That reason is people like more money than less money. No one logs into their brokerage account and invests in Sonos because they have a great product that is growing (or shrinking) at the rate of the speaker market.
People want to see their year end report at least equal the broad market returns.
The directive for all business leaders is to hit those benchmark returns, not pump out a solid speaker for however many years.
And if a private business owner operates their company in a way that lags the market’s returns, then they are basically doing charity work. They’re going to have to pay a lot of cash compared to their competitors who can use RSUs to incentivize employees.
Clearly everyone likes money. We could pay them for good things rather than the transient illusion of good things.
Yes it would be imperfect. No it wouldn’t be worse than this mess. Bell Labs didn’t invent the transistor on this model, JFK didn’t send us to the moon on this model.
This “privatize the commons of a century of effective public/private partnership” model is going rather shit in fact.
Every publicly listed business already does this, in the form of stock grants and options with various targets to hit at various intervals. See bottom of page 51 for an example:
https://investor.apple.com/sec-filings/sec-filings-details/d...
It’s where all those rage bait headlines of extreme executive compensation come from, from maturing equity granted before the stock appreciated a good amount over the course of a few years.
I hate to be aggressive but it’s really pretty godawful that people let absurd, corrosive claims like this fly. There is a creeping normalcy to weird Art Laffer talking points and weird Milton Friedman Freak Offs with no evidence. Things suck for the typical person since Dick Cheney and Art Laffer started “cutting taxes”.
You’re wrong in a way that demands a complete ignorance of everything from news to history to human empathy.
This mindset needs fucking therapy and where therapy fails the legal system for a fucking change.
This is not
> There is absolutely no basis for the sweeping, extraordinary claim that “every publicly listed business” is managed and incentivized around sustainable long-term value.
There has been plenty of research into figuring out how executive compensation can be tied to longer term performance, but “sustainable long term value” is such a nebulous term, I have no idea what it could mean other than a fantasy where people are able to magically measure everything they want.
https://en.wikipedia.org/wiki/Executive_compensation
I only meant to highlight the fact that it is standard practice at publicly listed businesses to hire consultants whose job it is to figure out how to align executives and reward them for achieving long term goals.
Maybe you think the current timetables are not long term enough, or the measures are not correct, but it’s not as if cash is being handed out Willy nilly.
We’re handing out trillions in cap for press releases.
What on God’s green earth the fuck are you talking about?
Willy nilly? Will Wonka with a chocolate factory is closer to earth.
My Google Home costs $30 second hand, don’t sound as good, but I’ve not spent a single cent on it after setting it up. What is SONOS doing?
I'm sure that at some point, Samsung or Google or Sony or some upstart will catch up, but it will be a long time before someone eliminates SONOS from contention despite this multi-year setback
It just did’t evolve very far or very fast, or even adapt pricing to better fit a rapidly changing market.
They switched away from multi-room hi-fi (or at least mid-fi) audio and users with their own hoard of digital audio to focus more on streaming services and chase the trend of little monophonic speakers. The higher-end devices remained good but ever more niche.
Then they broke everything, particularly customer trust, with the app update.
[0] I have no idea what it is actually
So while it's maybe neat that they solved fringe use cases, it's unfortunate that they failed at the basic use case of "just easily play audio from my phone"
I think that's the kicker. It was revolutionary when it came out, and it's a solid technical solution, but Sonos was novel over a decade ago.
The reason is tax law and it applies to all companies not just tech. Removing the double-taxation of dividends would fix so much of our economy.
If you run a stable, no-growth but profitable company, and each year return the profits to the owners (shareholders) in the form of a dividend, that's bad because the income is first taxed when the corporation declares it as income and then again when the shareholders receive the dividend.
If instead you don't issue the dividend, but re-invest to grow the company, then the value of the shares can increase without creating a taxable event for the shareholders.
We could avoid a lot of the boom-bust cycles, enshittification of products and other economic problems if we just structured tax law to encourage stable, profitable companies issuing boring predictable dividends instead of our current system that requires infinite growth.
Why is that bad? The first case is income to the corporation and they pay income tax on it. The second is income to the shareholder and they pay income tax on it. How is it different from the corporation's employees paying income tax on money received from the corporation?
>If instead you don't issue the dividend, but re-invest to grow the company, then the value of the shares can increase without creating a taxable event for the shareholders.
That's true as long as the shareholders never sell their shares. Once they do, it's a taxable event like the dividend.
The money paid to employees is only taxed once.
We (pretty much everywhere) tax companies on their profits, but individuals on their income. It seems unfair, it leads to some weird but accepted inequalities (like the cost of renting a house vs buying), but no alternative seems to work.
While sometimes criticized as "executives juicing the stock price because that's what their incentives are tied to", in fact investors recognise that buybacks are economically equivalent to dividends, but tax-advantaged (for exactly the reasons you gave, they don't create a taxable event for the shareholders).
One problem with buybacks is it's socially difficult for companies to replace dividends with buybacks - by convention, dividends are usually issued on a regular schedule and buybacks are ad-hoc, so "cutting dividends" is seen as a sign of a company that no longer has reliable profits. But that really is just convention and it would only take a few companies switching to normalize this.
But while superior products at a price point can capture a bunch of share, after that they grow at the rate of the market. Those markets have “matured”.
For whatever reason we don’t as a society let “tech” markets mature. We demand growth long after everyone is satisfied.
This is where ideas like “growth” and ideas like “useful” diverge: raise your hand if you like Facebook or Google in 2025 more than 10-15 years ago.
Sonos (and I’m aware of the structure) “grew” right out of a sustainably profitable business with happy customers.