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0 pointsreissbaker2y ago0 comments

Yes and no. If you take shareholder money, you are required to operate in the interests of the shareholders. However, what exactly that means can vary. For example, Amazon is famously "customer obsessed" — not shareholder obsessed — with the idea that focusing on creating customer value creates a better business (which in turn benefits the shareholder).

Meanwhile Costco views employee culture as not only the most important thing, but "the only thing" [1] that creates a strong business, and has a strong track record of growing employees internally: the current CEO started out as a forklift operator at the company, and the previous CEO started as a warehouse manager. This culture of strong employee growth and retention, in Costco's theory, creates a better business and is thus justifiable (and desirable) for shareholders as well.

1: https://www.inc.com/justin-bariso/in-a-world-dominated-by-am...

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7 comments · 3 top-level

danielscrubs2y ago· 2 in thread

“Customer obsessed” must be lip service. Is there anything they made that is customer focused compared to their competitors? Seems very focused on margins instead.

lazystar2y ago

"Please allow 6 to 8 weeks for delivery."

When was the last time you saw that phrase?

reissbakerOP2y ago

Not to mention that like half the Internet runs on AWS, and it's not because the cloud is cheap... It's convenient, and the core services work really well.

throw0101b2y ago· 2 in thread

> Yes and no. If you take shareholder money, you are required to operate in the interests of the shareholders.

Nope:

* https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...

Per the US Supreme Court:

> […] modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.

* https://caselaw.findlaw.com/court/us-supreme-court/13-354.ht...

Or, at the very least, you have to ask which shareholders:

> Serving shareholders’ “best interests” is not the same thing as either maximizing profits, or maximizing shareholder value. "Shareholder value," for one thing, is a vague objective: No single “shareholder value” can exist, because different shareholders have different values. Some are long-term investors planning to hold stock for years or decades; others are short-term speculators.

* https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

The focus on shareholders mostly took hold in the 1970s (coïncidentally when folks like Milton Friedman became more popular, and the 1980s (Reagan, Thatcher)):

* https://en.wikipedia.org/wiki/Friedman_doctrine

and so to claim it is self-evident when there is decades of history for other views, is at least not accurate:

* https://www2.law.temple.edu/10q/purpose-corporation-brief-hi...

And contrary to what many people think, the shareholders are not the owners of a company.

* https://www.ippr.org/articles/who-owns-a-company

* https://hbr.org/2012/07/what-good-are-shareholders

* https://www.ft.com/content/7bd1b20a-879b-11e5-90de-f44762bf9...

* https://www.forbes.com/sites/petergeorgescu/2021/07/21/the-s...

* https://queenslawclinics.ca/node/81

_heimdall2y ago

I think we're all in agreement here. The comment you're replying to, and mine along the chain, are only making the point that corporate leadership is required to act in the best interest of shareholders but that this can be interpreted more broadly than just profits.

reissbakerOP2y ago

Yeah, this is exactly the point I was making. You do have a fiduciary duty to your shareholders, but you have fairly broad latitude in how that's interpreted.

_heimdall2y ago

There's definitely a lot of leeway in how any one leader will define "best interests," but in the long run I'd argue its always going to end up in the hands of someone chasing the money above all else.

j / k navigate · click thread line to collapse

0 comments

7 comments · 3 top-level

danielscrubs2y ago· 2 in thread

“Customer obsessed” must be lip service. Is there anything they made that is customer focused compared to their competitors? Seems very focused on margins instead.

lazystar2y ago

"Please allow 6 to 8 weeks for delivery."

When was the last time you saw that phrase?

reissbakerOP2y ago

Not to mention that like half the Internet runs on AWS, and it's not because the cloud is cheap... It's convenient, and the core services work really well.

throw0101b2y ago· 2 in thread

> Yes and no. If you take shareholder money, you are required to operate in the interests of the shareholders.

Nope:

* https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...

Per the US Supreme Court:

> […] modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.

* https://caselaw.findlaw.com/court/us-supreme-court/13-354.ht...

Or, at the very least, you have to ask which shareholders:

* https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

The focus on shareholders mostly took hold in the 1970s (coïncidentally when folks like Milton Friedman became more popular, and the 1980s (Reagan, Thatcher)):

* https://en.wikipedia.org/wiki/Friedman_doctrine

and so to claim it is self-evident when there is decades of history for other views, is at least not accurate:

* https://www2.law.temple.edu/10q/purpose-corporation-brief-hi...

And contrary to what many people think, the shareholders are not the owners of a company.

* https://www.ippr.org/articles/who-owns-a-company

* https://hbr.org/2012/07/what-good-are-shareholders

* https://www.ft.com/content/7bd1b20a-879b-11e5-90de-f44762bf9...

* https://www.forbes.com/sites/petergeorgescu/2021/07/21/the-s...

* https://queenslawclinics.ca/node/81

_heimdall2y ago

reissbakerOP2y ago

Yeah, this is exactly the point I was making. You do have a fiduciary duty to your shareholders, but you have fairly broad latitude in how that's interpreted.

_heimdall2y ago

j / k navigate · click thread line to collapse