6 ms·

Businesses actually having to break even. Who’d have thought!?

by trollied 3y ago

yieldcrv 3y ago
what a concept
- candiodari 3y ago
  With that you mean that in tech the value extraction has been in the hands of only a few players (which is exactly what you'd expect in a global market with near-perfect competition. To some extent you could say the entire cause of this is that governments allow multinational companies to exist at all). Value production for the internet was mostly done for free. Both where it comes to end users and the hosting they needed. And yes, sometimes by "wasting investor dollars" (of course investigating new things, wasting dollars, is exactly what investment is supposed to do, that it does that is why investment is allowed). And ironically this goes multiple steps up the value chain. Users and mods are complaining to reddit that they don't "pay" them enough. Reddit is complaining that Google/FB/even OpenAI at the moment don't "pay" them enough by trying to take in ads directly, and presumably training their own AIs soon on "their" data. Elon Musk is complaining that he's providing data for free (it's even costing him some money, even though not anywhere close to the amount he implies) and not getting the dollars AI companies are attracting with "his (users)" data. The real value in OpenAI is that Google's position is that they are the arbiter of where users go. Users decide where to put their attention 99% ... and Google 1% (and FB 0.1%, and reddit 0.01%). But OpenAI is a serious threat to Google's 1%, because it can give better answers and therefore will have the perfect, most expensive, place to put ads if things keep going the way they're going. For Google this is a lose-lose proposition. Either they win, get to keep their position because they get the best Chatbot. However, running this chatbot is much more expensive than Google search (and they will need to restart their revenue optimization with angry shareholders screaming at them. There is no adwordsLLM yet). So they'll need to run a much more expensive internet scrape on a regular basis, and figure out how to run ads on this new platform, just to maintain the position they currently still have. Shareholders don't care, they just want to see Google's dollar amounts go up 20% per year as they did for a decade. And if Google doesn't do this massive investment? Well, they may lose everything. Funny how apt the old Futurama joke has become "the internet has always been about the free and open exchange of somebody else's ideas". Futurama meant Napster. But Reddit has exactly this business model. Google has exactly this business model. Twitter ... etc. I bet the tech sector has actually made more money on this than even the most absurd claims of the RIAA say Napster has cost them.
  - lotsofpulp 3y ago
    Great post, but I would rephrase this > Shareholders don't care, they just want to see Google's dollar amounts go up 20% per year as they did for a decade. And if Google doesn't do this massive investment? Well, they may lose everything. to “they may stagnate”. Alphabet shareholders are not going to be left with worthless shares because Alphabet still has the ability to earn tens of billions of dollars of profit per year, just shares worth less than they hoped they would be worth. I.e. they might have to be content playing in the market cap of hundreds of billions rather than trillions.
  - mumblemumble 3y ago
    > OpenAI is a serious threat to Google's 1%, because it can give better answers It does seem to give better answers. But I don't think that's necessarily indicative of which kind of technology is capable of giving better search results. Google isn't what it was 20 years ago, so I don't think that what Google is now is terribly indicative of what their core technology is capable of being. They've largely allowed their search service to sink into a quagmire of content farms. They occasionally make a vague swipe at dealing with the absolute worst of it, but for the longest time they've had little incentive to put too much effort into it because these same content farms produce a sizable chunk of their ad revenue. And they won't go down without a fight. I can't imagine it will be that easy for their crown to be wrested away by a chatbot with stratospheric operating costs that's been jerry-rigged into an ersatz search engine that nobody can afford to "reindex" more often than once every couple years. I wouldn't be surprised if a few rounds of proximal policy optimization costs more than it would cost Google to apply some proper attention to their search result quality.
    - joeythedolphin 3y ago
      Their service also got destroyed by SEO. Google has been at war with the public for decades. They simply lost. The public literally destroyed their product. Then they needed to increase ads. They are on a runaway train to zero.
  - asah 3y ago
    > OpenAI is a serious threat to Google's 1%, because it can give better answers For now. source: old enough to remember Netscape vs Microsoft and many other examples.
- ergocoder 3y ago
  The concept is more foreign than you ever expected. Here is a person criticizing 37Signal who wants to optimize for profit. The tweet was just last week ... in the current economic climate. https://twitter.com/moritzplassnig/status/1672780314920501249 https://twitter.com/moritzplassnig/status/167278031492050124...
  - imglorp 3y ago
    And that link is also inaccessible, underscoring some point... Plan A: continue as now, make a little money and everyone eats, or Plan B: pretend to your investors you will be super duper profitable, wreck the internet, and then go out of business with your golden parachute.
    - ergocoder 3y ago
      It is the Elon's rate limit...
  - Arainach 3y ago
    There is a big difference between making a profit and optimizing for profit. Plenty of businesses make a profit - even a healthy profit - while respecting their employees and contributing to their community. Ones which optimize for profit inevitably become evil.
    - ergocoder 3y ago
      The context is 37Signal has moved from cloud to their owned servers. You can decide whether that is an evil move.
wintermutestwin 3y ago
Ever hear of a non-profit entity <edited - see below>? So much of what the users want from social media is not technologically innovative and thus doesn't require the profit motive to fuel that innovation. I cannot see one reason why Facecrook, Twits, or Spreddit requires a for-profit business model. Can you?
- hfkwer 3y ago
  > non-profit business That's an oxymoron if I ever heard one. A business is literally an activity that is undertaken for the purpose of profit. There are activities that are entered for reasons other than profit, but they're not businesses.
  - wintermutestwin 3y ago
    Yes, from a taxonomy perspective, you are correct. I'll edit to be precise because the definitions don't change the point of my post.
  - Sharlin 3y ago
    Depends on the definition. If an organization is arranged as, say, a limited-liability company, then it is a business no matter what its goals are. And "profit to shareholders "is neither definitional nor mandatory; the value produced can be whatever the shareholders want it to be. Of course, most of the time it’s profit.
    - grepfru_it 3y ago
      If it is an LLC, then each employee would have to be a member to exercise control and have the legal standing to request profits from the company. An LLC does NOT have a requirement to maximize shareholder profit because there are no shareholders, just members. An LLC has a max number of members and members are required to maintain their portion of tax liability (this means they will owe a % of tax due or receive a % of tax refunds). This overwhelmingly means employees are NOT part of the LLC, as all it would take is one employee not paying their taxes for the entire LLC to be at risk (also this is why investors will run like the wind from an LLC raising money). An LLC CAN have an employment contract where they offer paper shares, which can translate to profit sharing but they are called paper shares because they are unsecured debts and are literally worth nothing in the event of bankruptcy. They could be a C corp (could also be an S corp but that comes with a 100 share holder limit), but then they have a duty to maximize profit to the shareholders. In a private corporation, the shareholders may be less inclined to sue, but the option is still there and as such the CEO must work to ensure the company is profitable. If they decide to share all profits with the employees, and the employees are majority shareholders, then this likely falls within the sphere of maximize profits. There are things like a publicly-traded LLP which allows employees to own a portion of the company while offloading tax liabilities to the shareholder, but that is usually limited to companies which depend on depleting natural resources (think oil, gas, coal, lithium, etc)
superkuh 3y ago
Yep. Any community that is run as a single business will eventually enshittify. Cut the gordian knot by avoiding all commercial or even incorporated entities for community communication. The incentives of incorporated entities, like the assumption that making a profit is required in all contexts just because they apply in business contexts, just don't align with human persons or communities.
- joeythedolphin 3y ago
  Good summary. Clear, concise, real. I wish we had advocacy groups sitting on corners with signs saying this. Seriously. People need to wake up, and they need a concise understanding to latch onto. I say it like this, "Perhaps social media where you upvote, downvote and like is just a shitty idea, for businesses and people. I think people WILL realize this, and I am hoping it will not crash software engineering, but I think it will, but most people building shitty software will leave the industry, while the useful software will continue. So it's important to be with an employer in an industry that is legitimate.

Businesses actually having to break even. Who’d have thought!?

yieldcrv 3y ago

what a concept

candiodari 3y ago
With that you mean that in tech the value extraction has been in the hands of only a few players (which is exactly what you'd expect in a global market with near-perfect competition. To some extent you could say the entire cause of this is that governments allow multinational companies to exist at all). Value production for the internet was mostly done for free. Both where it comes to end users and the hosting they needed. And yes, sometimes by "wasting investor dollars" (of course investigating new things, wasting dollars, is exactly what investment is supposed to do, that it does that is why investment is allowed). And ironically this goes multiple steps up the value chain. Users and mods are complaining to reddit that they don't "pay" them enough. Reddit is complaining that Google/FB/even OpenAI at the moment don't "pay" them enough by trying to take in ads directly, and presumably training their own AIs soon on "their" data. Elon Musk is complaining that he's providing data for free (it's even costing him some money, even though not anywhere close to the amount he implies) and not getting the dollars AI companies are attracting with "his (users)" data. The real value in OpenAI is that Google's position is that they are the arbiter of where users go. Users decide where to put their attention 99% ... and Google 1% (and FB 0.1%, and reddit 0.01%). But OpenAI is a serious threat to Google's 1%, because it can give better answers and therefore will have the perfect, most expensive, place to put ads if things keep going the way they're going. For Google this is a lose-lose proposition. Either they win, get to keep their position because they get the best Chatbot. However, running this chatbot is much more expensive than Google search (and they will need to restart their revenue optimization with angry shareholders screaming at them. There is no adwordsLLM yet). So they'll need to run a much more expensive internet scrape on a regular basis, and figure out how to run ads on this new platform, just to maintain the position they currently still have. Shareholders don't care, they just want to see Google's dollar amounts go up 20% per year as they did for a decade. And if Google doesn't do this massive investment? Well, they may lose everything. Funny how apt the old Futurama joke has become "the internet has always been about the free and open exchange of somebody else's ideas". Futurama meant Napster. But Reddit has exactly this business model. Google has exactly this business model. Twitter ... etc. I bet the tech sector has actually made more money on this than even the most absurd claims of the RIAA say Napster has cost them.
- lotsofpulp 3y ago
  Great post, but I would rephrase this > Shareholders don't care, they just want to see Google's dollar amounts go up 20% per year as they did for a decade. And if Google doesn't do this massive investment? Well, they may lose everything. to “they may stagnate”. Alphabet shareholders are not going to be left with worthless shares because Alphabet still has the ability to earn tens of billions of dollars of profit per year, just shares worth less than they hoped they would be worth. I.e. they might have to be content playing in the market cap of hundreds of billions rather than trillions.
- mumblemumble 3y ago
  > OpenAI is a serious threat to Google's 1%, because it can give better answers It does seem to give better answers. But I don't think that's necessarily indicative of which kind of technology is capable of giving better search results. Google isn't what it was 20 years ago, so I don't think that what Google is now is terribly indicative of what their core technology is capable of being. They've largely allowed their search service to sink into a quagmire of content farms. They occasionally make a vague swipe at dealing with the absolute worst of it, but for the longest time they've had little incentive to put too much effort into it because these same content farms produce a sizable chunk of their ad revenue. And they won't go down without a fight. I can't imagine it will be that easy for their crown to be wrested away by a chatbot with stratospheric operating costs that's been jerry-rigged into an ersatz search engine that nobody can afford to "reindex" more often than once every couple years. I wouldn't be surprised if a few rounds of proximal policy optimization costs more than it would cost Google to apply some proper attention to their search result quality.
  - joeythedolphin 3y ago
    Their service also got destroyed by SEO. Google has been at war with the public for decades. They simply lost. The public literally destroyed their product. Then they needed to increase ads. They are on a runaway train to zero.
- asah 3y ago
  > OpenAI is a serious threat to Google's 1%, because it can give better answers For now. source: old enough to remember Netscape vs Microsoft and many other examples.
ergocoder 3y ago
The concept is more foreign than you ever expected. Here is a person criticizing 37Signal who wants to optimize for profit. The tweet was just last week ... in the current economic climate. https://twitter.com/moritzplassnig/status/1672780314920501249 https://twitter.com/moritzplassnig/status/167278031492050124...
- imglorp 3y ago
  And that link is also inaccessible, underscoring some point... Plan A: continue as now, make a little money and everyone eats, or Plan B: pretend to your investors you will be super duper profitable, wreck the internet, and then go out of business with your golden parachute.
  - ergocoder 3y ago
    It is the Elon's rate limit...
- Arainach 3y ago
  There is a big difference between making a profit and optimizing for profit. Plenty of businesses make a profit - even a healthy profit - while respecting their employees and contributing to their community. Ones which optimize for profit inevitably become evil.
  - ergocoder 3y ago
    The context is 37Signal has moved from cloud to their owned servers. You can decide whether that is an evil move.

wintermutestwin 3y ago

Ever hear of a non-profit entity <edited - see below>? So much of what the users want from social media is not technologically innovative and thus doesn't require the profit motive to fuel that innovation. I cannot see one reason why Facecrook, Twits, or Spreddit requires a for-profit business model. Can you?

hfkwer 3y ago
> non-profit business That's an oxymoron if I ever heard one. A business is literally an activity that is undertaken for the purpose of profit. There are activities that are entered for reasons other than profit, but they're not businesses.
- wintermutestwin 3y ago
  Yes, from a taxonomy perspective, you are correct. I'll edit to be precise because the definitions don't change the point of my post.
- Sharlin 3y ago
  Depends on the definition. If an organization is arranged as, say, a limited-liability company, then it is a business no matter what its goals are. And "profit to shareholders "is neither definitional nor mandatory; the value produced can be whatever the shareholders want it to be. Of course, most of the time it’s profit.
  - grepfru_it 3y ago
    If it is an LLC, then each employee would have to be a member to exercise control and have the legal standing to request profits from the company. An LLC does NOT have a requirement to maximize shareholder profit because there are no shareholders, just members. An LLC has a max number of members and members are required to maintain their portion of tax liability (this means they will owe a % of tax due or receive a % of tax refunds). This overwhelmingly means employees are NOT part of the LLC, as all it would take is one employee not paying their taxes for the entire LLC to be at risk (also this is why investors will run like the wind from an LLC raising money). An LLC CAN have an employment contract where they offer paper shares, which can translate to profit sharing but they are called paper shares because they are unsecured debts and are literally worth nothing in the event of bankruptcy. They could be a C corp (could also be an S corp but that comes with a 100 share holder limit), but then they have a duty to maximize profit to the shareholders. In a private corporation, the shareholders may be less inclined to sue, but the option is still there and as such the CEO must work to ensure the company is profitable. If they decide to share all profits with the employees, and the employees are majority shareholders, then this likely falls within the sphere of maximize profits. There are things like a publicly-traded LLP which allows employees to own a portion of the company while offloading tax liabilities to the shareholder, but that is usually limited to companies which depend on depleting natural resources (think oil, gas, coal, lithium, etc)

superkuh 3y ago

Yep. Any community that is run as a single business will eventually enshittify. Cut the gordian knot by avoiding all commercial or even incorporated entities for community communication. The incentives of incorporated entities, like the assumption that making a profit is required in all contexts just because they apply in business contexts, just don't align with human persons or communities.

joeythedolphin 3y ago
Good summary. Clear, concise, real. I wish we had advocacy groups sitting on corners with signs saying this. Seriously. People need to wake up, and they need a concise understanding to latch onto. I say it like this, "Perhaps social media where you upvote, downvote and like is just a shitty idea, for businesses and people. I think people WILL realize this, and I am hoping it will not crash software engineering, but I think it will, but most people building shitty software will leave the industry, while the useful software will continue. So it's important to be with an employer in an industry that is legitimate.