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The need to have a for profit platform leads to perverse incentives. This seems to be universally true, and when it becomes apparent that advertising doesn't w

• troupo 3y ago
  > The need to have a for profit platform leads to perverse incentives. The need to have profit is the goal of any business. The problem isn't that. The need for profit has been entirely replaced with the need for continuous unimpeded growth. Which is decidedly not the same thing, but no one cares anymore, and profit doesn't even come into equation anymore.
  • yarg 3y ago
    When the goals of the customers and the goals of the company are at odds, things will never work out long term. But I disagree that the continuous growth model is the cause, although I certainly believe that it frequently adds fuel to the fire (growing a company when it's making a loss on a per customer basis frequently leads to accelerating death spirals as well as all manner of desperate measures).
    • troupo 3y ago
      > But I disagree that the continuous growth model is the cause, When is the last time you've heard a company evaluated on profits (the actual measure of a successful business) and not on growth (of random metrics)?
      • criddell 3y ago
        Public benefit corporations (like Bluesky) can be run like that.
  • zelphirkalt 3y ago
    I think part of the problem, but also reason for existing, of the growth whatever it takes mindset is, that as long as there is growth, no matter how artificial or not, you can keep up make-belief, that the business is viable and investors are going to belive either just that, or that they can enter now and exit before the bubble bursts. It does not matter to most investors, whether the business is actually viable in the long run, or makes any sense, as long as they see or believe there to be an opportunity to extract money out of the bubble. A bit like trying to extract energy out of vacuum, except, that due to our believe system of economics, it can actually work for them.
  • the_other 3y ago
    > The need to have profit is the goal of any business. This isn't true. A non-profit is still a business. Charities are businesses. Cooperatives can make profit. Also (almost) no-one thinks small businesses making modest profit and riding the ups and downs alongside others in a locale is a problem. The problems arise in companies that choose to only or mainly focus on profit. Most capital funds don't make anything themselves other than money, which they extract from businesses that do make things. You can claim that they're market-correcting forces that allow money to easily move between different areas of human interest... but ultimately their product is their own enrichment. The speed and convenience they provide might be an illusion created by their apparent success. It might be better that our markets and locales develop more slowly; if more smaller scale investors made a wider range of decisions, rather than a handful of large ones making most of them.
• sneak 3y ago
  I think for-profit is fine; I think the need to profitably apply eight figures of capital is the problem. It's fine to seek profit; it's seeking triple digit millions of revenue that drives the problem. Is it possible this is simply a knock-on effect of too-low interest rates for so long? Too cheap VC money?
  • rightbyte 3y ago
    Maybe it is a sunk cost fallacy? I.e. not aiming for some stupid amount of growth is the same thing as telling the VCs you have failed and wasted their money. So going for some unhealthy revenue target is the path of least resistance, since the failure still is in the future.
  • yarg 3y ago
    For profit might be fine - but for profit masquerading as free simply doesn't seem to work.
    • gmerc 3y ago
      Oh it worked alright. FB could have a 6% gross margin and operate forever - but people wouldn’t bet phenomenally rich. Let’s not pretend they even had to pay anyone off at their profitability. It only doesn’t work for outsized expectations after a decade of interest binge party.
• p-e-w 3y ago
  > The need to have a for profit platform leads to perverse incentives. Only because, despite their immense importance, those platforms are essentially unregulated. Imagine water suppliers were unregulated. There would also be "perverse incentives", such as doctors paying them to add poison to the water so they get more patients and can make more money. But nothing like that ever happens, because there are rules such companies must abide by. Therefore, they simply sell water for money, and that's it. There are no incentives to extract more profits through other means, because anything else is prohibited. I fail to see why analogous regulation wouldn't work for online communication platforms.
  • yarg 3y ago
    Locality is one issue, and the fact that it's significantly less vital means that it's generally not a matter of life and death. As far as doctors bribing water suppliers to get more customers, the law is seldom enough to discourage bad behaviour when you're expecting not to get caught or the fines are too low for criminality to be profitable.
  • moffkalast 3y ago
    > There would also be "perverse incentives", such as doctors paying them to add poison to the water so they get more patients and can make more money. This is why anything recommended by a for-profit dentist is the opposite of what you should probably buy.
  • zeroonetwothree 3y ago
    I find it weird that you think “regulation” is needed to stop people from committing crimes. That’s already illegal! Anyway your example is silly because no one would buy water from a producer that poisons it. The potential profit to doctors is low as well. At least you could have chosen something more realistic. Water being regulated is probably the biggest cause of shortages in the US West. Prices are set too low (especially for certain buyers) and it causes overconsumption. It’s a classic tragedy of the commons that public management has failed to resolve.