I feel like it’s a common script that most good companies eventually fall to short term focused management types who are happy to shred the company as long as they get their golden parachute.
Why does this seem to be the case? If you wanted to build a company that was more immune to this sort of thing how would you go about it? Examples and counter examples of these sorts of companies would be awesome to hear about.
I’m curious what would be your reply to this? Do you think a society can regulate or educate this problem away?
The problem is capitalism, and it’s beyond the reach of education or regulation. There are other methods that could overturn it, of course, but not those two things.
Even if you established another economic system, though, that system too would be subject to corruption. I don’t know how a society regulates itself in such a way that economic systems never get corrupted by the desire for short-term personal gain.
To expand on that, even if you didn’t want to take the VC funded money and bootstrap your own business, the deck is stacked against you. If you compete in the same space, a VC funded company can do more marketing, develop the product faster, have more connections to important business partners because of large amount of money and connections they have.
And they will “outcompete” you at a loss, until the bootstrapped business goes under or settles for a tiny market share in a niche. So when they say, the economy is rigged, this is what they mean. You will need large amounts of capital to compete in the tech space. Even if you are two times smarter and work two times harder, you will never be able to compete with a VC funded company flushed with money in the same space unless you get reaaaally lucky.
Makes me wonder if a stronger system of government subsidies could replace the need for VC for some startups. The government agrees to back your expenses for X number of years until you have the means to pay back the investment, and if the startup flops in the end, the government takes the IP. If the startup is still deemed to have potential, the government continues operating the company as a state-sponsored org or folds it into a state agency to ensure the livelihoods of the startup’s employees.
End result is that startups aren’t forced into situations by VCs where they have to go public, and if they end up going under anyways by failing to pay back the government’s investment (tax payer money, basically) it is seen as a purchase of potentially valuable IP which can be made available to the public for the betterment of society and industry.