4 ms·

Are we seeing blowback from the era of cheap money to really high inflation rates or am I just underestimating how many people have to have layoffs after an acq

Are we seeing blowback from the era of cheap money to really high inflation rates or am I just underestimating how many people have to have layoffs after an acquisition wasn't budgeted properly?

delfinom 3y ago
Cheap money and incompetent executives that were able to survive using that cheap money. A lot of "business type" individuals were truly kept afloat by just being to finance their dumb ideas on cheap money instead of actually being able to bring profit to the table.
- qwytw 3y ago
  The thing is that the business would have been perfectly fine without that nonsense. They have a core product which despite all its issues still have real demand it's not bloatware but something you can build a sustainable business on. Had they not massively overhired, stayed at ~1500-2000 employees, focused on the engine itself and not wasted massive amounts of money on acquisitions like this the company would likely already be profitable.
  - thereddaikon 3y ago
    That's not how publicly traded businesses are run. You are not serving the needs of the business. You are serving the needs of the shareholders. Line must go up therefore you need to constantly expand. This incentivizes stupid acquisitions bought on with stock and debt. It does not incentivize focusing on your core businesses and investing in to it.
    - qwytw 3y ago
      > That's not how publicly traded businesses are run That's not necessarily true. There are plenty of examples of public companies which have grown in more sustainable way while prioritizing their core businesses. > You are serving the needs of the shareholders. Line must go up therefore you need to constantly expand. Yet the market did not reward them and the shareholders are not particularly happy. While these pressuresfor public do exist at the end the incompetences of Unity's board and upper management are to blame.
      - thereddaikon 3y ago
        >That's not necessarily true. Sure, not necessarily but it is a common result and not a surprising one. >Yet the market did not reward them and the shareholders are not particularly happy. While these pressuresfor public do exist at the end the incompetences of Unity's board and upper management are to blame. Ultimately these moves end poorly for the business doing them. That's not in question. But shareholders are mad not because the move was made but because it didn't work as intended. Buying smaller companies to inflate your stock value short term while crippling the company with debt and bloat long term is an old tactic to maximize short term shareholder wealth so they can cash out and leave latecomers holding the bag. This lead to some famous company collapses when it backfired or when it drove less unethical executives to commit accounting fraud like Worldcom. But it doesn't always end up with such a spectacular implosion. Usually it just cripples the company and they get gobbled up by a competitor a few years later. Its a common problem because the way the stock market works today doesn't necessarily align with its intended goals. The point was to let outside investors join in an enterprise they think was profitable and grow with it. But that's not the only way the game can be played. stock itself is a commodity and treated as such. I don't know how you fix that but doing so would go a long way to realigning incentives and preventing this kind of thing.
    - deleted 3y ago
      [deleted]
    - robertlagrant 3y ago
      > That's not how publicly traded businesses are run Can you cite how you know this is the case for all / most publically traded businesses?

Are we seeing blowback from the era of cheap money to really high inflation rates or am I just underestimating how many people have to have layoffs after an acquisition wasn't budgeted properly?

delfinom 3y ago

Cheap money and incompetent executives that were able to survive using that cheap money. A lot of "business type" individuals were truly kept afloat by just being to finance their dumb ideas on cheap money instead of actually being able to bring profit to the table.

qwytw 3y ago
The thing is that the business would have been perfectly fine without that nonsense. They have a core product which despite all its issues still have real demand it's not bloatware but something you can build a sustainable business on. Had they not massively overhired, stayed at ~1500-2000 employees, focused on the engine itself and not wasted massive amounts of money on acquisitions like this the company would likely already be profitable.
- thereddaikon 3y ago
  That's not how publicly traded businesses are run. You are not serving the needs of the business. You are serving the needs of the shareholders. Line must go up therefore you need to constantly expand. This incentivizes stupid acquisitions bought on with stock and debt. It does not incentivize focusing on your core businesses and investing in to it.
  - qwytw 3y ago
    > That's not how publicly traded businesses are run That's not necessarily true. There are plenty of examples of public companies which have grown in more sustainable way while prioritizing their core businesses. > You are serving the needs of the shareholders. Line must go up therefore you need to constantly expand. Yet the market did not reward them and the shareholders are not particularly happy. While these pressuresfor public do exist at the end the incompetences of Unity's board and upper management are to blame.
    - thereddaikon 3y ago
      >That's not necessarily true. Sure, not necessarily but it is a common result and not a surprising one. >Yet the market did not reward them and the shareholders are not particularly happy. While these pressuresfor public do exist at the end the incompetences of Unity's board and upper management are to blame. Ultimately these moves end poorly for the business doing them. That's not in question. But shareholders are mad not because the move was made but because it didn't work as intended. Buying smaller companies to inflate your stock value short term while crippling the company with debt and bloat long term is an old tactic to maximize short term shareholder wealth so they can cash out and leave latecomers holding the bag. This lead to some famous company collapses when it backfired or when it drove less unethical executives to commit accounting fraud like Worldcom. But it doesn't always end up with such a spectacular implosion. Usually it just cripples the company and they get gobbled up by a competitor a few years later. Its a common problem because the way the stock market works today doesn't necessarily align with its intended goals. The point was to let outside investors join in an enterprise they think was profitable and grow with it. But that's not the only way the game can be played. stock itself is a commodity and treated as such. I don't know how you fix that but doing so would go a long way to realigning incentives and preventing this kind of thing.
  - deleted 3y ago
    [deleted]
  - robertlagrant 3y ago
    > That's not how publicly traded businesses are run Can you cite how you know this is the case for all / most publically traded businesses?