Thread by @edzitron

Today's newsletter is about the problem at the center of everything I've written -that private and public markets have become entirely focused on company growth over all else, stagnating innovation and creating a constant binge and purge of human capital.

ez.substack.com/p/the-rot-econ…

When Meta went all-in on the metaverse, Wall St. savaged them for it, but once Zuckerberg fired 10,000 people, Meta's stock pumped, because the street saw this as a "cost-cutting measure" that would boost revenue, despite the company fundamentally *worse*
ez.substack.com/p/the-rot-econ…

Google ruined Google Search by monetizing every single facet of the product, they lose money on the cloud, and they have regularly trailed almost every industry they're in. But Sundar Pichai won't be fired, because he's making stockholders and CNBC happy.
ez.substack.com/p/the-rot-econ…

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. Just look at Uber, which has never made a god damn profit.
ez.substack.com/p/the-rot-econ…

This is why we see massive hiring/layoff cycles - because companies aren't punished for being unsustainable or bad at business. Why else would Satya Nadella be able to talk about a "referendum on capitalism" in 2020 and then fire 10,000 people in 2023?
ez.substack.com/p/the-rot-econ…

Venture Capital is even more noxious, incentivized to create businesses that *look* valuable with the hopes they can go public or exit before the non-businesses they fund go kaput. They aren't "good" companies - they're assets to be sold for a profit.
ez.substack.com/p/the-rot-econ…

Why do you think A16Z pumped so much into Web3? Because they aren't interested in "building" - they wanted the quickest possible road from investment to liquidity. They found, albeit briefly, a way to skip from "idea" to "exit," a perfect rot system.
ez.substack.com/p/the-rot-econ…

Adam Neumann is the king of symbolic capital - a guy who took WeWork from $47bn to $2.9bn, who raised $350m for a real estate company he can't describe. He is a terrible businessman, but resembles a Guy Who Can Make A Company Sell, even if he hasn't.
ez.substack.com/p/the-rot-econ…

Because the markets in particular prioritize growth over all else - such as making a profit or having a sustainable business - VCs will cram hundreds of millions into zombie-companies that burn money until they can be sold or dumped into the stock market.
ez.substack.com/p/the-rot-econ…

Growth is a fire, and we, societally, have turned our markets and businesses - private and public - over to arsonists. We have created conditions where we celebrate people for making “big” companies but not “good” companies. It is cancerous to progress.

ez.substack.com/p/the-rot-econ…

As long as companies like Microsoft and Google are rewarded for constantly burning cash and human capital, they will keep mass-hiring and firing, because the street sees people as assets. As long as VCs are rewarded for gambling, innovation will suffer.
ez.substack.com/p/the-rot-econ…

This is the problem at the center of almost everything I’ve written. The incentives of running a business publicly or otherwise are aligned with endless growth. Good companies don't do mass layoffs, and don't destroy products for profit.
ez.substack.com/p/the-rot-econ…

Overhiring Mass layoffs aren't a problem for the street, because unsustainable and reckless abuse of human capital is considered a necessary cost to increase the value of a stock. A "good company" can be run badly if the numbers keep going up.
ez.substack.com/p/the-rot-econ…

tips @Techmeme the rot economy - the problem at the center of layoffs and most of the problems in tech today ez.substack.com/p/the-rot-econ…