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Comment by jalgos_eminator | Hacker News Reader

I think an interesting business question is: when does a startup shift from being highly customer/usability focused to focused on making money? We've seen many companies start off by creating innovative products, and now they all just seem like cash grabs. Amazon, Google, Microsoft, Apple, Nike, etc.

Do they start to become constrained by marketing? i.e. their actual innovation won't earn them many more sales, and only by marketing more they can increase sales? Do all companies that get big enough (in revenue) do this?

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My take, and I'd love to hear any contrasting opinions, is that this is due to shareholder supremacy. Once a company has shareholders, it is beholden to them. The purpose of the company isn't to innovate, or do good in the world, or make their customers happy. It's to make money for their shareholders.

Now, in order to make that money for shareholders, they're going to need customers that are satisfied with their product. They might need to innovate to stay competitive. They might need to actually make the world a bit better in order to stay solvent. But at the end of the day, they aren't going to sacrifice shareholder rewards for their customers, innovation, the betterment of the world at large, or for anything else. It's simply not their modus operandi.

When you can't innovate anymore and your userbase is as large as it's ever going to be, what's left to do other than monetize? The problem with startups is not that they all seek to "cash grab" at some point, but that they often do so in highly non-transparent ways, sometimes even actively abusing a monopoly position. The reason you'll see them try to grow via marketing is that this is cheaper and safer than trying to innovate.

I guess the followup question is: is this inevitable? The cynic in my says yes, but I don't want to believe it. Many people want to make the world a better place (including myself), but then just become a marketing manager or some other cog in the money making machine. Maybe we've been sold a narrative about society that doesn't hold with the economics of society.

I think it's inevitable if your business operates under specific environments that force you in that direction- for instance, often when a company takes VC funding and is required to make certain returns.

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