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The hypothetical here is a Joann’s that never went public, not a Joann’s that is already far down the “we exist to grow” strategy road.

by wrs 2y ago

s1artibartfast 2y ago
I fundamentally agree that companies don't need to grow. They do however need to have returns. Companies need returns to justify their continued existence to owners. Growth comes into the picture because if someone thinks growth is possible, they are willing to pay more for it then an owner thinks it's worth. This is an extremely common PE situation, where a management firm and Banks think more profit could be generated then the current owner. Then they offer more money than the owner thinks it's worth and try their luck. Sometimes it works out, and sometimes it doesn't. The other common case is when PE act a buyer of last resort. If someone doesn't want to run a business anymore, they look for a buyer.
lotsofpulp 2y ago
Why would that be the hypothetical? The people that made Joann are the ones who decided to make it a publicly listed business, all the way back in 1969. https://www.cleveland.com/pdextra/2010/12/the_history_of_jo-ann_stores_i.html https://www.cleveland.com/pdextra/2010/12/the_history_of_jo-... notcancer stated: >Call me old-fashioned, but maybe craft stores don't need infinite double-digit growth. Craft stores don't need double digit growth (returns is more accurate than growth), but Joann did because Joann's owners decided they wanted to try to expand their business, and probably their own wealth, and so they tapped the public equity markets. People seem to be upset that business owners desire to bet for bigger returns, but isn't that the business owners' right? A lot of times, it doesn't work out, or it eventually doesn't work out. But what is the alternative?
- s1artibartfast 2y ago
  State ownership of business or heavy restrictions on the ability of owners to sell, dissolve, for take risks with business they own. I don't agree, but that seems like the clear alternative. Some people might propose preventing debt backed private equity firms from defrauding investors, but those laws are already on the books. The banks that fund buyouts and sometimes get left holding the bag absolutely know the risks and have well funded legal teams capable of protecting them. Consumers don't get a say because they are not actual equity owners things like securing access to yarn or all you can eat shrimp do not supersede property rights in the view of the government.
  - alephnerd 2y ago
    > State ownership of business Until they either collapse (LGFVs in China) or severely degrade in user quality (Air India), and it's the taxpayers on the hook. > heavy restrictions on the ability of owners to sell, dissolve, for take risks with business they own Then there's no incentive to start or scale a business, for example why business incorporation in Switzerland is preferred over France despite similar/same culture, but easier ability to incorporate, sell, or shut down businesses > Consumers don't get a say because they are not actual equity owners things like securing access to yarn or all you can eat shrimp do not supersede property rights in the view of the government I can still go to Michael's, Hobby Lobby, or my local crafts shop to buy the same products.
    - s1artibartfast 2y ago
      This should be clear from my post, but you are preaching to the choir. In my opinion, if someone wants to gut their business, that is their choice. If someone doesn't like the options, they should start a competitor. basing a system on the idea that consumers shouldn't have to shop or businesses can never fail leads to all sorts perverse outcomes.
- wrs 2y ago
  As a reminder, the question was “why does a craft store need double-digit growth?” And the answer is “it doesn’t, until the owners make a big enough bet that it’s unrecoverable if they fail”.
  - alephnerd 2y ago
    In Joann's case, they were competing with Michaels and Hobby Lobby, nor were they that differentiated from Michaels.

The hypothetical here is a Joann’s that never went public, not a Joann’s that is already far down the “we exist to grow” strategy road.

by wrs 2y ago

The hypothetical here is a Joann’s that never went public, not a Joann’s that is already far down the “we exist to grow” strategy road.

s1artibartfast 2y ago

I fundamentally agree that companies don't need to grow. They do however need to have returns. Companies need returns to justify their continued existence to owners. Growth comes into the picture because if someone thinks growth is possible, they are willing to pay more for it then an owner thinks it's worth. This is an extremely common PE situation, where a management firm and Banks think more profit could be generated then the current owner. Then they offer more money than the owner thinks it's worth and try their luck. Sometimes it works out, and sometimes it doesn't. The other common case is when PE act a buyer of last resort. If someone doesn't want to run a business anymore, they look for a buyer.

lotsofpulp 2y ago

Why would that be the hypothetical? The people that made Joann are the ones who decided to make it a publicly listed business, all the way back in 1969. https://www.cleveland.com/pdextra/2010/12/the_history_of_jo-ann_stores_i.html https://www.cleveland.com/pdextra/2010/12/the_history_of_jo-... notcancer stated: >Call me old-fashioned, but maybe craft stores don't need infinite double-digit growth. Craft stores don't need double digit growth (returns is more accurate than growth), but Joann did because Joann's owners decided they wanted to try to expand their business, and probably their own wealth, and so they tapped the public equity markets. People seem to be upset that business owners desire to bet for bigger returns, but isn't that the business owners' right? A lot of times, it doesn't work out, or it eventually doesn't work out. But what is the alternative?

s1artibartfast 2y ago
State ownership of business or heavy restrictions on the ability of owners to sell, dissolve, for take risks with business they own. I don't agree, but that seems like the clear alternative. Some people might propose preventing debt backed private equity firms from defrauding investors, but those laws are already on the books. The banks that fund buyouts and sometimes get left holding the bag absolutely know the risks and have well funded legal teams capable of protecting them. Consumers don't get a say because they are not actual equity owners things like securing access to yarn or all you can eat shrimp do not supersede property rights in the view of the government.
- alephnerd 2y ago
  > State ownership of business Until they either collapse (LGFVs in China) or severely degrade in user quality (Air India), and it's the taxpayers on the hook. > heavy restrictions on the ability of owners to sell, dissolve, for take risks with business they own Then there's no incentive to start or scale a business, for example why business incorporation in Switzerland is preferred over France despite similar/same culture, but easier ability to incorporate, sell, or shut down businesses > Consumers don't get a say because they are not actual equity owners things like securing access to yarn or all you can eat shrimp do not supersede property rights in the view of the government I can still go to Michael's, Hobby Lobby, or my local crafts shop to buy the same products.
  - s1artibartfast 2y ago
    This should be clear from my post, but you are preaching to the choir. In my opinion, if someone wants to gut their business, that is their choice. If someone doesn't like the options, they should start a competitor. basing a system on the idea that consumers shouldn't have to shop or businesses can never fail leads to all sorts perverse outcomes.
wrs 2y ago
As a reminder, the question was “why does a craft store need double-digit growth?” And the answer is “it doesn’t, until the owners make a big enough bet that it’s unrecoverable if they fail”.
- alephnerd 2y ago
  In Joann's case, they were competing with Michaels and Hobby Lobby, nor were they that differentiated from Michaels.