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Because a system in which companies are intentionally built to be sold for a lot more money than they could ever earn is not sustainable. Moreover, it's not ae

by nir 18y ago

Because a system in which companies are intentionally built to be sold for a lot more money than they could ever earn is not sustainable. Moreover, it's not aesthetic. For a while our model was 14th century Florence, now we're 20th century Hollywood, complete with our own starlets and gossip columnists but without an audience willing to buy show tickets.

paul 18y ago
Just because a company is sold before it's profitable doesn't mean that it couldn't ever earn money, or that it doesn't deliver value to the buyer. It doesn't personally interest me, but there is nothing wrong with building a company whose primary value is as part of something bigger. It's like attacking a tractor company for not growing any food. If they can enable farmers to grow more food, then they've created value.
- davidw 18y ago
  Furthermore, by creating a more complex market in which people can more narrowly focus on what they do best, it allows two types of complementary individuals to flourish: builders and maintainers, I'll call them. If someone's true talent lies in building and growing a company from nothing, they're going to be better off if they have some outs like selling it on. Perhaps the 'maintainers' aren't as good at creating something from nothing, but are better at running a big, mature enterprise, and paying careful attention to profitability. Some people (Jobs, Bill Gates), are good at both, but it stands to reason that not everyone has both skill sets.
- nir 18y ago
  >Just because a company is sold before it's profitable doesn't mean that it couldn't ever earn money, or that it doesn't deliver value to the buyer. I agree with that, but currently many companies are sold without even having an notion how to earn money (other than "ads"), and those that do have some revenues get GM-sized evaluations. I don't mean to attack anyone - it's markets and currently building to sell is a reasonable choice. At a certain scale it's even sustainable, but currently I think we're in a bubble: the tractor company's customers use the product to increase their revenues. Has Conde Nast increased its revenues after buying Reddit? Will Bebo bring $850m of value to AOL?

by nir 18y ago

paul 18y ago

Just because a company is sold before it's profitable doesn't mean that it couldn't ever earn money, or that it doesn't deliver value to the buyer. It doesn't personally interest me, but there is nothing wrong with building a company whose primary value is as part of something bigger. It's like attacking a tractor company for not growing any food. If they can enable farmers to grow more food, then they've created value.

davidw 18y ago
Furthermore, by creating a more complex market in which people can more narrowly focus on what they do best, it allows two types of complementary individuals to flourish: builders and maintainers, I'll call them. If someone's true talent lies in building and growing a company from nothing, they're going to be better off if they have some outs like selling it on. Perhaps the 'maintainers' aren't as good at creating something from nothing, but are better at running a big, mature enterprise, and paying careful attention to profitability. Some people (Jobs, Bill Gates), are good at both, but it stands to reason that not everyone has both skill sets.
nir 18y ago
>Just because a company is sold before it's profitable doesn't mean that it couldn't ever earn money, or that it doesn't deliver value to the buyer. I agree with that, but currently many companies are sold without even having an notion how to earn money (other than "ads"), and those that do have some revenues get GM-sized evaluations. I don't mean to attack anyone - it's markets and currently building to sell is a reasonable choice. At a certain scale it's even sustainable, but currently I think we're in a bubble: the tractor company's customers use the product to increase their revenues. Has Conde Nast increased its revenues after buying Reddit? Will Bebo bring $850m of value to AOL?