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> If the company itself is profitable, then typically it can continue. I only wish, but rarely. This is one of the great tragedies of the grow at all cost syst
by jjav 4mo ago
> If the company itself is profitable, then typically it can continue.
I only wish, but rarely. This is one of the great tragedies of the grow at all cost system. There have been so many great profitable companies, where the product is great, customers love it, employees love it, everyone is happy.. except it's not growing fast enough to satisfy the leeches so it gets destroyed.
As a society we should be supportive of small companies that make a great product that everyone loves, pays good salaries and makes a profit. The more of those, the merrier. But no, unless growth is on the hockeystick curve, private equity will destroy it sooner or later.
- kasey_junk 4mo agoThe reason hockey stick growth is required is because the “leeches” are putting up the capital to build the profitable company and if the profits dont significantly outpace the risk free rate it’s a very bad investment. The founders and employees and even the customers are accruing all the benefits of that capital so of course they are happy. How else do you propose funding the quite expensive and risky enterprises that venture backs? Taxes? Paying employees less before profitability? Charging early customers a lot more? Clearly you can see the downsides of those approaches.
- TheOtherHobbes 4mo agoGrowth != Profits I would propose not funding them at all, because so much of the system has turned into outright grift, with wildly implausible "companies" receiving brain-melting sums so investors can pay themselves huge fees. The companies all do things like "Pitch decks as a service" or "Coworker cafes in space" or "Fusion permanently two years from now, until we spend the money on drugs then pivot to military contracting" or "AI-powered gig economy pet sitters for the Bay Area". There's a lot of happiness around, but there are also more useful things everyone could be doing.
- kasey_junk 4mo agoThat’s already an option? You can get small business loans, bootstrap, get grants etc that don’t require massive growth. You can found or work for a company like this anytime you like. But the “leeches” the op mentions are a voluntary funding mechanism for a particular kind of company. If you found or work for one of those the trade off is clear. You can’t have it both ways though. As an employee you can’t live off the largesse of investors as you build the business and then not expect them to want an elevated return on that risk.
- jjav 4mo ago> How else do you propose funding the quite expensive and risky enterprises that venture backs? Easy: Risk. When you invest in a small private startup, accept that it's a crazy risky bet that will probably fail. So those investors should accept that the risk is there instead of trying to push too hard to the point of destroying the company that could've continued on a happy path of slow growth.
- s1artibartfast 4mo agoI think they completely accept there is risk of failure. That doesnt mean they have to hand the company over to founders when they could just as easily sell it to PE or another company. Founders could also buy it back if they can find a lender, but if they are profitable enough for one to be interested, but the financials rarely work out for that.
- robocat 4mo ago> satisfy the leeches Poor metaphor. If you decide to play with sharks which demonstrate how to eat, you shouldn't be disappointed when you find out they are cold-blooded killers.
- Scroll_Swe 4mo agoSo you can take advantage of the money but cry when ROI comes?