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There seems to be this complete disconnect for most people as to why a business exists. It exists for the owners and the employees. Helping customers, or creati

There seems to be this complete disconnect for most people as to why a business exists. It exists for the owners and the employees. Helping customers, or creating something a customer wants may be a welcome side-effect but it's not the _reason_ a business exists. Of course you get the "pageant-effect" when you ask a business why they exist. They always have some altruistic reason as the "official party line" just like "miss somewhere" wants world peace. But businesses are bottom-line driven, indeed they have a fiduciary responsibility to optimize share-holder value. There are organizations that exist exclusively for the benefit of the customer. they're called "not for profits" or "charities". We even give them a different name to show they're not a business. In their case the side effect is paying employees, but their _reason_ is to help customers. Every time you use a "free" service on the internet you have to determine if the provider is a charity or a business. If a business they _have_ to have some sort of payment strategy. (Or, if they don't they quickly go out-of-business and the free-users will moan bitterly about that too.) If you are not paying for the service you are _not_ a customer. You are a _user_. Customers trump users every single time. (Of course users may turn into customers, that's the precept of most startups. Equally this is the point most of them fail at.) >> What about the general public that you were trying to help out with your product? The general public were being helped only in as much as they fulfilled the business' needs. Google filled the need better (with cash), and so they became the customer.

ericd 15y ago
Not all businesses are the same. What you're talking about is the standard business school definition of a business. In reality, businesses vary as much as their founders. Some are altruistic and genuinely want to help people and solve problems. Others are ruthless. If it's a public company, they may be bound by fiduciary rules, but private companies can mostly do what they want. There exist real businesses whose primary goal is to help people, even to the detriment of profits, and many of those that don't have it as a genuine secondary goal. Those that have helping people just as the "party line" are dishonest. I would hope that people would shun those businesses.
- chopsueyar 15y ago
  Tell that to the IRS, when you show a loss for three years, yet keep going. Is it a business or a hobby?
  - ericd 15y ago
    I didn't say it had to be run at a loss, that's a false dichotomy. A sadly prevalent attitude, though.
_delirium 15y ago
> Helping customers, or creating something a customer wants may be a welcome side-effect but it's not the _reason_ a business exists. For many small businessmen I know, that is the reason a business exists. If they just wanted to make money, they would work somewhere on wall street and reel in bonuses. Why do they work longer hours for less money running their own business? For some, it's freedom and not having a boss. But for others, it's because they have some sort of vision for how they want to change an industry or society; and they want to leave a legacy of having done so, not just make money.
- chopsueyar 15y ago
  This guy is not leaving a legacy with his startup. Google acquired it and him and will/has buried his project.
- dhimes 15y ago
  What's more, it is why the concept of business exists. It's a system by which society can advance by efficiently using our individual talents.
- bruce511 15y ago
  >> But for others, it's because they have some sort of vision for how they want to change an industry or society; and they want to leave a legacy of having done so, not just make money. Absolutely, and if that is the prime motivation then they should start a charity not a business. It's more tax-efficient for starters, and also more likely to attract like-minded people to contribute resources (time and/or money). Open-Source projects for example are often clearly "not for profit" and incorporate, or align themselves with not-for-profit structures. The FSF, Mozilla foundation and a score of others spring to mind. For the small businessmen you know, who do not care about the money (beyond their salary), who are out to build a legacy, they _should not_ use a business structure. If they do, well that still doesn't make them a "business". If they're aiming to start from scratch, and create a giant business, so they have "succeeded" (think Hewlett, Packard, Johnson, Ford et al) then that creation still serves the needs of the owner - those needs are just not cash. It might be good for customers along the way, but the business exists for the owners' glory, not the customers. Of course the vast majority of small businesses are absolutely, 100%, businesses. A small business may fit a person better than a big business, but it's still a business. If you take away the money aspect from most small businesses, they close their doors. It's exactly like the OP said - the business exists to fulfill the needs of the owner and the team (if there is a team). Those needs are usually cash, but include other things like flexible hours, and not-having-a-boss and so on. When the needs of the customer clash with the needs of the business, the business always wins. And of course there are _bad_ business people out there. There are those that will take calls at 1am because the customer demands it (so they say) but they don't place a value on it, or require the customer to pay that value. That's bad business, and of course it's very common. But you can't use that as a data point for arguing that businesses exist for the benefit of customers. Some owners even use their relative lack of success as evidence of their altruism. In which case recommend to them that they start a charity, get a board to oversee their salary, and get out of the way.

ericd 15y ago

Not all businesses are the same. What you're talking about is the standard business school definition of a business. In reality, businesses vary as much as their founders. Some are altruistic and genuinely want to help people and solve problems. Others are ruthless. If it's a public company, they may be bound by fiduciary rules, but private companies can mostly do what they want. There exist real businesses whose primary goal is to help people, even to the detriment of profits, and many of those that don't have it as a genuine secondary goal. Those that have helping people just as the "party line" are dishonest. I would hope that people would shun those businesses.

chopsueyar 15y ago
Tell that to the IRS, when you show a loss for three years, yet keep going. Is it a business or a hobby?
- ericd 15y ago
  I didn't say it had to be run at a loss, that's a false dichotomy. A sadly prevalent attitude, though.

_delirium 15y ago

> Helping customers, or creating something a customer wants may be a welcome side-effect but it's not the _reason_ a business exists. For many small businessmen I know, that is the reason a business exists. If they just wanted to make money, they would work somewhere on wall street and reel in bonuses. Why do they work longer hours for less money running their own business? For some, it's freedom and not having a boss. But for others, it's because they have some sort of vision for how they want to change an industry or society; and they want to leave a legacy of having done so, not just make money.

chopsueyar 15y ago
This guy is not leaving a legacy with his startup. Google acquired it and him and will/has buried his project.
dhimes 15y ago
What's more, it is why the concept of business exists. It's a system by which society can advance by efficiently using our individual talents.
bruce511 15y ago
>> But for others, it's because they have some sort of vision for how they want to change an industry or society; and they want to leave a legacy of having done so, not just make money. Absolutely, and if that is the prime motivation then they should start a charity not a business. It's more tax-efficient for starters, and also more likely to attract like-minded people to contribute resources (time and/or money). Open-Source projects for example are often clearly "not for profit" and incorporate, or align themselves with not-for-profit structures. The FSF, Mozilla foundation and a score of others spring to mind. For the small businessmen you know, who do not care about the money (beyond their salary), who are out to build a legacy, they _should not_ use a business structure. If they do, well that still doesn't make them a "business". If they're aiming to start from scratch, and create a giant business, so they have "succeeded" (think Hewlett, Packard, Johnson, Ford et al) then that creation still serves the needs of the owner - those needs are just not cash. It might be good for customers along the way, but the business exists for the owners' glory, not the customers. Of course the vast majority of small businesses are absolutely, 100%, businesses. A small business may fit a person better than a big business, but it's still a business. If you take away the money aspect from most small businesses, they close their doors. It's exactly like the OP said - the business exists to fulfill the needs of the owner and the team (if there is a team). Those needs are usually cash, but include other things like flexible hours, and not-having-a-boss and so on. When the needs of the customer clash with the needs of the business, the business always wins. And of course there are _bad_ business people out there. There are those that will take calls at 1am because the customer demands it (so they say) but they don't place a value on it, or require the customer to pay that value. That's bad business, and of course it's very common. But you can't use that as a data point for arguing that businesses exist for the benefit of customers. Some owners even use their relative lack of success as evidence of their altruism. In which case recommend to them that they start a charity, get a board to oversee their salary, and get out of the way.