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Yeah, it's almost as if prioritizing returns on investment over EVERYTHING!!! else has bad side-effects for the economy as a whole.

MichaelZuo 1y ago
It seems really unlikely so many elements of American society decided to prioritize returns simultaneously… but more like those who didn’t… eventually couldn’t compete anymore and left the market. Leaving behind only those completely focused on returns.
- Fade_Dance 1y ago
  I'd reframe that slightly. There is a vast foundation of stable, optimized businesses that are in commoditized/low-growth ares. They function as the underpinnings of the American economy. When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold. The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
  - graycat 1y ago
    Okay, "logistics optimization"??? In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization. Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!
  - rswail 1y ago
    Not only leverage, but also destabilizing those optimized businesses to harvest the capital assets from their balance sheets to pay for the leverage, while destroying the underlying business. PE is arguably much worse than VC. VC's business model is well understood and by taking VC funding, you are committing to their expected returns. PE is, usually, unsolicited and is designed to exploit what appears to be a "lazy" balance sheet, but which is actually a stable business producing output and providing a reasonable ROI. PE has very few redeeming features.
    - nostrademons 1y ago
      They're very much yin and yang. PE's operating model is to take businesses that are operating inefficiently, squeeze all the inefficiencies out, sell off assets that would be more productive under other management, and basically strip the company bare. If it kills the company, that creates fertile ground for new startups funded by VC. Think of PE as the decomposers of capitalism, and VC as its seeds. Most people don't like to think of it that way because they don't like to be reminded that death is a part of life. But if you view capitalism as a living ecosystem and your role within capitalism as someone to accelerate growth and then accelerate death so that new growth can take its place, it all makes sense. And you can probably profit pretty handsomely from it, because most people don't view capitalism like that and instead seek stability in the dying parts.
    - galangalalgol 1y ago
      PE played a part in manufacturing leaving the US. Often the buyouts were of sick companies, and it was just the optimum way to monetize their death. But without PE not all of them wouldnhave eventually died, and it would have given policy makers more time to react to what was happening.
      - MichaelZuo 1y ago
        It’s just natural that nobody wanted to pay for outdated machines and tooling in developed countries. Labor costs, permits, fees, etc., means that buying used just doesn’t make sense unless it’s almost free. Whereas developing countries were willing to pay a lot more, sometimes as much as 50 cents on the dollar compared to brand new equipment and they would send a team to rip it out too. I’ve heard that applied to almost everything too heavy to move by forklift during the 80s, 90s, and 2000s.
roenxi 1y ago
What country are you thinking when you say that? It doesn't sound like the US. Through the zero-interest rate era they've been absurdly tolerant of companies offering no- to little- returns on investment. They've basically been operating investor-led charities. It is still unsettling seeing Uber turning a profit, but even with that they're not turning a net profit over the lifetime of the company yet and won't be for a few years. Hopefully no-one pops up to compete with them now the sector has profits in it.
- petralithic 1y ago
  Their sentiment and their phrasing ("it's almost as if... ") is a Reddit-level meme I see all the time on that site that's then blindly upvoted, so I don't think they're thinking of any country besides the US in particular when they say that.

MichaelZuo 1y ago

It seems really unlikely so many elements of American society decided to prioritize returns simultaneously… but more like those who didn’t… eventually couldn’t compete anymore and left the market. Leaving behind only those completely focused on returns.

Fade_Dance 1y ago
I'd reframe that slightly. There is a vast foundation of stable, optimized businesses that are in commoditized/low-growth ares. They function as the underpinnings of the American economy. When turning the spotlight to capital that is seeking returns, it is true that these areas may be mediocre places to deploy fresh capital, but it doesn't mean that these players aren't competing, and they will probably be cranking out sheet metal and port cargo logistics optimization well after 90% of the AI startups fold. The caveat is of course Private Equity, which is about 10 trillion in assets. They can derive high returns from these areas, but it requires leverage.
- graycat 1y ago
  Okay, "logistics optimization"??? In the US there have been a few, i.e., apparently less than 20, universities with an applied math program up to date in and teaching optimization. Sooooo, anyone at all seriously interested, long, for decades, would, could, should visit some of those math programs, meet some of the profs, get recommendations for their former students, call them, chat, and offer a job better than their current lawn mowing, fast food restaurant kitchen cleaning, or car washing. Instead of just the US, might also consider Waterloo in Canada. Actually the Chair of my Ph.D. orals committee specialized in optimization in logistics. After sending 1000+ beautifully written resume copies and hearing back nothing, can begin to conclude that optimization is not a hot field and for highly dedicated optimizers who want to sleep on a cot in a single room, forgo bathing, most days eat bread, other days peanut butter, have no children, wife, or family contact, don't own a car, and must get any needed medical care from some of the last resort special clinics. Ah, real optimization!
- rswail 1y ago
  Not only leverage, but also destabilizing those optimized businesses to harvest the capital assets from their balance sheets to pay for the leverage, while destroying the underlying business. PE is arguably much worse than VC. VC's business model is well understood and by taking VC funding, you are committing to their expected returns. PE is, usually, unsolicited and is designed to exploit what appears to be a "lazy" balance sheet, but which is actually a stable business producing output and providing a reasonable ROI. PE has very few redeeming features.
  - nostrademons 1y ago
    They're very much yin and yang. PE's operating model is to take businesses that are operating inefficiently, squeeze all the inefficiencies out, sell off assets that would be more productive under other management, and basically strip the company bare. If it kills the company, that creates fertile ground for new startups funded by VC. Think of PE as the decomposers of capitalism, and VC as its seeds. Most people don't like to think of it that way because they don't like to be reminded that death is a part of life. But if you view capitalism as a living ecosystem and your role within capitalism as someone to accelerate growth and then accelerate death so that new growth can take its place, it all makes sense. And you can probably profit pretty handsomely from it, because most people don't view capitalism like that and instead seek stability in the dying parts.
  - galangalalgol 1y ago
    PE played a part in manufacturing leaving the US. Often the buyouts were of sick companies, and it was just the optimum way to monetize their death. But without PE not all of them wouldnhave eventually died, and it would have given policy makers more time to react to what was happening.
    - MichaelZuo 1y ago
      It’s just natural that nobody wanted to pay for outdated machines and tooling in developed countries. Labor costs, permits, fees, etc., means that buying used just doesn’t make sense unless it’s almost free. Whereas developing countries were willing to pay a lot more, sometimes as much as 50 cents on the dollar compared to brand new equipment and they would send a team to rip it out too. I’ve heard that applied to almost everything too heavy to move by forklift during the 80s, 90s, and 2000s.

roenxi 1y ago

What country are you thinking when you say that? It doesn't sound like the US. Through the zero-interest rate era they've been absurdly tolerant of companies offering no- to little- returns on investment. They've basically been operating investor-led charities. It is still unsettling seeing Uber turning a profit, but even with that they're not turning a net profit over the lifetime of the company yet and won't be for a few years. Hopefully no-one pops up to compete with them now the sector has profits in it.

petralithic 1y ago
Their sentiment and their phrasing ("it's almost as if... ") is a Reddit-level meme I see all the time on that site that's then blindly upvoted, so I don't think they're thinking of any country besides the US in particular when they say that.