8 ms·

Tim O'Reilly: The heart of what is best in capitalism

38 points by Sato 15y ago

Thrymr 15y ago
This line is great: "profit in a business is like gas in a car. You don't want to run out of gas, but neither do you want to think that your road trip is a tour of gas stations."
- DanielRibeiro 15y ago
  It is orignally from another great article of Tim O'Reilly: Work on Stuff that Matters[1] [1] http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-...
- crikli 15y ago
  I've used a similar analogy frequently, that profit is to my business as fuel is to an aircraft. I want as much profit as I can get not because I'm greedy but because I want to stay in their air as long as possible, constantly making longer and more adventurous flights. My biz might be just a little four-place Cessna right now but my goal is to someday be a nice Boeing Business Jet.
OstiaAntica 15y ago
The problem isn't Wall Street greed. The problem is that the government rescued the banks with public bailouts, at a time when a true capitalist system would have put them out of business.
- samstave 15y ago
  You are seeing a delineation between wall street/banks/government which is not there. The problem IS [wall street/banks/government] GREED All of Obama's top advisers are GS and banking cartel. Thus we transfer all our wealth to them. Just like when all of Bush/Cheney's cabinet (including Cheney) were all from the MIC cartel - we transferred all our wealth to them. This is 30 minutes worth your time: http://www.youtube.com/watch?feature=player_embedded&v=KDeUsWsUhKU http://www.youtube.com/watch?feature=player_embedded&v=K...
  - eru 15y ago
    Just call it regulatory capture, and principal agent problems.
  - lukifer 15y ago
    David Icke? The guy who thinks the world is run by alien reptiles? Really? I'm the biggest conspiracy theorist there is (Conspiracy 0: hijacking the term "conspiracy"), but this guy flips my bozo bit. That said, his description of fractional reserve banking is mostly accurate; it just seems an odd source when there are so many good video and text diatribes on the subject.
    - samstave 15y ago
      True - but there is not a single thing I can find wrong with this statement. This is one of the best arguments against what is going on right now that I have seen.
- russell 15y ago
  There was a time, before the Federal Reserve, when banks were not rescued, but failed. In the 19th century banks failed and there were panics and depressions every decade or two. What we have now is way better. The problem now is that banks can reliably depend on being rescued every decade or so. In the 70's it was loans to SA dictators, in the 80's it was the savings and loan crisis. the it was devaluation of the ruble which took out Long Term Capital Management, then the current mess of housing mortgages and derivatives. At one time there were $60 trillion of worthless paper sailing through the system. The problem in the rescue this time is that the TARP money went to rescue the banks, not to the middle class that needed it. The "too big to fail" banks got bigger. Glass-Stegall was not restored. The Republicans stonewalled any meaningful regulation. And of course Congress was bought and sold. Capitalism is the economic engine of our society, but it cannot be allowed to complete freedom without being regulated to conform to the economic and social needs.
  - megablast 15y ago
    Lots of banks fail, a couple every week over the last few years. They are small banks though. The problem is when banks get too big, and there failing would have a huge effect on the economy. That is why banks should not be allowed to get that big, but for some reason no one is interested in changing the laws.
- anamax 15y ago
  > The problem is that the government rescued the banks with public bailouts, at a time when a true capitalist system would have put them out of business. Umm, the bank bailouts aren't the big problem. They turned a profit, and since the subprime crisis was mostly due to govt action.... The big problem is the other bailouts and subsidies. They're never going to pay off.
  - Sato 15y ago
    Those who think the bank bailouts aren't the big problem may want to read this famous article, "The Great American Bubble Machine"[1]. [1] http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 http://www.rollingstone.com/politics/news/the-great-american...
    - anamax 15y ago
      That article doesn't argue that bank bailouts were the big problem. It argues that bank influence, specifically Goldman Sachs, is the big problem. There is a difference. As I wrote, the bank bailouts weren't a huge money-suck and the subprime crisis wouldn't have happened without govt intervention. (We can argue about why govt intervened, but that doesn't change the fact that it did.) You can't say either about the other govt bailouts. Note, I'm excluding the GSE's (like Fannie Mae) bailout from "made money" - that is still losing money.
- rayiner 15y ago
  No True Scottsman, huh?
brc 15y ago
I always get a prickly uncomfortable feeling whenever a business leader comes out and says 'profits aren't the most important thing'. It's this type of wording that can give life to stupid ideas such as 'you can run a business without making a profit'. I also lose respect for business leaders who try and paper over their success with motherhood statements like 'I wasn't in it for the money', when clearly they enjoy the trappings of wealth. People should be proud to state they are chasing a profit, proud to make profits, proud to have successful, profitable businesses. It's impossible to make profits without providing value for other people. Profits (for the most part, over the long run) are just a recognition that you're productive and are providing something of value. My take on this particular piece is that a focus on short term profits is a mistake, and that a focus on long term value through great products and innovation is the right choice. Because long term value creation should necessarily result in profits. But I just wish more people would have the gumption to say 'I made a big set of money hats for myself, my investors and my employees, and I feel great about it'.
- jhancock 15y ago
  As a long time small business owner, I can say that "profit" is not the key element, but rather "cash flow". It may seem a minor nit, but I think helps to distinguish between short term profit and long term. Its nice to have a billion in the bank and only focus on long term goals. Few companies have this luxury. For all the rest, we focus on meeting our monthly payroll.
- mousa 15y ago
  I wish people would stop trying to paint their own motives on other people. There is no reason for him to trumpet that he loves profit if that not his main motive. These guys have money and successful companies it's possible they would make some sacrifices to the bottom line to impact on the world if it if they have that disposition. You think someone like Elon Musk is only thinking bottom line when he has poured all his money into three industries that haven't ever been profitable?
  - brc 15y ago
    I certainly hope Elon Musk has profit as his motive, otherwise his lifes work will end up in vain. As O'Reilly said - you need to make it to the next gas station. If Elon Musk wants to launch rockets and make new car companies he's going to need to be profitable in that enterprise, or it's going to hurt a lot of people in a pretty short amount of time. My point is this - he has to have profit as his main motive or he would fail. If you're going to change the world, you have to last long enough to do so. In order to do that, everyone involved has to be getting out more value than they are putting in. And that is profit.
chrismealy 15y ago
Hint: that's not capitalism.

38 points by Sato 15y ago

This line is great: "profit in a business is like gas in a car. You don't want to run out of gas, but neither do you want to think that your road trip is a tour of gas stations."

DanielRibeiro 15y ago
It is orignally from another great article of Tim O'Reilly: Work on Stuff that Matters[1] [1] http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-...
crikli 15y ago
I've used a similar analogy frequently, that profit is to my business as fuel is to an aircraft. I want as much profit as I can get not because I'm greedy but because I want to stay in their air as long as possible, constantly making longer and more adventurous flights. My biz might be just a little four-place Cessna right now but my goal is to someday be a nice Boeing Business Jet.

OstiaAntica 15y ago

The problem isn't Wall Street greed. The problem is that the government rescued the banks with public bailouts, at a time when a true capitalist system would have put them out of business.

samstave 15y ago
You are seeing a delineation between wall street/banks/government which is not there. The problem IS [wall street/banks/government] GREED All of Obama's top advisers are GS and banking cartel. Thus we transfer all our wealth to them. Just like when all of Bush/Cheney's cabinet (including Cheney) were all from the MIC cartel - we transferred all our wealth to them. This is 30 minutes worth your time: http://www.youtube.com/watch?feature=player_embedded&v=KDeUsWsUhKU http://www.youtube.com/watch?feature=player_embedded&v=K...
- eru 15y ago
  Just call it regulatory capture, and principal agent problems.
- lukifer 15y ago
  David Icke? The guy who thinks the world is run by alien reptiles? Really? I'm the biggest conspiracy theorist there is (Conspiracy 0: hijacking the term "conspiracy"), but this guy flips my bozo bit. That said, his description of fractional reserve banking is mostly accurate; it just seems an odd source when there are so many good video and text diatribes on the subject.
  - samstave 15y ago
    True - but there is not a single thing I can find wrong with this statement. This is one of the best arguments against what is going on right now that I have seen.
russell 15y ago
There was a time, before the Federal Reserve, when banks were not rescued, but failed. In the 19th century banks failed and there were panics and depressions every decade or two. What we have now is way better. The problem now is that banks can reliably depend on being rescued every decade or so. In the 70's it was loans to SA dictators, in the 80's it was the savings and loan crisis. the it was devaluation of the ruble which took out Long Term Capital Management, then the current mess of housing mortgages and derivatives. At one time there were $60 trillion of worthless paper sailing through the system. The problem in the rescue this time is that the TARP money went to rescue the banks, not to the middle class that needed it. The "too big to fail" banks got bigger. Glass-Stegall was not restored. The Republicans stonewalled any meaningful regulation. And of course Congress was bought and sold. Capitalism is the economic engine of our society, but it cannot be allowed to complete freedom without being regulated to conform to the economic and social needs.
- megablast 15y ago
  Lots of banks fail, a couple every week over the last few years. They are small banks though. The problem is when banks get too big, and there failing would have a huge effect on the economy. That is why banks should not be allowed to get that big, but for some reason no one is interested in changing the laws.
anamax 15y ago
> The problem is that the government rescued the banks with public bailouts, at a time when a true capitalist system would have put them out of business. Umm, the bank bailouts aren't the big problem. They turned a profit, and since the subprime crisis was mostly due to govt action.... The big problem is the other bailouts and subsidies. They're never going to pay off.
- Sato 15y ago
  Those who think the bank bailouts aren't the big problem may want to read this famous article, "The Great American Bubble Machine"[1]. [1] http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 http://www.rollingstone.com/politics/news/the-great-american...
  - anamax 15y ago
    That article doesn't argue that bank bailouts were the big problem. It argues that bank influence, specifically Goldman Sachs, is the big problem. There is a difference. As I wrote, the bank bailouts weren't a huge money-suck and the subprime crisis wouldn't have happened without govt intervention. (We can argue about why govt intervened, but that doesn't change the fact that it did.) You can't say either about the other govt bailouts. Note, I'm excluding the GSE's (like Fannie Mae) bailout from "made money" - that is still losing money.
rayiner 15y ago
No True Scottsman, huh?

brc 15y ago

I always get a prickly uncomfortable feeling whenever a business leader comes out and says 'profits aren't the most important thing'. It's this type of wording that can give life to stupid ideas such as 'you can run a business without making a profit'. I also lose respect for business leaders who try and paper over their success with motherhood statements like 'I wasn't in it for the money', when clearly they enjoy the trappings of wealth. People should be proud to state they are chasing a profit, proud to make profits, proud to have successful, profitable businesses. It's impossible to make profits without providing value for other people. Profits (for the most part, over the long run) are just a recognition that you're productive and are providing something of value. My take on this particular piece is that a focus on short term profits is a mistake, and that a focus on long term value through great products and innovation is the right choice. Because long term value creation should necessarily result in profits. But I just wish more people would have the gumption to say 'I made a big set of money hats for myself, my investors and my employees, and I feel great about it'.

jhancock 15y ago
As a long time small business owner, I can say that "profit" is not the key element, but rather "cash flow". It may seem a minor nit, but I think helps to distinguish between short term profit and long term. Its nice to have a billion in the bank and only focus on long term goals. Few companies have this luxury. For all the rest, we focus on meeting our monthly payroll.
mousa 15y ago
I wish people would stop trying to paint their own motives on other people. There is no reason for him to trumpet that he loves profit if that not his main motive. These guys have money and successful companies it's possible they would make some sacrifices to the bottom line to impact on the world if it if they have that disposition. You think someone like Elon Musk is only thinking bottom line when he has poured all his money into three industries that haven't ever been profitable?
- brc 15y ago
  I certainly hope Elon Musk has profit as his motive, otherwise his lifes work will end up in vain. As O'Reilly said - you need to make it to the next gas station. If Elon Musk wants to launch rockets and make new car companies he's going to need to be profitable in that enterprise, or it's going to hurt a lot of people in a pretty short amount of time. My point is this - he has to have profit as his main motive or he would fail. If you're going to change the world, you have to last long enough to do so. In order to do that, everyone involved has to be getting out more value than they are putting in. And that is profit.

chrismealy 15y ago

Hint: that's not capitalism.