(2023-02-09) Zitron The Rot Economy

Ed Zitron: The Rot Economy. At the center of everything I’ve written for the last few months (if not the last few years), sits a cancerous problem with the fabric of how capital is deployed in modern business. Public and private investors, along with the markets themselves, have become entirely decoupled from the concept of what “good” business truly is, focusing on one metric — one truly noxious metric — over all else: growth. (BigWorld)

Companies like Google, Meta, and Microsoft were rewarded for having unfocused, capital-intensive businesses that required mass layoffs when times got tough, because the market loved the idea that they’d found a way to save money. They weren’t punished for their poor planning, their stagnating products, their mismanagement of human capital, or their general lack of any real innovation because the numbers kept going up. (BigTech)

Google has, like every major tech company, focused entirely on what will make revenues increase, even if the cost of doing so is destroying its entire legacy.

That’s because the markets do not prioritize innovation, or sustainable growth, or stable, profitable enterprises. As a result, companies regularly do not function with the intent of making “good” businesses - they want businesses that semiotically align with what investors - private and public - believe to be “good.”

Andreessen Horowitz was the lead participant in arguably the biggest con in venture capital, pumping billions into Web3 companies that didn’t have any real product.

Venture capital and the public markets don’t actually reward or respect “good” businesses or “good” CEOs - they reward people that can steer the kind of growth that raises the value of an asset. (equity market)

Until we see a seismic shift in how major investors treat the companies they invest in, this cycle will continue.

This is the problem at the center of almost everything I’ve written. Why are bosses mad they can’t bring people back to the office? Because their alignment of business success isn’t really tied to profit or “success,” but rather the sense that they are “big” and “successful,” which requires a bustling workplace and “ideas.”