That's the majority of US run companies these days. If it isn't employees with stock grants, the executives themselves have performance bonuses. So doing every long term business killing thing for short term personal profit is status quo.

It also incentives short-term thinking and results. Some managers will burn whole departments just to hit a target and then leave after they got their bonus and the company goes down.

Maybe companies that let themselves be controlled by such forces deserve to go down.

The problem is that ~all companies let themselves be controlled by such forces. Given there are so few counter examples it looks like it is a systemic issue and not a choice each board makes independently.

Google's unusual share class structure was supposed to give them a degree of independence from these forces, but it didn't last. They still tie employee comp to share prices, so they still have to care about share prices. Facebook has even stronger centralization of shareholder power, but its pay structure is very similar. Can you think of any example of a public company that is resisting these forces?

Apple comes to mind as a company with some degree of long term vision and strong leadership. They are meticulous about maintaining their brand, and so far have resisted the enshitification.

They also have more cash than they know how to spend. So maybe the pressure to increase revenue this quarter is just lower in general.

They also destroy perfectly good computers with their trade-in system, reducing the resale and spare parts market. This would be the plot of one of those environmentalist children's cartoons.

There are no true saints in the world. But some monsters are much worse than others.

They resell them here https://www.apple.com/shop/refurbished

From that page:

> If your device isn’t eligible for credit, we’ll recycle it for free.

Per https://www.vice.com/en/article/yp73jw/apple-recycling-iphon... (2017, so it might have changed since):

> Apple rejects current industry best practices by forcing the recyclers it works with to shred iPhones and MacBooks so they cannot be repaired or reused—instead, they are turned into tiny shards of metal and glass.

> "Materials are manually and mechanically disassembled and shredded into commodity-sized fractions of metals, plastics, and glass," John Yeider, Apple's recycling program manager, wrote under a heading called "Takeback Program Report" in a 2013 report to Michigan Department of Environmental Quality. "All hard drives are shredded in confetti-sized pieces. The pieces are then sorted into commodities grade materials. After sorting, the materials are sold and used for production stock in new products. No reuse. No parts harvesting. No resale."

Recycling is not a good thing: it is an expensive and intensive industrial process. Recycling is a last resort: if you have to make new stuff then sure, recycle, but it's better to avoid making new stuff by (a) not needing stuff in the first place, and (b) maintaining and repairing old stuff for as long as possible. Whatever happened to “reduce” and “reuse”?

> Recycling is a last resort

It sounds like that's exactly what Apple is doing though?

>> If your device isn’t eligible for credit, we’ll recycle it for free.

If they can, they will resell the device. But a 5+ year old phone with a busted screen and dead battery is just trash. There is nothing to do but recycle it.

Scrapping the phones for spare parts would still be possible. This is usually standard practice for electronics recyclers, but the recyclers working for Apple are (were?) forbidden from doing that.

If you don’t think that this goes on at Apple, I have a bridge to sell you.

Just food for thought - why do you think that the ipad (with the same processor as the laptop) has not gotten more capable over the years? They can’t figure out how to do it? No one on the ipadOS team has the brains to make it happen, or it just hasn’t occurred to them? Or maybe there has been an internal conversation and they realized that it would drop the sales of Mac machines below a threshold where fixed costs outweigh the mac team’s ability to stay afloat (pure speculation on my part)?

Make no mistake, Apple is no paragon of virtue here. I love their products (though they also frustrate me), but the company is largely the same as Google and Microsoft in ethics.

I am not personally a fan of Apple products for exactly this reason. I think the user experience on all their products (iphone, ipad, mac) is not good out of the box and is really restricting in what you can do.

But, I still believe Apple is trying to make the best products they can. Their design philosophy is heavily opinionated, and therefore a lot of people don't like it. Google's core mission is to slurp up user data & sell ads, and they are willing to make their products worse for the user to satisfy that goal. I don't think Apple would intentionally make a product worse to boost some short term metrics in that same way.

> why do you think that the ipad (with the same processor as the laptop) has not gotten more capable over the years?

I think Apple has consistently shown that they don't really care about power users. Why can't I snap windows on a mac? Why can't I customize the launcher on an iphone? Apple doesn't care about that use case. They stuck an m1 into the ipad because they already make them and its a super power efficient chip; they still have the same product vision for the ipad.

> Make no mistake, Apple is no paragon of virtue here.

Certainly, no company is virtuous. I think its more about incentives. Apple is incentivized to make good products and maintain their brand. Google is incentivized to sell as many ads as possible.

Shareholder independence does not actually liberate you from caring about share price if you want to be a successful monopolist.

Google is not an innovative company and cannot launch anything that people actually want to use. What they do is buy things other people built and scale them up. And in order to do that, you need access to the capital markets so you can borrow money[0] to buy other companies. Those loans are collateralized against the company that took out the loan, and if the company's value goes down, your credit limit goes down.

The only way to actually liberate companies from these forces is not to turn the company from a shareholder oligarchy into a founder dictatorship, but to restrict M&A so that the competitive pressures of "monopolize or die" subside.

[0] You could self-finance M&A but most businesses don't like to do that because it ties up cash flow.

And how do they "go down" if they have monopolized their product area and made it impossible for new competitors to enter the field?

why companies are terrible

https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

depressing

This is unbelievable. Imagine how different the world would be today if this had gone the other way.

If it had gone the other way it would have been overturned probably pretty quickly. It doesn't make sense for owners of something to not be in control of it.

> It doesn't make sense for owners of something to not be in control of it.

When I say this about my phone, I get told that It was my choice to buy it.

I would really like to have the same set of principles applied consistently to ownership of end product and ownership of the stock.

Currently some people enjoy greater rights for no reason other than privilidge.

i don’t find it at all unbelievable. i think the judgement is pretty spot on:

> A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes…

You never know, it’s the law of unintended consequences. Maybe it would’ve caused people to walk away from stocks as an investment. Maybe people would’ve put all their money in real estate instead. Kind of staggering if you think about how much worse the whole housing crisis could be.

Devil's advocate; maybe they would invest more into small businesses instead of housing.

Small businesses are hard. I can’t tell you how many restaurants moved in (and then went out of business within a year) to the plaza next to the university during my degree. The landlords who own that plaza have remained the same for decades. They don’t care if any of the businesses survive. They have tenants lined up around the block, just waiting to pay big rents.

What's the failure rate in small- vs mid- and large-sized companies? Is it really any different?

Restaurants have extremely high failure rates! Large sized companies are rock solid by comparison.

you would invest in a fund, not individual small companies.

So you think that companies would be better if the shareholders were not a check on CEO power? Basically that would make all companies like tech companies with dual class shares that give the CEO perpetual absolute power.

The problem with shareholders as the ruling class of an organization is that they are prima facie incapable of having a vision, projecting it, and marshalling the resources to make it a reality. Because they act as a crowd, they can only converge on their common interest, which is profit. When the shareholders have their way, a profitable venture and it's customers are min-maxed for share values until the enterprise is left a pile of rubble

I sometimes wonder if future civilizations will look back on this as a kind of socio-technological inadequacy: "See, this is what people had to deal with before we invented Zlormian Goal Contracts!"

This kinda-relates to other legal theories, such the rule against perpetuities [0], since it's hard to assemble a framework that can survive 50.0001% of the shareholders deciding to loot it.

The closest I can think of actually involves legal-statute and tax law, where a company incorporates for an explicitly-charitable or non-profit purpose and then the government enforces that status indefinitely.

[0] https://en.wikipedia.org/wiki/Rule_against_perpetuities

I feel like having a CEO with a grand vision beyond profitability would be good 5% of the time and an ego driven mess / financial disaster 95% of the time.

I would agree if shareholders were stuck owning the stock for a while, but currently average stock ownership duration is measures in weeks or days. How much interest do these people have in the future of the company?

In this instance their customers are the advertisers / ad buyers not chrome users.

Aligning employees' interests with the long-term interests of the company is really challenging.

A typical counterexample to compensating in proportion to equity performance is compensating in proportion to revenue or profit performance (i.e. something still related to market performance, but with fewer tangential variabilities).

But I don't think that switcheroo would have resulted in a different outcome, here?

I think, perhaps, the underlying issue is the cultural norm of lionizing revenue to the exclusion of all other corporate principles. In this case, it's not really the Sales person's fault. It's Jerry's manager, or Jerry's managers' manager, etc. – for allowing the feature-blind prioritization of revenue to fester.

Most businesses have one or more metrics that they track that mirrors customer happiness or satisfaction. For example Netflix has total paid subscribers. Amazon has monthly active users (as does reddit and whole bunch of other companies). Reddit also has daily average time on site.

You could easily tie compensation to these metrics. Of course in some cases these too can be gamed, but as long as you find a metric that mirrors customer happiness, then everyone is incentivized to increase customer happiness.

You can increase monthly active numbers by making unsubscribing harder.

You can increase average time on site by just funneling people lowest common denominator garbage all day.

Pretending there is some magic metric here and Google isn’t meeting it is ridiculous. Google is very well liked by the average person!

Those metrics are in fact routinely gamed by well-meaning PMs whose (perceived) compensation is affected by those numbers, with UX-dubious features like unnecessary and disruptive notifications, highly discounted introductory promotional periods that most users churn out of, and so on.

Hence the adage: the most effective way to take a useful metric for measuring progress towards a goal and make it useless, is to make the metric the goal.

Hardly , users are not the customers we are not paying for search , they only have to maintain the image so we don’t sour on the brand , they don’t have to care about our actual experience there are no competitors

The customers are ad buyers and their concerns and revenue dips are being taken seriously here as the public company /esop system is designed to do.

I think tying compensation to stock price makes sense... if you work for a company till retirement. If these stock options are the difference between covering your retirement or working into your seventies, employees would think long-term.

If https://www.cnbc.com/2019/12/03/a-tech-firm-tried-it-all-to-... is to be believed, average tenure at Google is just over a year. That turns stock options from a retirement fund into a nice bonus to cover looking for a new job.

what’s the alternative