8 ms·

If this harms their business then why would they keep doing it

by glcheetham 4y ago

bombcar 4y ago
Harms it long term, makes money short term.
- rixthefox 4y ago
  Long term, systemic damage to both product and company reputation. Google Stadia case in point. Nobody serious backed Stadia because almost everyone expected Google to kill it off so nobody jumped to it and then it was inevitably killed off because it didn't bring in the cash Google was expecting. Even when the stars had aligned for them with the pandemic and supply shortages that should have given them tons of players Google just couldn't convince enough people to go for it. I wouldn't be surprised if there are high level talks going on about the sustainability of some of this exact lines of thinking. Chasing growth organically is fine. Artificially generating it by shifting costs or cutting corners elsewhere to maintain the illusion of growth eventually sinks the whole ship.
  - thereddaikon 4y ago
    Nobody cares though. Investors only care about short term. When it stops making money they will just move their money somewhere else. When you can get out of the game at any time there is no incentive to think long term for those at the top. The Executives are told to make money today. And why not? They will leave soon too. To run another company for a few years doing the same thing. The only people who are interested in long term viability are customers and low level employees. And their opinions don't matter.
ceejayoz 4y ago
Because it helps in the short term, and Wall Street doesn’t mind destroying companies over the long.
- Bootvis 4y ago
  Why blame this on Wall Street? This idea is the idea of someone at Google, it was implemented by someone at Google, the decision to go ahead was approved by someone at Google.
  - ceejayoz 4y ago
    The someones at Google are compensated significantly by shares of the company, traded on Wall Street, and some of them are compensated with even more shares if those shares do well. Pretending the two are at arms length is a bit silly.
    - Bootvis 4y ago
      Seems to me that the individuals involved would care more about getting extra shares than the expected increase in share price from this change. The bonus might be significant, the increase in share price might be a percent or 2. Google dishes out this bonus, not Wall Street.
marcus_holmes 4y ago
Say you're a decision-maker at Google (or Any Large Corp). You have a KPI to increase revenue by 5% this year. If you hit this KPI, then you get a bonus. If you get the bonus, then you can afford the thing that your partner has been wanting forever (or that will make your neighbours jealous, or whatever), and you get a happy life. You know that doing X will harm the company in the long term (defined as anything past your likely tenure in this role, so usually 2 years max). But doing X will bump revenue in the short term, and get you your bonus and your happy life. WDYD? Given that to get to a level where you have the power to make this decision, you had to have a particular personality type and set of priorities, it's extremely likely that you decide to do the thing that helps you and hurts everyone else.
- public_defender 4y ago
  And it's turtles all the way down. Every single incentive and system is optimized for some goal like periodic revenue increase. It's not one personality type and the desire to buy a new car, it's the intentional structure of a public corporation. We have high minded ideas about sustainability and corporate citizenship, but those views don't drive decisions in the bear market.
  - ecuaflo 4y ago
    or in the bull market. techies are greedy
    - public_defender 4y ago
      Yes that's true. I just think it's particularly easy to forget how your company actually works--e.g. what puts the bread on the table--when the markets are high. Therefore we see more monetization strategy in this type of financial cycle.
- JohnJamesRambo 4y ago
  How do we fix this loop in companies? It is a very serious problem for humanity’s future. It exists in government too. How do we reward long-term thinking and decisions?
becquerel 4y ago
You are assuming that capitalism pushes individual actors to act in their own best self-interest. It does not. It pushes people to serve capital
- public_defender 4y ago
  I agree with this statement, but it's pretty academic. At this stage of the game (metastatic capitalism), people aren't generally allowed to have interests that don't serve capital. Like, there may be some philosophical "best self interest" which is beyond the capture of capital markets, but it's not part of our culture. Besides, look at context. We are talking about what a company does and the agents of the company. Of course it all collapses to serving capital. I read GP as "why would company take short money over long?"
- refurb 4y ago
  People serve their own self interests in general. You don’t need capitalism for that (as non-capitalist systems have clearly shown).
is_true 4y ago
The incentives they have are not sustainable

If this harms their business then why would they keep doing it

bombcar 4y ago

Harms it long term, makes money short term.

rixthefox 4y ago
Long term, systemic damage to both product and company reputation. Google Stadia case in point. Nobody serious backed Stadia because almost everyone expected Google to kill it off so nobody jumped to it and then it was inevitably killed off because it didn't bring in the cash Google was expecting. Even when the stars had aligned for them with the pandemic and supply shortages that should have given them tons of players Google just couldn't convince enough people to go for it. I wouldn't be surprised if there are high level talks going on about the sustainability of some of this exact lines of thinking. Chasing growth organically is fine. Artificially generating it by shifting costs or cutting corners elsewhere to maintain the illusion of growth eventually sinks the whole ship.
- thereddaikon 4y ago
  Nobody cares though. Investors only care about short term. When it stops making money they will just move their money somewhere else. When you can get out of the game at any time there is no incentive to think long term for those at the top. The Executives are told to make money today. And why not? They will leave soon too. To run another company for a few years doing the same thing. The only people who are interested in long term viability are customers and low level employees. And their opinions don't matter.

ceejayoz 4y ago

Because it helps in the short term, and Wall Street doesn’t mind destroying companies over the long.

Bootvis 4y ago
Why blame this on Wall Street? This idea is the idea of someone at Google, it was implemented by someone at Google, the decision to go ahead was approved by someone at Google.
- ceejayoz 4y ago
  The someones at Google are compensated significantly by shares of the company, traded on Wall Street, and some of them are compensated with even more shares if those shares do well. Pretending the two are at arms length is a bit silly.
  - Bootvis 4y ago
    Seems to me that the individuals involved would care more about getting extra shares than the expected increase in share price from this change. The bonus might be significant, the increase in share price might be a percent or 2. Google dishes out this bonus, not Wall Street.

marcus_holmes 4y ago

Say you're a decision-maker at Google (or Any Large Corp). You have a KPI to increase revenue by 5% this year. If you hit this KPI, then you get a bonus. If you get the bonus, then you can afford the thing that your partner has been wanting forever (or that will make your neighbours jealous, or whatever), and you get a happy life. You know that doing X will harm the company in the long term (defined as anything past your likely tenure in this role, so usually 2 years max). But doing X will bump revenue in the short term, and get you your bonus and your happy life. WDYD? Given that to get to a level where you have the power to make this decision, you had to have a particular personality type and set of priorities, it's extremely likely that you decide to do the thing that helps you and hurts everyone else.

public_defender 4y ago
And it's turtles all the way down. Every single incentive and system is optimized for some goal like periodic revenue increase. It's not one personality type and the desire to buy a new car, it's the intentional structure of a public corporation. We have high minded ideas about sustainability and corporate citizenship, but those views don't drive decisions in the bear market.
- ecuaflo 4y ago
  or in the bull market. techies are greedy
  - public_defender 4y ago
    Yes that's true. I just think it's particularly easy to forget how your company actually works--e.g. what puts the bread on the table--when the markets are high. Therefore we see more monetization strategy in this type of financial cycle.
JohnJamesRambo 4y ago
How do we fix this loop in companies? It is a very serious problem for humanity’s future. It exists in government too. How do we reward long-term thinking and decisions?

becquerel 4y ago

You are assuming that capitalism pushes individual actors to act in their own best self-interest. It does not. It pushes people to serve capital

public_defender 4y ago
I agree with this statement, but it's pretty academic. At this stage of the game (metastatic capitalism), people aren't generally allowed to have interests that don't serve capital. Like, there may be some philosophical "best self interest" which is beyond the capture of capital markets, but it's not part of our culture. Besides, look at context. We are talking about what a company does and the agents of the company. Of course it all collapses to serving capital. I read GP as "why would company take short money over long?"
refurb 4y ago
People serve their own self interests in general. You don’t need capitalism for that (as non-capitalist systems have clearly shown).

is_true 4y ago

The incentives they have are not sustainable