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The pressure comes from investors. (The board is elected by shareholders, so in theory they represent the wishes of investors). It's extremely difficult/rare t

The pressure comes from investors. (The board is elected by shareholders, so in theory they represent the wishes of investors). It's extremely difficult/rare to find investors who will just sit back and trust the CEO run the company as they see fit, particularly in a world where "unicorns" are going from zero to $billions in a few years. It happens occasionally, but only in the case of extreme outlier companies where the company is already a rocketship and thus the CEO/has already proven themselves - e.g., Apple/Jobs-post-mid-2000s, Facebook/Zuckerberg. Whilst plenty of companies could reach huge scale over a longer period of time, it can be difficult for investors/outsiders (and indeed the management themselves) to know whether their company really is a slow-building long-term winner vs a zombie. Perhaps what the LTSE is doing is attracting investors who are willing to be patient over a slow/long-term build, but to also work with the companies to ensure they really are on a path to long-term success and not in zombie mode.

qeternity 6y ago
I don't know why people continuously repeat this narrative. Two of the largest companies in the world, and in the history of humankind, are constantly marched higher by this "shortsighted" investor base: AMZN and TSLA. People say companies pursue short-term gains but in reality they just mean they pursue things they disagree with. And herein lies the dirty secret: professional investors aren't short-sighted, they just don't value the things you do because (shocker) the average Joe doesn't really understand how to create shareholder value.
- Terr_ 6y ago
  > Two of the largest companies in the world Survivorship bias?
  - qeternity 6y ago
    No, because the whole premise here is that investor behavior prevents this kind of bias. You can't take the whole argument and then cast massive, glaring contradictions to the core premise as merely bias.
    - Terr_ 6y ago
      I think we have a communication hitch here: > the whole premise here is that investor behavior prevents [survivorship] bias WTF? How the heck is some "investor behavior" supposed to prevent you (or I, or anybody) from succumbing to a common human mistake made when analyzing data and discussing it here in the comments-section? > You can't take the whole argument and then cast massive, glaring contradictions to the core premise as merely bias. Back up: You're using a straw-man argument, a false version created out of black-and-white absolutes, rather than trends and high probabilities. ___________ Consider this fictional conversation: A: "Playing the lottery is a sucker's game, you're almost guaranteed to go bankrupt." B: "But look! These people bought a lot of tickets and won! They're multi-millionaires now!" A: "That's survivorship bias. You're not considering the huge numbers of not-so-notable people who lost money instead." B: "No it's a massive glaring contradiction to your core premise! You can't brush it off as bias!"
- tomhoward 6y ago
  I said right in my comment there are exceptions, and inevitably the exceptions are the outlier-success companies. Both companies you mentioned have had particular conditions that allowed them to be long-term focused. For Amazon it was that they achieved huge growth and cash flow from very early in their history and so Bezos has been able to call the shots. For Tesla it was that Musk was already rich and could spend several years investing his own money before needing outside investment. (And by the way, just look at the crap Musk has to deal with from a major segment of the investor community as he seeks to pursue a bold long term vision; and he’s one of the greatest force-of-personality founders ever). These conditions don’t apply to unproven founders relying wholly on outside investment, working on opportunities that may not yield rapid growth and cash flow in the short/medium-term.

qeternity 6y ago

I don't know why people continuously repeat this narrative. Two of the largest companies in the world, and in the history of humankind, are constantly marched higher by this "shortsighted" investor base: AMZN and TSLA. People say companies pursue short-term gains but in reality they just mean they pursue things they disagree with. And herein lies the dirty secret: professional investors aren't short-sighted, they just don't value the things you do because (shocker) the average Joe doesn't really understand how to create shareholder value.

Terr_ 6y ago
> Two of the largest companies in the world Survivorship bias?
- qeternity 6y ago
  No, because the whole premise here is that investor behavior prevents this kind of bias. You can't take the whole argument and then cast massive, glaring contradictions to the core premise as merely bias.
  - Terr_ 6y ago
    I think we have a communication hitch here: > the whole premise here is that investor behavior prevents [survivorship] bias WTF? How the heck is some "investor behavior" supposed to prevent you (or I, or anybody) from succumbing to a common human mistake made when analyzing data and discussing it here in the comments-section? > You can't take the whole argument and then cast massive, glaring contradictions to the core premise as merely bias. Back up: You're using a straw-man argument, a false version created out of black-and-white absolutes, rather than trends and high probabilities. ___________ Consider this fictional conversation: A: "Playing the lottery is a sucker's game, you're almost guaranteed to go bankrupt." B: "But look! These people bought a lot of tickets and won! They're multi-millionaires now!" A: "That's survivorship bias. You're not considering the huge numbers of not-so-notable people who lost money instead." B: "No it's a massive glaring contradiction to your core premise! You can't brush it off as bias!"
tomhoward 6y ago
I said right in my comment there are exceptions, and inevitably the exceptions are the outlier-success companies. Both companies you mentioned have had particular conditions that allowed them to be long-term focused. For Amazon it was that they achieved huge growth and cash flow from very early in their history and so Bezos has been able to call the shots. For Tesla it was that Musk was already rich and could spend several years investing his own money before needing outside investment. (And by the way, just look at the crap Musk has to deal with from a major segment of the investor community as he seeks to pursue a bold long term vision; and he’s one of the greatest force-of-personality founders ever). These conditions don’t apply to unproven founders relying wholly on outside investment, working on opportunities that may not yield rapid growth and cash flow in the short/medium-term.