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> An ISP's job, as a private company, is to maximize shareholder value. You lost me there. "There is only one valid definition of a business purpose: to creat

> An ISP's job, as a private company, is to maximize shareholder value. You lost me there. "There is only one valid definition of a business purpose: to create a customer." ~Peter Drucker (whose writings contributed to the philosophical and practical foundations of the modern business corporation) “On the face of it, shareholder value is the dumbest idea in the world. Shareholder value is a result, not a strategy… your main constituencies are your employees, your customers and your products. Managers and investors should not set share price increases as their overarching goal. … Short-term profits should be allied with an increase in the long-term value of a company.” ~Jack Welch (former very successful CEO of GE)

josh2600 12y ago
That's true except in markets where saturation has been achieved. In a market with 80-100%+ saturation, the per subscriber revenue does not increase year over year. In these cases, creating a customer doesn't actually increase shareholder value because there aren't enough customers that can be created to combat the atrophy of existing revenue. Jack Welch was hugely successful in creating and competing in new markets specifically because competing in saturated markets is not profitable. Those models are great for industries in the 0-80% saturation growth period, but aren't really applicable to high saturation markets.
- cookiecaper 12y ago
  The issue is that value doesn't necessarily mean money. In terms of money, is Apple really the most profitable company in the world? We know that it's not, so why do they have the highest market cap? Because people value their shares for more than just the present dollar value. People want to be part of Apple regardless of its profitability. The negative shareholder value argument depends on a summary characterization of all investors as people who only care about money. Not all investors are like that. You can create shareholder value out of anything that your shareholders value, which is not to say that "shareholder value" should even be a serious metric. It's just a narrative that anti-corporate people have drummed up.
gorhill 12y ago
> "There is only one valid definition of a business purpose: to create a customer." And yet financial statements are reported in dollar units, not in customer units.
- mantrax5 12y ago
  A business should be solvent, so of course they're in dollar units. A business is a balancing act of many "should"s and "could"s. But when your top priority, or god forbid, sole priority, becomes "maximizing" money, versus contributing in a meaningful way to society, your business no longer deserves to exist.

josh2600 12y ago

That's true except in markets where saturation has been achieved. In a market with 80-100%+ saturation, the per subscriber revenue does not increase year over year. In these cases, creating a customer doesn't actually increase shareholder value because there aren't enough customers that can be created to combat the atrophy of existing revenue. Jack Welch was hugely successful in creating and competing in new markets specifically because competing in saturated markets is not profitable. Those models are great for industries in the 0-80% saturation growth period, but aren't really applicable to high saturation markets.

cookiecaper 12y ago
The issue is that value doesn't necessarily mean money. In terms of money, is Apple really the most profitable company in the world? We know that it's not, so why do they have the highest market cap? Because people value their shares for more than just the present dollar value. People want to be part of Apple regardless of its profitability. The negative shareholder value argument depends on a summary characterization of all investors as people who only care about money. Not all investors are like that. You can create shareholder value out of anything that your shareholders value, which is not to say that "shareholder value" should even be a serious metric. It's just a narrative that anti-corporate people have drummed up.

gorhill 12y ago

> "There is only one valid definition of a business purpose: to create a customer." And yet financial statements are reported in dollar units, not in customer units.

mantrax5 12y ago
A business should be solvent, so of course they're in dollar units. A business is a balancing act of many "should"s and "could"s. But when your top priority, or god forbid, sole priority, becomes "maximizing" money, versus contributing in a meaningful way to society, your business no longer deserves to exist.