9 ms·

The major reason is they are a private company with good business. The don't have a need to keep adding to shareholder value ie stock price instead just need to

by xbmcuser 11mo ago

The major reason is they are a private company with good business. The don't have a need to keep adding to shareholder value ie stock price instead just need to generate a yearly income. We have reached a point where the shareholders are a companies real customers and that is who they all try to attract.Everytthing else a company does is just to attract shareholders

nish__ 11mo ago
Exactly. Going public is like leaving your baby to be raised by wolves.
- londons_explore 11mo ago
  If you IPO but the founders still have more than half the voting rights, you can fully ignore the public in all your decision making and there is nothing the other shareholders can do.
  - consp 11mo ago
    Can't they sue you out of control? Fiduciary duty and all?
    - londons_explore 11mo ago
      If you employed your cousin on a huge wage, probably yes. But if you're just running the company 'badly' (in the shareholders eyes), probably no.
    - triceratops 11mo ago
      Fiduciary duty means "put the shareholders' interests above yours". Not "make the shareholders more and more money no matter what".
  - triceratops 11mo ago
    Only kind of. The most obvious examples are big tech companies such as Meta or Alphabet. But they pay their employees in RSUs. If the stock price falls employees make less money and can be lured away.
usefulcat 11mo ago
It’s definitely more than just private ownership. In fact I’d say that’s the least part of it. Look at all the horror stories about businesses that were bought by PE firms; those are all privately held too.
- bigstrat2003 11mo ago
  Private ownership is a necessary, but not sufficient, condition to have a business which has a healthy relationship with its customers. You also need the owners to be people of reasonably good character who understand that the best way to run a business is a win-win approach on both sides, not people who see nothing wrong with extracting maximum profit from the business no matter whom it hurts. The PE horror stories you hear are cases where the owners are in the latter group.
  - tehjoker 11mo ago
    Could also consider: employee ownership and public ownership People complain about the latter because they have higher expectations because the institution is supposed to serve them and often has all the diseases of true scale without being able to pick and choose customers. Private industry skates by because people assume it's out to screw them and they can cherry pick.
  - kasey_junk 11mo ago
    You hypothesis then is that there is not a _single_ public company that has a healthy relationship with its company? Not one, in the entire global public space? When does this relationship with customers happen? Is it at the IPO? When they file the paperwork? When they contemplate going public for the first time? Or is it that any founder who might one day decide to contemplate going public was doomed to unhealthy customer relations from birth? The obvious next thing we in society should do is abolish public equity as a concept as a customer protection mechanism?
    - MobiusHorizons 11mo ago
      > Not one, in the entire global public space? It is genuinely hard to think of one. I treat all companies as adversarial relationships, where I fully expect them to treat me as disposable at least over any time horizon greater than 1-2y. There are certainly some companies that are more likely to find a mutually beneficial equilibrium. I think of Target, IKEA, sometimes Apple. But I don’t trust any of those companies to take care of me in the future. But I also wouldn’t be the least bit surprised if my next interaction with any of those companies was bad. I just typically expect it to be more mutually beneficial than Comcast, Hertz, or Verizon.
johnnyanmac 11mo ago
I'm not really a fan of this reasoning when in the same breath: Epic is also a private company but has its share of stuff. It's done some good stuff for the industry and even contributed to some bit FOSS projects. But business is still business.
- cromka 11mo ago
  I think the point was about publicly traded companies becoming inevitably evil due to shareholder expectations, not about private companies being inherently ethical.
  - wilg 11mo ago
    This is a pretty serious problem, since we would like lots of companies to participate in public markets so that regular people can gain some of the upside and so there is transparency and increased oversight.
    - bfg_9k 11mo ago
      I find it so weird that you say public companies being 'evil' (which is to turn a profit) is a problem, yet you also say you'd like for companies to exist on the public market so that the public can access some of the upside.
      - wilg 11mo ago
        I didn't say that?
    - kineticdaffodil 11mo ago
      [dead]
- quitit 11mo ago
  Attributing it to private company behaviour really minimises what Valve chooses to do. Per your counter example: Epic Games has been having a very public meltdown this week regarding Steam's inclusion of Gen-AI labelling - here we have two private companies, with two very different priorities. It's also worth reminding ourselves that Epic settled with the FTC for over half a billion dollars for tricking kids into making unwanted purchases in Fortnite.(1) Epic also stonewalled parents' attempts at obtaining refunds, going so far as to delete Fortnite accounts in retaliation for those who arranged charge backs. Furthermore the FTC's evidence included internal communications showing that Epic deliberately schemed and implemented these dark patterns specifically to achieve the fraudulent result, even testing different approaches to optimise it. https://www.ftc.gov/news-events/news/press-releases/2022/12/fortnite-video-game-maker-epic-games-pay-more-half-billion-dollars-over-ftc-allegations https://www.ftc.gov/news-events/news/press-releases/2022/12/...
quitit 11mo ago
>We have reached a point where the shareholders are a companies real customers and that is who they all try to attract. We currently have a handful of AI companies who make no profit, have revenue far below operating costs, their entire business runs on investment and they're posturing themselves for IPOs. Meaning that the reason they can keep the lights on solely comes from attracting investors (and will likely be that way for the foreseeable future).
- ghurtado 11mo ago
  That's not unique to AI though. That's very common for tech startups. If they keep doing it, it must be because sometimes it works.
  - ethbr1 11mo ago
    Ponzi schemes work* too. *At a specific point in time and for certain investors
    - positron26 11mo ago
      Please just talk about capital and leverage like an adult. Do you expect a CFO and their team to look at the math and say, "Well, we figured out that we can speed up adoption and bring forward billions of dollars of revenue by spending fewer billions from capital injection and debt deals this year" and then not do it?
      - tomrod 11mo ago
        Adults tell jokes too, especially gallows humor, and to great effect. Ergo I propose grandparent commentator inject more humor in their clear understanding of leverage and debt to widen your, my, and their audiences' understanding regarding debt and leverage beyond your proposed metaphor of the toddler CFO failing the marshmallow challenge.
  - anigbrowl 11mo ago
    [Slaps roof of barge] You can fit zo many tulips in this bad boy
wqaatwt 11mo ago
But isn’t Valve extremely profitable compared to pretty much non private company in the industry? They have few employees and massive revenue.
- Qwertious 11mo ago
  They're the #1 most profitable per employee. There are plenty of companies more profitable than Valve, but they have more employees. Valve could hire more employees.
  - wqaatwt 11mo ago
    Yes, I meat profit margin which is what public investors care about (in addition to growth). And IIRC Valve and EA had almost exactly the same revenue figures last year, yet EA had 10x more employees. On paper it would seem extremely appealing to public investors.
aydyn 11mo ago
Private or public, they are making stacks hand over fist. Why cant other companies learn that being good to your customers is a winning strategy?
- ethbr1 11mo ago
  Because it's not, all other things equal. Valve can be Valve because HL + Steam, in the same way that Google ~2010 could not be evil because search + ad revenue. The difference is that Google IPO'd and took market capital, and Valve didn't. Once public investors are onboard, you maximize profits or face lawsuits.
  - aydyn 11mo ago
    But thats the point, Valve IS maximizing profits. If they treated their customers like Epic does, do you think people would still be using Valve when Epic is generally a bit cheaper?
    - ethbr1 11mo ago
      The entire point of this thread is that there are many things that Valve could do to increase its profits over the short, intermediate, and long terms... that it doesn't (presumably because that's not the kind of company it wants to be). As the simplest example, they could have stamped HL3 on a third party game and made several millions of dollars with only a minor hit to their brand (in 5 years, "that bad HL"). In more realistic terms, they could have built proprietary, closed source emulation packages (they are funding a lot of development, apparently) to give themselves a unique advantage. If they were a publicly traded company, they probably would be doing all these things.
      - aydyn 11mo ago
        I don't see a problem with the first, if they want to outsource HL3 go ahead. Consumers can decide if they want to buy it when it releases, that's just normal economics. As for the 2nd, that's sort of what Epic does, yet Valve's store revenue is 10x Epic. So if enacting these anti-consumer practices were actually more profitable, why is Epic doing so shit? Not even in terms of absolute numbers but in terms of growth, Epic store isn't growing at all. Epic can't hit even a fraction of Steam's numbers despite giving away hundreds of games. Developing open source emulation is essential to their success - no developer would build and verify for Steam OS and Proton if it were closed source and only available on a single device (lol). Steam being very pro-consumer is what makes them successful.
InvisibleUp 11mo ago
I find it a touch strange, in the abstract, that a corporation being public is a bad thing. On paper it should be a good thing; being publicly owned should mean that your corporation has turned from a private business venture into effectively public infrastructure that's impossible to boycott and depended on to some extent by everybody. As a result, financial statements should be (and are) public and transparent, and the company should be able to be externally steered via regular elections in a manner that benefits the public and not just its founders. The issue really lies in the fact that the (long-term, majority) shareholders aren't much, if at all, related to the customers or employees of the business, but first the founders, and then parties who are merely interested in rising stock prices and dividends. It feels like the solution here ought to somehow desegregate voting rights from how many shares are owned, instead of dismantling the concept of public ownership entirely. (Or, perhaps, allow the general public to proxy vote via their 401(k) index funds?) (There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.)
- mcny 11mo ago
  > (There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.) You mean the special class B shares that gives 10 votes per share, right? It isn't just Google though. Facebook and Snapchat also do the same thing, iirc?
  - tomrod 11mo ago
    And, famously, Berkshire Hathaway
  - avadodin 11mo ago
    Share classes can be very varied(such as preferred shares that get what's left after bond debt is paid off on bankruptcy) but generally what he's proposing(a coop-style one-head-one-vote class) is not common. Not sure if it's legal for US corporations or not(I could swear it is but in any case it's exceedingly rare). The usual principle is one-share-one-vote.
- 11mo ago
Xixi 11mo ago
There's a little known alternative: Steward-ownership [1]. It's the kind of structure used by Novo Nordisk, Bosch or Patagonia. LLM summary: "Steward-ownership is a model where a company’s control stays with long-term stewards (founders, employees, or a mission-aligned foundation) while profits are limited and the company cannot be sold for private gain. The goal is to protect the mission permanently." The key, if I understand properly, is that these company cannot be sold (not even by the founders), so there is no "shareholder value" per se to maximize. It is also probably not a good way for founders to maximize their net worth, which is probably why it's not more popular... [1] https://en.wikipedia.org/wiki/Steward-ownership https://en.wikipedia.org/wiki/Steward-ownership
- nikanj 11mo ago
  This model, unfortunately, often leads to a "well, we might as well spend the extra profits on executive benefits"-issue. Whenever you have money without oversight, you always face a moral hazard. If the company makes a profit and there aren't shareholders there to keep the stewards in check, excesses can and do develop.
  - franga2000 11mo ago
    I get the first point, but having shareholders doesn't solve that in any way. Shareholders would just give themselves payouts instead of letting the execs take everything as bonuses. And unlike the execs, whose bonuses could be limited by charter and who could be chosen on the basis of trust, shareholders are "whoever has the most money to throw around", so there's no mechanism to align them with company values. So it's not perfect, but it sure as hell beats having shareholders.
    - xp84 11mo ago
      > Shareholders would just give themselves payouts Precisely, in the form of the #1 trend of public companies, stock buybacks! I've seen aggressive buybacks take a company with a ton of money in the bank and a profitable business and drive it right to Chapter 7 bankruptcy in just a few short years.

nish__ 11mo ago

Exactly. Going public is like leaving your baby to be raised by wolves.

londons_explore 11mo ago
If you IPO but the founders still have more than half the voting rights, you can fully ignore the public in all your decision making and there is nothing the other shareholders can do.
- consp 11mo ago
  Can't they sue you out of control? Fiduciary duty and all?
  - londons_explore 11mo ago
    If you employed your cousin on a huge wage, probably yes. But if you're just running the company 'badly' (in the shareholders eyes), probably no.
  - triceratops 11mo ago
    Fiduciary duty means "put the shareholders' interests above yours". Not "make the shareholders more and more money no matter what".
- triceratops 11mo ago
  Only kind of. The most obvious examples are big tech companies such as Meta or Alphabet. But they pay their employees in RSUs. If the stock price falls employees make less money and can be lured away.

usefulcat 11mo ago

It’s definitely more than just private ownership. In fact I’d say that’s the least part of it. Look at all the horror stories about businesses that were bought by PE firms; those are all privately held too.

bigstrat2003 11mo ago
Private ownership is a necessary, but not sufficient, condition to have a business which has a healthy relationship with its customers. You also need the owners to be people of reasonably good character who understand that the best way to run a business is a win-win approach on both sides, not people who see nothing wrong with extracting maximum profit from the business no matter whom it hurts. The PE horror stories you hear are cases where the owners are in the latter group.
- tehjoker 11mo ago
  Could also consider: employee ownership and public ownership People complain about the latter because they have higher expectations because the institution is supposed to serve them and often has all the diseases of true scale without being able to pick and choose customers. Private industry skates by because people assume it's out to screw them and they can cherry pick.
- kasey_junk 11mo ago
  You hypothesis then is that there is not a _single_ public company that has a healthy relationship with its company? Not one, in the entire global public space? When does this relationship with customers happen? Is it at the IPO? When they file the paperwork? When they contemplate going public for the first time? Or is it that any founder who might one day decide to contemplate going public was doomed to unhealthy customer relations from birth? The obvious next thing we in society should do is abolish public equity as a concept as a customer protection mechanism?
  - MobiusHorizons 11mo ago
    > Not one, in the entire global public space? It is genuinely hard to think of one. I treat all companies as adversarial relationships, where I fully expect them to treat me as disposable at least over any time horizon greater than 1-2y. There are certainly some companies that are more likely to find a mutually beneficial equilibrium. I think of Target, IKEA, sometimes Apple. But I don’t trust any of those companies to take care of me in the future. But I also wouldn’t be the least bit surprised if my next interaction with any of those companies was bad. I just typically expect it to be more mutually beneficial than Comcast, Hertz, or Verizon.

johnnyanmac 11mo ago

I'm not really a fan of this reasoning when in the same breath: Epic is also a private company but has its share of stuff. It's done some good stuff for the industry and even contributed to some bit FOSS projects. But business is still business.

cromka 11mo ago
I think the point was about publicly traded companies becoming inevitably evil due to shareholder expectations, not about private companies being inherently ethical.
- wilg 11mo ago
  This is a pretty serious problem, since we would like lots of companies to participate in public markets so that regular people can gain some of the upside and so there is transparency and increased oversight.
  - bfg_9k 11mo ago
    I find it so weird that you say public companies being 'evil' (which is to turn a profit) is a problem, yet you also say you'd like for companies to exist on the public market so that the public can access some of the upside.
    - wilg 11mo ago
      I didn't say that?
  - kineticdaffodil 11mo ago
    [dead]
quitit 11mo ago
Attributing it to private company behaviour really minimises what Valve chooses to do. Per your counter example: Epic Games has been having a very public meltdown this week regarding Steam's inclusion of Gen-AI labelling - here we have two private companies, with two very different priorities. It's also worth reminding ourselves that Epic settled with the FTC for over half a billion dollars for tricking kids into making unwanted purchases in Fortnite.(1) Epic also stonewalled parents' attempts at obtaining refunds, going so far as to delete Fortnite accounts in retaliation for those who arranged charge backs. Furthermore the FTC's evidence included internal communications showing that Epic deliberately schemed and implemented these dark patterns specifically to achieve the fraudulent result, even testing different approaches to optimise it. https://www.ftc.gov/news-events/news/press-releases/2022/12/fortnite-video-game-maker-epic-games-pay-more-half-billion-dollars-over-ftc-allegations https://www.ftc.gov/news-events/news/press-releases/2022/12/...

quitit 11mo ago

>We have reached a point where the shareholders are a companies real customers and that is who they all try to attract. We currently have a handful of AI companies who make no profit, have revenue far below operating costs, their entire business runs on investment and they're posturing themselves for IPOs. Meaning that the reason they can keep the lights on solely comes from attracting investors (and will likely be that way for the foreseeable future).

ghurtado 11mo ago
That's not unique to AI though. That's very common for tech startups. If they keep doing it, it must be because sometimes it works.
- ethbr1 11mo ago
  Ponzi schemes work* too. *At a specific point in time and for certain investors
  - positron26 11mo ago
    Please just talk about capital and leverage like an adult. Do you expect a CFO and their team to look at the math and say, "Well, we figured out that we can speed up adoption and bring forward billions of dollars of revenue by spending fewer billions from capital injection and debt deals this year" and then not do it?
    - tomrod 11mo ago
      Adults tell jokes too, especially gallows humor, and to great effect. Ergo I propose grandparent commentator inject more humor in their clear understanding of leverage and debt to widen your, my, and their audiences' understanding regarding debt and leverage beyond your proposed metaphor of the toddler CFO failing the marshmallow challenge.
- anigbrowl 11mo ago
  [Slaps roof of barge] You can fit zo many tulips in this bad boy

wqaatwt 11mo ago

But isn’t Valve extremely profitable compared to pretty much non private company in the industry? They have few employees and massive revenue.

Qwertious 11mo ago
They're the #1 most profitable per employee. There are plenty of companies more profitable than Valve, but they have more employees. Valve could hire more employees.
- wqaatwt 11mo ago
  Yes, I meat profit margin which is what public investors care about (in addition to growth). And IIRC Valve and EA had almost exactly the same revenue figures last year, yet EA had 10x more employees. On paper it would seem extremely appealing to public investors.

aydyn 11mo ago

Private or public, they are making stacks hand over fist. Why cant other companies learn that being good to your customers is a winning strategy?

ethbr1 11mo ago
Because it's not, all other things equal. Valve can be Valve because HL + Steam, in the same way that Google ~2010 could not be evil because search + ad revenue. The difference is that Google IPO'd and took market capital, and Valve didn't. Once public investors are onboard, you maximize profits or face lawsuits.
- aydyn 11mo ago
  But thats the point, Valve IS maximizing profits. If they treated their customers like Epic does, do you think people would still be using Valve when Epic is generally a bit cheaper?
  - ethbr1 11mo ago
    The entire point of this thread is that there are many things that Valve could do to increase its profits over the short, intermediate, and long terms... that it doesn't (presumably because that's not the kind of company it wants to be). As the simplest example, they could have stamped HL3 on a third party game and made several millions of dollars with only a minor hit to their brand (in 5 years, "that bad HL"). In more realistic terms, they could have built proprietary, closed source emulation packages (they are funding a lot of development, apparently) to give themselves a unique advantage. If they were a publicly traded company, they probably would be doing all these things.
    - aydyn 11mo ago
      I don't see a problem with the first, if they want to outsource HL3 go ahead. Consumers can decide if they want to buy it when it releases, that's just normal economics. As for the 2nd, that's sort of what Epic does, yet Valve's store revenue is 10x Epic. So if enacting these anti-consumer practices were actually more profitable, why is Epic doing so shit? Not even in terms of absolute numbers but in terms of growth, Epic store isn't growing at all. Epic can't hit even a fraction of Steam's numbers despite giving away hundreds of games. Developing open source emulation is essential to their success - no developer would build and verify for Steam OS and Proton if it were closed source and only available on a single device (lol). Steam being very pro-consumer is what makes them successful.

InvisibleUp 11mo ago

I find it a touch strange, in the abstract, that a corporation being public is a bad thing. On paper it should be a good thing; being publicly owned should mean that your corporation has turned from a private business venture into effectively public infrastructure that's impossible to boycott and depended on to some extent by everybody. As a result, financial statements should be (and are) public and transparent, and the company should be able to be externally steered via regular elections in a manner that benefits the public and not just its founders. The issue really lies in the fact that the (long-term, majority) shareholders aren't much, if at all, related to the customers or employees of the business, but first the founders, and then parties who are merely interested in rising stock prices and dividends. It feels like the solution here ought to somehow desegregate voting rights from how many shares are owned, instead of dismantling the concept of public ownership entirely. (Or, perhaps, allow the general public to proxy vote via their 401(k) index funds?) (There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.)

mcny 11mo ago
> (There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.) You mean the special class B shares that gives 10 votes per share, right? It isn't just Google though. Facebook and Snapchat also do the same thing, iirc?
- tomrod 11mo ago
  And, famously, Berkshire Hathaway
- avadodin 11mo ago
  Share classes can be very varied(such as preferred shares that get what's left after bond debt is paid off on bankruptcy) but generally what he's proposing(a coop-style one-head-one-vote class) is not common. Not sure if it's legal for US corporations or not(I could swear it is but in any case it's exceedingly rare). The usual principle is one-share-one-vote.
11mo ago

Xixi 11mo ago

There's a little known alternative: Steward-ownership [1]. It's the kind of structure used by Novo Nordisk, Bosch or Patagonia. LLM summary: "Steward-ownership is a model where a company’s control stays with long-term stewards (founders, employees, or a mission-aligned foundation) while profits are limited and the company cannot be sold for private gain. The goal is to protect the mission permanently." The key, if I understand properly, is that these company cannot be sold (not even by the founders), so there is no "shareholder value" per se to maximize. It is also probably not a good way for founders to maximize their net worth, which is probably why it's not more popular... [1] https://en.wikipedia.org/wiki/Steward-ownership https://en.wikipedia.org/wiki/Steward-ownership

nikanj 11mo ago
This model, unfortunately, often leads to a "well, we might as well spend the extra profits on executive benefits"-issue. Whenever you have money without oversight, you always face a moral hazard. If the company makes a profit and there aren't shareholders there to keep the stewards in check, excesses can and do develop.
- franga2000 11mo ago
  I get the first point, but having shareholders doesn't solve that in any way. Shareholders would just give themselves payouts instead of letting the execs take everything as bonuses. And unlike the execs, whose bonuses could be limited by charter and who could be chosen on the basis of trust, shareholders are "whoever has the most money to throw around", so there's no mechanism to align them with company values. So it's not perfect, but it sure as hell beats having shareholders.
  - xp84 11mo ago
    > Shareholders would just give themselves payouts Precisely, in the form of the #1 trend of public companies, stock buybacks! I've seen aggressive buybacks take a company with a ton of money in the bank and a profitable business and drive it right to Chapter 7 bankruptcy in just a few short years.