| What a bizarre article. Even as someone who thinks big private equity acquisitions tend to go badly, I’m not sure this article makes very good points. In particular, lots of blame is levied against bending spoons but not much against the founders, yet the founders arranged to not give employees equity, the founders reneged on their ‘never sell’ promise, the founders did not try to negotiate better severance for the employees that would be let go after the sale, and the founders set the business direction before the sale. I do feel like there is something to the idea that one should be suspicious of some ‘social good’ messaging from companies as it can often be a way to allow or hide existing inequities, eg paying everyone the same (in cash but not equity) or claiming they don’t need equity as you won’t sell the company (except you do). Amusing that it is the relatively left-wing prosocial German startup scene where the workers get fucked over rather than the SF one though maybe this is outliers or startups choosing employees in Germany with things the other way around in the US. I think the article also seems to misunderstand the emphasis on growth. The expectation is not for profits to continue growing forever. The expectation is that the growth will happen roughly logistically (until some outside force causes a loss/increase of market share), so under this model a slight slowdown in growth implies that the maximum is nearer, and this maximum has a big impact on the value of the business. If one is hoping to sell the business then maintaining growth is important because it implies something about the size of the market and therefore the valuation. It was the founder’s desire to sell for a high price (alternatively to try to gain network-effects advantage over competition) that drove the growth, not the existence of private equity firms. Some other thoughts: As a user, I don’t particularly care about the particularities of how employees in developed countries are treated. The company gets some choice in how it divides its equity and how much revenue goes to paying staff and in what proportions. These things tend to be negotiable for engineers working for software startups (maybe not in Germany??) and these employees negotiating themselves relatively poor contracts isn’t really something I blame on private equity. I feel like the article implies that capitalism necessarily leads to the way that private equity seems to destroy the communities run by the companies it acquires but I’m not sure that should be true. It seems to me like it ought to be more profitable in the long run to be less destructive (though some of this can look bad to users if they see layoffs as a focus on growth is decreased or the removal of loss-leading products that users like for obvious reasons). |