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0 pointsAnimats1y ago0 comments

Much of this hinges on what the company does.

AirBnB is basically a web site and a customer service operation. They don't own or run hotels.

Netflix started like that, but now they also create content. The web site part is basically operating a server farm with a halfway decent interface. The negotiation with content providers part is crucial to success. Netflix also creates content. That works more like a VC operation.

Movie making is interesting as a management problem. Strip away all the glitz, and it's a project business where a new team is formed for each project, they do a complicated one-off, and then disband. This works partly because of standardized roles and tasks. Sometimes it doesn't work, and whoever's funding the thing has to be funded for failures.

These are all industries where the question of what to do dominates the mechanics of doing it. Compare, say, a railroad, an auto company, or an aircraft company, where ongoing execution dominates. YC tends not to fund that type of company.

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crop_rotation1y ago

> an auto company, or an aircraft company,

In both we are seeing how professional management can decimate a company with several decades of history. e.g Boeing.

twelve401y ago

Boeing is a very strange example to give for this, because it's been under "professional management" for probably one whole century now. How does professional management suddenly decimate it today vs. say 1960, when it was also run like a corporation?

KaiserPro1y ago

> professional management

Management incentivised to grow stock market value. look, if the incentives are wrong then you get distortions. A good example with "founders" is wework.

Wework's innovation was two fold:

zeroth) vast funding

one) run the company like a mystery cult

two) Have beer in a shared office

Everything else is exactly what a shared office company does. WeWork's entire incentive was to grow as fast as possible and get as many customers as possible. No one cared about business fundamentals, because WeWork wasn't a buisness. It was a commodity to be traded by softbank.

Buisness fundamentals have been royally fucked by changes in finance. Stock buybacks, limp monopoly actions, toothless market regulation, have all meant that profit is one thing, but share price is everything.

The capitalism that made boeing et al is not the capitalism that we live in now.

fsndz1y ago

Regarding Boeing, it's true that the principal-agent problem and misaligned incentives are issues. However, you must also consider the impact of promoting business school graduates and McKinsey-type consultants—who often believe they are the smartest people in the room, despite lacking operational expertise beyond making slides—to leadership positions in a company driven by engineering. Naturally, these business types will focus on short-term revenue and stock prices, as they have been trained their entire lives to optimize for vanity metrics like GPA, company prestige, and strategy over operations. This mindset is ingrained in their identity, leading them to undermine the engineering culture. For instance, Boeing's CEOs reportedly referred to engineering leaders as "retards" and "losers." Now, we are witnessing the consequences of these actions.

AnimatsOP1y ago

WeWork was a finance concept. Lease commercial real estate in bulk long term, subdivide and sublease it short term, and borrow medium term to finance it. That's a speculation on interest rates and short-term commercial real estate rents.

The CEO got a really good exit package from Softbank.[1]

[1] https://en.wikipedia.org/wiki/Adam_Neumann#Business_career

munificent1y ago

> Netflix started like that

Netflix started as a disk distribution company.

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