9 ms·
It looks like regulators are actually doing their job. I would love to see more of this, along with breaking up companies that have gotten too big for their bri
by hallway_monitor 3y ago
It looks like regulators are actually doing their job. I would love to see more of this, along with breaking up companies that have gotten too big for their britches.
- scarface_74 3y agoThe entire purpose of starting a company is to get acquired. Of the literally hundreds of companies that YC has invested in, only 5 have gone public. The VC market will dry up even more if they see their chances of an exit diminishing because of an overzealous government.
- earthnail 3y agoOr we’ll see more IPOs. It might change valuations as expectations might be lower but it won’t dry up the VC market.
- mushufasa 3y agodeclining frequency of IPOs is mostly driven by regulatory requirements that keep getting harder over time; the 90s were before sarbanes-oxley. I don't see any reason to believe fewer acquisitions will cause more IPOs.
- endisneigh 3y agoThe purpose of a for profit company is to provide a good or service and profit from doing so. You don’t need to be acquired to accomplish that.
- chiefalchemist 3y agoYes. But when you're driven by the idea of exit striving towards such things becomes ultra focused. Put another way, exit is the ultimate recognition that these purpose(s) have been acheived.
- endisneigh 3y agoThere are ways to exit other than being acquired, still.
- chiefalchemist 3y agoThose are still exits.
- capableweb 3y ago> provide a good or service > profit from doing so Is the first actually a requirement? I can think of plenty of companies that do the second part well, but have nothing to do with the first one.
- oblio 3y agoYou're misreading the text. They said "provide A good OR service", they're not saying "provide good service".
- capableweb 3y agoI don't think so, I read and understand the "OR" in there.
- endisneigh 3y agoYes? What company makes money without providing goods or services to someone?
- ceejayoz 3y agoComcast?
- endisneigh 3y agoComcast provides plenty of services?
- 3y ago
- ianceicys 3y agoYou are mistaken. The purpose of a company is to make a profit and provide a good or service. In that order. Everything else is a hobby.
- endisneigh 3y agoNope. Profit follows the goods and services, not the other way around.
- ianceicys 3y agoTell that to Too BIG to FAIL banks…look at the Billions given from the government to lobbying companies.
- dahart 3y agoWhy do you say that, and how does it work? Are you making a completely different statement than the point the parent was making? Sure you usually need to sell something in order to get the profit, but that doesn’t mean that the good or service or it’s quality was prioritized above getting any profit, which is what I think parent was talking about. Generally speaking, private non-subsidized companies that offer goods and services for sale cannot actually survive without any profit, right? They can bootstrap for a while with investment, but they tend to die, statistically speaking, if they prioritize goods and services over profit. The way companies tend to survive death is by doing everything they can to ensure that the sale of their goods or services generates a profit. You might also be temporarily forgetting that it’s also incredibly common for companies to pivot on what products they make and sell whenever they’re not making enough profit. TBH it actually seems really funny to me argue about which comes first, because the kind of company we’re talking about needs both, it doesn’t otherwise exist. But the idea parent shared, that profit takes the highest priority, is often absolutely true in practice, many companies will do everything they can to avoid not making a profit, from lowering the quality of their goods and services, to coming up with other more profitable products, to merging with another company that has more customers for your product and/or a longer runway.
- earthnail 3y agoDepends on your worldview. Historically, companies had a purpose first and profit second. You needed approval by the crown before you were allowed to start a company. Then, once your company fit the purpose as seen by the crown, you were allowed to make profit with it. That has changed, especially since the 80s, where the prevalent world view turned to "let's have the market figure out purpose", which equates to anything that is profitable is good. We've since learned that this isn't automatically true (as exemplified in this abandoned merger, for example), and my understanding is that right now there's no clear opinion in society whether profit or purpose comes first in companies.
- ethanbond 3y agoThe entire purpose of antitrust regulation is to prevent monopolization. Both those things can be true and both can be legitimate interests.
- ceejayoz 3y ago> The entire purpose of starting a company is to get acquired. The vast majority of companies are little "lifestyle" businesses without any intention of ever getting acquired by anyone. Your local pizza shop doesn't expect to be a unicorn.
- chiefalchemist 3y agoAnd *this* is The Key difference between an entrepreneur and a mom & pop. That said, even a mom & pop should be mindful of exit. What happens when the owner(s) wants to retire? Or has a serious health issue? Or has a family member with a health issue? Etc.? You don't have to be a unicorn to build something that someone else wants to acquire. Editorial: And this is why I dislike words like solopreneur, mompreneur, and so on. Sure you can have a one person business with a steady revenue stream. But that's not a 'preneur. If you are the business and the business is you, you're ability to exit is highly limited. That's not a 'preneur. If you get hit by a bus and your customers are screwed and the business tanks. That's not a 'preneur. You're much closer to a m&p TBH. I realize that's counter to conventional wisdom on social media, but such snake oil ideas deserve to be called out already.
- ceejayoz 3y agoMom-and-pop businesses fit the definition of entrepreneur just fine. I'm not willing to let Silicon Valley VCs redefine the term. > What happens when the owner(s) wants to retire? Maybe they just close down the shop. > Or has a serious health issue? And purchase disability insurance.
- chiefalchemist 3y agoThe point is, regardless of circumstances, if no one wants to acquire the business then the business by definition has not created value (in the eyes of the market). Being a mom & pop is not the same as being an entrepreneur. They are two separate mindsets. One use exit as a North Star the other just retires and closes up shop.
- rcxdude 3y ago
- chii 3y ago> The entire purpose of starting a company is to get acquired. or to make profit. Being acquired used to mean you failed, and had to suck your pride in and let someone else buy you out to pay off your debts.
- tebbers 3y agoNo it isn’t just about selling out. It’s to unseat incumbents, deliver better products, make a difference. What do you think Google would have turned out like if Yahoo had bought them for $1m in 1996?
- gumby 3y agoAn underzealous government (in regards to antitrust) is as bad as the number of potential acquirers is smaller; in such a monopsony environment purchase prices will be smaller too.
- kozikow 3y agoThere's also always a private equity market that is often a middle ground between IPO and acquisition. And in my feeling, I've seen PE getting more active in tech last year (maybe just because valuations went down).
- jen20 3y agoPE universally has the worst possible outcomes for all sides of a deal besides the PE firm themselves.
- kozikow 3y agoJust because the acquired company falls into the "can't justify higher rev multiple thanks to synergies with the acquiring company" and "not successful enough for the IPO". If there was no options in that niche, the market objectively would be a lot tougher.
- piva00 3y agoCorporate consolidation is not a good end for capitalism. If you believe in the capitalist system you'd prefer that less acquisitions happen given that we've empirical data where a lot of these acquisitions are made to stamp out competition. If the business model is to be acquired that will require the business model to change, I'd prefer that than a bunch of companies only working to be acquired, fucking customers in the process (and all of the externalities deriving from that, like wasted man-hours to move away from products that will be killed).
- joshstrange 3y agoI think the state of “build to be acquired” is actually pretty gross and I wouldn’t mind it being pruned back a bit. To call this “overzealous government” is a bit ridiculous. Figma being acquired by Adobe was not good for customers, in most cases the government just allows shit like this to happen, this is the exception, not the rule.
- treprinum 3y agoStatistically, 90% of startups go belly up, 6% end up as zombies barely scraping by, 3% are acquired and 1% go public.
- andruby 3y agoI agree with your statistics and want to add extra context that these statistics are about (US?) _startups_. There are a lot of companies being started that don't pursue huge growth. I believe they are sometimes referred to as "mom and pop" shops in the US. In europe they're just called businesses or SME's. I don't have any numbers and probably more than 50% do fail, but not 90%. Plenty of bakers, restaurants, accountants and small shops succeed in making money for the owners, employment for the staff and value for the customers.
- robertlagrant 3y ago> in most cases the government just allows shit like this to happen Good. Agreements should as much as possible be free between consenting parties. It shouldn't be normal to expect the government to be involved in approving things except where there's a great reason to need it.
- Drakim 3y agoEspecially things like when a company owns the entire town and pays their workers in scrip. Both the company and worker is a consenting party, so the government should stay out of it. The problem with this ideology is that will destroy society and reduce it to ashes.
- layer8 3y agoLuckily, successful companies can also be started without VC money.
- jen20 3y agoRealistically, only by the already-wealthy - i.e. those for whom the cost of failure is less than complete personal ruin. Admittedly these are the people getting the lions share of VC money in the first place though.
- epolanski 3y agoYou should send this memo to Musk, Zuck and many other entrepeneurs telling them they doing everything wrong.
- hliyan 3y ago> The entire purpose of starting a company is to get acquired The entire purpose of starting a company is to make a profit by delivering a product or service that the market will willingly buy. The operative word there is "profit" -- something that seems to have going conspicuously missing from companies that are being built for the purpose of being "exited".
- qwebfdzsh 3y ago> The entire purpose of starting a company is to make a profit by delivering a product or service that the market will willingly buy Why? People can start companies for whatever reason, also your company itself can be the product and big tech companies might be the market you're targeting. Users might just be along for the ride (and they get cheaper and/or better products because VCs are willing to subsidize their development).
- edouard-harris 3y ago> The entire purpose of starting a company is to get acquired. Certainly not in terms of expectation value. Most of the value of a startup at any given funding round is driven by the possibility of a public listing. This is true even though most successful startup outcomes are acquisitions. > Of the literally hundreds of companies that YC has invested in, only 5 have gone public. The correct number is 18, not 5. [1] [1] https://www.ycombinator.com/topcompanies/valuation https://www.ycombinator.com/topcompanies/valuation (select the "Public" tab.)
- scarface_74 3y agoSo instead of .125% of companies. It’s .45%. The best I could find is that YC has invested in 4000 companies..
- spencerchubb 3y agoThis page indicates that YC invested in 18 companies that went public. https://www.ycombinator.com/topcompanies/valuation https://www.ycombinator.com/topcompanies/valuation
- uxp8u61q 3y ago> The entire purpose of starting a company is to get acquired. I imagine this claim is satire, given how outlandish it is. But if I were to take it at face value for a second... Acquired by whom? Other companies... Who were started to... Get acquired themselves? Where did these other companies get the money to begin with? Etc. This is just a stupendously ridiculous take, I just cannot consider it was made in good faith. > Of the literally hundreds of companies that YC has invested in, only 5 have gone public. YC is a droplet in the ocean of the economy. Even if we just look at the US, about five million businesses were started in 2022 alone. https://www.census.gov/econ/bfs/index.html https://www.census.gov/econ/bfs/index.html
- scarface_74 3y agoSo how many VC funded companies do you think get acquired instead of IPOing?
- deleted 3y ago[deleted]
- urbandw311er 3y agoWith all respect I think you’re completely wrong - this is not supposed to be the “entire purpose” of starting a company.
- hliyan 3y agoPublic approval like this is a good signal to send to the regulators (and disapproval when they fail to do their job) -- it helps counterbalance the pressure from lobbyists and politicians aligned with industries.
- schneems 3y agoWhat’s the best way to send signals to regulators?
- hliyan 3y agoI think more people talking about it publicly on social media will do. Today, social media seems to drive at least some part of traditional media coverage, and traditional media coverage at least in part drives political debate and at least a part of that drives actual policy.
- thejackgoode 3y agoI think public discourse on social media is close to being ruined by bots. Petitions which require id to authenticate might be a better measure, although has it's flaws for sure.
- wmeredith 3y ago> talking about it publicly on social media will do No way. Slacktivism is a pejorative for a reason. Compared to an upvote or a comment on [social media platform], a call or physical letter will have between 10 and 10,000 times the impact on your targeted public servant.
- schneems 3y agoPossibly if you mention them, likely not even then. Most accounts are run by staffers. Getting media attention is a long shot. I asked the original question. I was hoping for a “here’s a list of people you can email or call or write to” resource. Social media is better than nothing, but it would be a lot more impactful to go the extra distance to make sure it lands somewhere people are already looking. I just wish I knew where that somewhere was.
- londons_explore 3y agoThe problem is nearly all company mergers, both big and small, are detrimental to competition... Even my local corner store merging with a corner store in the next town over is bad for suppliers (combined negotiations when buying stock), and bad for consumers (prices set the same between the two towns). I wonder what a world where company mergers were banned would look like?
- jenscow 3y agoNot disagreeing with you, however some mergers can be good for the consumer. With your example, the local stores could have joined forces to compete against their bigger competitor: the supermarket.
- macintux 3y agoI imagine you could look at U.S. banking before and after 1980 to get some sense of what an industry looks like before and after mergers became legal. https://en.wikipedia.org/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act https://en.wikipedia.org/wiki/Depository_Institutions_Deregu...
- andruby 3y agocoops usually seem like a net-win for everyone. If you ban mergers, that probably also impacts co-operations. Joint-ventures might also be a postive. I can think of ARM, and the alignment in the automotive industry to standardise parts and platforms to lower total costs.
- BurningFrog 3y agoIf companies can't be sold, there is less reason to start them. In the mainstream economist view, mergers are generally good, both for the companies and society. If they don't produce some efficiency surplus, there is no reason for the companies to do them.
- TheCoelacanth 3y agoI wouldn't go that far. If instead of Adobe buying Figma, it was Adobe's biggest competitor, that would probably increase competition by making that company a more viable competitor to Adobe.
- paulpan 3y agoAt least the European regulators are. Still waiting for US agencies to do their job...case in point: Intuit.
- hotpotamus 3y agoIt seems like the common refrain is to blame Lina Kahn for conservatives stacking the courts against her since before she was born.
- LewisVerstappen 3y agoUm, no. You've somehow confused the supreme court with the US court system as a whole. If you look at stats, it's about a 50-50 split in appointments between right vs. left.
- anon291 3y agoI really think we should distinguish between people providing goods to the public, for which there is an immediate need for competition, and B2B services like Figma. Monopolization of the former can cause active harm to individuals right now. Monopolization of the latter leads to... businesses having to spend more and provides incentives for other competitors. In particular, what I think a lot of people are missing is that this could be the end for Figma too. I'm going to guess the workers there were really hoping for a payout. If they don't get that, there's going to be de-motivation. Especially having basically been told they're too big to acquire. An IPO is possible, but the opportunity costs given the current markets are almost too much to bear. I feel sorry for them.
- notnullorvoid 3y agoAny policy that disincetivizes growth by unsustainable practices is good policy IMO. We need less companies who's end goal is getting acquired, and more that are in it to build a self sustainable business. Having employee motivation hinge on a acquisition is one of the most toxic business practices. My general rule of thumb is that unless the company is putting you in a position where you actually get to drive, stock should be treated only as icing on the cake of an already worth while salary. (Unless it's a publicly traded company where you can reasonably assert that stock price will most likely go up or stay around the same)
- deleted 3y ago[deleted]
- deleted 3y ago[deleted]