This is yet another thing I blame on American Business sacrificing itself on the altar of Shareholder Value. It’s no longer acceptable for a public business to simply make a profit. It has to grow that profit, every quarter, without fail.
So, simply having a good consumer product division that makes money won’t be enough. At some point some executive will decide that he can’t possibly get his bonus if that’s all they do, and decide they need to blow it all up to chase larger profits elsewhere.
Maybe we need a small, private company to come along and start making good consumer hardware. They still need components, though, so will have to navigate getting that from public companies who won’t return their calls. And even once they are successful, the first thing they will do is cash out and go public, and the cycle starts again.
Maybe we need a small, private company to come along and start making good consumer hardware.
I’ve always wanted to start a business like this. “Generic Brand” household goods. Not fancy, just solidly functional base models but with modular upgradability. Wish you bought the WiFi capable washer? Buy the module for $30. Everything would be fully user serviceable and upgradable (within reason), so parts sales ensure sustained income once market saturation is reached.
It’s not totally out of the realm of possibility. Michael Dell did it, after all, but he did it in a different time.
And Dell is actually a good case study for all this. It went public rather quickly after it started growing, but grew a bit stagnant by the 2000’s. So much so that 2013, Michael Dell orchestrated a leveraged buyout of his own company (with the help of venture capital) to make it private again. He pretty much admitted that the changes he wanted to make to the company would be impossible while it was still public. It stayed private for a while, but went public again as part of some deal made after it acquired the parent company of VMware.
Another notable thing is that Carl Ichan owned a large chunk of Dell, both in its first public incarnation and in its private incarnation. When Dell tried to take it private, Ichan challenged the plan, and thought about putting in his own bid, only to back off when he decided it wasn’t worth the effort to revive the company. Still, he was publicly against Dell’s buyout plan but was outvoted by other shareholders. Yet, he must have still held a part of the private company, because Ichan also protested it’s second plan to go public, and sued to force Dell to increase its terms to the private holders.
Michael Dell is no saint, but I conclude that he realized that the company meant more than a spreadsheet, and needed a purpose to justify its existence. He also realized that in order to sustain a business over the long term, having to constantly sustain quarterly numbers may be counterproductive. I think Carl Ichan, on the other hand, only cares about Number Go Up, and doesn’t care at all about how the company makes that happen. Over the long term, that will never be sustainable, but fuck you all, he got his bag already.
This is yet another thing I blame on American Business sacrificing itself on the altar of Shareholder Value. It’s no longer acceptable for a public business to simply make a profit. It has to grow that profit, every quarter, without fail.
So, simply having a good consumer product division that makes money won’t be enough. At some point some executive will decide that he can’t possibly get his bonus if that’s all they do, and decide they need to blow it all up to chase larger profits elsewhere.
Maybe we need a small, private company to come along and start making good consumer hardware. They still need components, though, so will have to navigate getting that from public companies who won’t return their calls. And even once they are successful, the first thing they will do is cash out and go public, and the cycle starts again.
I’ve always wanted to start a business like this. “Generic Brand” household goods. Not fancy, just solidly functional base models but with modular upgradability. Wish you bought the WiFi capable washer? Buy the module for $30. Everything would be fully user serviceable and upgradable (within reason), so parts sales ensure sustained income once market saturation is reached.
It’s not totally out of the realm of possibility. Michael Dell did it, after all, but he did it in a different time.
And Dell is actually a good case study for all this. It went public rather quickly after it started growing, but grew a bit stagnant by the 2000’s. So much so that 2013, Michael Dell orchestrated a leveraged buyout of his own company (with the help of venture capital) to make it private again. He pretty much admitted that the changes he wanted to make to the company would be impossible while it was still public. It stayed private for a while, but went public again as part of some deal made after it acquired the parent company of VMware.
Another notable thing is that Carl Ichan owned a large chunk of Dell, both in its first public incarnation and in its private incarnation. When Dell tried to take it private, Ichan challenged the plan, and thought about putting in his own bid, only to back off when he decided it wasn’t worth the effort to revive the company. Still, he was publicly against Dell’s buyout plan but was outvoted by other shareholders. Yet, he must have still held a part of the private company, because Ichan also protested it’s second plan to go public, and sued to force Dell to increase its terms to the private holders.
Michael Dell is no saint, but I conclude that he realized that the company meant more than a spreadsheet, and needed a purpose to justify its existence. He also realized that in order to sustain a business over the long term, having to constantly sustain quarterly numbers may be counterproductive. I think Carl Ichan, on the other hand, only cares about Number Go Up, and doesn’t care at all about how the company makes that happen. Over the long term, that will never be sustainable, but fuck you all, he got his bag already.