7 ms·

Call me crazy, but the idea that a company can be formed with no purpose other than to make a profit strikes me as somewhat perverse and malign. All companies s

Call me crazy, but the idea that a company can be formed with no purpose other than to make a profit strikes me as somewhat perverse and malign. All companies should exist for a specific purpose, and when that is achieved (or no longer needed, or no longer possible), they should be wound up.

richrichie 3y ago
I think you need memorandum and articles of association to incorporate a company in most places. And those documents state the purpose and type of activity the company can engage in.
- thfuran 3y ago
  But I don't think they're typically the sort of thing that would ever be finished, unless maybe the entire industry becomes obsolete.
ActionHank 3y ago
VCs only want profitable companies so that they can get that sweet sweet exit payday. CEOs of larger, listed corps are competing in the same markets as startups and so are forced to pursue the same or risk looking like they're failing in the market. Ultimately everyone(customers, employees, the company, longer term investors) loses except the investors who are able to influence the company's direction and priorities.
- williamcotton 3y ago
  And in a world without value investing then everyone loses. Profitable companies must be providing valuable goods and services to customers. In the long run the customer is king.
  - pixl97 3y ago
    >In the long run the customer is king. Traded companies don't exist in the long run, they exist to the quarter and if they 'screw up' (whatever that means) they are punished by the short sellers. Companies can work just fine for some period of time providing nothing of value and long as they can keep investors hooked to the slot machine. I mean, this is typically how every boom/bust cycle works. The problem with boom/bust cycles is they can have society destabilizing effects if they are large enough. They key is moderating behaviors to avoid the worst outcomes. Let's play with a silly analogy to example this. Farmers find out they can make a lot of money very quickly growing a cash crop of drugs. It only takes a few months to grow so they can harvest a few times a season. Huge numbers of farmers jump on this and achieve record profits... Then fall comes around and everybody starts asking "Where's the food at".
- troupo 3y ago
  > VCs only want profitable companies In the US at least this hasn't been true for a very long time. You only have to look at "YCombinator Top 100" to see multiple companies losing hundreds of millions and billions of dollars of investor money for years
  - ActionHank 3y ago
    There is nothing wrong with wanting to have a share in a profitable company, the full line that you quoted fills in the rest of the problem, they want to maximize the "value" so that they can exit. It's a pump and dump scheme with more steps.
- pyinstallwoes 3y ago
  VCs also incur risk. The only reason you're able to use a computer today is because of VCs.
PeterisP 3y ago
You can form companies with all kinds of specific purposes, however, if you want to attract investors (or even attract general public investment by being a publicly traded ompany), then don't be surprised if most investors want to invest in companies whose explicit purpose is making money for the investors.
- stemlord 3y ago
  Yes the system is broken
  - PeterisP 3y ago
    What is the broken part? There is a difference between investment and donation, should investors be forced to invest in ventures which don't explicitly promise them financial return on the investment?
    - fsflover 3y ago
      The broken part is when the investors sue the company for not making maximal profit possible, ethic be damned. This is exactly where choosing to be a social purpose corporation might help.
    - RunSet 3y ago
      > What is the broken part? "most investors want to invest in companies whose explicit purpose is making money for the investors". Rational investors should favor companies whose explicit purpose at least resembles a value proposition, which "PROFIT$!" does not.
      - davidivadavid 3y ago
        The unspoken premise here is that profit correlates to value creation, so it may be more rational to allocate resources to people who can generate value regardless of the form it takes (that's kind of Friedman's idea if you dig a layer deeper).
      - 3y ago
throwaway22032 3y ago
Literally every job I've ever had I've done with no purpose other than to make a profit. It's up to the people buying my labour to decide whether it's useful for them, we're not all the same.
01HNNWZ0MV43FF 3y ago
But if you're pivoting it seems like a waste to wind up the company and restart it with the same people and resources. A company is just a legal name with legal powers attached to it. Why add purpose to that?
- thfuran 3y ago
  Why create it in the first place?
NoMoreNicksLeft 3y ago
If companies and persons are legally equivalent, I'm not sure why this is so perverse to you. There are many people in the world who do not have "purpose", their personal philosophy is that they need/want to go out and "make a profit" so that they can survive. Are they perverse? A company isn't perfectly equivalent to a person, but does exist as a tool so people can accomplish goals. If two people have no calling, have no passions, and they start a company that expresses their personal goals of survival, what's wrong with that?
- pixl97 3y ago
  I'll believe that companies are the legal equivalent to persons when Texas executes one of them.
  - NoMoreNicksLeft 3y ago
    If they aren't the legal equivalent of persons, then they can't perform necessary activities like entering into contracts. Can you find a company that committed capitol murder? Or are they supposed to just execute one to test your theory, even if they're not guilty?
    - thfuran 3y ago
      >If they aren't the legal equivalent of persons, then they can't perform necessary activities like entering into contracts. That's not true. Yes, corporate personhood exists to make things like forming a contract with or suing a corporation possible without a whole bunch of extra laws. But corporate personhood is not declaring corporations totally equivalent to natural persons. Corporations, for example, cannot vote or get married and probably can't adopt kids in any state.
      - NoMoreNicksLeft 3y ago
        Not all natural persons can vote. Despite what Trump says, green card holders are disallowed such. The trouble, I think, is that some people want to keep corporations, but to somehow keep a leash on them so that they're only weaponized against their enemies. If you truly hated corporate personhood, instead, you might start talking about how corporations shouldn't be allowed in any circumstances. You can't keep a leash on them. They're effectively immortal, enormously rich beyond even billionaires, and have agendas. Like, I'm not exaggerating... they have agendas, and can play a long game. You'll never politically neutralize them as long as they exist, and unneutralized they will just continue to chip away until they've got their legal personhood back.
deleted 3y ago
[deleted]
xjay 3y ago
Alan Kay mentioned this recently at a UCLA talk [1] in February. It's known as the "The Friedman doctrine" after the American economist Milton Friedman. A) Milton Friedman: Shareholder profits > All. "...the social responsibility of business is to increase its profits. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders." [2] B) Peter Drucker: Customer has primary focus. "A company's primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company's continued existence and sustainability." [3] [1] https://www.youtube.com/watch?v=dZQ7x0-MZcI&t=5205s https://www.youtube.com/watch?v=dZQ7x0-MZcI&t=5205s [2] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine [3] https://en.wikipedia.org/wiki/Peter_Drucker https://en.wikipedia.org/wiki/Peter_Drucker
- PeterisP 3y ago
  Company's continued existence and sustainability isn't necessarily a terminal goal or a valuable thing; most industries aren't growing eternally but eventually reach a decline, and in certain cases the best way to handle that is to exit that industry while you can still do it effectively - milking the company dry and then shutting it down while you can get a good deal for its assets, instead of losing most of its value while slowly agonizing in a declining market to try to continue its existence until you can't and it gets shut down after bleeding all its reserves.
rldjbpin 3y ago
you can chalk it down to survivorship bias but most companies don't always end up succeeding in their original mission. if the likes of samsung and netflix stuck to their original purpose and stopped operations, we would not see the impact they've created today.
pyinstallwoes 3y ago
How would you incentivize an AI to "work towards" goals universally?

richrichie 3y ago

I think you need memorandum and articles of association to incorporate a company in most places. And those documents state the purpose and type of activity the company can engage in.

thfuran 3y ago
But I don't think they're typically the sort of thing that would ever be finished, unless maybe the entire industry becomes obsolete.

ActionHank 3y ago

VCs only want profitable companies so that they can get that sweet sweet exit payday. CEOs of larger, listed corps are competing in the same markets as startups and so are forced to pursue the same or risk looking like they're failing in the market. Ultimately everyone(customers, employees, the company, longer term investors) loses except the investors who are able to influence the company's direction and priorities.

williamcotton 3y ago
And in a world without value investing then everyone loses. Profitable companies must be providing valuable goods and services to customers. In the long run the customer is king.
- pixl97 3y ago
  >In the long run the customer is king. Traded companies don't exist in the long run, they exist to the quarter and if they 'screw up' (whatever that means) they are punished by the short sellers. Companies can work just fine for some period of time providing nothing of value and long as they can keep investors hooked to the slot machine. I mean, this is typically how every boom/bust cycle works. The problem with boom/bust cycles is they can have society destabilizing effects if they are large enough. They key is moderating behaviors to avoid the worst outcomes. Let's play with a silly analogy to example this. Farmers find out they can make a lot of money very quickly growing a cash crop of drugs. It only takes a few months to grow so they can harvest a few times a season. Huge numbers of farmers jump on this and achieve record profits... Then fall comes around and everybody starts asking "Where's the food at".
troupo 3y ago
> VCs only want profitable companies In the US at least this hasn't been true for a very long time. You only have to look at "YCombinator Top 100" to see multiple companies losing hundreds of millions and billions of dollars of investor money for years
- ActionHank 3y ago
  There is nothing wrong with wanting to have a share in a profitable company, the full line that you quoted fills in the rest of the problem, they want to maximize the "value" so that they can exit. It's a pump and dump scheme with more steps.
pyinstallwoes 3y ago
VCs also incur risk. The only reason you're able to use a computer today is because of VCs.

PeterisP 3y ago

You can form companies with all kinds of specific purposes, however, if you want to attract investors (or even attract general public investment by being a publicly traded ompany), then don't be surprised if most investors want to invest in companies whose explicit purpose is making money for the investors.

stemlord 3y ago
Yes the system is broken
- PeterisP 3y ago
  What is the broken part? There is a difference between investment and donation, should investors be forced to invest in ventures which don't explicitly promise them financial return on the investment?
  - fsflover 3y ago
    The broken part is when the investors sue the company for not making maximal profit possible, ethic be damned. This is exactly where choosing to be a social purpose corporation might help.
  - RunSet 3y ago
    > What is the broken part? "most investors want to invest in companies whose explicit purpose is making money for the investors". Rational investors should favor companies whose explicit purpose at least resembles a value proposition, which "PROFIT$!" does not.
    - davidivadavid 3y ago
      The unspoken premise here is that profit correlates to value creation, so it may be more rational to allocate resources to people who can generate value regardless of the form it takes (that's kind of Friedman's idea if you dig a layer deeper).
    - 3y ago

throwaway22032 3y ago

Literally every job I've ever had I've done with no purpose other than to make a profit. It's up to the people buying my labour to decide whether it's useful for them, we're not all the same.

01HNNWZ0MV43FF 3y ago

But if you're pivoting it seems like a waste to wind up the company and restart it with the same people and resources. A company is just a legal name with legal powers attached to it. Why add purpose to that?

thfuran 3y ago
Why create it in the first place?

NoMoreNicksLeft 3y ago

If companies and persons are legally equivalent, I'm not sure why this is so perverse to you. There are many people in the world who do not have "purpose", their personal philosophy is that they need/want to go out and "make a profit" so that they can survive. Are they perverse? A company isn't perfectly equivalent to a person, but does exist as a tool so people can accomplish goals. If two people have no calling, have no passions, and they start a company that expresses their personal goals of survival, what's wrong with that?

pixl97 3y ago
I'll believe that companies are the legal equivalent to persons when Texas executes one of them.
- NoMoreNicksLeft 3y ago
  If they aren't the legal equivalent of persons, then they can't perform necessary activities like entering into contracts. Can you find a company that committed capitol murder? Or are they supposed to just execute one to test your theory, even if they're not guilty?
  - thfuran 3y ago
    >If they aren't the legal equivalent of persons, then they can't perform necessary activities like entering into contracts. That's not true. Yes, corporate personhood exists to make things like forming a contract with or suing a corporation possible without a whole bunch of extra laws. But corporate personhood is not declaring corporations totally equivalent to natural persons. Corporations, for example, cannot vote or get married and probably can't adopt kids in any state.
    - NoMoreNicksLeft 3y ago
      Not all natural persons can vote. Despite what Trump says, green card holders are disallowed such. The trouble, I think, is that some people want to keep corporations, but to somehow keep a leash on them so that they're only weaponized against their enemies. If you truly hated corporate personhood, instead, you might start talking about how corporations shouldn't be allowed in any circumstances. You can't keep a leash on them. They're effectively immortal, enormously rich beyond even billionaires, and have agendas. Like, I'm not exaggerating... they have agendas, and can play a long game. You'll never politically neutralize them as long as they exist, and unneutralized they will just continue to chip away until they've got their legal personhood back.

deleted 3y ago

[deleted]

xjay 3y ago

Alan Kay mentioned this recently at a UCLA talk [1] in February. It's known as the "The Friedman doctrine" after the American economist Milton Friedman. A) Milton Friedman: Shareholder profits > All. "...the social responsibility of business is to increase its profits. This shareholder primacy approach views shareholders as the economic engine of the organization and the only group to which the firm is socially responsible. As such, the goal of the firm is to increase its profits and maximize returns to shareholders." [2] B) Peter Drucker: Customer has primary focus. "A company's primary responsibility is to serve its customers. Profit is not the primary goal, but rather an essential condition for the company's continued existence and sustainability." [3] [1] https://www.youtube.com/watch?v=dZQ7x0-MZcI&t=5205s https://www.youtube.com/watch?v=dZQ7x0-MZcI&t=5205s [2] https://en.wikipedia.org/wiki/Friedman_doctrine https://en.wikipedia.org/wiki/Friedman_doctrine [3] https://en.wikipedia.org/wiki/Peter_Drucker https://en.wikipedia.org/wiki/Peter_Drucker

PeterisP 3y ago
Company's continued existence and sustainability isn't necessarily a terminal goal or a valuable thing; most industries aren't growing eternally but eventually reach a decline, and in certain cases the best way to handle that is to exit that industry while you can still do it effectively - milking the company dry and then shutting it down while you can get a good deal for its assets, instead of losing most of its value while slowly agonizing in a declining market to try to continue its existence until you can't and it gets shut down after bleeding all its reserves.

rldjbpin 3y ago

you can chalk it down to survivorship bias but most companies don't always end up succeeding in their original mission. if the likes of samsung and netflix stuck to their original purpose and stopped operations, we would not see the impact they've created today.

pyinstallwoes 3y ago

How would you incentivize an AI to "work towards" goals universally?