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This really is a terribly written article, wouldn't get a passing grade for a high school student. There's absolutely no coherence to any of the arguments, it's

This really is a terribly written article, wouldn't get a passing grade for a high school student. There's absolutely no coherence to any of the arguments, it's just a rant and poor understanding of finance. I'd like to be more concrete in my criticisms but honestly I don't even know where to start. There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. Typically the reverse happens, companies get merged for economies of scale, thereby adding value through efficiency. Sometimes companies are broken up because the individual pieces don't work well together anymore and create strategic issues, e.g. because a company has two units moving into two different directions, and require completely different strategy, people, ideas, customers, financing approach etc. e.g. a newspaper company that has a journalist branch that produces news, and a factory branch that produces printed (news)paper. That may have worked before. But in a digital age, journalists want to focus on news, and paper printing businesses on paper printing. You can lose value by tying these companies together under one CEO, one strategy, one financing model. You can add value by disentangling, letting them focus on their core business. The notion you can routinely magically just sell for 20 billion, what you purchased for 10, without adding value, is I hope obviously nonsense. Then there's a whole piece on globalisation... again, not sure where to start. The big claim is it reduces quality and this is a net loss for everyone, and that second, personal income has been dropping for decades. In reality, quality changes are well studied and part of inflation data, and personal income after inflation adjustment has been increasing for decades. [0] [0] https://fred.stlouisfed.org/series/RPI https://fred.stlouisfed.org/series/RPI

pydry 5y ago
>There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. This is just one face of financialization.It's known as asset stripping and it has a long wikipedia page so my sophomoric take is that it's probably real, but I'd be interested to see your rebuttal to it nonetheless. >Typically the reverse happens, companies get merged for economies of scale They typically get merged to bolster market power and they say that it's for economies of scale because it sounds like it's in the consumers interest rather than diametrically opposed to it and that's how to get mergers approved. Anybody who has worked in a large multinational corporation of stitched together mergers could tell you just how kafkaesque the diseconomies of scale can be. >Then there's a whole piece on globalisation... again, not sure where to start Maybe don't.
- sdoering 5y ago
  I remember when my employer (together with a whole bunch of other agencies) got bought by a global consulting company. Towards us employees as well as to the market the talk was always to generate better opportunities that one agency alone would not be able to target (read win pitches from the big corporations). Shortly thereafter we were the biggest digital agency in ASGR (Austria, Switzerland, Germany & Russia) and every MD was clapping themselves on the shoulder for achieving this. Nobody seemed to mind that the status came because of a big shopping spree by Accenture and not from natural growth. And what does it actually mean to be the biggest? But I have yet to see said opportunities being won after nearly 5 years. Sure there were some big wins. But in the end the existing agency brands won these pitches, not because they were part of Accenture (Interactive) but brought their own DNA and approach to the table. On the contrary - having to price in the Accenture overhead either led to loosing because of being too expensive or the necessity to offshore most work to India (or nearshore towards Eastern Europe).
  - pydry 5y ago
    The worst run company I ever worked for was an financial services company that had ballooned as a result of multiple mergers. Each time they rolled out the efficiencies, synergies and economies of scale spiel and each time it got worse as they patched a new IT system onto an old one.
    - sdoering 5y ago
      I don't know what you are talking about. There is nothing bloated about multiple systems necessary to track my time or my expenses while project managers also insist that you use jira to track time because they otherwise have no way of reporting time spent on a per project level to the client or deliver any reporting more frequent than every fortnight (capabilities we had before the merger). Or the necessity to forbid ssh connections in the corporate networks as well as ssh ports being open on cloud instances. If you need a shell use the one the cloud provider provides you in the browser. While also installing software on your work machine that MITMles you opening up ssl connections (just for security reasons) at least in countries that don't have strong employer protection institutions in place (like mine). /s Pardon my sarcasm. I hear you.
sdoering 5y ago
Just being curious. Could you explain the graph in [0]? I just don't understand it. Probably because as a non US citizen I for example already don't know what Chained Dollars are. If I made 50k in say 2012 and now make 52k in 2022. Did my spendable income increase? The linked graph would imply that imho.
- djoldman 5y ago
  It means that US average income, taking into account inflation, has risen.
  - sdoering 5y ago
    Ahh I understand a bit better. Average or median? Because if you have a bar with 9 people and together they have each an average net worth of say 100k nothing much happens to the average when the next regular Jane enters the bar. But once Bill Gates (or Warren Buffet) enters the bar the average increases massively. But regular Jane and John Doe did not suddenly become more rich. That is what I am trying to understand about the linked graph above. Does it tell me that the average household in the US has now significantly more disposable income than in the past.
    - pydry 5y ago
      Mean. Median has remained more or less flat.
      - benreesman 5y ago
        I'm sure mean real wages and net worth are useful for something? I can't for the life of me figure out how it's a useful way to know anything whatsoever about the welfare of the broader body politic.
        sdoering 5y ago
        Mean, median and distribution taken together tell you something. Not the whole picture but way more than any one metric looked at in isolation. In my experience taking one single metric (be it mean or median) without context is more often than not because it supports a specific politicsl/ideological point of view. Using the mean in this case supports the notion that globalization was a win for the American society. Using the mean alone shows that it more or less did nothing (but maybe also did not hurt). Showing the distribution or the mean increase per income bracket would show it benefitting the upper income/net worth levels while maybe hurting the people on the lower end. Comparing income with buying power for specific goods (like done in other places of this discussion) is also often dependent on the political/ideological point of view. Others have stated that nowadays everybody has a supercomputer in their pocket (implying things got better through globalization) while others pointed out that the average worker cannot afford a home for themselves and their family (implying globalization wasn't so great - at least not for everyone). So it takes context and different metrics to at least paint a rich picture to enable us to rationally discuss good and bad sides of a phenomenon like globalization and what could be done to fix the bad things (if we (not you and me, but all discussion participants) could find middle ground in defining the same things as being bad).
Joeri 5y ago
In the tech sphere, what you are saying does not seem to bear out. Tech mergers or buyouts often reduce the value of the combined companies from what it was when they were separate, and usually don't create economies of scale. Tech buyouts seem to fall into three categories: (1) reducing competition (e.g. facebook buying whatsapp and instagram), (2) acquihiring and sunsetting the acquired products (e.g. most purchases apple has made), and (3) hold and sell at markup without having created any of the added value (e.g. softbank's acquisition of ARM). I find it hard to think of tech mergers and buyouts which actually work the way you say these things work.
- pas 5y ago
  Instagram was able to scale due to FB. Of course it reduced the competition, but at the same time the other platforms that were not acquired just withered away (Kik? Snapchat apparently has 4B revenue, and ~20M USD net profit, which is basically 0 compared to IG). And it's also telling that no other giant felt to enter this space (Google after G+ just started to focus on B2B cloud/workspaces, and their B2C is limited to Youtube (Premium) and Android (Pixel and AndroidOne)). Basically the only real competition is TikTok, which is made possible by high resolution/definition smartphone cameras and displays, and a ~10 second attention span. (Which is still more than the doomscrolling on IG/FB.) But since their revenue share model is very hostile/unfair to creators, in its current form it'll eventually hit a ceiling. (Or not, predictions are just predictions.) > ARM SoftBank found a buyer for ARM, but authorities stepped in. Is this good or bad? On one hand it would have created a lot of added value for Nvida, so it would have been a mergers success story. But on the other hand Nvidia would have extorted the market (allegedly!) so it would have created (yet another) success story for the "capitalism bad" ongoing highly acclaimed ideology series. > Apple People seem to love Apple (people buy their expensive gadgets, like there's no tomorrow), and their acquisitions (like the well known laser drilled holes, and CNC machined bodies for their laptops [0]) allowed them to deliver those high quality gadgets with enormous profits. Likely their acquihires are providing them a lot of added value ... and people seem to agree that Apple is good. So maybe acquihire is good too? [0] https://blog.bolt.io/manufacture-like-apple/ https://blog.bolt.io/manufacture-like-apple/
- NoLinkToMe 5y ago

pydry 5y ago

>There's an idea about financialisation, which is just completely wrong: he notes companies are willing to pay $20 billion for a $10 billion company, after selling it off for its pieces, and noting no value has been added. This is just one face of financialization.It's known as asset stripping and it has a long wikipedia page so my sophomoric take is that it's probably real, but I'd be interested to see your rebuttal to it nonetheless. >Typically the reverse happens, companies get merged for economies of scale They typically get merged to bolster market power and they say that it's for economies of scale because it sounds like it's in the consumers interest rather than diametrically opposed to it and that's how to get mergers approved. Anybody who has worked in a large multinational corporation of stitched together mergers could tell you just how kafkaesque the diseconomies of scale can be. >Then there's a whole piece on globalisation... again, not sure where to start Maybe don't.

sdoering 5y ago
I remember when my employer (together with a whole bunch of other agencies) got bought by a global consulting company. Towards us employees as well as to the market the talk was always to generate better opportunities that one agency alone would not be able to target (read win pitches from the big corporations). Shortly thereafter we were the biggest digital agency in ASGR (Austria, Switzerland, Germany & Russia) and every MD was clapping themselves on the shoulder for achieving this. Nobody seemed to mind that the status came because of a big shopping spree by Accenture and not from natural growth. And what does it actually mean to be the biggest? But I have yet to see said opportunities being won after nearly 5 years. Sure there were some big wins. But in the end the existing agency brands won these pitches, not because they were part of Accenture (Interactive) but brought their own DNA and approach to the table. On the contrary - having to price in the Accenture overhead either led to loosing because of being too expensive or the necessity to offshore most work to India (or nearshore towards Eastern Europe).
- pydry 5y ago
  The worst run company I ever worked for was an financial services company that had ballooned as a result of multiple mergers. Each time they rolled out the efficiencies, synergies and economies of scale spiel and each time it got worse as they patched a new IT system onto an old one.
  - sdoering 5y ago
    I don't know what you are talking about. There is nothing bloated about multiple systems necessary to track my time or my expenses while project managers also insist that you use jira to track time because they otherwise have no way of reporting time spent on a per project level to the client or deliver any reporting more frequent than every fortnight (capabilities we had before the merger). Or the necessity to forbid ssh connections in the corporate networks as well as ssh ports being open on cloud instances. If you need a shell use the one the cloud provider provides you in the browser. While also installing software on your work machine that MITMles you opening up ssl connections (just for security reasons) at least in countries that don't have strong employer protection institutions in place (like mine). /s Pardon my sarcasm. I hear you.

sdoering 5y ago

Just being curious. Could you explain the graph in [0]? I just don't understand it. Probably because as a non US citizen I for example already don't know what Chained Dollars are. If I made 50k in say 2012 and now make 52k in 2022. Did my spendable income increase? The linked graph would imply that imho.

djoldman 5y ago
It means that US average income, taking into account inflation, has risen.
- sdoering 5y ago
  Ahh I understand a bit better. Average or median? Because if you have a bar with 9 people and together they have each an average net worth of say 100k nothing much happens to the average when the next regular Jane enters the bar. But once Bill Gates (or Warren Buffet) enters the bar the average increases massively. But regular Jane and John Doe did not suddenly become more rich. That is what I am trying to understand about the linked graph above. Does it tell me that the average household in the US has now significantly more disposable income than in the past.
  - pydry 5y ago
    Mean. Median has remained more or less flat.
    - benreesman 5y ago
      I'm sure mean real wages and net worth are useful for something? I can't for the life of me figure out how it's a useful way to know anything whatsoever about the welfare of the broader body politic.
      - sdoering 5y ago
        Mean, median and distribution taken together tell you something. Not the whole picture but way more than any one metric looked at in isolation. In my experience taking one single metric (be it mean or median) without context is more often than not because it supports a specific politicsl/ideological point of view. Using the mean in this case supports the notion that globalization was a win for the American society. Using the mean alone shows that it more or less did nothing (but maybe also did not hurt). Showing the distribution or the mean increase per income bracket would show it benefitting the upper income/net worth levels while maybe hurting the people on the lower end. Comparing income with buying power for specific goods (like done in other places of this discussion) is also often dependent on the political/ideological point of view. Others have stated that nowadays everybody has a supercomputer in their pocket (implying things got better through globalization) while others pointed out that the average worker cannot afford a home for themselves and their family (implying globalization wasn't so great - at least not for everyone). So it takes context and different metrics to at least paint a rich picture to enable us to rationally discuss good and bad sides of a phenomenon like globalization and what could be done to fix the bad things (if we (not you and me, but all discussion participants) could find middle ground in defining the same things as being bad).

Joeri 5y ago

In the tech sphere, what you are saying does not seem to bear out. Tech mergers or buyouts often reduce the value of the combined companies from what it was when they were separate, and usually don't create economies of scale. Tech buyouts seem to fall into three categories: (1) reducing competition (e.g. facebook buying whatsapp and instagram), (2) acquihiring and sunsetting the acquired products (e.g. most purchases apple has made), and (3) hold and sell at markup without having created any of the added value (e.g. softbank's acquisition of ARM). I find it hard to think of tech mergers and buyouts which actually work the way you say these things work.

pas 5y ago
Instagram was able to scale due to FB. Of course it reduced the competition, but at the same time the other platforms that were not acquired just withered away (Kik? Snapchat apparently has 4B revenue, and ~20M USD net profit, which is basically 0 compared to IG). And it's also telling that no other giant felt to enter this space (Google after G+ just started to focus on B2B cloud/workspaces, and their B2C is limited to Youtube (Premium) and Android (Pixel and AndroidOne)). Basically the only real competition is TikTok, which is made possible by high resolution/definition smartphone cameras and displays, and a ~10 second attention span. (Which is still more than the doomscrolling on IG/FB.) But since their revenue share model is very hostile/unfair to creators, in its current form it'll eventually hit a ceiling. (Or not, predictions are just predictions.) > ARM SoftBank found a buyer for ARM, but authorities stepped in. Is this good or bad? On one hand it would have created a lot of added value for Nvida, so it would have been a mergers success story. But on the other hand Nvidia would have extorted the market (allegedly!) so it would have created (yet another) success story for the "capitalism bad" ongoing highly acclaimed ideology series. > Apple People seem to love Apple (people buy their expensive gadgets, like there's no tomorrow), and their acquisitions (like the well known laser drilled holes, and CNC machined bodies for their laptops [0]) allowed them to deliver those high quality gadgets with enormous profits. Likely their acquihires are providing them a lot of added value ... and people seem to agree that Apple is good. So maybe acquihire is good too? [0] https://blog.bolt.io/manufacture-like-apple/ https://blog.bolt.io/manufacture-like-apple/
NoLinkToMe 5y ago