money is put where profits are

this seems like a low-margin low-profit business

it’s not the investors who are the problem, it’s the capitalist system which encourages this behavior

It's the nature of predatory capitalism. Push as much of the cost of doing business onto external entities as possible.

The way this is supposed to work is that you make flour and I want flour so I give you money and you give me flour. Then you make more money by automating the production of flour so you can sell it to me for a lower price even though you now have higher margins, and try to take market share from competitors who are doing the same thing. The profit motive increases efficiency. This is growing the pie.

The nefarious way to make money is to swipe somebody else's piece. This is rent seeking. It causes prices to increase with no increase in value. It is to be destroyed.

Just as it was possible for a medieval king to have terrible finances by spending more on war/security than he collected in rent from Barons, a tech company can lose lots of money by spending more on customer acquisition/platform maintenance than collected in rent from suppliers.

Sure, but first lend me a few hundred million in capital would ya?

I realize not every business requires that much but I work for an oil supermajor... so, little hard to do what you're suggesting without your help. The "capital" in "capitalism" keeps getting in the way.

It's a bit myopic to say this only about America.

Which actually benefits us as the consumer. Would you prefer a less greedy corporation that goes where the most expensive labor is which then increases the cost of production which then increases the cost of the products you buy from said company?

Greed is what keeps prices low, and competition high.

Exactly! Why do we have to pretend we have a goal other than making money without compromising our principles? The best way to make money and keep on doing so is to give people something that is worth spending their money on. A good product at a fair price isn't healing the world, but it's not breaking anyone's leg either.

I wonder if a lot of this goes back to early 20th-century businessmen who tried to apply Transcendentalist thought to business, promoting unity and loyalty by creating a feeling of a noble cause in their employees (Charles Ives, an insurance executive and composer, is the example I'm most familiar with).

I really wish anti-capitalist sentiment would grow louder in IT. This is pretty much capitalist critique 101. Companies chasing profit are often blind not only to the negative effects of their businesses, but even to the needs of their customers.

It's extremely difficult for companies to stay content in their current business model without growing. If the company is not willing to be sold to a larger company, a larger company (often FAANG) will pump nearly limitless capital into building a free competitor that will eat your userbase. This happens over and over again, so it's not very practical to just say "companies should stay where they are good at". The system disincentivizes this, and companies staying still will always get knocked down.

We need a systemic change.

Definitely this - there should be no such thing as a labor shortage under capitalism, you can always pay more to get workers, and if the business can't afford that then it's a fault in the business model. At that point the ideal outcome is for the business to go under and sell off their assets at a low market value to recoup losses - which frees up those resources for new businesses to form

That is completely reasonable if you own and run your own business.

But most businesses aren't owned by the people running them. The owner doesn't care what happens, they just have $X and want that money to grow a small % every year. The way that's gonna happen is if the business they bought with that money grows a small % every year.

The board, the CEO, the managers, the VPs, they all work to make that % increase happen, whatever it takes. If they can't make it happen, they get fired. If they need to increase prices for that, that's what's going to happen. If they need to milk people, cut corners, move manufacturing overseas, whatever it takes, they will do it. If they don't, someone else will.

The owner's money must grow. And "owner" doesn't have to be some fat cat evil billionaire. It's also the retiree living off their 401K savings. It's the 20-year-old starting their contributions. It's the employee pension fund that is there to protect employees.

P.S. I'm positive none of this is news to you or anyone reading it, but I love talking about this sort of thing.

That's too reductionist. You could apply that logic to anything that a company pays for. Renting photocopiers? Then the capitalists at Xerox are reaping part of the rewards. It might be true, but it's not very interesting.

Hum... That one is expected. If you improve commerce, you create a huge amount of surplus, and you will certainly be able to take a bit of it.

What is sad is that the current crop of middlemen is so uncreative and risk-free. That means our commerce is so restricted that anybody bold enough to defy the government makes a revolution.

You aren't entitled to profits at all. Profits come after cost. You're cost. You cost more because the demand for your labor versus the supply of your labor raises the price of your labor.

Don't assume this will go on forever, the next bust may well wipe out the huge wage advantage of today's tech workers.

This is what is known as "rent-seeking behavior"

And there's a metric fuckton of it in our economy.

That's easy to say but IMHO requires the consumer to pay directly rather than the whole advertising nonsense that has nothing to do with the consumer searching for stuff.

Starting to think the only way to stop this kind of thing is to remove the profit motive as much as possible. The whole 401k plan idea for retirement savings is causing huge inflows of cash into the market which is probably where a lot of the money looking for returns is coming from. When a whole society is seeking profits it seems like that's going to make things worse. I'm not even sure how much return rich folks were looking for in the old days - if you owned a big company and it was making money, was there such thing as "enough"? There definitely isn't today.

I don't see anything wrong with that; as the owner, the upside accrues to me, so it makes sense that I'd be willing to work for less compensation in the short term. (I've been in situations where my compensation was negative while employees were getting paid. If you can't get investors, it makes a lot of sense, I think. For me, even living in silicon valley, after $40K/year or so, the improvements to my life brought by every additional dollar diminish rapidly, and as I'm in silicon valley, 3x-4x that is not unreasonable compensation for my skillset, even sticking with year+ long gigs; this is how I funded my company until recently.)

>People typically pay a premium for a temporary service rather than employing someone full time. That is how you make money. It is why I pay a plumber a crap ton when my pipes break because it is still cheaper than employing one full time.

That is not how I make money. Selling hours... is difficult to scale. My goal is to get into a situation where my capital (plus a little bit of scalable labour, or labour I can easily hire out because I've worked in the field my entire life and I can recognise good people) multiplies every year. You know, own some means of production. Become, as the communists would say, bourgeois.

This is part of why my marketing message is so consistently "we don't provide a lot of support" - I'm happy to accept a slightly lower (but still ridiculous, by investment standards) return on my capital if the labour bit becomes more scalable.

So yeah, that's why I'm willing to take a loss on my labour (or even on total compensation) - for the chance to have a business that grows without being limited by my labour.

I'm renting, essentially, unix servers, so while my capital equipment depreciates at a terrifying rate, my capital is my primary tool for generating revenue. (and as far as investments in capital go, the margin on VPSs is pretty high. A server will pay for itself in under 4 months, on average.)

I mean, the whole revenue of the company is about a quarter million a year right now, which is about what me and my full timer would get paid, combined, if we both went and worked for a local big company. (the lion's share of that is eaten by power and new hardware.) I know why I'm here; revenue doubles every year, and this is the sort of business where capital cancan make money with minimal labour, I mean, potentially I'm sitting on something that can double my capital investment every year. I mean, if I don't screw it up.

But yeah; if you are looking at a business that scales? this long period of not getting paid a whole lot is pretty normal. You go out and buy a retail store? a restaurant? etc, etc, - it's going to be a long time before you earn back the initial investment.

It's really only contracting/consulting where you make more from day one; and that's a great way to get your hands on some capital, but from my point of view, long-term? it's not nearly as attractive as having my capital do the work.

Now, I think I'm stabbing in the right direction, but it has yet to be seen if I'm doing it wrong. Certainly, if I sold today for 1x revenue (not at all unusual for small businesses) I'd have made less money for more work than if I had just done consulting for that time period and put the money in T bills or whatever. But if current trends continue; it doesn't take very many years before we're talking about real money. (now, such doubling never continues forever. But I don't need forever. I'd be dang comfortable with another 3.)

The opposite is rampant inequality, where workers get paid pennies and owners keep most of the profits.

> I see no particular reason why profit of a company must be shared with its workers, most of whom did not outlay the initial capital (or subsequent funding rounds) that built the company.

You are OK with the people who create the actual thing a company sells, not getting their share. Only people who provide capital should.

Where do you think wealth comes from?

Because that's capitalism. Investors want "growth".