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Yvloxas's avatar

It’s very hard to argue with most of this—directionally, companies/CEOs are sub-optimized towards good products or profit. Personally, I’m interested in what you think going forward from this. Specifically, questioning the idea that investors will or even want to suss out bad long term business and, relatedly, given zirp or post-zirp. More broadly, there are many reasons to think of the line being much blurrier between C-suite and investors than we’re giving credit for. The CEO is much more on team investor than team company (with their employees), incentive-wise and even socially. Perhaps you view public companies vs startups as meaningfully different for the point you’re making, could be. But there are many many companies making and selling things very unprofitably explicitly to get an exit before ever having to solve or deal with getting in the black. This is Plan A or a very desirable Plan B . Even public companies have any number of champions for an argument of short term stock price mattering to investors more than long term sustainability (Tesla, GameStop, etc). Maybe those examples feel too trifling, but I’m not sure why we should default expect investors to be long term oriented. Even if the companies eventually make good a decade or two from now, the investors would almost certainly have done better to just jump between the short term wins. You could argue they don’t have the intel to do this well—though this is easier when the execs and investors are “aligned”—but that wouldn’t explain choices of buying into stocks with distorted PE ratios.

You’re right on about questioning who or why leaders become leaders I think. But I’m not sure I agree that their “weaknesses” aren’t actually helping them. They seem to do quite well. Often even when their companies “fail.”

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Drayton's avatar

I wrote a review of Thomas Boyle's book: https://enterprisevalue.substack.com/p/foreseeing-ges-fall

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