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> I'm not sure any company can avoid this fate long term if they need to keep growing. I wonder why “if they need to keep growing” is so important to literally

by voisin 3y ago

> I'm not sure any company can avoid this fate long term if they need to keep growing. I wonder why “if they need to keep growing” is so important to literally everyone? I’d die for a meaningful business that predictably spit out cash due to extreme customer loyalty. Why did growth itself become the prize everyone reaches for?

solardev 3y ago
Same. I hate the systems we currently have.
rrr_oh_man 3y ago
> Why did growth itself become the prize everyone reaches for? That's literally capitalism. The hamster wheel. A closed loop. If you take out a loan from a bank, the bank expects 5% annual return on that loan. Where do you get the additional 5% that you owe? You need to take it from someone else (who themself took out a loan, maybe even from the same bank). While the bank can and will almost literally create (digital) money from thin air.
- voisin 3y ago
  > If you take out a loan from a bank, the bank expects 5% annual return on that loan. Where do you get the additional 5% that you owe? This has a lot of implicit assumptions which don’t hold true in reality. The 5% would have to be the same as the return on equity prior to the loan, and the loan would have to be for the full amount of the equity. What I said above is that you can have a stable business with a decent return without needing to grow the business. Say you have a business with $10 million in sales, and a net profit margin of 15%, so you take out $1.5 million per year. In my mind this is a great business. 1. To your specific point re a loan, this could easily support a $4 million load at 8% without demanding the underlying business grow revenues at all. 2. Lots of people would be tempted to grow the top line to $100 million even if net margins shrank to 5%. This is the point I don’t understand. Is it just greed? The consequence is that, in the aggregate across the economy, businesses and people rarely become businesses like OP points out and usually end up doing a lot of shitty things that destroy any lasting brand value or loyalty. I’m looking at Google Search and Facebook, and a million other businesses in and out of tech when I say this.

by voisin 3y ago

solardev 3y ago

Same. I hate the systems we currently have.

rrr_oh_man 3y ago

> Why did growth itself become the prize everyone reaches for? That's literally capitalism. The hamster wheel. A closed loop. If you take out a loan from a bank, the bank expects 5% annual return on that loan. Where do you get the additional 5% that you owe? You need to take it from someone else (who themself took out a loan, maybe even from the same bank). While the bank can and will almost literally create (digital) money from thin air.

voisin 3y ago
> If you take out a loan from a bank, the bank expects 5% annual return on that loan. Where do you get the additional 5% that you owe? This has a lot of implicit assumptions which don’t hold true in reality. The 5% would have to be the same as the return on equity prior to the loan, and the loan would have to be for the full amount of the equity. What I said above is that you can have a stable business with a decent return without needing to grow the business. Say you have a business with $10 million in sales, and a net profit margin of 15%, so you take out $1.5 million per year. In my mind this is a great business. 1. To your specific point re a loan, this could easily support a $4 million load at 8% without demanding the underlying business grow revenues at all. 2. Lots of people would be tempted to grow the top line to $100 million even if net margins shrank to 5%. This is the point I don’t understand. Is it just greed? The consequence is that, in the aggregate across the economy, businesses and people rarely become businesses like OP points out and usually end up doing a lot of shitty things that destroy any lasting brand value or loyalty. I’m looking at Google Search and Facebook, and a million other businesses in and out of tech when I say this.