7 ms·

Burnham, Elon, and the Revenge of Entrepreneurial Capitalism

38 points by Ambolia 4y ago

fredley 4y ago
Article suggests the lack of ownership by the managerial class corrupts incentives, and that owner-operated companies will win out due to an alignment between company management and long term strategy. Interesting to see how that's going for Facebook, Twitter.
- Ambolia 4y ago
  You could also argue how much is Elon Musk really an old school industrialist when many of his companies are very intertwined with the government. Tesla selling regulatory credits to other automakers, SpaceX with goverment contracts, ... So I not sure if managerialism vs industrialist is the right divide here. But there is some divide that makes Elon owning Twitter more notable than Blackrock owning it for some reason.
  - nverno 4y ago
    The government has always been a customer. Companies in many industries can compete for government contracts. Going back the to industrialist days the gov was providing subsidies as well, eg. for railroads
  - snovv_crash 4y ago
    Isn't that more of a virtue of the industries he is in rather than specifics of the companies he has built? SpaceX gets government contracts, yes, but no more than Boeing or Lockheed Martin. You can also argue they give a lot more value for the public money they do get, relative to the industry incumbents. Similarly, any other car company that had bothered to make a viable electric car could have cashed in on the regulatory credits. In fact Toyota, the biggest car company in the world, was doing this for a decade with the Prius, until they dropped the ball on going full electric.
- abvdasker 4y ago
  That's a good point. The piece fails to address the many ills of the entrepreneurial capitalism it describes, probably owing to Silicon Valley's tendency towards self flattery. It's remarkable how poorly the industry has fared now that the Fed has closed the spigot of free money.
  - Apocryphon 4y ago
    FTX is an example of entrepreneurial capitalism!
    - abvdasker 4y ago
      Too bad the piece never mentions it.
- jojobas 4y ago
  The managerial class often gets generous stock options. A lot of them prefer to convert them into cash as soon as they can, rather than to align with company interests and gamble for their own success. Perhaps it has more to do with the one guy who calls the shots more than not owning any of the company.
Apocryphon 4y ago
This class analysis seems overcomplicated. What makes Musk's leadership "entrepreneurial capitalism" as opposed to managerialism? Musk is a member of the PMC! You may consider him a more competent, assertive, and unorthodox manager, at best, but he is still a manager. And as his control solidifies, is he going to make all of the management decisions still? No, he will institute likely handpicked managers who he entrusts. Who are ultimately still members of the managerial class. When HN preaches the benefits of founder-led companies, it does not claim that founders are a different class from other types of CEOs. More hands-on and with more personally invested, sure. But are all founders truly different from the managerial class? That seems to be more of a management style than anything. And founder-led companies are often less than successful- just ask Dorsey himself. Was he PMC? Was he not an entrepreneur capitalist when he was CEO of Twitter the second time around? This is all a lot of half-baked analysis to claim that one set of presumably more able management and an older ossified set of management are two entirely different classes of people.
- darawk 4y ago
  The essential difference between PMC and Entrepreneur is skin in the game. Musk is the manage and primary equity owner, whereas the PMC is managerial only. Whether that's good, bad or indifferent is up to you, but the whole point of the article is this distinction.
  - Apocryphon 4y ago
    Perhaps then this article should have highlighted the importance of Musk taking Twitter private, and the current equity situation with the company. The graphic included shows him taking on 9% of shares, which seems substantial... but is far from a majority? So maybe this article should explain how Musk's current position is substantially different from Dorsey's second tenure, which ended in November 2021. Was Dorsey no longer entrepreneur, but a PMC? But this article quotes Musk bemoaning his departure? Did entrepreneurial capitalism really disappear from Twitter in the past twelve months without Dorsey? This essay is making a lot of assumptions without quantitative analysis.
- hotelmaz 4y ago
throwawaywd89e 4y ago
I think the major problem a lot of people have with Elon's behaviour is not that he is behaving in an "entrepreneurial" way, but that he appears to be in the middle of a hypomanic episode and has nobody around him who has the ability or balls to tell him he's acting irrationally. And I say this as someone who is bipolar and has them on a regular basis. Most people (who manage their mental health conditions responsibly), have a group of people they trust to rein them in when they start going batshit. This usually involves things like taking away their bank cards so they don't spend all their money, dissuading them from making any major, life altering decisions, noting when you're lying to yourself and others, and attempting to point out that possibly behaving like a self aggrandising megalomaniac is not particularly healthy. It's quite clear that Musk doesn't have anyone around who is willing or able to do that. Most of us when we go hypo will end up blasting through our savings, screwing around (literally) and generally pissing off all around us by behaving in a self centred and irrational way, but ultimately the damage we do is limited mostly to ourselves. Elon on the other hand has spent billions on a company, apparently on a whim, probably during another episode, that he later regretted and tried to get out of, again presumably when he came down, and now appears to be taking a series of increasingly irrational and destructive decisions that are affecting the lives of many. To be honest, I think it's kind of sad to watch.
- hotelmaz 4y ago
  Is it really an unusual mental state for Musk? Seems like normal behaviour for him, he's often in the news for being a dick, just as much as he is for his entrepreneurial ventures.
- Apocryphon 4y ago
  Without speculating about his mental state, which doesn't only apply to him but to other polarizing public figures, it definitely seems like his actions are larger-than-life and controversial. I'd argue that a lot of it is probably carefully cultivated, but the monomaniacal, megalomaniacal style is just off-putting for the masses exhausted by celebrity spotlight chasing (even if it might serve to elide all sorts of decisions the public might not be looking at): https://news.ycombinator.com/item?id=33659992 https://news.ycombinator.com/item?id=33659992
tovej 4y ago
Is this the James Burnham who really wanted to use biological and chemical weapons in Vietnam? The James Burnham who thought Germany and Japan would win world war II? The James Burnham who was so blinded by his ideology that he couldn't see a way for the USSR to survive past WWII? Who was so paranoid he thought that China and the USSR never split up? The James Burnham whose ideas about the managerial revolution have been refuted and thrown away by modern scholars? And how is this in any way related to Musk's absolutely insane antics at twitter? In no way at all. The article also suggests that Musk is good because twitter used to be owned by the Saudis, but forgets that Musks purchase was funded by the Saudis. It somehow manages to say nothing and contain pretty garish misrepresentations at the same time. The blogpost also uses a lot of 4chan/libertarian dog whistles: "normie", "marketplace of ideas", references to Ayn Rand for petes sake. Honestly, what a load of drivel.
- defrost 4y ago
  Indeed. I was expecting perhaps a new and savage Bo Burnham musical takedown of Space Karen . . . instead it was fantastical Rand-esque fanfic salivating over some notion of überMuschk.
- deleted 4y ago
  [deleted]
- skrebbel 4y ago
  Total nitpick, because i generally agree, but “normie” is a 4chan/libertarian dog whistle? I don’t identify with that group at all but i use plenty. I just thought it referred to generally “the not nerdy / not terminally online crowd”.
  - tovej 4y ago
    You're right, it's pretty widespread these days, but in the early 2010s I would have associated it mostly with 4chan culture, although I suppose other communities would have used it as well. I'm not as terminally online anymore so my gut feeling might be wrong now, and I'll admit it may have been wrong for the 2010s too. Possibly it's just the combo of crypto-fascist vibes and the use of juvenile terms like "normie" that triggers some 4chan detector in my brain.
christmm 4y ago
negamax 4y ago
Lmao. What about Trump then? Elon doesn't represent anything now that I think of it. How many people from Elon's companies does anyone know of? He has successfully squandered all credit. Guy's the best tool in the world for taking everyone on a ride
4dregress 4y ago
The guy is a dickhead, simple as that. Let’s not forget when he called that cave diver a pedo! I won’t be giving any business associated with him any time or money. I really don’t know why people worship him so much.
- tovej 4y ago
  Best part: he's been claiming he has a bachelors in physics, he doesn't. He's tech illiterate, he can't manage for shit, he just makes up some silly sci-fi promises for most of his projects and then silently buries them later. People treat him like he's a Henry Ford but he's more of a Kim Kardashian (except Kim has some actual talent). He really just wants attention and fame, most of his success is built by other people and he's just made very visible stunts to get the media to focus on him.
s3000 4y ago
>Managers, consciously or unconsciously, are more likely to create invisible problems to justify their job. Or worse, they prevent real problems from being solved in order to preserve their scope. They are incentivized to do so: If someone is in charge of a problem, and that problem is solved, they no longer have a job. It should be secondary if Musk is more like a manager or an entrepreneur. The question is whether he personally can make Twitter better or not. There come mixed signals from his other investments but it stands out that he questions existing procedures within industries. As such, despite all the negative decisions, it is quite likely that he can lift Twitter's roadblocks. It could as well be Twitter that is the globally dominating social network.
- yks 4y ago
  What were the twitter roadblocks exactly?
  - s3000 4y ago
    Whatever prevents twitter from expanding further. It's not obvious but I can imagine that Elon Musk can instill the spirit into Twitter to figure it out. They had Vine, without creating Tiktok. Unlike Facebook, they don't seem to experiment. Facebook tries to offer everything that people want from a social network, when it sees other social networks doing it first. If Twitter becomes like SpaceX or Tesla, it could be Twitter that is doing things first.

38 points by Ambolia 4y ago

Article suggests the lack of ownership by the managerial class corrupts incentives, and that owner-operated companies will win out due to an alignment between company management and long term strategy. Interesting to see how that's going for Facebook, Twitter.

Ambolia 4y ago
You could also argue how much is Elon Musk really an old school industrialist when many of his companies are very intertwined with the government. Tesla selling regulatory credits to other automakers, SpaceX with goverment contracts, ... So I not sure if managerialism vs industrialist is the right divide here. But there is some divide that makes Elon owning Twitter more notable than Blackrock owning it for some reason.
- nverno 4y ago
  The government has always been a customer. Companies in many industries can compete for government contracts. Going back the to industrialist days the gov was providing subsidies as well, eg. for railroads
- snovv_crash 4y ago
  Isn't that more of a virtue of the industries he is in rather than specifics of the companies he has built? SpaceX gets government contracts, yes, but no more than Boeing or Lockheed Martin. You can also argue they give a lot more value for the public money they do get, relative to the industry incumbents. Similarly, any other car company that had bothered to make a viable electric car could have cashed in on the regulatory credits. In fact Toyota, the biggest car company in the world, was doing this for a decade with the Prius, until they dropped the ball on going full electric.
abvdasker 4y ago
That's a good point. The piece fails to address the many ills of the entrepreneurial capitalism it describes, probably owing to Silicon Valley's tendency towards self flattery. It's remarkable how poorly the industry has fared now that the Fed has closed the spigot of free money.
- Apocryphon 4y ago
  FTX is an example of entrepreneurial capitalism!
  - abvdasker 4y ago
    Too bad the piece never mentions it.
jojobas 4y ago
The managerial class often gets generous stock options. A lot of them prefer to convert them into cash as soon as they can, rather than to align with company interests and gamble for their own success. Perhaps it has more to do with the one guy who calls the shots more than not owning any of the company.

Apocryphon 4y ago

This class analysis seems overcomplicated. What makes Musk's leadership "entrepreneurial capitalism" as opposed to managerialism? Musk is a member of the PMC! You may consider him a more competent, assertive, and unorthodox manager, at best, but he is still a manager. And as his control solidifies, is he going to make all of the management decisions still? No, he will institute likely handpicked managers who he entrusts. Who are ultimately still members of the managerial class. When HN preaches the benefits of founder-led companies, it does not claim that founders are a different class from other types of CEOs. More hands-on and with more personally invested, sure. But are all founders truly different from the managerial class? That seems to be more of a management style than anything. And founder-led companies are often less than successful- just ask Dorsey himself. Was he PMC? Was he not an entrepreneur capitalist when he was CEO of Twitter the second time around? This is all a lot of half-baked analysis to claim that one set of presumably more able management and an older ossified set of management are two entirely different classes of people.

darawk 4y ago
The essential difference between PMC and Entrepreneur is skin in the game. Musk is the manage and primary equity owner, whereas the PMC is managerial only. Whether that's good, bad or indifferent is up to you, but the whole point of the article is this distinction.
- Apocryphon 4y ago
  Perhaps then this article should have highlighted the importance of Musk taking Twitter private, and the current equity situation with the company. The graphic included shows him taking on 9% of shares, which seems substantial... but is far from a majority? So maybe this article should explain how Musk's current position is substantially different from Dorsey's second tenure, which ended in November 2021. Was Dorsey no longer entrepreneur, but a PMC? But this article quotes Musk bemoaning his departure? Did entrepreneurial capitalism really disappear from Twitter in the past twelve months without Dorsey? This essay is making a lot of assumptions without quantitative analysis.
hotelmaz 4y ago

throwawaywd89e 4y ago

I think the major problem a lot of people have with Elon's behaviour is not that he is behaving in an "entrepreneurial" way, but that he appears to be in the middle of a hypomanic episode and has nobody around him who has the ability or balls to tell him he's acting irrationally. And I say this as someone who is bipolar and has them on a regular basis. Most people (who manage their mental health conditions responsibly), have a group of people they trust to rein them in when they start going batshit. This usually involves things like taking away their bank cards so they don't spend all their money, dissuading them from making any major, life altering decisions, noting when you're lying to yourself and others, and attempting to point out that possibly behaving like a self aggrandising megalomaniac is not particularly healthy. It's quite clear that Musk doesn't have anyone around who is willing or able to do that. Most of us when we go hypo will end up blasting through our savings, screwing around (literally) and generally pissing off all around us by behaving in a self centred and irrational way, but ultimately the damage we do is limited mostly to ourselves. Elon on the other hand has spent billions on a company, apparently on a whim, probably during another episode, that he later regretted and tried to get out of, again presumably when he came down, and now appears to be taking a series of increasingly irrational and destructive decisions that are affecting the lives of many. To be honest, I think it's kind of sad to watch.

hotelmaz 4y ago
Is it really an unusual mental state for Musk? Seems like normal behaviour for him, he's often in the news for being a dick, just as much as he is for his entrepreneurial ventures.
Apocryphon 4y ago
Without speculating about his mental state, which doesn't only apply to him but to other polarizing public figures, it definitely seems like his actions are larger-than-life and controversial. I'd argue that a lot of it is probably carefully cultivated, but the monomaniacal, megalomaniacal style is just off-putting for the masses exhausted by celebrity spotlight chasing (even if it might serve to elide all sorts of decisions the public might not be looking at): https://news.ycombinator.com/item?id=33659992 https://news.ycombinator.com/item?id=33659992

tovej 4y ago

Is this the James Burnham who really wanted to use biological and chemical weapons in Vietnam? The James Burnham who thought Germany and Japan would win world war II? The James Burnham who was so blinded by his ideology that he couldn't see a way for the USSR to survive past WWII? Who was so paranoid he thought that China and the USSR never split up? The James Burnham whose ideas about the managerial revolution have been refuted and thrown away by modern scholars? And how is this in any way related to Musk's absolutely insane antics at twitter? In no way at all. The article also suggests that Musk is good because twitter used to be owned by the Saudis, but forgets that Musks purchase was funded by the Saudis. It somehow manages to say nothing and contain pretty garish misrepresentations at the same time. The blogpost also uses a lot of 4chan/libertarian dog whistles: "normie", "marketplace of ideas", references to Ayn Rand for petes sake. Honestly, what a load of drivel.

defrost 4y ago
Indeed. I was expecting perhaps a new and savage Bo Burnham musical takedown of Space Karen . . . instead it was fantastical Rand-esque fanfic salivating over some notion of überMuschk.
deleted 4y ago
[deleted]
skrebbel 4y ago
Total nitpick, because i generally agree, but “normie” is a 4chan/libertarian dog whistle? I don’t identify with that group at all but i use plenty. I just thought it referred to generally “the not nerdy / not terminally online crowd”.
- tovej 4y ago
  You're right, it's pretty widespread these days, but in the early 2010s I would have associated it mostly with 4chan culture, although I suppose other communities would have used it as well. I'm not as terminally online anymore so my gut feeling might be wrong now, and I'll admit it may have been wrong for the 2010s too. Possibly it's just the combo of crypto-fascist vibes and the use of juvenile terms like "normie" that triggers some 4chan detector in my brain.

christmm 4y ago

negamax 4y ago

Lmao. What about Trump then? Elon doesn't represent anything now that I think of it. How many people from Elon's companies does anyone know of? He has successfully squandered all credit. Guy's the best tool in the world for taking everyone on a ride

4dregress 4y ago

The guy is a dickhead, simple as that. Let’s not forget when he called that cave diver a pedo! I won’t be giving any business associated with him any time or money. I really don’t know why people worship him so much.

tovej 4y ago
Best part: he's been claiming he has a bachelors in physics, he doesn't. He's tech illiterate, he can't manage for shit, he just makes up some silly sci-fi promises for most of his projects and then silently buries them later. People treat him like he's a Henry Ford but he's more of a Kim Kardashian (except Kim has some actual talent). He really just wants attention and fame, most of his success is built by other people and he's just made very visible stunts to get the media to focus on him.

s3000 4y ago

>Managers, consciously or unconsciously, are more likely to create invisible problems to justify their job. Or worse, they prevent real problems from being solved in order to preserve their scope. They are incentivized to do so: If someone is in charge of a problem, and that problem is solved, they no longer have a job. It should be secondary if Musk is more like a manager or an entrepreneur. The question is whether he personally can make Twitter better or not. There come mixed signals from his other investments but it stands out that he questions existing procedures within industries. As such, despite all the negative decisions, it is quite likely that he can lift Twitter's roadblocks. It could as well be Twitter that is the globally dominating social network.

yks 4y ago
What were the twitter roadblocks exactly?
- s3000 4y ago
  Whatever prevents twitter from expanding further. It's not obvious but I can imagine that Elon Musk can instill the spirit into Twitter to figure it out. They had Vine, without creating Tiktok. Unlike Facebook, they don't seem to experiment. Facebook tries to offer everything that people want from a social network, when it sees other social networks doing it first. If Twitter becomes like SpaceX or Tesla, it could be Twitter that is doing things first.