They merged with a private equity company. It got turned into a financial instrument instead of a business.

Yep. There's always the assumption that just because a business sells a product or service that it is in business to sell a product or service. This is not always true.

Like real estate.

Isn't that what happened to Bed Bath & Beyond? Can someone explain to me why this happening isn't a bad thing?

> explain to me why this happening isn't a bad thing

because there is now a good change everyone with one of these devices is likely no longer going to get support, warranty, or updates. apps will become outdated and fall off the app store parts to repair will no longer be available etc

devices/a brand people enjoyed using is now gone because PE did what PE does and destroyed the brand for a quick buck

that sounds like a bad thing tho

oh that is my bad, i read your comment on why this IS a bad thing not isn't :(

sorry

How does PE survive? If these companies become instruments and now forced into bankruptcy, the PE must write off the bankruptcy (some economic advantage must exist for this path). But then the PE has to move on and find another company to possess, right? I wish we had Instant’s financials, they did seem to be selling well, so their value was based on expected sales/profit in perpetuity…bankruptcy stops that because bankruptcy has a cap, right?

I need help understanding how PE continues to exist, beyond the assumption that they got money out of the deal and will move on to another one…

A basic HN Search yields some interesting top articles: https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...

Pensions should be outlawed. If employees want retirement savings they should be given money for 401k plans, not outdated and inefficient defined benefit plans.

More importantly, company-ran pension plans should be outlawed because they are a morass of perverse incentives and opportunities for quasi-legal theft. To put it simply, it is often the incentive of the people who make decisions about the pensions to mismanage them.

I suppose pensions take advantage of the time value of money; funding someone's 401k means you can't use the money to expand your business, but if you just pay them what they would have made 30 years later, you already expanded and that money is easy to come by because you're making so much now. But, it's difficult to enforce. The expansion plans could be "yacht for the CEO plans", and when retirement time comes, "oh sorry we don't have any money :(" is the likely excuse. So it doesn't seem to work anymore in practice; being optimistic about doing better than average long-term is not a viable financial strategy.

What's inefficient about pensions? Pension funds can also participate in a wider variety of investments than individual 401k holders. Employer funded 401ks (at least in Canada) are also a free payday for fund managers since they can charge a premium over "normal" funds and the investor is a captive audience since they can't move their investments elsewhere until they change jobs.

Sounds like 401ks are very efficient for fund managers. Maybe that’s what they meant?

I disagree. Pension is an insurance for accidental long life. Unless pension, everyone must hoard their property enough to live until about 90-100yo. It's a big waste for society.

That just puts workers' retirement funds on the open market, to be abused by any friend of their fund manager.

PE continues to exist by gaming the system: As others on this thread have speculated, driving a company into bankruptcy can shed pension obligations and enable breaking other contracts, leases, etc. Hence the paradox of everyone having these seemingly very popular products while the company is "bankrupt." Bankruptcy is not a loss for PE, yet, anyway. Which is why there is a perverse incentive to "go bankrupt" in large measure due to LBO loans, while there is plenty of brand equity and other assets to propel future sales.

PE exists because the cases you hear about are the failures. It would be like looking at the products of Google that never made money and then wondering how Google runs, you're not looking at the full picture. For every failure story like this, there are numerous other firms where PE has come up, removed a bunch of inefficiencies, driven up profits, and then moved on. It is just a more involved form of VC investing, and in that world failures are even more common.

Sure, PE is bigger than this. But isn’t the issue people are having is that this “failure” isn’t a failure (PE gains something)…it’s part of doing business as a PE firm?

One of many different models for PE firms. Yes it is a tactic used by some firms, but not all. There really are a variety of PE approaches. This article lists some of them: https://www.skynova.com/learn/business/the-9-types-of-privat...

The shady tactics end more commonly as part of the LBO or Distressed style firms.

Thanks for the article.

PE is the Ticketmaster of finance. They charge a bunch of fees, take a bunch of money, take all of the heat, and quietly funnel the money back to the founder/early investors/etc. who sold out but don't want you to know.

>and quietly funnel the money back to the founder/early investors/etc. who sold out but don't want you to know.

I don't understand this attitude. If you're in the arts I can understand why you don't want to be a "sellout", but founders/investors? Isn't the point literally to sell out?

Some founders are legitimately in it for the long haul and treat working for the company they founded as their career. I don't know how common they are, but I was lucky to work for one for about a decade.

“Quietly funnel the money back”?

Ticketmaster makes no secret of being a for-profit enterprise…

The fact that they own and operate a lot of sites that present themselves as part of the secondary market, and sell first-release tickets there, is not widely publicised; nor is the fact that many of the bullshit fees they attach to ticket sales are actually at the artist's request and paid to them.

How does slash and burn agriculture work? Similar question.

> How does PE survive?

Why do active investment funds survive (when the evidence for passive indexes is so overwhelming)?

Because people think they can make money.

PE already got theirs, through the magic of a "leveraged dividend". There's really no bigger scam going these days. From the S&P rating note a couple years ago:

"U.S.-based Instant Brands Holdings Inc. (formerly known as Corelle Brands Holdings Inc.) is issuing a new $450 million first-lien term loan. The company will use the proceeds, along with $100 million in cash, to refinance its existing $200 million term loan due 2024, $100 million seller notes, and fund a $245 million dividend to shareholders."

If you subtract out the refinanced debt the new owners walked away with $100M in company cash and another $150M in borrowed money.

"Private Equity" is a bit too broad of a term to have a single explanation (i.e. there are a few different categories of PE strategy).

In its purest form resembling instance, PE is a decomposer. It takes a business that isn't particularly healthy (due to mismanagement, sector headwinds, etc.), and efficiently disintegrates it into raw material (various forms of capital, essentially) for eventual re-allocation elsewhere. It profits and reproduces as a side-effect of playing its role in the recycle of raw material.

It's sad because a company that played a meaningful role for people and other companies is dying and being sold for parts, but it's the cycle of life – not every company is meant to endure indefinitely.

Many of the brands involved existed for DECADES: Pyrex, CorningWare, Corelle, with fervent users of this durable, long lasting cookware, dinnerware.

And they will continue to exist. The name or Trade Mark has value. So those will be sold off to someone else, hopefully with the IP.

As a sibling comment noted, you're essentially talking about the products, not the companies. They're distinct entities that are temporally correlated, but you should reason about them separately.

It's possible to have a perfectly good and marketable product, and a terribly owned or operated company.

In this case, while the company has given up the ghost, the products are still valuable. Them most likely outcome is that some other company will acquire those products/brands and continue to extract value from them on the other side of a bankruptcy.

To do anything else would be to leave money on the table, which is not what PE owners do.

I don’t know why you’re trying to naturalize private equity behaviour. It’s not some immutable law of nature, it’s a shitty consequence of our current set of laws and economic system. Our society could be better.

I mean, yeah, death is a shitty consequence of life.

The executives and boards who sell to these kinds of private equity companies know exactly what they’re signing up for. It’s a parasitic relationship, it isn’t dignified, but it’s less wasteful in some global market sense than self-immolation (i.e. ceasing operations).

>It's sad because a company that played a meaningful role for people and other companies is dying and being sold for parts, but it's the cycle of life – not every company is meant to endure indefinitely.

It's also worth noting that Instant Pot, Pyrex, etc. will almost certainly be back.

Freedom Group's well-deserved bankruptcy (its PE-induced enshittification began in the mid-2000s with Cerberus Capital Group) and subsequent sale of Remington, Marlin, Bushmaster, etc. to other manufacturers in no way suggests their products were not financially viable, which is why the companies that acquired them are still making said products.

Interestingly, just like Pyrex, these companies all face stiff competition from products they made more than a century ago that are still as capable as the day they were made. It's a tough go when you make products that last that long and where the market is already saturated with one's own products, and means that the industry isn't actually as large as their reputation would suggest (which is partially why we never see anything truly new from it- the other part is mostly just technological stagnation over those 100 years).

As far as other firms ruined by PE (for instance, Sears)... well, they won't be back mainly because the decline was slow enough, and competitors were present enough (Amazon, in Sears' case) to make the only valuable thing about the company the cultural cachet its name held 30+ years ago.

Everyone who wants one already has one, and it's not the kind of thing you need to upgrade every year. I'll keep using my Instant Pot for the next 10 years, but that won't help Instant Brands make money.

By that logic, the following industries would not exist: automotive, furniture, computer, kitchen appliances, other home appliances, television, bicycle...

The article itself and mikeyouse's comment explain the situation most clearly. Standard PE financial (over)-engineering was the primary cause of their problems.

Slowing sales obviously don't help, but changes in the macro-environment can typically be weathered if the companies' financials are appropriately managed.

> automotive, bicycle

They're supposed to have recurring maintenance fees. One might do the maintenance themselve, but a significant part of the user base will ask a shop to do it, probably the dealer where they bought it.

> furniture, kitchen appliances, other home appliances

On the higher end it survives by charging years worth of purchase. Like a 4000 bucks oak dining table. Kitchen appliance also either cost an arm and a leg or won't last for 10 years (including buying replacement for the perishable parts)

The lower end is the market IKEA dominates.

> television

They exactly saw this problem front and center and started pivoting to selling viewing data and pushing ads, getting "smart"

> computers

That's exactly why companies (the biggest cmputer purchasers) are led to leases instead of purchases, and those renew every 3 years. On the user side cheaper computers are also the mainstream, and people don't expect those to last 10 years.

I completely disagree with your examples. Cars have massively changed over time - even in short intervals, cars today offer a lot of value you wouldn't get even just 5 years ago in many models. And they're priced accordingly. Computers? Laptops got smaller, graphics improved, performance improved, etc. And still is. Televisions went from CRT to LCD, SD to HD, to OLED. There were continual reasons to upgrade.

The instant pot is like the Bialetti Moka pot - it's a simple device, that doesn't wear down quickly and isn't used enough to wear it down quickly. New devices don't differentiate nearly enough. And the used market is likely flooded with cheap ones that others stopped using.

All of those are examples of very challenged industries. Car dealers are scared of EVs because of the lack of maintenance revenue - many of them will fail. Most computer retailers went bankrupt (remember Gateway?). Kitchen appliances have been engineered down to break in 10 years. Televisions are down to 2 or 3 panel manufacturers. The bike business is famously broken.

Or you recognize that the product area it's in, and size the business to market and make it efficient for a long term run (probably growing shrinking according some metric of market adoption gap, demographics, household growth...). But that's crazy talk.

Counterpoint, we were gifted an instant pot and used it about half a dozen times before realizing it was an extra piece of kitchen equipment that did absolutely nothing for us in terms of food quality or ease of cooking. It sat in the back of a deep cupboard for a couple of years until we threw it away when we moved.

That is interesting. Like OP, we use ours constantly. I consider it to be the kitchen appliance I would never do without. I wonder if it comes down to OP and we making more similar foods than what you eat.

This is quite possible. I use mine to cook wild rice, which takes awhile stovetop. And hard boiled eggs, which come out great. Everything else I've tried with it, I might as well just cook with the stove or oven. I don't like most recipes I've seen and am somewhat of a picky eater.

I primarily use mine to make rice, beef stews, and hummus.

All of those take less time and are just as good if not better than stovetop.

Once I made shawarma in mine, that was pretty neat.

You use it to make hummus? Is there a good recipe that you use, or are they just floating out there?

I have one from my sister-in-law, that she got from her (Israeli) partner's grandmother, which is a very traditional Israeli hummus recipe. That recipe is for stovetop and I adapted it to the instant pot.

The trick is to use baking soda when you cook the chickpeas in the instant pot, because it dissolves/softens the shells. Then you take them out and rinse thoroughly in water to get rid the baking soda taste, before slapping them into a food processor with tahini and whatever else.

Good quality tahini also makes a difference. Lots of north American brands have a wildly different taste than what's common in the middle east.

Baking soda also um…degasses the chickpeas shall we say

It is wonderful to use instead of an oven since it doesn't heat up the whole room and you can pressure cook dry beans without soaking to fully done in about 20 - 30 minutes.

> It is wonderful to use instead of an oven since it doesn't heat up the whole room

Energy efficiency is a big point. Between my Instant Pot and Air Fryer I have few opportunities to turn on the oven. These devices heat up faster, cook faster, and provide more consistent results. This is especially true now that I'm an empty nester and no longer cooking for a large family. It also makes it easy to resist the temptation to rely on processed foods.

If I’m being really miserly about heat output and/or food smells I’ll walk my pot out to the back deck to release. (Could also plug into an outdoor outlet to cook, but gets logistically complicated with timing if I’m not already hanging out on the deck.)

IIRC you're really not suppose to do this. A pressurized pressure cooker is not something you want to drop accidentally.

Interestingly, different people also use pressure cookers in entirely different ways, which I learned when my partner and I moved in together, and we both brought an Instant Pot the household.

I use mine exclusively for single items that I want to cook efficiently in bulk - eggs, beans, potatoes, yams, etc. (Most recently, made a pot full of chick peas this weekend to split between hummus and a quinoa salad.)

She uses hers for single-pot soups, stews, etc. that are ready to eat as-is.

Ours is mainly a glorified rice cooker that sometimes does something else.

As a rice cooker, it cooks rice.

You're missing out, because you should be using it to make beans. As a bean cooker, it turns a annoying multi-hour job into from dry to beautifully cooked in an hour. As a rice cooker, you should just use a rice cooker, they're like 1/3 the price and you can run it at the same time as the bean cooker.

I really do need to get into the bean scene, but we have had issues [1] in the past.

[1] https://www.whelenmassnotification.com/wp-content/uploads/si...

YMMV, but the rice cooker is mostly collecting dust since I got and Instant Pot. Why? The IP is much faster than a rice cooker. Also, the inner vessel is more durable - it's stainless steel (as opposed to the non-stick coating in the rice cooker), so no worries about scratches, dishwasher, etc... .

It's a tool. What you get out of it will depend on what you expect of it. What I try to tell people is that Instant Pot is not something that makes food better nor does it necessarily cook things faster. When you factor in the time it takes to get up to pressure and the time it takes for it release it, it isn't necessarily faster than normal cooking.

What is does do it take care of itself. In other words, I can throw a bunch of stuff in the pot, configure it for cook time then turn off the heat, set a timer and know that in 45 minutes it will be ready to serve. In a house hold where multitasking is a necessity, that is a huge boon. Finally, one pot to clean up.

There is also the pressure cooker option. That's where our household gets the most mileage out of it. Pressure cooking is easy. Instant Pot pressure cooking is automagic.

Pressure cooking itself is magical but the InstantPot is like a level one mage casting magical missile. Even the “high pressure” setting is pretty low compared to a real pressure cooker.

Thankfully most meals have low HP.

Yes, you might not use it as an industrial broaster, which requires a significant amount of pressure. But for most home use, InstaPot is painless. And the cleanup is really easy.

Instant Pot sold a model called the Max which went up to the full pressure of stovetop pressure cookers. It didn’t sell. The problem is that it took so much longer to reach the highest pressure. The main limitation? North American household 110V 15-amp circuits max out at 1650W (and typical appliances max out around 1350W to leave margin).

If we had European 240V circuits we could have an Instant Pot designed for well over 2000W and it wouldn’t be an issue.

The same story goes for electric kettles. Alec of Technology Connections [1] went into extensive detail about it!

[1] https://youtu.be/_yMMTVVJI4c

My instant pot (the “ultra” model) only draws a maximum of 700w. It’s very annoying that they seemingly cheaped out on the heating element, it makes it take way too long to get up to pressure.

Yup. I have an EU version, the heating element draws exactly 1000W during the pressurization cycle. It takes pretty much the same time to pressurize as the US version does.

Pressure cooking is magic. Your dhal is reliably done after 30 minutes, even with an old batch of beans. Before, I might have waited 2 hours, and dinner was till not ready because the beans were too old.

For me, culinarily, it is basically a slow cooker that produces acceptable results, and also isn't necessarily slow either. We do ribs a lot in the instant pot and while I disagree with just about every recipe on the internet and add 10-15 more minutes than they specify, it is still faster than conventional methods because the extra heat does matter. We also use it as a rice cooker a lot; whether or not it is faster it is convenient, and, you know, we have one, which makes it cheaper than buying a dedicated rice cooker.

Regarding the set it and forget it, I can reliably steam to perfection any of the vegetables we regularly eat just by setting the pressure cook time to one minute. I don't have to constantly monitor the firmness, worry about the pot running out of water, or have uneven results. The device is worth it for that alone.

Things I use mine for regularly:

- Hard-boiled eggs. Takes just 5 minutes. Not much time savings, but the eggs are consistently easy to peel and yes, I've tried it Serious Eats way too.

- Incubating yogurt. Makes a perfect batch of four mason jars worth every time.

- Risotto. Saves the 30 minutes of attending to rice where you slowly ladle in the broth.

- Black beans. Start from dry beans in a pinch, no soaking needed.

I'm doing a complete tear down remodel of the kitchen so I bought some devices to make our 95% cooked from scratch meal lifestyle bearable through the awful times.

A top of the line Breville toaster oven was the first, it's fantastic, but it is also silly to compare it to our 25 y/o Viking duel fuel range, waiting to reenter our life.

A week ago I got my Instant Pot Pro, and I've been putting it through its paces. I boiled some eggs. This is what really irks me about IP fans: it does not take 5 minutes. It has some indeterminate amount of preheat, the 5 min., and then a cool down. The eggs are just fine, as flawless as the following method on a quality gas burner stove: Put eggs and water into pot to just cover, turn burner high"ish"; when bubbles just start, turn down to a very very slow bubble generation and set timer for 10m (12-13min at 5500' elevation), scoop out the eggs when the timer expires and put on the counter, peel when cool enough. I very rarely had to spend any attention monitoring this. The IP is just, but only just, as good.

BUT ITS NOT FIVE MINUTES.

Shouting because why do instant pot fans do this?

Now, I am quite interested in the yogurt thing. That sounds very cool, we love yogurt and industrial yogurt, meh. Also strawberries are cheap right now and I'm thinking of making some exotic French confitures, and mixing that with the yogurt.

Risotto? No brainer on a decent stove. Dried beans? I also have a 30 y/o Magefesa pressure cooker that has a thicker bottom than the instant pot "pot" and does dried beans perfectly. No magic, or even "instant", there.

Another gripe: compared to the Breville that roller knob in the center is a gawdawlful POS. Reeks of cheap.

Compared to the 15 y/o electric range that is going to be tossed out the back doors, and then shot multiple times with 12 gauge 3" buckshot loads, the IP is great, so maybe I'm a little sad that the inevitable PE bankrupt/shitify it happened to it too.

"why do instant pot fans do this?"

You may hatenjoy the discussion at https://news.ycombinator.com/item?id=36038796 .

(Hmmm... with hatenjoy I may finally have ticked "create a legit googlewhack" off my bucket list. I see some usages that appear to be "Hat Enjoy" jammed together as a domain name or company name but a portmanteau of hate-enjoy Google is not finding for me. Of course Google isn't what it used to be...)

The Serious Eats recipe requires 20 minutes of cooking time and 3 quarts of water for up to 6 eggs:

https://www.seriouseats.com/perfect-boiled-eggs-recipe

In my Instant Pot it's about 3-4 minutes to bring maybe 4 oz of water to pressure, 4 minutes to pressure cook, maybe a minute to release pressure and I'll do 8 eggs. So that's like half the cooking time.

Cooling time is the same. I plunge the eggs into an ice bath for 5 minutes before refrigerating.

I don't really do it for the time savings though. I mostly do it because it gives me a more consistent result. My egg yolks are always cooked exactly to the same doneness and the eggs are always easy to peel, even when starting with fresh eggs. (Freshness is the primary determinant of how easy eggs are to peel with older eggs being easier to peel than fresh eggs.)

I found that making them using the Serious Eats recipe I didn't always get consistent doneness (it's a lot harder to get the water temp exactly the same on a gas stove even with a thermometer). I also found they weren't always easy to peel.

So yes, the Instant Pot does save me time even with eggs where the time savings is minimal. More importantly it gives me a more consistent result with less attention from me.

YMMV.

On Rissoto, yes it's easy on a stove. But it requires you to stand there for 30 minutes lading in broth a little at a time. At least that's always the way I've done it to get a really nice result. On the Instant Pot, I can add all the ingredients at once an hit a button and 30 minutes later it's perfectly done w/o having required 30 minutes of my attention. I don't do it for the time savings. I do it because it's easier.

On beans, I didn't own a pressure cooker already.

On the yogurt, I never had consistent results trying to incubate naturally. I also tried a yogutherm, coolers, my oven, the counter. Nothing worked. So I resolved that I needed to buy an incubator and when I learned the Instant Pot could do that and more, I bought it. It was like $80 on sale. I've been making perfect yogurt for like two years now. Here's my recipe:

Fill four mason jars with whole milk. I use the Whole Foods brand ultra pasteurized whole milk. Screw lids loosely in place. Put jars into Instant Pot on top of the trivet. Fill with water till it comes up about 3/4 the way up the jars. Place lid on Instant Pot and set it to sous vide setting, 190° for 30 minutes. When done, remove the mason jars and place them in cool (not cold or they will crack) water. I do this in my sink. After about 15 minutes remove the lid from one and check the temperature is below 110°.

Add 1 tsp of starter to each jar and stir lightly. Put mason jars back in Instant Pot. Place lid on. Incubate for 8 hours. Once it's done incubating, place jars on counter for an hour or so, then move to the fridge.

For a starter, I use White Mountain Bulgarian Yogurt. Then I can chain my own yogurt along as starter for months at a time.

I prefer to mix things into my yogurt when I eat it so I like to keep the yogurt itself nice and tart.

I do it with mason jars from the start so I don't have to transfer it when it's done.

But there's a very big difference when it comes to convenience: the Instant Pot (Or in my case the Sage/Breville Fast Slow Pro, which is great) has a built in timer and cooks automatically. Once you hit "start", you can walk away and come back any time to perfectly cooked eggs.

With a stove top method, you have to stand there and watch the timer, and manually turn off your stove when it's done.

I am curious, do you often put on eggs to boil and then walk away doing other things for an extended period of time?

I am usually still in the kitchen preparing the rest of the meal by the time the alarm rings, so turning off the stove is not a big inconvenience.

I do! If I'm making boiled eggs its usually for a salad, so I want to make the eggs in advance and let them cool down before use anyway. It's nice to be able to set and forget and not have to babysit the pot or risk overcooking them. The pressure-cook method also adds a nice level of no-effort precision: if you want them slightly softer or harder you can just adjust the cook time by a minute or two. But with a pot if you want that level of precision you really have to babysit it... first wait for the water to boil, then add the eggs (risking cracking them when dropping in to boiling water), and start the timer, wait for timer, take them out as soon as timer goes off... it's just so much easier when you can skip all these steps!

There's also another advantage of the instant pot method: because it's cooking under pressure, it compresses the whites very slightly inside the shells as they cook. This means the shells always peel very easily from the eggs! Often when stovetop cooking, I'd get the shells sticking to the eggs which makes them difficult to peel.

When I make eggs in the Instant Pot, I do it on high pressure for 4 minutes, then immediately vent and plunge them into ice water. If I left them in any longer than that or even if I skip the ice bath, they'd be very overdone.

I usually do take them out fairly quickly after I hear the end alarm. I also prefer yolks which are still a tiny bit runny, so I agree that a short cooking time and removing them quickly works best!

But it's not the end of the world if you don't as it cools down quite quickly when it vents (if set to quick-release). They might be slightly overdone, but certainly not as bad as forgetting them and leaving them boiling in a pot for 15+ minutes. Which I've done more times than I care to admit.

Ah, that makes sense! Thanks.

I usually make boiled eggs when I take food somewhere (be it for hiking or a lunch in the park). But I also drop them into cold water once they are cooked to stop the cooking, so they are quickly not that hot anymore.

Not having to worry about the timing does sound nice!

Do you happen to have a yogurt instant pot recipe you'd recommend?

I replied here with how I make it:

https://news.ycombinator.com/item?id=36319364

What's your motivation for making your own yoghurt? The taste?

I make my own mostly because I enjoy making my own food. But it's also a lot cheaper and a bit easier on the environment. A 32 oz glass jar of White Mountain yogurt is almost $10 whereas a gallon of Whole Foods milk is $7.00. So $7 vs $40, and four fewer glass jars each batch.

Since I start by cloning White Mountain, my yogurt is basically identical and the taste is the same.

It's not just the convenience. Pressure cookers are way more energy efficient than boiling a big pot of food on an electric stove. If you're using an electric air conditioner to re-extract that heat from your house, the savings are even bigger.

You do need to know how long your food needs to cook up front, or be tolerant of overcooked food.

The money was stolen.

This is an utterly textbook private equity play, the kind of thing that has been wrecking American business and jobs.

There's nothing subtle about this at all, it's looting with a pen.

They acquire the business, load it down with massive amounts of debt, do reckless short term things to boost growth (aka "eating the seed corn") and then take the money and keep it leaving someone else holding the bag.

It has nothing at all to do with how much people do or don't like cookware.

It's a bust out, a racket, just an inch away from organized crime. It happens daily in this country.

If that's true, I wonder why the article doesn't make this clear. All it says is the company has a half-billion in debt, without any explanation for how that came about. It doesn't even mention that the company is owned by a PE looter.

Quotes from the article:

> In 2019, his company merged with Illinois-based Corelle Brands, the owner of Pyrex, CorningWare, SnapWare and Corelle.

> In 2021, at the height of its popularity, the company borrowed $450 million US worth of bonds, due in 2028, to expand its business.

Is Corelle the PE firm? Is "expand its business" the standard figleaf PE firms use when looting a business?

For some unknown reason this all still happens right out in the open without a major media narrative built around it. A few activists and lawmakers have tried but it's still not in the public consciousness.

But it's constant and blatant and somehow seems to still be legal.

The PE firm here is Cornell Capital.

The business press is in on it. I don't mean in the sense that they get financial kickbacks, but business reporting is a cushy job where 90% of the work is rewriting press releases and boilerplate 'analysis' of stock movements.

to be clear, PE isn't always purely extractive, but when it is, it can be highly destructive. sometimes a business is so mismanaged that debt (and the pressure it adds) and new management is all that is needed to right the ship.

PE itself is a bloated industry because we have too much money being extracted out of the real economy going into the pockets of the already wealthy who don't know what to do with it, so they hand it to a money manager (i.e., PE) to make more money for them, not knowing what to do with those potential future earnings either. this is the kind of economic inefficiency that concentrations of capital brings, in direct refutation of the common economic argument that the wealthy are better at investing money (i.e., more capital efficient, which in turn supposedly adds more real productivity to the economy).

small, local amounts of wealth are more capital efficient, but large, distant amounts are not.

Private equity, as a concept, just means a firm or group of people that owns something. We're posting these comments right now on a website owned by a private equity firm. Technically if I sell my lawn service to some guy with an LLC it's private equity.

Private Equity, as a distinct industry, is fully engaged in looting of the type contemplated by the principal-agent problem:

https://en.wikipedia.org/wiki/Principal–agent_problem

not sure what point you're making here, but my point was that there is room for little PE, but not big PE, because little PE can have the effect of making capital more efficient for the overall economy. it's the same with arbitrage--a little arbitrage is good for the economy, but large, systemic arbitrage is extractive for no overall benefit.

the principal-agent problem emerges in any business where professional managers are employed (which usually happens when a business gets too big for its britches), so it's not PE-specific.

A while back I was reading up on private equity as an 'industry' after a prior employer was bought up by PE, carved into bits, with each 'chunk' being sold off to the highest bidder.

If you look up the names of some of the PE companies they're quite on the nose: https://macellumcapitalmanagement.com/ Macellum literally means "meat market": https://m.dict.cc/latin-english/macellum.html 'Take an animal (company); chop it into parts and sell those off'

Wikipedia page for Macellum: https://en.wikipedia.org/wiki/Macellum

And they’re proud of it. From their own website:

> Macellum’s campaign resulted in the addition of 4 of 13 directors. Also, as a byproduct of the pressure applied during the campaign, the company sold non-core assets equal to approximately 75% of the market capitalization. Macellum’s price objective were met and we exited the position at the beginning of 2021. Subsequently, a fractured board and new CEO were unable to oversee and execute the turnaround plan Macellum outlined during our campaign and results deteriorated.

A little piece of classical music on this theme: https://www.woodyguthrie.org/Lyrics/Pretty_Boy_Floyd.htm

"Yes, as through this world I've wandered I've seen lots of funny men; Some will rob you with a six-gun, And some with a fountain pen.

And as through your life you travel, Yes, as through your life you roam, You won't never see an outlaw Drive a family from their home."

Stolen from whom? The shareholders got cashed out in the acquisition. The lenders financing the acquisition might or might not lose money, but they’re certainly sophisticated enough that I shed no tears for them.

Private Equity. Instant Pot had great cashflow but slowing sales, so the PE owners issued $450M in new debt and then immediately paid out $250M in dividends resulting in 8x leverage compared to the 4x it had prior to their financial engineering. Further slowing sales and all the cash being stripped from the company ends up with bankruptcy every time.

Really disappointed that this happened.

I'm apparently stupid. I can't understand how that can be even remotely legal.

I know basically nothing about this, but hear money peeps talking about it all the time like it is common practice. Some version of it happened to the B&M store Clarie's.

The company's officers are in on the take. Legally they can take these actions on behalf of the company, as long it's clear and in the open.

It is the bankruptcy part that I don't understand the legality of. Parent company pulls a ton of money out of subsidiary, claims bankruptcy, then magically parent company isn't liable for subsidiary's debt?

PE isn't a parent company. LBO debt is debt carried by the acquired company. So there is no sleight of hand in bankruptcy. The poison is already in the acquired company's bloodstream.

Yep, all correct. The sleight of hand comes just before bankruptcy when the assets are stripped and sold to a different entity so the debtholders are screwed with worthless assets and are stuck filing longshot lawsuits to recover assets while the ghouls who raided the company invest their ill-gotten proceeds while tying the mess up in court for years.

https://archive.is/LsqUp

Who in their right minds lends to a PE-owned company? You know they’re going to raid the piggy bank and leave the lender holding the bag. There can’t be that many rubes with $450 million laying around. Are the investors government pension funds or something?

Just another in a long list of the awful long term consequences of zero interest rate environments interacting with the principle-agent problem.

The people approving these loans get to report better quarterly numbers and by the time the chickens come home to roost, they’ve already moved on.

LBO lenders charge high rates. This means a loan that eventually settles for less than face value can still be more profitable than a low-interest loan that gets paid off on schedule.

I guess those loans are rather quickly sold on to third parties, either as bundles or stand alone. Kind of like what happened to MBS, mortgage backed securities.

Also, a lot of the time, the government will bail them out, and they can continue doing that.

You've got a few numbers there, and I'm really really curious about the whole story.

Besides killing the company/jobs, the debt-holders are left holding the bag?

No reason to think the company or jobs are in jeopardy. Maybe they are, maybe not. The really bag-holders are the lenders who will take a haircut. Most companies emerge from bankruptcy stronger than before, having never ceased operations.

From the article: "Broadly speaking, the CCAA is the Canadian equivalent of Chapter 11 of the U.S. bankruptcy code. Companies enter both processes when they are seeking the court's help to protect them from their creditors while they try to come up with a way to restructure the business and continue to operate."

Yep, pretty much. PE Owners get rich(er), debtholders get wrecked, employees lose their jobs, any assets (pension contributions etc) are given to the debtholders. The company will likely continue to exist and Instant Pots will still be made/sold, but with a much smaller footprint in the future.

The linked article talks to management about how unsustainable the $500 million in debt is without noting that it was half of that amount until these jokers took out loans worth $450M to gave themselves $250M.

Instant Pots are awesome, broadly useful, and last a long time. They reached market saturation, though, and the company kept trying to find a way to keep up the growth curve it had when Instant Pot was being adopted. And then, of course, the Private Equity “extract money and load the firm up with debt” maneuver of death.

I recently bought their sous vide gadget and it seems pretty good. I wish it would remember its setting after erroring out, but that's very minor. It seems very accurate, within a degree.

> kept trying to find a way to keep up the growth curve it had when Instant Pot was being adopted

I think if you're to pick a lesson to takeaway, this is it.

There are other objectives to pursue, than "continue to grow as much or more this year as we did last year". That objective in particular is destined for eventual, guaranteed failure – and an outcome that leads to decomposition (by PE, bankruptcy, whatever).

If you live by the sword of greed, you die by the sword of greed. It's tragic but banal in the 20th/21st Century US – great brands succumb to it every day.

> We have an Instant Pot and use it. All. The. Time. It is a well made product that is simple to use, has a good feature set, is useful, and relatively inexpensive

You may have just described why they're filing for bankruptcy.

While I do not own an Instant Pot, I do own an awful lot of Pyrex cookware that I bought well over a decade ago... My mother has Pyrex cookware she's owned for decades and will likely pass down one day.

It's hard to build a lasting company when your customer's buy once and never again. Perhaps there's really such a thing as "too good".

Not at all - as long as they're earning a profit on each one large enough to justify having produced it, then they lose nothing by their products lasting a long time. The worst outcome might be that the market becomes saturated and everybody already has one or two, in which case the business just scales down and goes away, having earned a lot of money. But I doubt even that outcome in this case.

Maybe, but in the same time duration I've bought multiple sets of pots/pans, wooden spoons/spatulas, several wooden cutting boards, mixing bowls, etc.

If the company drags on long enough, all that profit gets eroded away. Pyrex has been around since the early 1900's for instance.

I agree, might not be 100% of what happened here, but it surely has to be a component.

It sounds like you're getting a lot of value from your purchase, which is great. But this doesn't mean that the company made any money by selling it to you. Maybe they did or not, but that's a different question.

Same, we have one, we use it probably at least 4-5 times a week, it's a great product.