[Xixi]

There's a little known alternative: Steward-ownership [1]. It's the kind of structure used by Novo Nordisk, Bosch or Patagonia.

LLM summary: "Steward-ownership is a model where a company’s control stays with long-term stewards (founders, employees, or a mission-aligned foundation) while profits are limited and the company cannot be sold for private gain. The goal is to protect the mission permanently."

The key, if I understand properly, is that these company cannot be sold (not even by the founders), so there is no "shareholder value" per se to maximize. It is also probably not a good way for founders to maximize their net worth, which is probably why it's not more popular...

[1] https://en.wikipedia.org/wiki/Steward-ownership

[panick21_]

One of the issues with founders is that they get really into one specific idea and sink the company, rather then to switch strategy.

[idiotsecant]

As opposed to shareholders, who ravenously seek to maximize short term profits and sink the company.

[arcfour]

That's why there are no publicly-traded companies more than a decade or two old. Oh, wait...

[delecti]

The comment you replied to was just pointing out that, like how a founder-held company can get stuck pursuing the founder's obsession, a stock market held company can also single-mindedly pursue quarterly gains to the detriment of long-term health.

There are old companies in either model.

[arcfour]

It didn't say can. It stated it rather definitively, which I wanted to point out the absurdity of.

[pipodeclown]

Plenty of countries have corporate laws that are less shareholder focussed than those of america. In the Netherlands for example boards are obligated to take into account broader sets of interest such as employee in their decisions and this is enforceable in court.

[nikanj]

This model, unfortunately, often leads to a "well, we might as well spend the extra profits on executive benefits"-issue. Whenever you have money without oversight, you always face a moral hazard.

If the company makes a profit and there aren't shareholders there to keep the stewards in check, excesses can and do develop.

[franga2000]

I get the first point, but having shareholders doesn't solve that in any way. Shareholders would just give themselves payouts instead of letting the execs take everything as bonuses. And unlike the execs, whose bonuses could be limited by charter and who could be chosen on the basis of trust, shareholders are "whoever has the most money to throw around", so there's no mechanism to align them with company values.

So it's not perfect, but it sure as hell beats having shareholders.

[xp84]

> Shareholders would just give themselves payouts

Precisely, in the form of the #1 trend of public companies, stock buybacks! I've seen aggressive buybacks take a company with a ton of money in the bank and a profitable business and drive it right to Chapter 7 bankruptcy in just a few short years.

[bux93]

It's not as if public companies don't overspend on executive compensation. I think one CEO recently asked for a trillion dollar compensation package?

[simonh]

I'll make you a deal. You agree to give me a trillion dollars, but only if I make you 8 trillion dollars.

I don't think he'll deliver and I think it's based on fantasy economics, he's been really losing it recently, but as a deal it's not entirely irrational if he could make it happen.

[wat10000]

The thing is, the compensation is only based on it happening, not on him making it happen. “I make you 8 trillion dollars” rests on a strong assumption that it all comes from the CEO.

This particular CEO is on the more influential end of the spectrum, but I think executives generally get too much credit for outcomes. If this does happen, it won’t just be because of the CEO, but also because of ~100,000 other employees. Their contribution might be smaller, but comparing compensation, I don’t think it’s proportionally smaller.

[simonh]

Speaking honestly as a foot soldier employee, I look around myself and I think you could swap out most of the people around me, including me, for most other people in our industry and the company would continue just fine. In fact that happens naturally over time anyway. The work we do is essential, but as individuals we are not essential. If I quit and move on, how many investors will reconsider their position in my company? Give me a break, and they would be right to not care.

It's about leverage. It's all about where you stand and how long your lever is. Musk stands at the top and he has a very long set of levers. He's also much more closely personally involved in engineering aspects of a company that most CEOs know little to nothing about. Sometimes that's good, sometimes it's bad, because his decisions have massively outsized effects because of this. Leverage.

If Musk makes good or bad decisions over the next few years, that matters much, much more than the decisions of anyone else at Tesla, especially because he hires and fires everyone else at Tesla. They're all only there, as individuals in particular, because of him anyway.

As it happens I think his decision making has deteriorated significantly recently, in some respects but not all. Also Tesla just doesn't have the magic special sauce SpaceX has had since they developed reusability. There's no special engineering insight in the Tesla architecture. Other vehicle manufacturers already caught up. That catch up is happening in space tech as well with BO's recent booster recovery, but SpaceX still has a very significant lead there, based on a truly revolutionary concept (which Musk championed personally) that they had exclusively for 10 years. Starship still doesn't work though, so we'll see.

[wat10000]

I can't help but notice you said you could swap out most of the people around you, not all. Yeah, some random salesperson is not contributing enormously to the company's growth and could be replaced without much difficulty. But that's not true of everybody. The CEO is not uniquely special in this regard.

I agree that the CEO is typically the most important in this respect, especially this particular CEO. I just think that giving him an additional 1/8th of the company's entire market cap growth, on top of the roughly 1/8th he already has, is highly disproportionate.

Clearly the shareholders disagree, and that's entirely their right. And I'm not surprised, CEOs are greatly overvalued in general.

[Xixi]

Steward-ownership is a philosophy more than an actual structure, my understanding is that each such company is in practice structured somewhat differently.

This article explains roughly how Patagonia is structured: https://medium.com/@purpose_network/the-patagonia-structure-...

For Patagonia a trust owns 100% of the voting rights, while a charity collects 100% of the dividends. I don't doubt that there are ways the structure could be subverted, but it's a far cry from "money without oversight".

Do you have examples of Steward-owned companies that ended up with "well, we might as well spend the extra profits on executive benefits"-issues?

(I personally think Steam should go in that direction, otherwise I'm afraid enshittification is unavoidable once Gabe Newell is no longer at the helm)

[dahauns]

Huh, fascinating. The Patagonia structure is actually strikingly similar to the Bosch model - non-profit owning the shares, but no voting rights, trust having voting rights but no shares - just taking it to the logical 100% conclusion without the residual influence of the Bosch family (having retained a few percent in both).

The model has worked well for many decades for a 100 billion$ revenue company like Bosch, good to see others taking a cue from them.

(Also goes to show that even constructs like these are not safe from corporate fuckups - see the emissions scandal...)

[graemep]

Shareholders are not an effective check in most cases. They are with private companies where individual shareholders have a lot at stake - its their money that is being wasted.

If they can just easily sell the shares they will do that instead.