[remedan]

> It is the goal of every business to maximise profits. As a business, it is your responsibility to price your products in a way that will yield the most profit.

This is how the article starts, and it might be somewhat off-topic, but I disagree. Plenty of businesses (at least privately held ones) have the goal of simply making enough for the owners to get by. Not to optimize for the absolute maximum. And why should they be responsible to do so?

[realityfactchex]

Yeah, it's a myth, and a pervasive one. Decent description at [0].

Not only that, but people actually think they know that.

Since people believe it, it's "real to them".

IMO, this helps make it easier to go from "we're going to make the best widgets and be good, responsible, ethical corps" to "we will extract as much value as possible from customers, anything within the law is fair game, external consequences not being our concern".

[0] https://skeptics.stackexchange.com/questions/8146/are-u-s-co...

[wahnfrieden]

Why is the idea of quality oriented “getting by” businesses popular here, but worker cooperatives generally scorned? A worker owned coop is more resilient to deciding to focus on quality and affordability than a business with investors and hierarchical ownership that can change (after a death or a sale etc)

[oooyay]

I've never actually seen them criticized here but I'll bite since I've worked for one.

Worker owned companies are just a different shade of typical corporate politics. I worked for North America's largest sewer inspection and cleaning company. The company did about equal volumes of each type of work but since inspection is more technology based there were far more cleaners than there were inspectors and analysts. I'd been there about a year and I'd noticed that we were so far outpacing cleaning that we'd started to lapse on some of our contractual inspection storage commitments which required about ten years storage of raw inspection files. The inspection files were raw video with annotations. I drew up a proposal to build out centralized storage arrays and upgrade video processing site internet connections. Pretty baseline stuff to meet the needs of our contractual obligations. It went up for a vote because it'd effect the yearly budget which impacted dividends checks. It was unanimously voted down by the cleaners. I realized then and there that any business that's worker owned will be primarily be influenced by the largest in quantity labor group and haven't worked for one since.

Long way of saying that I wouldn't say it's any better or worse than other management structures.

[wahnfrieden]

There are different ways to structure worker cooperatives and decision making. Have you seen the consent-based framework sociocracy uses (rather than majority voting or consensus)?

[oooyay]

It's hard to say without turning back time that this would've changed things. I could see a seasoned cleaner arguing that the diff of x and y dividends would be impactful to their lives and that I could be pressured to build a less efficient, decentralized system that compliments the existing decentralized system because when I signed up inefficiency was already built in.

Having voting power didn't actually change my position as someone making a proposal. It actually made it worse because now instead of convincing one slightly less informed king I'm trying to convince a room full of even lesser informed peasantry. It'd be like if the cleaners tried to convince me to buy the new line of vac truck with technology advancements that can clean a complex sewer in ten minutes instead of 30. Reflexively, having never dropped down in waders into a sewer I'd say, "Well, what's 20 more minutes of contractual time?"

That's ultimately the social mechanics that were at play: "Okay nerd, why do you need better efficiency and audit ability? This industry has gotten by just fine filing physical hard drives into physical filing systems for a long time." Without being required to empathize with the problem, and without being necessitated to have experienced decision making it's like democracy with pure bureaucracy and no subject matter experts.

[wahnfrieden]

https://www.sociocracyforall.org/consent-decision-making/

[rahimnathwani]

What are some examples of worker cooperatives that are successful due to their focus on quality and affordability?

What might I buy from them?

(The only worker cooperative I knowingly buy from now is a local bakery/pizza place.)

[jjj123]

As you mention, plenty of bakeries, grocery stores are worker owned. For example rainbow grocery is not _cheap_ but the quality is high and the bulk prices are not bad.

For some reason two of the biggest and best flour brands are worker owned: King Arthur and Bob’s Red Mill.

But if we’re talking bottom of the barrel prices, I don’t know many worker owned orgs that focus on that.

Turns out when operations are more democratic and left leaning (and all worker owned coops I know of in 2025 are left-leaning), workers are unlikely to support things that are cheaper but have negative externalities. So produce is more likely to organic (and expensive), farming practices are more likely to be ethical (and expensive), etc.

I’ve been on the lookout for worker owned clothing brands but they’re few and far between.

[rahimnathwani]

The post to which I replied was specifically about:

- worker cooperatives, and

- quality and affordability

I don't know whether worker cooperatives are more or less likely than a median business to generate negative externalities, so I won't comment on that part.

I wouldn't call Rainbow Grocery 'affordable'. It's been a long time since I bought anything there, but I recall it being much more expensive than every single chain supermarket (not just the lower end ones).

King Arthur and Bob's Red Mill are not 'worker cooperatives' as far as I can tell. They both have ESOPs (Employee Stock Ownership Plans), but I don't see anything suggesting they're run in a democratic (one employee = one vote) fashion.

[wahnfrieden]

https://www.bobsredmill.com/employee-owned Certainly many non-coop businesses have ESOPs but this says the goal is to transition to 100% employee-owned via the ESOP (rather than the typical single or low double digit employee grant pool). I recall reading that when Bob was dying he decided or had it in his will to transition his ownership fully to the employees.

edit: "100% employee owned / That happy day came in April 30th of 2020: as of our 10th anniversary, Bob’s Red Mill is now 100% employee owned, one of only about 6,000 businesses in the country to achieve this incredible feat."

Equal Exchange is a worker-owned co-op: https://equalexchange.coop their management leadership positions are rotating (across workers) and have compensation multiplier caps. The coffee at least is quite affordable compared with other specialty brands.

Thanks to zoning laws in Japan, whereby practically anyone is able to start a retail business with minimal capital and permitting requirements, there are many shops and food-related businesses that are worker-owned. Many are also highly affordable can be cheaper than chains or convenience options (apart from the very cheapest of chains).

[bee_rider]

Worker co-ops are scorned here? I think they just don’t come up much due to the nature of the industry.

Like all [citation needed] nerds I consumed a ridiculous amount of fantasy fiction growing up, and think programming is as close to magic as we’ll ever get in the real world. If somebody made a “Programmers Guild” in the style of a wizard’s guild, who among us wouldn’t join such a thing?

[giancarlostoro]

> If somebody made a “Programmers Guild” in the style of a wizard’s guild, who among us wouldn’t join such a thing?

HN is the wizard's guild.

[bee_rider]

I sort of assumed there was a wizard message board, that’s why they spend so much time gazing into their crystal balls.

[skinnymuch]

Yes. HN is a western, liberal, and capitalist hive mind essentially. Or to put it another way, it is for the status quo, more or less. Things like coops are naturally going to not be too well received in such a place.

[bee_rider]

I’ve seen co-ops come up in a couple threads. Usually I see interest, not a ton of direct experience, sometimes a little bit of skepticism of the idea, but not a ton. Here’s an example:

https://news.ycombinator.com/item?id=42748394

Now, you can find some negative reception I’m sure of you look hard enough, but generally the reception ranges from “a little experience” to “totally naive but curious.”

[wahnfrieden]

Yes they get criticized as communist idealism and without upside for people to start

[JanNash]

Valid inquiry!

[BurningFrog]

It's not a perfect model of the world, but empirically it's a very useful one, so economists often use it to understand the world.

[emptybits]

Agreed. Related: the widely held belief that a corporation's singular goal is to maximize shareholder value.

[andoando]

It might not be the case legally, but it is the sole metric that stockholders value.

[eCa]

It’s not. Plenty of investors might skip investing in arms, petro, cigarettes or betting for moral reasons, even though it might yield more money.

[deaux]

This isn't a "disagree or agree" topic. It's a "wrong or right" topic, and even at 13 years old I could've told you that you're right and they're wrong. Of course this isn't the goal of every business, and it's trivially verifiable.

They effectively put out a statement saying "the earth is flat, water is dry and sunlight is wet".

[tirant]

I agree. The objective of every business is to be decided by their owners. That claim is indeed not always valid. That might be the case for basically every publicly traded company but for sure not for many small businesses.

[TZubiri]

Funnily enough, when incorporating, "to make profit" is usually not part of the stated mission, usually it's something along the lines of "to make chess software"

[wahnfrieden]

Those missions are generally for employee alignment, recruiting, customer facing marketing. “Making money” doesn’t work for employees that don’t share ownership of the business and are paid at market rate (IOW as low as the market will bear)

[chrisfosterelli]

Obviously money is important. We live in a capitalist world. It lets an org invest in future, greater service to its mission. But it's not WHY a business exists. It's just a measure. It's sort of like saying that you exist to breathe oxygen or pump blood. It's necessary and important, but suggesting that's your mission would be a little reductive.

[wahnfrieden]

There’s a reason boards study financials and hide them from employees

[chrisfosterelli]

The reasons are because it's their job to ensure the organization's future, and financials are the specifics of how the company plans to do that, and because providing financial information to more people than necessary increases the risk that it leaks to competitors and inside traders.

[TZubiri]

Not really, they are part of the charter granted by government and they bind the company in its legal capacities.

Companies are de jure entities, they exist not de facto, but by registration with the state. For many reasons, you or others cannot go to courts and claim different things about a company as a separate entity from its owners without previously having declared to the state and courts that such a company exists and what the rules of the company were.

The mission of a company are thus part of the rules defined for a company at creation, such that if an owner made its riches in oil prospecting, but also had a company whose mission was software development, then other partners of the second company, or creditors in case of bankruptcy, would have no claim to riches that came from oil prospecting. For example.

[briandoll]

In short, the leadership team has a fiduciary responsibility to their investors. Privately held lifestyle businesses don't, at least not as much.

[lesuorac]

But there's no concrete definition of fiduciary!

One can easily argue that by having flat pricing they're doing their fiduciary responsibility because it's setting the company up to succeed in the long run through strong consumer trust.

One can argue that by having regional pricing they're doing their fiduciary responsibility because it's setting the company up to succeed by having success in more markets.

The takeaway from Dodge vs Ford [1] is that not fiduciary duty means dollars at any cost. It's that you need to have a reason that is good for the shareholders. If you don't bother to claim it's good for the shareholders then you're not doing your fiduciary duty.

[1]: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

[mattkrause]

Yes! Dodge v. Ford is a tough one because Ford explicitly announced that he was using the company's money to advance his own philanthropic aim. That's essentially theft: it's the company's money, not his.

However, as long as management is running the company as a company (and not, say, the director's personal slush fund), the courts give them incredibly wide latitude. They're won't second-guess whether it was "correct" to prioritize long-term growth or short-term profit-taking, as long as either is vaguely in the company's interests.

A parallel case, Shlensky v. Wrigley, has absolutely bonkers facts. Wrigley wouldn't install electric lights at his ball field, clearly due to some...idiosyncratic...beliefs about how baseball "ought to be played." However, unlike Ford, Wrigley left open the possibility that this was also a business decision too: perhaps changing the neighborhood would drive people away, or the lights would cost too much to operate. Consequently, the court found in his favor even though one gets the sense they were not totally convinced it was a sensible business decision.

Longer thread with references and quotes here: https://news.ycombinator.com/item?id=23393674

[wongarsu]

And the VC world is full of examples where shareholder want the company to prioritize marketshare or riding certain hypes or other activities that increase company valuation within the shareholder's investment horizon. In most VC funded startups maximizing revenue would be a violation of your fiduciary duty

[fluoridation]

"Shareholder primacy" implies that at any time a decision needs to be made that puts the interests of shareholders against those of anyone else, the shareholders' should take priority. Since pricing affects revenue and revenue affects shareholders in some way, pricing should be structured such that revenue is maximized. So it doesn't need to be the maximum price possible, but it does need to be whatever price yields the greatest revenue.

[hnthrowaway121]

But surely it’s debatable whether increased short term revenue benefiting shareholders this year is better or worse than longer term plays with the chance of higher returns later, or that avoiding some sources of revenue for ethical reasons protects the brand’s reputation and image in the market.

[fluoridation]

If a decision puts at odds the interests of two different sets of shareholders at two different points in time, why should the interests of the more distant one be given priority over those of the current one?

[cedilla]

There's no reason to speculate about who the future shareholder will be, nor is there any good reason to just assume that favouring short-term gains will favour the current shareholders more. It's also unknown if a shareholder would prefer long-, mid- or short term gains.

Favouring short term gains over anything else is obviously wrong – Amazon could sell AWS for 5 billion dollars tomorrow, but I don't think you'd argue that this would be in their interest at all, even though it's just giving priority to current shareholders over more distant ones.

[bee_rider]

The current stakeholders probably have an interest in the company not going out of business long term as well.

Anyway, what’s the level of evidence required to sue somebody for working against the interest of their shareholder? I’d expect it to be something along the lines of: the CEO knowingly and maliciously worked against their interest… I mean, we can’t have made being bad at your job illegal, right?

The market is pretty clever, so there is at least room to believe that any move that plausibly would help long-term company health should also help short-term stock prices, right?

[lesuorac]

Why are they different shareholders?

Trivially, the company can expect that it's current shareholders will hold the stock for a long time and so there's no reason to "juice" the current price at the cost of future price.

But also simply, making long term plans is easily arguable to be in fiduciary duty as a future shareholder would be willing to pay more to the current shareholder for a company in good health.

[jszymborski]

Right, but destroying customer trust will also destroy shareholder interests

[deaux]

The leadership team absolutely does not have any responsibility to maximize short-term profit, whichis the claim this thread is about.

It has a responsibility to not actively and intentionally destroy the company, and to not use the company's resources for purely personal gain in a way unrelated to the company.

That's it.

This is also why you never hear about any company getting sued for anything related to this (let alone succesfully). Because it doesn't happen, as it's not a thing and any lawyer would immediately tell you you don't have a case.

[gruez]

>Privately held lifestyle businesses don't, at least not as much.

Only because if they're the sole owner, there's nobody with standing to sue. There's no special legal classification for "Privately held lifestyle business". If such businesses have minority shareholders, you still have fiduciary duty to them, and can't use it as a personal slush fund, or manage it incompetently.

[dpoloncsak]

Many of those businesses eventually get acquired or crushed by the guys who do put profit over everything else.

Sure, Amazon made drivers piss in bottles. They also put killed (or atleast, put the final nail in the coffin) your local brick and mortar xyz store.

[johndhi]

surely it's the goal of most pricing strategies, though, right?

[SergeAx]

In most jurisdictions shareholders may sue management for deliberately lost profits.