Comment by akulbe | Hacker News Reader

Comment by akulbe | Hacker News Reader

Why is this _the_ goal? Seriously.

Everything eventually goes to shit once a company goes public.

In the beginning, it was about some kickass product/service. The focus is on making something good, offering a good service.

Once a company goes public, the all-consuming reason for existence changes. Now it's no longer about the good product/service. It's only about increasing value for shareholders.

This begets mergers and acquisitions, which begets mass layoffs. (Where CEO gets more fat pockets than he had already, shareholders get a little more than a pittance, and hundreds if not thousands of employees get the shaft.)

Why not bootstrap, and get money the old-fashioned way, by working your ass off? You know, building something YOU control, and that you're not beholden to shareholders for?

Build something to last instead of looking for an exit?

I left my last job of 8.5 years, the longest I've ever been at any one job, to go out on my own. Sure, it's a risk.

My employer was in the process of an acquisition, and it completed after I left. Then articles said they were planning on laying off 10% of staff. It's hit 20% now, and no end in sight.

If you take VC money, your goal becomes the VC's goal.

VCs need a liquidity event to happen within the expiration of the fund that they wrote the check from. IPOs are theoretically unbounded in terms of availability.

I would say this is all the more reason not to take VC money, but bootstrap on your own. Why give up control?

>Why give up control?

For access to capital. If you were an Uber/Lyft competitor, it becomes very hard to compete with competitors who have near vast amounts of money to spend on marketing and customer/driver acquisition. Both Sidecar and Hailocab (in the US) lived this first hand.

Some (if not most) businesses cannot be bootstrapped. It took a while for Google to become profitable, and who knows if the search product would have been as good if they had to focus on generating revenue on day 1.

Capitalism. Sure, you can go it alone, but if you're making good profits in your niche you better expect a well-capitalized competitor to come sniffing around.

And when they find out you're minting money they'll jump in and undercut you on price, poach your talent, replicate your product (but not all the costs you put into development), and then do everything to out-compete you. And then your profits start to corrode. And eventually you're either forced to sale or forced into ever more narrow niches.

Public companies have a cheaper cost of capital, which means they can, over time, outcompete non-public companies.

There's a few exceptions to this like private-equity backed companies, and large closely-held private super firms like Koch, Cargill, etc. But if anything these firms are even more ruthlessly capitalistic than public companies.

There's no way around this unless you occupy a very well-protected space that big companies wouldn't find profitable.

I think it's becoming increasingly more difficult to find such spaces in software.

In other words: if there's a healthy market with three equal players (A, B, C) and you, as A, don't merge with either B or C... then B and C are going to merge, and the newly-formed B+C is going to use its increased efficiency to outcompete you.

At the highest levels, this is considered monopolism, and measures are put in place to avoid it... but at its lower levels, this is just "everything working as expected" in the engine of capitalism.

You are assuming "The focus is on making something good, offering a good service" and "maximising shareholder value" are opposites. That need not be the case. Amazon is a classic example.

Amazon is a famous example of not maximizing shareholder value by reinvesting into R&D, no?

Which shareholder? The guy in it for the long haul or the guy looking to flip the stock in a quarter. If Bezos had maxed profits on selling books, the market cap might have been the same as Borders at its peak. The key question is whether the projects are positive on some npv basis. Given bezo's track record, I see no reason to believe otherwise. Short term shareholders might disagree though.

Layoffs are extremely common at startups too. They just don't make the news.

In the case of $FORMER_EMPLOYER, we're talking about 1600 people out of work. (I know, I know, larger corps have had it worse) For what? So the C-level dudes can have a good balance sheet?

It just makes me sick.

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