Let's pretend the suggestions of the author were adopted by Apple in 1995. They stopped entering new markets. They have a product portfolio that generates $11B ($30B today). That portfolio includes some real winners, like the Pippin, a webtv competitor. (WebTV--another company that clearly didn't need to enter new markets because they're doing fantastic today.)
Does anyone really believe this company is viable in 2024? In this scenario, Apple is dead.
The author is free to change his mind about what product he wants over time... but there's something wrong with a company that changes products over time? Companies must be free to adapt to the changing preferences of customers. The alternative is corporate death.
I'm not sure. I'm a big plant guy and when I think about how plants adapt to new environments it's all about growth. Movement to better soil, water, or light is achieved by growing to a new location and then abandoning the old stems/leaves/etc. A plant that can't grow is about to be toast - these often bloom in a last-ditch effort to continue their genes through new plants (that will have to grow) elsewhere. It's very hard, or even impossible, to maintain a static ecosystem. Plant parts age or get mechanically damaged - the only way to replace them is growing new ones.
It's obviously not a perfect analogy. But in complex natural systems stability without growth is rare.
Maybe for you and even me. But not for the owners and workers of said company. If you were 42 years old, with 3 children to feed would you not mind if your company was dying and suddenly you had to start brushing up your resume, applying for new jobs which you don't even know if will be as good as what you have now?
What I mean is, it's absurd to expect companies not to behave the way they have always did.
Your definition of “always” might be different than mine
There was a time not long ago and for the majority of human life that the modern concept of a equity based corporation with distinct split between owners and labor didn’t exist
So I’m not sure if always is accurate grounding or the base rate that should be compared against
I think a lot of how companies behave is defined by how they are constructed in law. For example, limited liability allows shareholders of companies to to be shielded from the consequences of "externalities" that their companies cause, which drastically changes their risk landscape compared to a counterfactual world where people were still legally responsible for their actions even when trying to make money
Even in this counterfactual world, and likely EVERY counterfactual world, people with lots of money (which equates with power) will always develop a system that will shield them from accountability. Any system like this is self-reinforcing because a few people with more money will always have a greater influence on 'the system' than the larger number of people with less money.
It's inevitable that people with power will use that power to their advantage. But the degree and the ways in which this is possible permit a vast spectrum of degrees, and adjusting this is a feasible problem of mechanism design. Limited liability in its present form is not an inevitability
Those who payed attention and had been keeping their options open went on to other jobs.
I don’t think “job stability” is ever really a thing in a changing world, more of a fantasy, and those who invest everything in it are really investing in their eventual discomfort.
Many small companies and businesses don't have growth as their primary mandate but are moreso vehicles to facilitate the exchange of labor and money between their current staff and their customers.
The author referred to a specific problem: the company changing their business strategy not because they have a competitor, not because business is crashing (these were the problems Apple was facing in ~1995), but because they must grow even though that entails making their products worse and invoking negative externalities.
Customers don't necessarily want a successful product to change. Much of that desire for change is engineered via marketing so that there is an opportunity for growth.
> Does anyone really believe this company is viable in 2024? In this scenario, Apple is dead.
Death is not a "couldn't hack it" outcome. Death is an evolved and persistently retained pattern in all living systems that have arrived here to share spacetime with us (the exceptions that are sustainable are vanishingly small, and those unsustainable are synonymous with approaching-death, aka cancer)
Death is adaptive to systems. With very few exceptions, all living things DIE. We've been selected to DIE. Things that don't die, kill their ecology. They are terrible neighbors, and so are selected for extinction.
So your "would apple survive" question feels like it's missing the point.
All agents must eventually die for the larger performance to thrive. But no actor* will ever choose that, the system does. (Governments often plays this role in the noosphere, as a corporation won't.)
*Humans seem different in that we can model a system, and think like systems. We are an actor, flirting with being a system. I'm open to the fact that we can maybe decide to choose death, even when we have put other options on the table ("defeating death"). So far as a collective of supposedly smart agents, we're kinda failing to realize the adaptive nature of death, and are mostly driving for increased longevity.
(All of the above is informed by complexity science or complex systems, if anyone finds the above trains of thought interesting.)
Reflecting on the future intersection of AI and corporate governance, one of my underlying concerns ties directly to the concept of mortality.
Currently, the inevitability of death ensures a natural cycle of change within companies, as departing leaders make way for new visions and ideas. This turnover allows for evolution, adaptation, and sometimes, necessary redirection. However, the integration of AI into these leadership roles introduces the potential for an 'immortal' rigidity.
If AI were to maintain steadfast control, it might anchor organizations to a static set of principles or strategies, lacking the organic, transformative shifts that human mortality inadvertently guarantees.
This challenges us to consider how we might embed adaptability and growth into systems that, by their nature, could become inflexibly eternal.
Such sclerotic are vulnerable to competitors though and can only survive if they are entrenched enough to be able sit out any changes with minimal adaptations, like car makers and the weapons industry.
That is not a reasonable comparison. Apple 1995 was dead because it had products that were not selling and was running out of ideas. The problem then was not growth out of control, but a complete loss of traction.
Ultimately this is about capital allocation and rates of return. Capital flows into the places where it can be best put to work. If you wish for your investments to yield above inflation, you're a card carrying member of the cult of growth.
If Apple decides it will stop growing, it will plow 100% of its profits in share buybacks (I bet op loves those!) and work hard to squeeze costs down. This happens routinely under private equity ownership. It's not as fun as you'd think.
The view expressed by the author is naive and shortsighted. Growth is required for society to function. If it doesn't come from Apple, it must come from somewhere else.
Yours is also a very naive and rosy view of the system.
> Capital flows into the places where it can be best put to work.
It also flows to places which it can return the most to capital owners, not necessarily that means best put to work. Financial markets decouple productivity from value, the cryptocurrency market is not even close to be productive but has massive capital inflows; the housing market collapse of 2008 was not money being put where it could be best worked. Money flows to where returns are expected, that's about it, the more decoupled that returns became from actual productivity and improvements to society (and mostly by the hyperfinancialisation of economies since the 80s) the less that statement is true.
I agree it is shortsighted. If Apple doesn't grow, their competitors will, and soon enough they are building better things because they have more resources. But, it is irritating: sometimes you just want people to do a few things well, and not try to grow and grow and grow ...
Just so we clear. I’m talking about Apple as an example. Saying that if Apple doesn’t grow other will is missing the point. I’m saying the entire mindset is a cancer.
> If Apple decides it will stop growing, it will plow 100% of its profits in share buybacks (I bet op loves those!) and work hard to squeeze costs down. This happens routinely under private equity ownership. It's not all unicorn and rainbows.
This is still just growth (in share price).
I would say that the real alternative to growth is dividends. Plenty of grocery store chains are happy to putter along paying a solid quarterly dividend with meager yearly growth.
1. Dividends and share buybacks are the exact same thing, just with a different tax treatment.
2. A share buyback should not in itself produce an increase in share price. You decrease the $ of shares on the market by the exact amount you decrease the $ on your balance sheet.
3. An increase in share price is not business growth.
> Dividends and share buybacks are the exact same thing, just with a different tax treatment.
That depends on the percentage of shares that are liquid. Shares can be locked up in options or other contracts so a buyback disproportionately affects the liquid capitalization rather than the fully diluted capitalization--a pretty significant difference from dividends.
> A share buyback should not in itself produce an increase in share price. You decrease the $ of shares on the market by the exact amount you decrease the $ on your balance sheet.
Decreasing supply while demand remains constant would in fact produce an increase in share price. Of course, demand doesn't remain constant, so it's not a guaranteed increase, but the general principle of supply and demand does apply here.
> An increase in share price is not business growth.
Agreed, but that's sort of the problem--it's supposed to be. One of the flaws of our stock market is that share price is so manipulable in so many ways that it's divorced from the value the company actually creates.
Yes, but this is the noncompetitive growth of a single industry, which is monopolizing trade and labor. This is actually the opposite of social growth, and it's the reason we have anti monopoly laws.
The time value of money is always more than inflation. The classic simple example is that if you need food today, the money for food is worth much more today than it is worth a year from now.
Therefore to ask someone to surrender money today, they have to give you more money to return it to you next year.
This isn’t the same as growth (ie you’re doing a job, but next year they expect you to make 25% more sales, or else…)
In theory they could use the capital to inflict a loss on all the other places an investor could park their money. Zero growth but still an incentive to invest!
>> Apple is not happy that I bought a laptop in 2015 that was so good that it is still working fine 9 years later. And it's also not happy that I bought a phone more than 4 years ago that still does all the things I need it to do. Because they need to make money. More money.
Well I'm not so sure about "more" as much about "keep making". And here lays the problem in almost every business on this planet. Everyone needs money to survive and if those money are obtained by selling produce, if that produce doesn't sell, they don't survive. So what do you propose instead?
Make a product so good that people would choose to switch.
I bought a Mac M1 2 years ago. I did some really shitty research when buying it - I didn't have that much money available at the time tbh, even thought at the time they were cheaper in my country (don't ask) than in the US - and went for the lower end of the MacBook Pro. That's a decision I regretted almost immediately, and then end of last year I decided to go for an M3 with better specs.
With this machine, the only thing that is probably going to make me change - besides it breaking down - is probably blazing fast IA capabilities (As in, real-time LlaMA stuff, or similar).
Otherwise I plan to use this machine for as long as I can keep using it. Same applies to my iPhone 13; unless I see a real need for changing it, I'm keeping it - that is if I don't decide to go back to middle tier Samsung phones that in my opinion are better than iPhones.
This is a great example of growth, and why your long term plan is likely going to fizzle.
I'll give you all your money back for you M3, and give you the M1 you have/had only at a maxed out spec.
Would you take the deal?
It sounds good, but progress is a thing. That AI workload you want to run, isnt going to do so hot on the m1 (it doesn't have the right floating point systems).
Its likely that the current m3 will remain usable as a laptop for a few more years due to extra ram and storage, but it has a shelf life for high end workloads...
> Its likely that the current m3 will remain usable as a laptop for a few more years due to extra ram and storage, but it has a shelf life for high end workloads...
Isn't that my point exactly? (Sorry if I miss explained myself, not a native speaker and I didn't quite proofread my comment either)
What I want to say is, I have the feeling my M3 is going to provide good service for probably a longer time than Apple is expecting to, and the only reason that'll make me change is having the need - and the money - for a better option.
And I do think one of the biggest reasons as to why I might not make the switch is due to how incredible well this machine is engineered.
As I'm kind of Apple's target pop - I did buy, afterall, 2 machines from them in a very short span of time - the previous point I made plays against them.
> I'll give you all your money back for you M3, and give you the M1 you have/had only at a maxed out spec.
> Would you take the deal?
Depends on the deal, but very likely yes. Maxed out M1's are incredible capable machines in my opinion.
Its not that apple won’t survive. People still need laptops just less than what they might like to sell a year. If operations need to shrink so be it. Lean and mean is a good thing sometimes. Most of apples really inventive projects came when the company was smaller than it is today.
Lean and mean could mean people lose their job, lead to talent churn in the job market, wasting their talent and time doing things they don't love. Keep a steady cushy job so these talent can make great product while enjoy their life is a net gain for society.
> Keep a steady cushy job so these talent can make great product while enjoy their life is a net gain for society
No, it's a gross gain. And probably a small one, honestly. Whereas the associated costs to society are in the billions or trillions of dollars when we measure the environmental and social effects of mandatory-growth-culture. So it's a net loss.
If apple didn't need constant growth it'd likely be totally fine selling devices with a 10+ year turnaround. I mean the shop on my corner has been the same for 15 years and it didn't die because of it.
1. Obviously Apple's market reach is wildly different-- they can still sell globally without requiring to scale indefinitely.
2. Hardware isn't their only product.
Anyway, infinite growth is impossible, so the comparison to a local business is moot. Also, it should be legally required for Apple to make products that last 10+ years from an environmental standpoint.
I don't think this is a fair take for massive businesses like Apple. When you spend $77B on stock buybacks, "money to survive" is very far out of the question. Apple does not need to have increased profit margins every single year to survive. They could be very financially successful and also more consumer friendly in many areas. They do not need to have a walled garden and locked-down messaging to survive. They do not need to make components hard to repair and impossible to upgrade to survive. They do not need to offer only 5GB of iCloud storage, or only 8GB of ram on new laptops to survive.
They could be more generous and friendly to their consumers, and would probably have an even happier fanbase as a result. But it would likely not be more profitable, so they won't.
The point here is that more profitable every year is not necessary for survival or for a company to be strong. It's simply a way to make shareholders very rich. That doesn't make it good for society. This is not about companies surviving. This is about companies needing to grow and grow and grow...
And as the author says, there is no real end state. You keep growing until you buy out every one of your competitors? And when you have a stranglehold on the market, you can severely cut costs and reduce quality to continue growing profits without needing to find more customers. This shit really happens in a number of industries! It's not good for society.
Sure, survival applies to small companies, startups, mom & pop shops. But many of these massive companies are operating at a completely different level, and "needing money to survive," is not at all what they are trying to do. They are trying to grow profits every year, to make the shareholders happy and wealthy. Not to help them or the company's employees survive. (We all know these companies are very happy to do a layoff if that's what will move the needle on profit growth.)
Just because Apple is trying to grow infinitely, doesn't mean they will.
If they continue to do things that hobble their products, people will stop buying them and that will put a natural break on Apple's growth. Of course there is also the question of monopolistic practices, and that's where it's appropriate for governments to step in, as the Biden administration is attempting with their recent lawsuit against Apple.
I sense from progressives a growing sense that shaming people, corporations, organizations, governments, is the most effective means of social change. From what I can see, it accomplishes very little.
I'm tired of hearing this opinion because its overly simplistic. Anyone expressing this opinion likely would praise a company for growth through innovation. They don't hate growth, they hate companies who are scrounging for additional price value without adding intrinsic value. If Apple came out with the next device/car/service that was a big value add to our lives I'm sure this opinion doesn't come back up in that instance.
Growth mindset is a good thing overall. And sometimes you get growth through pretty shitty means. I can't really throw out "growth" altogether just because a lot of companies employ accountants, MBA executives, and lawyers.
You don’t have to guess what I’d likely think. You can just ask. I hate growth for growth sake. I hate growth when it pushes companies to do shitty things.
I don’t hate growth in general. I hate it when it’s the only driving force.
Growth mindset is a bit good thing overall. We might disagree on that. As a byproduct of other drivers, like innovation, sure, I’m cool with that.
I still think its overly simplistic. One man's growth for growth sake is another man's innovation to gain some unrealized value. I'm not a huge fan of penny-pinching either, but there is good in finding alternative paths for your expenses. Sometimes its crappy for the end product, sometimes you save a million dollars a year by printing stamps instead of buying them. And a company should be expected to defend its business practices in court, but sometimes they're scummy practices that the general public disagrees with.
But I find it difficult to separate these just on the idea of growth being a bad mindset. Lack of ethics or quality mindset might be the better thing to go after here, since that seems to be where most of the disagreeable actions come from.
Of course is overly simplistic. It’s a rant. I’m not trying to propose an alternative here because I’m not an idiot and I know there aren’t any.
It’s human nature. If one stops doing it someone else will take their place.
I just hate the state of the world in this specific context.
And again, I don’t have anything against growth itself. Growth is a byproduct. I have an issue when growth becomes a motivating force. Because it pushes well intentioned people in wrong directions.
The entire enshittification of the web is a testament of that.
There was a time when companies, local ones, were happy to have reached a steady state. You make a product people want, you’re earning more than you’re spending, you’re employing a bunch of people and that’s fine.
That entire concept seems to be forgotten because of this silly growth at all cost mindset.
I had a colleague who had recently become a manager ask me "so wait, people always have to be growing and advancing? What if they just got promoted and they want to do that for a while. Or they are happy with what they are doing right now?" I replied that I understood that and I feel like that is a problem everywhere. Everything has to be growing all the time and it's probably not for the better.
It's a problem for managers too. They may want employees to keep doing exactly what they are doing, but the employees themselves want "growth" in some sense.
So they have to create the illusion of growth, new title, a few inconsequential responsibilities, maybe some small salary bump. You get the idea.
To me the bottom line of life is to hold on to the fun stuff that makes you unique and happy. Other people practically hate you and pressure you to do things their way. Every time I "grew" it felt fake, performative, and aimless.
I know we're not meant to ask "did you even read TFA", so I guess I'll comment that your comment makes no sense in this context. I don't know what kind of growth you're talking about but I get the sense it's not the trillion-dollar kind...
Totally agree. Surprised there's so much hate of this idea in the comments here. Doesn't anyone here value building things to last, contentment, quality, and having enough?
Sure but the anti-growth thing is a classic naive zero-sum fallacy.
OP certainly thinks fondly of things built to last, and that’s admirable - but you should question the extent to which they actually value them. Let’s say OP is 30 and will buy one $3000 laptop per decade until age 70. If OP truly values things that last then they should be willing to pay at least $16000 today for a laptop with a 40 year lifespan. But that’s obviously silly! In reality OP values things that last to some extent but is willing to trade it off (newer, faster, lighter, cheaper) - they will undoubtedly choose to replace their laptop in the next 40 years.
The same with quality, I can almost always offer you a higher-quality product - but at a certain point you will not be willing to pay for it.
I’m not expressing an anti growth mindset. Maybe it’s just me being an awful writer/communicator. Which is quite possible.
I’m against growing just for the sake of growing.
I’m 35 btw, so your example is not too wrong. I do value things that last. And again, I don’t have issues with price increases.
And if you price me out, so be it. But if you price me out because you want to make more and more money then I’d argue that’s a shitty way to run a business.
Expecting growth along a single metric like dollars while staying product-offering static is a problem once most of the energy/production/scale optimizations have been implemented. It seems fine that we should expect innovation companies to grow, as in progress, to produce new product classes and improve old ones. I personally don't hope every company is destined to become primarily a stagnant service company.
Although I'm pretty sure the pressure to grow doesn't solely come from the outside-in perspective. It feels like internal politics, incentives, and the individuals desires to make their mark results in a shift in priorities in otherwise settled product lines as well.
At this point it feels right to switch from calling it growth, to neutrally 'drive'. Assuming some sense of drive not only is useful, but is an necessary feature of humans producing... then if priorities are not oriented directly towards maximizing usability or the quality of product for the end user, it will result in a product being reasonably propelled away from maintaining those. And so it seems to me, it is the priorities not the existence of drive or growth that is the issue to be focused on. I feel trying to establish a culture without drive would be net counter productive.
I think growing !== making your product last shorter. Develop a brand new market like AR VR headset is growing. Develop a new service that people need is growing. Keep growing to compensate for shrinking market for existing business, so that your employee can have a steady job and do what they love and are trained well to do, without churning in the job market is a net gain for society.
Title ought to have been "Endless growth is a mind cancer".
When your profits aren't up 20% for the tenth year in a row, you cut costs somewhere, and it's always the workforce that suffers most, due to layoffs. Other things suffer too, like product quality (maybe using cheaper materials maybe built-in obsolescence).
Aswath Damodaran speaks of a life cycle for companies. In his view, companies do decline and shut down after sometime. He makes it seem like a fact of life -- if it's true, then stock markets aren't so terrible after all. The declining companies often pay good (but declining) dividends, and wind up gracefully.
The problem isn't that they decline, it's that they decline in a way that leaves a ton of bagholders.
If you're a rank-and-file employee at the company, no amount of dividend payout on your shares (if you're lucky enough to be given any) is going to make up for the fact that the CEO has decided that he'd be able to buy a new beach house with the bonus he'd get from closing your division. Slightly enhanced earnings-per-share won't make up for the fact that you no longer have an income or benefits, and the fact that the local economy has just lost an employer. And yet, that's what will happen, because the CEO has more shares and can make that decision.
We make the assumption that only a select few can possess the ability to be motivated by profits as expressed by increases in share value, and that, to an extent, is true: only a few shareholding employees have enough equity to see real benefit. That's only because we make it that way.
If you spread out the shares over more employees and involved them more in these decisions, they would still be motivated: they would want higher profits for their own benefit. It'd just have to be expressed as some other store of value than stock shares, and this doesn't feed the ego of the executive class. Imagine Elon Musk being told he's now effectively a public servant to Tesla who has to play politics with a far larger group of employees if he wants to keep his job, and that he'd have a very limited equity advantage over anyone else at the company. He'd walk out the door and not come back.
It's also interesting to consider the things that we are making that are destined to decline and die. They aren't agentless pieces of the environment, a company with $3,000,000,000,000 does not go quiet into the night.
If you are on the path towards decline and you have a lot of money, you can then go buy a lot of power, and then you can make the ramp you are declining down point in a different direction.
So besides the bagholders, it feels like there's very few mechanisms for society to protect itself from massive companies that faced with pressure to grow or die decide to use their money and influence in ways that are net-negative to society.
A society where no corporation could ever reduce employee count would cause a lot more problems than it solves.
Of course many tech companies already give substantial equity to employees as part of their compensation. Maybe there are government policies to encourage this to be more wide spread, but I'm not sure what those policies would look like.
Because growth is now baked into the share price. If they don't keep stoking the fire of optimism, it burns out and the share price collapses. Our current business culture is saying that this is what managers need to think about, so this is what they think about.
I would be happy with a vast economy of Mittelstand type businesses, each producing ball bearings or gear wheels, not trying to eat the whole planet, just existing at a sensible level. It's not like they can't grow if the opportunity arises.
Because your competitors will grow to create economies of scale and vertically integrate, eventually killing your current business model since you won't be able to compete unless you're a boutiqueor some other niche. This is especially important if group think is a big part of your success (iPhones as a status symbol, always needing the latest one, iPods before that).
Because in their minds, the market will eventually dry up, and... they're not wrong. There's not many folks looking for a new Apple ][ these days. And since continuing business means needing to access ever-increasing amounts of capital to create the next thing to sell, they have to make the number bigger. Otherwise the business goes under.
Honestly, their hangup on that last point is perplexing, because as long as the big shareholders get a decent cut in a long enough horizon to hedge or exit positions, they don't care if the company goes kaput. See GE. Jack Welch basically parted out the company like a corporate raider. It was obvious what would happen: at some point, there would be nothing left to sell and the company could not continue as an independent going concern. But you could mark the sale of a division as income for the quarterly report, and it made them meet projections, so it was seen as visionary.
That's a tough thing to do when you consider the market dynamics - namely that other companies are trying to eat their market share. They have to be actively improving products doing marketing, etc. in order to just maintain their position, so why not do those things in a way that's targeted at growth?
There's also the matter of people - people like to work on big, important challenges. The best people don't tend to want to work at companies that are stagnant. If you're the leader and you lose the best people because you decide to stagnate and throw off revenue, then suddenly you're going to have trouble maintaining your market position because the best people are now at competitors working to take your market position.
It is a little weird how there are two economic systems seemingly. The one you mention about market share and global slices of pie. But then there is the entire long tail of businesses that don’t participate in these games at all. Most private companies are probably like this. You know, the six person graphic design shop with a string of clients. The local glass and mirror business. Your dentists private practice. A locksmith. A taco truck. All these businesses humming along making money for their owners with sometimes decades of operation under their belt.
I think that's just a mindset that made sense when tech was new. As this becomes just a part of life, I think you'll see a bifurcation between established tech and "new stuff", where the established stuff is treated more like a utility.
In some ways we have that now, it's just not flashy. There's countless websites (think Craigslist) that pull in predictable and reasonable income for the folks that run it.
I'd prefer a world full of those versus a bunch of megacorps using tactics of the KGB to try to increase their revenue by X% every year.
That's a pithy, vivid snarkonym I suppose; 10/10. The reality is that things don't exist in a vacuum: competitors exist and one of the best defenses against competitors is growth. Growth provides affordances, such as ample capital, market profile and regulatory leverage to counter competitors. Certainly one can conceive of alternative ways of surviving competitors, but it never hurts to be a thriving concern. That's hard work for all involved though, so better to simply spiral the rest of the way down and condemn competition as well: perhaps "The Market is societal metastasis".
Or something. You'll get there anyhow, so best to start working on the next clever derogation now.
I agree with your response, but I also think it's an unsustainable model, which is why it's a "mind cancer". Growth makes things easier but nothing grows indefinitely, and that mind-set has done a lot to create climate change problems.
That's the buyer seeking growth, even if only to shut the bought down, yielding relative growth. Big fish eat little fish. That's the universe talking, as opposed to whatever ideology you prefer to blame.
The "solution" -- should you perceive a problem with all this -- is destabilizing the large such that the small find more opportunities. Hating on growth isn't compatible with this, however: you must be capable of tolerating the small enjoying growth.
When it comes to the personal and intangibles, then grow all you want; read the books, develop the skills, and so on. But when it comes to consumption of resources and economic growth then cancer is the right word as unbounded growth fundamentally results in unbounded growth of waste products and overconsumption of inputs.
There is no system or ecology that can support infinite growth; as long as we're stuck in the "coasting is dying" mentality we'll see productive entities develop dysfunctions as they outgrow their ecosystems or kill themselves trying to expand. If coasting leads to gradual decline then over expansion leads to catastrophic failure.
Universal Paperclips comes to mind.... part of the issue is that companies peruse the goal of infinite growth, yet this stands in contrast and contradiction to the economic maxim of "wants are unlimited, but resources are finite". this relentless chase is fueled and exacerbated by the culture of "disposable" and made worse with planned obsolescence,pushing us to replace products faster than ever. We need to find ways to balance this, in order to achieve sustainable progress.
I’ve always wondered if you can design a business plan to encompass the birth, growth, and death of a company with full transparency. It wouldn’t work as a public company, but it seems it should be possible to go after one specific goal and have everyone participating know what the end game is. Some finite wealth at the end of it. You could push whatever idea you want to a limit, then let someone else carry it further in the same way when the OG company dies.
The hedonic treadmill principle isn’t just a personal thing. It passes through the machinery of business to be amplified and expressed in an absolutely massive way. All characteristics of businesses are those of the humans that make them up. It’s in our nature to want more. The author is asking humans to stop being human.
Aside, Apple going into services is incentivizing them making durable devices which are used long-term. Without services Apple may "not be happy" that you use a 9 year old Macbook. But with services they do want a large install base, new devices and old, so they can sell Apple TV and Music and Apps.
It's not a new idea at all or especially insightfully written. However, I'm not upset by it being posted; I still enjoyed reading it and found it was tastefully short.
It skips over the difficult question of "how big is too big?"
Easy to complain about in the abstract. Hard to answer how we restructure society to determine when a company or individual salary is too large, without allowing each company or individual make that decision for themselves.
This is an incredibly myopic take and unsophisticated take. Comparing to an artisan is in some ways apt, but undercuts the argument. For an artisan the growth target may be the growth of your skills or of your vision. That's growth, and it requires you to keep producing artifacts and to do so you must have some means of funding that production.
For any firm larger than perhaps a single person, you have to have some monetary growth in order to continue to exist. Eventually employees leave and new hires demand more money, equipment wares out and new equipment is expensive, your customers may demand more so you must invest in R&D. Unexpected expenses arise. A growing company can cope with change or rising costs.
There's still a cap on growth. Apple is running into market saturation for phones and eventually will land in a situation where the only way it can sell more phones is by selling the same consumers newer/more expensive phones. To achieve this they either need to reduce quality so devices wear out or artificially prevent prolonged use; either scenario results increased production of e-waste.
Ecosystems have limits; you can't grow past the absolute maximums of supply and demand.
We only have so many minerals and so many humans which means that growth has hard caps. Even if we manage to colonize the solar system the same cap will still exist on humans and minerals. Eternal growth is demonstrably false and if we ignore these bounds then we encourage companies to grow through increased generation of negative externalities.
I don't understand at all how some growth is a required precondition for continued existence. There is no rule saying that companies must grow or else they automatically vanish from existence.
I think it's pretty well explained above, costs grow, unexpected things can happen, things you use wear out, and the market you're in will change over time. If you don't grow at least a little inflation will drown you in rising costs. If you don't grow a little you'll be less resilient to costly shocks. If you don't grow and preferences change, you'll be stuck producing something no one wants anymore. Any of these things can kill a firm. Growth allows you to reinvest and adapt.
Beyond keep up with inflation and cost increases, there is no technical need for a large firm to keep on growing. There are many midsize companies that have a steady revenue and are happy with it.
It really feels like a scaling problem than anything else. It big companies go to shit as they do most of the time it's because tackling scale is a extremely difficult problem
They have to scale, and they don't see it as a problem.
Like the author says, at a certain point, you've saturated the market. Everyone who wanted M2 Macbook Pro has one, but still, the institutional shareholders come knocking, demanding more money so that retirees can move into that villa on the golf course in Florida and consume until the dementia sets in.
So what do you do to keep the shareholder returns coming? You expand into new markets, or create new markets, or create new products. Thus, you grow in scale.
Again, to them, this is not a problem. Most of the people involved in the actual workings of this system - executives, fund managers, financiers, etc. - are getting more money out of it than they could ever hope to spend in a lifetime. There is no downside the system produces that their wealth cannot overcome. The rest of us... well... we're annuities.
> demanding more money so that retirees can move into that villa on the golf course in Florida and consume until the dementia sets in.
There are also the taxpayers that need the government pension funds to make good on investment assumptions, lest taxes have to go up.
Edit:
Politician A: I will remove all deferred compensation schemes, but have to increase taxes to pay the employees with money today
Politician B: I will pay the employees with deferred compensation, and keep taxes lower than politician A, and let future taxpayers deal with any problems of underfunding and corruption
And politicians who keep making promises about a solvent pension fund because it's not fun for them if it's not solvent, and unions/retirees are much better at voting than the average person.
The thing is: Growth is the driver for increased efficiency and that is the driver for any kind of progress.
Progress does not just happen out of thin air when a bold mind in their ivory tower has a great insight. Progress requires (wo-)manpower. And that power in turn needs to be freed from more mundane tasks.
In other words: We, as a society, don't want Apple to become ever bigger and make ever bigger profits. We want them to continue making MacBooks and to need fewer and fewer people to make them. Because we want these people to cure cancer or drive spaceships to the outer system or develop artificial meat.
Unfortunately, this simply won't happen if we take out the unsatisfiable desire for more, more, more.
You don't think it's possible to harness the desire for more of certain things and less of certain other things in a similar way?
We collectively create the expectations under which "growth" is a meaningful thing for a company to do. We can change those expectations such that "number go up" for the company translates to more of the particular thing we want and less of the particular thing we don't. We just need a bit of incentive redesign.
The late novelist Kurt Vonnegut informed his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch-22 over its whole history.
Heller responded – “Yes, but I have something he will never have . . . enough.”
In a capitalist, competitive market, growth is the signal that a company is successfully adapting. "Grow or die" isn't just a rallying cry, it is a tough lesson learned from decades (centuries!) of running businesses.
I agree with the author's sentiment, that such growth has a cancerous end-game, but it's important to understand that this mindset is the result of systemic pressures. It's as inevitable as the Tragedy of the Commons (1833!), but even more complicated to address.
Game Theory is an exceptionally useful lens to analyze these systematic behaviors. If a company isn't growing, that means they're not adapting to the market. That leaves the opportunity open for a competitor, who will take over. Then the "ethical" original is dead, and you're left with a "cancerous growth" actor, again.
Does anyone really believe this company is viable in 2024? In this scenario, Apple is dead.
The author is free to change his mind about what product he wants over time... but there's something wrong with a company that changes products over time? Companies must be free to adapt to the changing preferences of customers. The alternative is corporate death.