> The employees have dramatically less incentive than the owners and management to earn the owners an adequate return on their investment.
What has led you to this conclusion?
I’ve observed the opposite to be true: employees have more incentive than investors to seek the long-term success of a company. Building a career within a company and industry requires an investment of time and effort. Career changes are slow and become increasingly difficult. In contrast, investors can invest in anything so investments are more liquid than careers. In the case of a company failure, well managed investment portfolios are exposed to significantly less risk than the typical salaried career.
Employees concept of this is not aligned with investors. Investors need a return on investment. It’s not enough for them to have a moderately profitable company with happy employees. They need a big exit event that fits their investment characteristics.
And this is fair because then accepting VC money gives them an advantage over their competitors who might have bootstrapped. We shouldn’t feel sorry for employees of a heavily VC funded company, but by their bootstrapped competitors trying to compete.
We shouldn’t try to protect employees with high salaries at entrenched big tech companies. We should allow entrepreneurs to create new companies to challenge them which is better for society. It’s better to have less monopolies and it would be better if one high salary was split in two due with someone from a smaller competing company. This is better for the labor market.
> It’s better to have less monopolies and it would be better if one high salary was split in two due with someone from a smaller competing company.
But the VCs whose needs you are arguing for are the ones who are seeking those monopolies, at least in tech. With the advent of blitzscaling as a preferred strategy, we are seeing VCs who are seeking to create monopolies and own markets from the start. So why do you feel sorry for those investors? They burn plenty of money, and if they lose money on one company, they have plenty more in their portfolios.
And if unions are truly as detrimental to the system as you claim, then perhaps it is good if they arise in VC-hyperfunded startups, because then they will thwart these nascent monopolies, and allow bootstrapped companies more of a fighting chance.
Your narrative contradicts itself.
> We should allow entrepreneurs to create new companies to challenge them which is better for society.
The existence of unions would not poise a challenge to entrepreneurship.
Without access to a parallel universe generator, I don't see how you could. All I'm asserting is that I think that you can't reliably say that management or workers/employees are consistently in a better position to understand the best path forward for a company. Either one can be overly focused on replicating past success; either one can be wrong about opportunities for growth.
It could be put to the test if more industries, such as tech, experimented with unions, or otherwise empowering employees to share in decision-making.
It is rather strange that in a field where there are all sorts of autonomous movements such as open source projects or hacker collectives, there is still the hierarchical belief that the managers knows best. Ah, well FOSS always do have their share of Benevolent Dictator for Life positions.
Employees can become managers. This class divide is so much less relevant today than it was due to startup culture. Funding is not that hard to come by.
The employees don't have a better strategy, but they think they do. This happens when trust and respect is lacking (in both directions) between management and workers.
What has led you to this conclusion?
I’ve observed the opposite to be true: employees have more incentive than investors to seek the long-term success of a company. Building a career within a company and industry requires an investment of time and effort. Career changes are slow and become increasingly difficult. In contrast, investors can invest in anything so investments are more liquid than careers. In the case of a company failure, well managed investment portfolios are exposed to significantly less risk than the typical salaried career.