Posted by echollama 2 days ago
Having spent a few years in the VC world I have been increasingly convinced outside investment is the biggest reason why companies lose their morals. The legal obligation to represent shareholders erodes morality. When the people running these companies feel they’re beholden to shareholders and can’t act on their own agency of course they will turn to addiction research not as a warning but as a guidebook. It’s Stanford Prison Experiment stuff.
I hate being reductionist, and I am posting this on a historically YC forum so of course there’s nuance, but there’s a pretty huge throughline of outside investment and addiction engineering. It sucks we’re seeing less grants and less security net to encourage risks under current administration, because it leaves investment as the quickest path to starting or scaling a company. Donate to open source, IMO
When we have that mindset, we absolutely don't care about the thing that we call "our product." It's just food for the actual product, where we want to fatten it up, and sell it to the biggest slaughterhouse.
That starts almost immediately. You can't even get an A round, without an "exit plan."
I feel that the very existence of an exit plan, dooms the user. No one cares about them. It's all about fattening the company, and making it look good. When we do that, we'll feed it nothing but junk food, in an effort to make it as fat as possible, as quickly as possible, with absolutely no thought as to long-term viability.
I would love to see the tech industry return to concentrating on truly delivering good to the end-user. It's still possible to make a decent living, but maybe not at the insane rates we see.
Side note, on "exit plan" - the most ridiculous thing about raising money is you need an exit strategy but you cannot explicitly say you have an exit strategy, you have to imply it while the whole time pretending it's not a focus for you. It's a very weird dynamic.
If you go the VC route then the VC is the customer. Since any good business is focused on customer satisfaction, a VC funded business is focused on VC satisfaction.
VCs want an exit. Which necessarily means switching funding model. The only switch that has worked so far is advertising. Advertising requires attention.
Of course a business can succeed with say SaaS subscriptions instead of advertising. This works well for B2B, but less so for B2C. Amazon is the poster child for B2C success, but makes most of its money from AWS (which is B2B).
The pattern is now well understood, and well demonstrated. If your business is B2C then figure out the funding model. If you can't do that, if you can't do it without VC money, then your path is predestined.
Amazon still makes the most revenue from ecom.
Why would you do that? Well companies are taxed on profit. And the money you pay to investors ... is also paid out of the profit. No profit -> all the money stays in the company, under the control of management, ready to be deployed on yachts and castles for the CEO. Governments get nothing. Investors get nothing.
Jeff Bezos (and very early investors) get everything. If they get desperate there is a buyback (no doubt matched by a greater stock package for the top of the company).
This is a pyramid scheme because the whole company only works because it only makes extremely minimal profit. If it starts demanding profit it will be eaten alive by competition in no time at all. Money has to be invested in, flows to the top, and is taken out at the top. No doubt Bezos was utterly baffled by the success of it and therefore isn't yet out, but ...
At least until it becomes too big to fail and can build anticompetitive "moats" around itself to increase the amount of profit it can take.
For example, in the case of Amazon, they aren't just a retailer, they're a logistics and shipping company, too. And all of those are separate, itemized services that suppliers pay for, which increases revenue in a very opaque and difficult to understand way. On the customer's end that means higher prices and worse selection.
Any competitor to Amazon doesn't just have to get the same products for cheaper, they also have to build their own shipping company that can get products to people with <48hr turnaround. This provides a lot of room for Amazon to take a cut.
That being said, when you start building a giant business empire the direct profits matter less than the amount of control over the economy you get. In other words, you have the power to tax and subsidy, just like a government does. Amazon maintained minimal profit by deliberately subsidizing new business ventures until they could get big enough to become extractive on their own.
At no point does the business flip a switch and go from "deliberately burning money to avoid carrying a profit" to "extracting so much profit they get eaten by nimbler competition". They instead are always burning money, and always extracting, moving money to where they see fit.
If you've ever dealt with Investor Relations at a public company, this becomes very apparent very quick.
Core fundamentals as a business can be strong, but if you cannot craft a unique story or thesis (which does not have to be tangentially related with active initiatives) about your company, you will not succeed.
Usually, the onus should fall on PM, EMs, and Sales Leadedship to drive customer outcomes, but the hyperfocus on short term deliverables AT THE EXPENSE of a long term product vision makes it difficult to push back.
Very few newly founded or public companies can do the latter - the most recent ones I can think of are maybe Datadog and Wiz (not public but they did drive a customer centric mentality internally).
Of course, a lot of this is also due to the extreme bloat that formed in the tech industry in the late 2010s to early 2020s. Teams grew unrealistically large with limited financial justification beyond cherry-picked growth metrics, and this meant a lot of companies lost the ability to innovate frugally or nimbly. Unrealistically high valuations also played a role because towards the end, founders could end up demanding IPO-sized multiples in private markets even without the underlying fundamentals (eg. Lacework's $9 BILLION valuation on what was at most $90 MILLION in revenue).
A lot of the current AI products and stories are cost-competitive due to that bloat itself, so some amount of rightsizing will help the industry.
There is way way more money up top looking for investments than there is in the hands of customers, so it’s far more profitable to chase that money and make the stock the product than it is to care about the actual product much.
It’s a special case of the more general big dumb money problem that happens whenever too much money ends up in too few hands, whether those hands are a government or a few private rich citizens. You end up with this giant piñata of big dumb money and everyone whacking it.
In the old USSR instead of the stock is the product it was the appearance in the eyes of other bureaucrats is the product, but it’s kind of the same phenomenon. The customer isn’t the customer.
The entire economy is to some degree a casino betting on itself. I think this is always true to an extent but the casino nature becomes much more dominant the more unbalanced things become.
1. They always have a reliable supply of their preferred drug. No matter how much they need, many of them will be able to afford it pretty much indefinitely. They can just live with the addiction.
2. They have first-class healthcare to mitigate the addiction and lessen its side effects.
3. They have the power to never run into any legal trouble over it. How often do 1%s get convicted on drug possession? This often applies even to the harshest regimes.
So, referring to what the other commenter said, the wealth inequality also affects addicts unequally. The rich, excluding the most extreme exceptions, are immune to the downward spirals of addictions and many of their consequences. The poor addicts become increasingly desperate as their drug habit consumes most of their income and savings. The poorest turn to the cheapest, most dangerous street drugs. Many get little to no medical help. Many are charged with drug-related crimes, ensuring their criminality keeps them down for the rest of their lives. This varies by country, but the patterns are all similar.
There's always going to be an underlying layer of people who tend to gravitate towards addictions, rich and poor - the real question is if more and more people are turning to them as they get desperate, who wouldn't otherwise have.
The point of saying it's complicated isn't to dismiss the problem, but to invite a deeper understanding of the problem itself so as to be better equiped to help solve the underlying issue, rather than show up, guns blazing, and then not actually fix anything.
> For every complex problem there is an answer that is clear, simple, and wrong.
-H.L. Mencken
Halfway true. There's a famous quote:
> In the short run, the market is a voting machine, but in the long run, it is a weighing machine.
At some point, strong fundamentals will catch up with you.
The problem is, any amount of rightsizing has the potential to tank the entire economy. Too big to fail, just that it isn't banks this time but a bunch of companies who went all in on "AI".
Inevitable when you tie the pension of people to the performance of the stonk markets.
As Action Jack Barker said, Pied Piper's product is its stock.
Really does make me cynical on investing...
One might question would we as society be better off if that money was spend on more efficient factories or say nuclear powerplants?
Imagine if every company was as wasteful as VC fueled startups and life would be hell, imagine going to the new smart grocery store where prices changes by the minute and now you have surge pricing since many wanted to buy toilet paper this minute...
Is it growth itself you are opposed to?
How do you force an industry to ignore profit incentive? Seems a little pollyannish to hope for.
Surely Capital would just purchase more convenient terms from politicians.
We actually need to combat this notion that somehow exclusive focus on short term returns is somehow legally, morally, or ethically required. It is actually antisocial and obviously destructive.
I say this because you used the phrase "fiduciary duty" which does not exist in this context.
Well, there was one case in the law over 100 years ago in the USA. A company had decided to sell itself for cash and go out of business. The Court ruled, that in that situation, it should sell to the highest bidder. This is long before Milton Friedman began advocating that corporations had a duty to their common shareholders that provided the only valid yardstick for evaluating corporate activities. Friedman was an economist, and a controversial one, not a lawyer, and how he got the lawyers behind him is itself a long strange story.
The idea that common shareholders own the corporation was not really obvious to anyone from the start. Common shareholders get from the corporation only what is their privilege according to the corporate bylaws and charter. There are now, and have been in the past, many different kinds of and classes of common shareholders. For example, some big corporations today have many common shareholders who do not have any voting rights. The thing that sets common shareholders apart from the other stakeholders who also hold pieces of paper from the corporation granting them various interests in the corporation, is that the common shareholders get to divide up whatever is left over if and when the corporation is liquidated and everyone else is given what they are owed first. They are more heirs than owners. It is more realistic to hold that the corporation, as an artificial person, is not and cannot be owned by other persons, and owns itself.
There is the “shareholder lawsuit” but that really is about enforcing a company’s stated goals to its shareholders, which can and often are things other than “try to make the stock price go up as much as possible”.
This is not statute, but it remains legally binding in Delaware so long as the courts uphold it.
It's that if you're going to make a decision that affects 1/3 of the companies value you need to actually claim it's in the shareholders interest that you do so.
> It's that if you're going to make a decision that affects 1/3 of the companies value you need to actually claim it's in the shareholders interest that you do so.
I'm not really sure where the 1/3rd ratio came from. Can you explain? To my layman's ear, "value" and "shareholder value" are the exact same thing.
The problem is that Ford didn't try to claim that the factory was in the shareholder's best interest.
> I'm not really sure where the 1/3rd ratio came from. Can you explain? To my layman's ear, "value" and "shareholder value" are the exact same thing.
Nothing special about 1/3. It's the value of the dividend (19 M) / value of Ford (60 M). If you're going to spend 1/3 of the company on something you better at least claim it's in the company / shareholder's best interest.
---
To quote the wikipedia article
> Under some interpretations, the case also affirmed that the business judgment rule that directors may exercise is expansive, leaving Ford and other businesses a wide latitude about how to run the company, if management decisions can point to any rational link to benefiting the corporation as a whole.
And then to emphasis: "if management decisions can point to any rational link to benefiting the corporation as a whole."
My understanding is those kind of cases aren't common because a) they are hard to prove, b) the people being sued if they actually have the money to make it worth suing them also have the money to fight it, and c) it's a really bad look for an investor to be suing a previous member of their portfolio and would a strong adverse affect on their deal flow
Unless you're saying there is no explicit legal obligation / fiduciary duty in law, but it does emerge from civil court cases, which is how I understand it, but short paragraphs are not a good place for the amount of nuance so I just said "legal obligation" as a shorthand for something real but very complex.
Activist investors will sue for anything alleging that executives broke securities law by doing anything that harmed their portfolio. It doesn't mean they win the cases, or that anyone is guilty.
There's also something worth noting that even if there isn't a legal obligation for executives to act on their shareholders interests, they have a really strong incentive when their compensation is mostly stock grants and the shareholders can fire them.
For CEO see https://www.rgrdlaw.com/cases-in-re-dole-food-co-inc-stockho...
> The Court declared that, in certain limited circumstances indicating that the "sale" or "break-up" of the company is inevitable, the fiduciary obligation of the directors of a target corporation are narrowed significantly, the singular responsibility of the board being to maximize immediate stockholder value by securing the highest price available.
Seems to imply that under normal operation (i.e. no inevitable break-up) the fiduciary obligations are quite different though?
- act in good faith;
- act in the best interests of the corporation;
- act on an informed basis;
- not be wasteful;
- not involve self-interest (duty of loyalty concept plays a role here).
We should be suspicious of games that favor shareholder value over common good and repair them. Of course this is harder than it sounds, but letting the person with the most money in a Monopoly game also set the rules is absurd and and obviously wrong. Wrong even without having a consensus reality on what "common good" entails and this is important.
The "capital game" should serve us, rather than us serving it. A fatalistic lack of imagination is no longer an option. When we're more afraid of unintended consequences than accepting that we have a responsibility to the current consequences, our current consequences look rather intended.
That of course won't mean that you will have the privilege of deciding for everyone else what counts as "the common good". It's unfortunately not like the Arch Linux terminal where you are omnipotent.
I say that sincerely, as somebody who had to do just that. It's easier for Mohammad to go to the mountain.
Edit: To say: I voted with my feet and moved to a place which better aligns with my values. From a "common good" society to a "freedom" society.
I don't think the appetite is there in most places
Just a quick glance at the 44 historic economic transitions in my dataset, most of them aren't well known. The most likely reason why we think economic revolutions are associated with violent revolt is due to selection bias - violent revolts are more memorable, take up a larger section of history books, etc.
Happy to take at look at your dataset and compare notes.
A capitalist system with right amount of social democracy to prevent worst concentration of wealth is the best model there is, at least for the well-being of its citizen and survival of its democracy.
"Stand for it's rights" is just weasel words for "Was willing to use violence in order to obtain their rights"
Even if they never actually had to become violent, violence or the credible threat of violence is the only thing that has ever in history convinced "The Elites" to change things
You really need to read more history about Europe.
I'm no expert on the French Revolution but I'm pretty sure that "We're all poor while the monarchs are all rich" was a huge driving force behind the French Revolution. "Let them eat cake", etc
It also didn't create democracy, they more or less immediately wound up under Napoleon, a self crowned Emperor
Democracy came later
It did create democracy, the French Republic, Napoleon did end that though but its much easier to reinstate democracy later than to create it from scratch.
> I'm no expert on the French Revolution but I'm pretty sure that "We're all poor while the monarchs are all rich" was a huge driving force behind the French Revolution. "Let them eat cake", etc
Revolutions to loot the rich happened a lot throughout history, but here the explicit goal was to end monarchy and create democracy not just looting the rich, that is a big difference.
The war in general ushered in new economic systems.
There's no general way to model, only empirical evidence. Unless I'm supposed to enter the mind and soul of people and see their motives and reasoning.
But I'll give a one word answer: pride.
>To make a somewhat successful "common good" society you first need to exterminate large swatches of the population
It sounds like you are conflating "common good" with authoritarianism.
Common good happens at the grass roots level and then spreads by consensus. Doesnt mean it will happen on a large scale, esp if there are larger forces at work.
It seems like this is a population size problem to me. Or at least a concentration of large populations in a small area (Cities). Maybe the trick is to spread out the population a bit more and prevent areas from becoming over populated somehow.
I don't have the data in front of me right now, but there are some sources that say when groups become to large people vie for attention which causes the most egoic people to try and dominate the areas that they are in.
Thus this creates social circles that try to gain power for powers sake and do not contribute to society.
You may be interested in this essay from the feminist movement in the 60s: https://www.jofreeman.com/joreen/tyranny.htm. It describes how the lack of structure or process forces the group to be run primarily by social dynamics like friendship, charm and influence.
There are lots of effects that happen as groups scale. But this capture of consensus-based and flat groups by ego-centric charismatic members happens in even tiny groups.
That's why successful flat groups (e.g. parliaments) have structure (e.g. Robert's rules) and make decisions by majority vote rather than consensus.
IMHO, it seems like it easier to deal with ego when the groups are smaller. When they get too large, we tend to use bureaucracies to manage decision making logistics. Bureaucracies make it easier for people that want power over others to hide.
What do you mean by exterminate large swatches of the population in Scandinavia? Yes the way the Sumi have (and to a degree still are) been treated is atrocious, but I'd argue that if anything this is not a feature of creating a "common good" society. I would argue that strongly capitalistic/mercetalistic societies have a horrible track record of treating (and still treat) indigenous populations.
What I'm referring to are the eugenics programs in Sweden, where unfit people were sterilized and/or had their children taken from them. These kind of programs were also present in North America, for what it's worth. The complete extent of these programs will probably forever be unknown, in all countries. Scandinavian countries are probably the countries who are most open about this, just like with suicide reporting.
As for Finland, they had a communist revolution and a very brutal civil war about the same time as the Russians. So their "common good" society was also born from a bloodbath, although the communists lost the war.
Norway is probably an exception. They're building a "common good" society on oil fortunes, just like the Gulf states have no problem with giving generous welfare for all of their citizens.
A good read: https://www.project-syndicate.org/commentary/costa-rica-enli...
All freedom US craves so much for (and much more) while stronger social state than next to nothing US has for its weaker part of society
https://www.businessinsider.com/female-breadwinner-moved-swi...
Absolutely and me too. And that's why neither of us are actually CEO of anything (I assume)
At least with share holder value, you know where you stand. The common good is a constantly changing thing determined by the moral authority in charge at a moment in time.
If anything those two are probably the most important needs so it's not possible to build such a system.
Besides why can't one of human needs also be an economic system that doesn't have the failure mode of poverty?
Those aren't very productive, our current system makes people produce value for others in their chase for status. Older systems people destroyed value for others in that chase, creating wars or other miseries, we have much less of that today.
I'd much rather have another billionaire than another authoritarian warmongering dictator.
I don't think most of the people who have extremely high status are doing anything remotely close to producing value
They just own capital which they use to pay other people to produce value, which they then take credit for, which boosts their status
So it would seem that we're pretty divorced from the idea of "produce value -> get status" these days, if you can just pay people to produce value for you instead
Expansionism, cult of followers, dispensing boons, and absolute control over their territory? check. The only reason we don't recognize them as warlords is because they don't wave scimitars and wear turbans. Neolibrral warlords wear Patagonia vests and beige slacks.
We're terrible at mistaking asthetics for function. Fortresses have been replaced by platforms; trade routes replaced by data sharing agreements. Armies have been ursurped by legal teams and lobbyists. We barely escaped feudalism and it's not clear we're out of the orbit of neo feudalism.
If we're able to be honest with ourselves, we need to learn that asthetics and function are different things. Just because they look different doesn't mean they don't fulfill the same function.
In practice that doesn't work, and the most successful "common good" systems instead ensure the disparity is limited and access is as equal as possible (e.g. not everyone can be wealthy, but the wealthy are not too rich and anyone had a chance to become rich instead of needing rich parents; or everyone can only have one married partner at a time instead of people who can afford it amassing big harems and not leaving any partners for the rest; or anyone can become famous, and famous people pushing their kids into fame is looked down on)
At one extreme you get theories like communism or socialism that treat humans as disposable cattle to be murdered or starved when they stand in the way of whatever the party leaders decide is the common good.
The common good is something that has to be worked out deliberatively and is more like taking the resultant of a huge number of force vectors than it is like mass producing units of the same good for everyone.
Would you cite sources for this claim?
What you are talking about is imposed self-interest at the level of the population from one or a small population that do not represent the common good. Not the same thing IMHO.
Common good historically was what's good for the city/polis/country/band/family. Basically, you make some (ideally relatively small) sacrifice to your own interest for the sake of a larger group you share fate with.
There are more formal/mathematical versions of it, for example in Bentham where the common good is essentially a weighted sum over the good to each individual. Rousseau described it almost exactly as the resultant of force vectors. There are more authoritarian versions like in historical Sparta and more recently in Marx and Engels where it's imposed through violence.
> imposed self-interest
I'm not sure exactly what you're saying here, but self-interest is almost by definition not externally imposed. In Marxism one particular vision of the common good is imposed externally via a "revolutionary terror."
common(adj.)
c. 1300, "belonging to all, owned or used jointly, general, of a public nature or character," from Old French comun "common, general, free, open, public" (9c., Modern French commun), from Latin communis "in common, public, shared by all or many; general, not specific; familiar, not pretentious." This is from a reconstructed PIE compound ko-moin-i- "held in common," compound adjective formed from ko- "together" + moi-n-, suffixed form of root mei- (1) "to change, go, move," hence literally "shared by all."
Your confusing political language with what came before this. Common good is the will of the people. It has nothing to do with cities, countries, or states. All of those things were created by people that wield political power. This is not the same as the common good. Common good directly relates to what is good for the people that share common values. You have been misinformed, by political society unfortunately.
It has nothing to do with shared values. It's exactly as I described it above.
Notice the reconstructed PIE means to move together. Common good is about the interests of groups that co-move rather than groups that share values.
This makes sense even in family contexts. What is good for the family is often different from what any one person wants. Think about things like choosing dinner for a big hungry family on a long road trip.
Often the best solution is at best everyone's third or fourth choice because values and desires differ.
So I understand that you think its about families, but in this context, its really not. It was a way or a method to protect commoners.
When I say value, I mean if we both value freedom then we have a "Shared Value". This is really about the rights of the people which differs what rulers, want for the people. And I mean rulers that want to wield power against the people, for self-interested purposes.
I'm honestly not sure it's worth responding here or what you're trying to say about Rome. It sounds like you may be confusing the Roman Republic with the Roman Empire, which started much later in 31 BCE. For one thing the Roman Republic did not have an emporer. For another it wasn't expanding militarily or ruling non-Romans.
And you also seem to be confusing different uses of "common".
Common generally means something held collectively by a group. By extension it can mean "customary" as in common law rather than statutory law. By extension it also can mean "ordinary" or "plain", as in "common house cat". "Commoners" or "common people" are just "ordinary" people; that is, people without titles.
The only connection between the "common" in "common good" and "common people" is the use of the string "common". The word means different things in the two contexts.
It can mean "ordinary" or "plain", but not in the context of "Common Good". I think you are trying to obfuscate the meaning by focusing on the peripherals of the context.
The problem with common good is that it's hard to agree upon what is good, and if you find a good, there's often a group that's outside this "common".
Its like principles of what the Constitution was written on. Life, Liberty and the pursuit of happiness.
Principles like these are qualities we all naturally exhibit and as such doesn't need any explanation or qualifications. I know in our modern world people have decided that everything is open to interpretation. But I believe this was indoctrinated into us, over a long period of time, not to consider the human value[0] aspect of our being that we are born with. This was done by watering down the direct meaning of words and slowly changing the perception that humanity doesn't have infinite value and has to rely on external power structures to give it meaning.
[0]: https://archive.org/details/end-of-all-evil/page/n1/mode/2up
I didn’t say perfect, i said best.
Check out the quality of life of the Aka, Baka, and Mbuti tribes. They're genetically and culturally linked to a mother tribe 150k years ago.
So a culture has kept these people going for 150k years. Capitalism has no such capability.
Collaboration, spontaneous improvisation, counterdominant play/decision making/protection, egalitarian, matrifocality, immediate return. Those are values that flourish in an infinite game theoretically and in real life. We just have been taught so many backwards ideas these ideas seem foreign & barely recognizable.
You have no idea how to scale up collaboration due to separation from indigenous cultures that were praxised for tens of thousands of years & cultivated food forests across America without price tags.
Only 40% of the Aka and Mbuti actually survive to age 15 or greater
I look forward to you explaining how this is actually a good thing. Because currently it looks like your argument is that the 9 billion people on earth should adopt the life style of tiny groups of hunter gatherers that for the most part don't make it out of childhood and those that do generally die in their early 20s or younger.
For reference, the average lifespan in the United States is 77, so more than 3x, approaching 4x. Per your prior arguments, this is a genocide...
Businesses are powerful tools for the common good and the fact they produce returns for investors is absolutely critical to their continued existence and long-term viability.
But the point for businesses to exist at all is to produce positive externalities and they need to produce those externalities for more than just their owners.
It cannot be "either/or" and it's not immoral to pursue profits.
I see little evidence that this is true. If anything, modern VC companies are "externality parasites". They produce positive externalities for some (ie. shareholders), by putting a lot of negative externalities on society as a whole (see for example the cost to democracy, societal cohesion, etc. that comes for Facebook and the like).
[1] https://en.wikipedia.org/wiki/The_purpose_of_a_system_is_wha...
Who is “we”? I can’t do anything about it. No more than peasants “allow” the king to exist..
You don't understand how kings work if you think it's equivalent to your situation in a western democracy.
"Voting obviously doesn't work." - Troll
The only reason it "doesn't work" is that the countries that did vote away capitalism didn't fare very well, so other countries people are very reluctant to try that again. But they absolutely could if they wanted.
This is a dumb saying. And if you start to apply it to everything capitalism still seems pretty ok. For example: "The purpose of Communism is killing 20+ million people"[1]
[1] https://en.m.wikipedia.org/wiki/Excess_mortality_in_the_Sovi...
> you can't (well, shouldn't) judge something by its intended purpose if what it ends up doing goes against it
If you check my Wikipedia link it shows that the original quote says more or less the same thing: "[this slogan] makes a better starting point in seeking understanding than the familiar attributions of good intention, prejudices about expectations, moral judgement, or sheer ignorance of circumstances".
In other words, it doesn't matter what's the historical context of why corporations were created, what matters is what they do now. You can argue, like it was argued, that corporations as a whole currently are a net benefit. My point is that bringing up the historical context of their original purpose adds nothing to the discussion.
As to your other point, I completely agree that it would be useless to try to defend the Staling regime by pointing out what communism was intended to be. That's more or less the point I was trying to make.
Quite the opposite in fact: if anything it's a reaction to people who do try to understand a system by looking at its original plan: it says that you should disregard that and look at what the system actually does (which includes "interactions of independent parties and random variables", as you say).
In any case, that's how I meant it: it's a bit useless to dig up the original purpose of corporations in history books to talk about how corporations work today, like the comment I replied to suggested.
What capitalism does is apparent in its worldwide success.
Easy peasy, no?
1. Nobody forces you to use a smart phone. 2. Nobody forces you to have social media or use it. 3. Nobody forces you to watch Netflix.
We all choose what we do in life.
#2 is heading that way. Lots of official info is only available on social media. Travel to certain countries can be difficult if you don’t have any social media presence as they’ll decide you’re trying to hide something.
#2, I have to use SM for marketing.
To avoid these I’d need to basically be a homeless vagrant.
If you hit the growth targets, they will pat you in the back and will demand Hyperscale growth growth growth and will throw money at you to supercharge it.
If you refuse to chase the growth, they will simply kick you off the company via Board or fund your competitor that will chase the growth at all means
Chilling effect is there one way or another, and even when that does not work adverse selection does.
You have to have a very strong market position to resist the investor pressure. Kinda like Google had twenty years ago.
Or you can have a diverse set of investors who can’t or won’t be swayed by activist investors. But that usually means being public at which point your employees are incentivized by RSUs.
If you get the money and then try to U-turn and refuse to chase growth, the board will start asking questions
The legal obligation is that CEO does whatever board tells him to, otherwise board can fire ceo
This amounts to an argument that if doing something immoral gives you money and power, you can not possibly say no and no one can blame you. That somehow more money and power is good enough excuse.
In 95% of cases, the founder isn't smashing moral barriers because the VCs and shareholders are making them, or lording the threat of legal action or any some such.
In 95% of cases, the founder is smashing through moral barriers because their interests are aligned with the VCs: because they think what they are doing will lead to stupendous mega-wealth for them personally.
Like sure, I think the idea that corporate execs must be beholden to maximizing share price is a) corrosive to our society and b) not as true as often portrayed, but I don't think that's even a real factor here.
The ones who play the game with integrity and morals never have the type of growth that makes headlines. But I’m sure they exist.
To succeed, you have to execute many things well and avoid bad luck. Add to this an extra constraint that one also needs integrity or morals and it will drastically reduce your success rate.
My statement will be true as long as having integrity or morals could hinder growth in some way.
Legally maybe. The market and shareholders will punish you if you deviate from the current standard behavior.
We’ve all seen companies do layoffs just because “Wall Street” was concerned about the economy and then instantly see the stock price spike up.
These negative consequences are all results of bog standard prisoner dilemma issues that need government regulation to make sure everyone picks the good square, but the tech industry and this boards community as well is allergic to the idea that regulations can improve the situation for everyone
And even if what you said is true, you can look at the results of years of this system, the difference between companies with outside investment vs without makes a strong case against what you're saying.
It's like saying educating people about their rights wrt police helps, but in practice police don't derive their power from actual laws and it comes at considerable personal expense to push it to courts, in the same way Delaware is very strongly biased towards shareholder rights.
That may be true legally, but practically it's only true if they control the board. Otherwise they will simply be replaced by people who are willing to do what the board wants.
That's what I was responding to.
But it's important for founders to understand they are not legally obligated to do any specific thing for their shareholders. It is their responsibility to act morally. Yes, there are other incentives and forces at play. "Legal obligation" is not the cop-out excuse that executives claim it is.
Individual investors are largely operating on trust.
This "legal obligation" is an internet rumor that does not exist in the real world. Yes, if your company has competing buyout offers of $1m and $2m and the board takes the $1m offer because they received a bribe, it will come up. Otherwise, it never does.
The proof is in the pudding (please go find me even one case where shareholders have successfully imposed their will on a board or executives because of this obligation), but it doesn't even logically make sense. Other than the buyout example, it's hard to think of almost any action a company could take that doesn't have some justification that it is for the benefit of shareholders. i.e. if we make our app too addictive, we risk social backlash and regulatory intervention by governments which will hurt out shareholders. And that's all that is needed, because there is no associated time frame with this obligation.
To be clear, boards and executives might strive to please investors, but it is not based on a legal obligation. An executive that ignores the interests of shareholders might be concerned about their reputation as a capable entrepreneur, risk losing their job, or devalue their own shares, but they are no in legal jeopardy.
Find me a serious lawyer anywhere that says this is a legitimate concern.
Look at Mozila for the most insidious example. Take a privacy focused product. Rope in a bunch of suckers. Then literally delete the privacy focus from your mission statment and start the "slaughter"
Craiglist is proof it can be done at scale.. Its just that so few people with them means and morality exist anymore. The Sodom and Gomorrah fable is a warning not to let this happen or your society will destroy itself.
I don't think this is a good example. Back then, the internet was a new thing only a small cohort of people cared about. Something small could just stay small because none of the big players with money cared. Nowadays, if someone wanted to start something like Craigslist, they would be outrun by someone else going the VC route before the small company could get big enough on its own. I think it boils down to the difference between slower growth, boot-strapped companies vs. VC-backed.
Early in a nascent industry, you focus on the core product. You bring scale and scope economies. You make the supply chain more efficient. You improve the logistics. More abundant basic food stuffs for everyone, and more profits for agriculture shareholders. A true win-win.
Later on when the industry matures, the easy wins are all gone. Logistics and agriculture is fully optimized. The only scope for improvement is in marketing, adding sweeteners, and cutting out expensive ingredients. Now it's a lose-win, but from the shareholders perspective only, it's a win.
The problem is, you can't just ask companies to act nicely. While that would be a good start, even if they genuinely wanted to, competition largely forces their hand. The solution is careful and minimal regulation, to deter the pathological late-stage optimizations.
Since the rich and powerful get what they want. This race to the bottom mentality has saturated anything where a company accepts outside investment. This means any public company and any investment into the company outside of a bank loan. Which is basically every company nowdays since private equity company have bought stake in literally almost everything.
Just a heads up, the experiment was complete fraud and could never be replicated.[1]
I agree with you that outside investment can work as a strong accelerator for these things. It enables founders to externalize responsibility.
However, it is not the main reason. Exploitative companies have existed long before venture capital was invented. In the end every company exists to make money and so is inherently immoral. That is why the state is needed to regulate the market so companies don't hurt society too much.
Those founders didn't get corrupted by evil venture capital, they didn't have that strong of a morality to begin with.
[1] https://www.vox.com/2018/6/13/17449118/stanford-prison-exper...
Either with a guy promising Mars while siegheiling or jeopardizing teens’ health or ruining the Earth. All that matters is the valuation.
And why not? Investors never get into trouble for the mess their investments cause. Worst-case scenario, they lose their investment.
In Magickal Faerieland, we have regulations to align those 2 things by incentivizing the "goodguy" path and/or disincentivizing the "cackling villain" path but we live in reality where money rules and regulatory capture is a thing. So a Facebook or other megacorp can get away with using neuroscience and psychology to engineer a virtual slot machine with a terrible payout and ExxonMobile et al can get away with being an architect of environmental degradation and the accompanying humanitarian disasters.
Show me the incentive, and I'll show you the outcome - Charlie Munger
It's the same with politics and money.
We don't get the leaders we want, because it costs money to buy people's attention. We get the people who have some way to pay for attention
(in recent years, one of those ways is increasingly corruption - e.g. senator of NJ, mayor of NY, etc.)
An article today talks about Cuomo following the "local TV buys" playbook, which WAS a fairly reliable way to win elections:
https://www.nytimes.com/2025/06/28/opinion/ezra-klein-show-c...
That didn't work this time, but the mechanism is simple and clear
Who watches local TV anymore? Probably not many people under 60.
If people actually believed in something they'd make it open source or a non-profit, not a convenient vehicle for personal enrichment. Imagine if Wikipedia was a for-profit startup, it would've eventually ended up as an unusable cesspool of advertising.
https://open.substack.com/pub/vonnik/p/how-to-take-your-brai...
Yes, the addictions are engineered in the service of shareholder value. There are many ways to fight it!
Fwiw, this dynamic goes way beyond VC and tech.
Douglas Courtwright writes about this in Age of Addiction:
https://www.amazon.com/The-Age-of-Addiction-audiobook/dp/B07...
If you don’t play this game you’ll lose. Look at Europe for example, they haven’t played the VC game properly and thus have no really significant tech player compared to the US / China.
So what options are left? Play the game or be ruled by those that play it.
I’d rather play even if moral erosion is required.
I am thinking how to make it sustainable without raising VC funding but not doing aggressive ad targeting. Obviously people are not going to pay for a social network. So maybe just very generic sponsered links?
But one for the rare case of ours taking off
Gross.
Engineering addiction is also probably more often than not intentional. When all the business metrics/KPIs are stuff like "engagement time", "$ spent", even AB testing of random features leads to manufacturing addiction
> but there’s a pretty huge throughline of outside investment and addiction engineering..
Personally I don't doubt that. But if people are taking outside money while being aware of its effects I don't know what kind of sympathy they deserve.
For instance, I took investment in my business, about five years in, from a very ethically and strategically aligned individual, as we mutually saw an opportunity to do something good together.
His life took a left turn. Two kids and wife in a horrendous car crash, all left extremely disabled, enormous medical and emotional costs. After a year or so he had little option but to sell his holding in our business, and we allowed it, knowing that his situation had become dire. He sold to a small PE consortium, who again, looked pretty well aligned with what we were doing.
The consortium all then had a falling out, as one member had brokered a deal with a large PE group to be bought out. This ground on for another year or so, us on the sidelines, until eventually the large PE group managed a hostile takeover.
And that’s how we found ourselves with blackstone as our corporate overlords.
It all went to shit over the following years as we were forced to squeeze margins, cut R&D investment, and depart from our original mission to instead gouge our customers.
I ended up leaving, as going to bat for the dark side every morning was beyond corrosive for me, and while it was a pretty terrible financial decision, it saved my life.
The company grinds on, a thing utterly different to what I founded. I don’t ask for sympathy, just… perhaps awareness that taking any investment, no matter how benign, can take you places you’d never wish to go.
It can happen even without investment. I’ve seen businesses where cofounders have had to sell out due to poor health or similar, and the outcomes have ended up pretty much the same.
Oh 1000%.
I once worked at a company where the founder had famously said many times that he would never take the company public. But then, he had a stroke. And within two years they had an IPO. Started doing what every other 'big company' did instead of their own thing. And from what I heard from folks on the inside, Enshittification happened pretty quick after I left.
The lack of addressing the loose ethics of 'Behavioral Psychologists' working in these fields, is TBH a bit of a stain on the whole profession.
If you construct your business model so that revenue is derived from attention, then your business will become a machine for consuming attention.
* Founders aren't trying to solve a problem, they're trying to grab table scraps from VCs and the already-wealthy to try and save their own skins. As a result, it's all about exit strategy, growth, and moat instead of business fundamentals and customer experience.
* VCs and their wealthy backers aren't looking for good business, they're looking for good profit. It's why they'll gladly invest into slop or outright grifts, and why they demand anything they invest into have an exit strategy (i.e., IPO) planned so they can cash out before the company collapses.
* Talent who wants to build a long-term career with a company - and accordingly focus on fixing its flaws, improving the customer experience, and saving expenditures - can't, because companies no longer fundamentally exist to provide long-term solutions and products, only short-term growth YoY. This ultimately ends up harming output and innovation, because why bother giving it your all when such efforts are counter to the "explosive growth" narrative and likely to get you PIPed?
* Retail investors and Business News are left feeding a monster that runs on Fairy Tales and ignorance, promoting big gains and huge losses rather than actual investing advice or corporate accountability.
It's all just a disgusting grift, is what I'm reducing it to, and I can't really fault Founders either since they're just trying to strike gold in an emptying mine shaft before it's closed off or collapses in. They're playing the game they think will net them safety and success...even though they may have better odds on some casino games instead.
I suppose we’re living in an age of unchecked capitalism. But there are other issues too
But it got captured by slick dealmakers who managed to cop the hoodie aesthetic and youthful ambition vibe but were the same born-to-privilege punks that have always ruined everything good in computing eventually. Now its messaging is vibe code and gladhand and suck up to whichever political party won last. Its a more insular, more inbred, less substantial network of the "right" kinds of people than the Ivy League was when it stepped on the scene.
And there's nothing inevitable about it, no "big money always goes to shit" story here: its 4 or 5 key people who abruptly had a serious seat at the table and chose very fucking selfishly.
HN is still here geeking out and being a gem on the internet.
As an outsider I don’t believe it. Morals? I don’t even see a nugget or trace of some elevated goal in all of these stories.
Shareholders or not, the companies have to make money. Now us users have been gaslit for years about us just being too stingy to “pay for the product”, therefore we “become the product”. But all of these gamification/social media platforms were made to be free. Obviously there had to be a path to monetization. Morals or not. And they all end up in the same place.
Duolingo was co-founded by the inventor of Captcha. One of the ideas was to use people as translators, similar to the Mechanical Turk idea of letting people do some chore and using the product. Anyway, they also monetized eventually. Now what has Duolingo actually done for langauge learning? According to many people now, nothing. Look on YouTube. People post about their streaks. I.e. the gamification. The last video I saw was barely about how Duolingo helped at all. They had the typical “of course you can’t use only Duolingo” and then they listed all the other approaches and techniques. Well, did Duolingo serve any role? They said repetition. Well the repetition is for very artificial and out of context words and phrases. That Duolingo learners are like fish out of water in a context where they have to apply their knowledge is a meme at this point.
Another fun, very SC thing[1] about DuoLingo is/was the volunteer community. Yes of course a volunteer community to boost the for-profit platform. That’s how you get Klingon.
The AI-fication, aggressive ads, and pay-to-streak (you can artificially pause a streak for a whole month apparently) has made people worry and complain. And not because they are making a good language learning app worse to use, even. It seems to be mostly that people are hooked to the streak and are now even more annoyed by the hoop they have to go through (the app itself) to maintain it.
So what did Duolingo (DL) achieve? It made people fret and worry about their streak. That’s it. I had a friend who was so glad that he was getting close to a one-year streak on DL. Why? Because then he could quit. I wrote like one or two sentences that I recalled in his target language. He didn’t understand it.
[1] See StackExchange. I remember Jeff Atwood’s very humble blog piece about how he made his millions. It was of course all him but he had a good upbringing and access to good schools of course. No mention of the employees, but that’s just normal capitalist things so that’s fine. But also no mention that he made a platform based on volunteer work. Hmm. Self-made man? In SC culture he is. Because getting users/fools to work for you for free is the ultimate disruption.
I admit I don’t really know the cause and effect dynamic here. Is that what makes VC’s successful, or the reverse?
Contrast with a car: Their monetization model does not depend on how much I drive it - as long as I find it useful enough to buy. Or a gym, where it actually runs in reverse - the gym makes more money when I use the product less, just so long as I don't leave.
Microsoft office or Mario Kart do not need me to be addicted - they just need me to buy the software. Even Photoshop with a subscription model doesn't pursue addiction strategies - why would they? Just make it useful enough for me to keep paying for it, and that's plenty good. Maybe it's actually closer to the gym in that sense.
Which products are the ones that require addiction?? The ones that are free to use but cost money to provide.
IOW - In many ways this is our fault for expecting social media and many other services to be provided to us for free, relying on ads to pay for it.
I suppose you could try to make a social media platform without dark patterns and charge a monthly fee for it, but how many people would pay for it? My guess is close enough to zero to ensure failure. But I tell you what - I'd probably pay for it myself. And I'd be very lonely.
Edit: Replaced all-caps with italics.
I personally think the solution is simple, yet fairly draconian and therefore hard to implement due to the inevitable political backlash: ban all targeted advertising. You can still run ads on digital platforms, but the outcome of the heuristic used to pick an ad must be independent of user derived data, including session data, ip address, time of day, country, past viewing history and so on.
We need to educate friends and family about ads, help them understand the harms, give them tools to avoid them.
No one should be browsing the internet without an ad blocker in 2025, certainly no one we love.
But I feel like a lot of people, on here especially, have this "all advertising is the devil period lalalala" attitude, but it does have real value. People don't like that it's been taken to a psychologically manipulative science of big brands being shoved down your throat. But I have genuinely found the ad experience on FB/IG to be the best there ever was. I do legitimately find out about things that I end up buying and liking and people ask where I got it and laugh when I say "a Facebook ad."
I'll just say this: make the algorithm work for you.
The decisions for which I am most grateful my co-founders and I have made, from day one, were to 1) have a monetization model that's not reliant on usage and 2) not set goals against usage.
Granted, we're a bit of a peculiar case because of the market we serve (giving parents a screen-free alternative to smartphones and social media for their kids). But personally, my experience here has given me hope that other monetization models _can_ pave the way for non-addictive social products to flourish.
In 2022, mastodon.social was provisioned at a cost of 0.6EUR/year/user for 191k users [1]. This price is payable even by many people in poor countries. People would pay for something like this same as they pay for other stuff, assuming it was well designed and gave users power to do stuff.
I would pay, FWIW. I am actively looking for a decent community of humans online that isn’t run by selling data to AI farms or trying to get my eyeballs all the time. Unfortunately social media ate many of the places I previously used to call home.
Ironically the Black Mirror episode from Netflix called Common People is the best dystopic extrapolation of this kind of behavior that I have seen.
[1] https://www.washingtonpost.com/technology/2024/08/10/front-p...
Old school specialty sites are still around, with topics, categories, and discussions around the whole site emphasis.
As someone who likes to grow a little food in a semi-rural area, I enjoy permies.com - every day, a volunteer posts a new question or reposts a relevant topic, depending on the season or recent interest or whatever.
But they're not trying to make a billion dollars. Or even a million dollars.
That's why I like it. To raise funds, they sell books, playing cards, instructional videos. With non-invasive "tiny ads" which they self-parody.
Small is beautiful. The current internet is ruled by evil reptiles seeking to rip off your time, your data, your privacy, your friends... "Don't be evil" is dead and gone.
Turn back the clock 30 years. I did. And I'm happy.
This isn't necessarily turning the clock back 30 years, it's just finding some (of the plenty of) other activities I can enjoy that don't require a screen.
Additionally, for both of these activities, if your mind is elsewhere you can't do it. You have to be 'present'. Tennis is technically difficult to play proper shots (and I'm not particularly good at it, I enjoy the challenge of getting better) and inline skating, well, if you take your mind / eyes off your environment for a second you're putting your bodily integrity at risk. Having that 'presence' or singular focus is also grounding. It clears a lot of the other shit that builds up.
And, not that I feel this viscerally, there's no manipulation of my intent around my activity: I don't get derailed onto a track I wasn't intending to follow.
Midunderstanding tangent, I don't think so. Arnold says to get off the phone, get out into the real world. Totally aligned with what you are saying.
I signed up for the gym, got my partner to do the same, sought out and found some good volunteer work where I was needed. Too much screen time is not good, but old school newsletters that are relevant work just fine. They always have. Be the change you want to see, all that mumbo jumbo can actually work. Sure community can be the catalyst.
"i want to help people connect!!! but i gave up when i noticed i wasnt gonna get easy money"
then you dont wanna help people..
Money can be like crack and big tech has plenty of addicts
Even facebook emojis can be entered into the record in a court of law during a divorce proceeding. A fleeting moment of trying to make someone feel better, or more likely, to get a thumbs up, becomes a permanent electronic record completely removed from fleeting circumstances. That nonsense is potentially very dangerous
Trying to bootstrap it without any funding is a lot, but necessary, and I have to run it on a shoestring. The frustrating part is that with all networks the flywheel is everything. Once you get the product on people’s phones, the value is easy to see, but to get the app in their phones, you need a bunch of money to create value to get people there.
This is why the VC funding is so pernicious and why projects like mastodon, lemmy, and pixelfed are so difficult to get off the ground. The point is almost always the network itself more than the product.
I’ll keep trying to just do it slow and steady, even if it takes me a decade. I honestly don't care if I fail because I know the people out there that care about golf course architecture just want a place to talk about the courses they love.
Aside from the occasional 503 error (again, I'm trying to get as much as possible out of the cheapest plan), it works pretty well.
I guess the LLM era makes credible products more capital-intensive than they used to be, but even so, the vendors are pricing their stuff aggressively, and even when they try to squeeze the prices later, half these foundation models that are better-than-last-year’s-SOTA are open-source!
If you want to play with lots of money and seek out lots of money, there’s lots of money swirling around seeking to involve you in that game. But if you just want to make something nice and human-scale and small, what better time than now?
The path to billions of bucks may require mercenary bucks-extracting behavior, but that’s not the same as a growth imperative being an inevitable force of nature.
I can’t help but feel like the Small Web folks are on to something.
This power intermittent reinforcement in the on-ramp of addiction is scary powerful.
Do we have any ways to innoculate ourselves and the future generations against it?
The author poses changing the game which is support. I guess the trendy “dopamine fast” is a tool against this or weekly screen free time. Maybe more education on intermittent reinforcement or a D.A.R.E-like program for apps (a this one is a little tongue-in-cheek, but not really).
Wow that’s scary. Such powerful addiction at such a young age
I've only been able to find articles that counter it[1][2][3][4], and nothing more rigorous than a Pew survey.
It feels right, and I recall feeling similarly about certain items/events as a teen, but teens aren't known for having the most measured interpretations of reality.
1: https://medium.com/@helmisantosa/teens-without-smartphones-h... 2: https://screenstrong.substack.com/p/can-you-raise-a-teen-tod... 3: https://www.thetimes.com/life-style/parenting/article/teenag... 4: https://www.cbsnews.com/news/smartphones-flip-phones-screen-...
> Regulated Algorithms: We regulate tobacco companies because their products are addictive and harmful. Algorithmic transparency or giving users control could preserve the benefits while reducing the addictive design patterns. The EU’s Digital Services Act already requires algorithmic transparency from large platforms.
What do you really get out of social media? I mean other than most of you getting crippling anxieties about things that aren’t even real, of course.
Sure sure, I know, everyone wants it because they need to share photos of the kiddos with grandma out of country. No one needs it because they enjoy the shallow bullshit and dopamine and snarky retorts that enforce their ideology.
I've always thought it would be a good idea for governments to run their own mastodon servers for this, but something else with accounts (not publicly) tied to real identities could be interesting.
Believe it or not, they post that on their own websites.
We had to turn on the TV and watch the marquee they would add to all shows. If you missed your school you had to go to another channel to see where in the alphabet they were.
You have not made a convincing argument. Social media has specifically moved away from synchronous time-prioritized posting in favor of algorithm engagement. So I can’t accept “notifications” as a legitimate use.
The former has a clear benefit (especially where it challenges legacy industries with exploitative pricing like mobile phone networks) and even the latter can benefit you by exposing you to new ideas and information.
That social media is incentivized to push meaningless but addictive fluff over genuine communication due to monetary incentives is the point of TFA. This is a reason for making social media a public utility, not against it.
An e ink smartphone gives me hours of my life back daily.
Can not recommend enough
LCD screens attract us like ants to a dropped ice cream
Texting works very well. I'm typing this on the phone right now. It's one of the smoothest eink devices I've ever encountered.
NFC payment works fine, but using google wallet on websites seem to fail for me.
Video calls are fine but obviously black and white and frame rate is approx 10fps or something.
Huge life upgrade compared to LCD smartphones. I’m crushing books like when in middle school. Best practical change to my life in maybe a decade
The Internet was "addicting" long before there was ever a concept of social networks the way that there is today. I used to sit on my computer from sun down to sun up way back in the mid 90s, and I knew hundreds of other people that did the same thing.
I've been "addicted" to social networks that predate modern capital schemes, such as message boards, IRC, AIM, ICQ, MMORPGs, and so on.