In old times, you took money from investor, built a company and finally returned them their principal + interest. You then went your way to care about whatever values you held close about your business. In new times, you become their employee permanently (as in CEO works for shareholders) and hence your goal is to increase their value.

I guess it’s because the level of capital that is required for modern endeavors is such that it is usually impossible to do full buyback like Dell did, for example. In part, it’s also because we have designated the investment itself as an asset as opposed to a loan. So even if a company wants to do full buyback it’s market cap is a moving target usually prohibiting that.

To understand this, imagine you got loan from your uncle for $100k to buy a house. But then your uncle sells your liability to another person for $200k because house prices are on the run. Now suddenly you must pay $200k if you really want to own the house. But then the cycle continues with people selling your liability at higher and higher price so one day you wake up and be happy that your house is now $10M but you can never truly be its owner unless you actually pay $10M. This is the magic and power of capitalism.

In antiquity, it was sometimes loathed upon even demanding interest on a loan because it was like stealing from someone else’s fruits of labor and making income through no or little effort of your own (aka passive income). But that prohibited the utilization of capital and people saw that there was nothing sinful in collecting interest on your capital as a reward for taking risk. Capital is an asset just like your house is an asset and demanding rent on is perfectly legitimate.

But then people with capital took one step further. Instead of demanding just interest, they started demanded ownership share of your endeavor as well. This was again loathed upon as the people landing money now also got all the rights and privileges in the creation of a person who actually did all the work. But soon people saw that this increased flow of capital even more. Investors now were suddenly more willing to participate in risky propositions. An entrepreneur can raise order of magnitude more capital than any other of time in history.

But then people with capital took one step further. Why can’t they sell your loan liability as an asset to someone else? This meant that original principal given to an entrepreneur as a loan now had undefined value. It was only determined by the wish and whims of buyer of his liability. This also meant that entrepreneur was freed up from any expectations that original loan would be paid up. Investors would instead be just happy with continuous flow of dividends and speculating how he will do in future. The loan became thus permanent. Soon need for larger and larger capital grew such that majority of ownership ended up with investors and the entrepreneur become the employee of the investor. This again allowed even higher order of capital collections. And that’s how we got here.