most prominent open source projects, the basic development model is still throwing corporate money at very expensive engineers. That's true for Linux itself--for a long time, the vast majority of contributions have been from corporate sponsors.
ethbro 7y ago
I should have said shareholder-primacy vs -friendly. I was specifically referring to the change in the 70s and 80s from a diversity of stakeholders being valued to shareholders above all other considerations. It seems fair to argue that the much-maligned dual stock schemes popularized by tech companies is a reaction to and repudiation of this. Zuckerberg being able to spend money better than Facebook's shareholders, etc. And I don't think it's a clear-cut decision on whether shareholder-primacy or balanced-management has produced "better" for-profit companies.