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Ask HN: Why so many big companies become greedy when they grow?

21 points by ElectricMind ↗ HN
What happens to "I started company to solve interesting problem" or "I want make world better place"? Why so much greed to bend rule and create monopoly. Look at Google , Look at Facebook - wanted to solve interesting problem. I assume founders were people like us - normal family- what happened to them? Why so much "money-money more money" at any cost mindset and society at large suffer. Why not moderate way of doing business without sucking common people dry? I am puzzled and sad. Let me know your thought. thanks.

29 comments

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llimos
Shareholders. In particular, the idea of shareholder supremacy.

Simon Sinek has some good talks on it, see for example https://www.youtube.com/watch?v=IJyNoJCAuzA

killtimeatwork
Zuckerberg has complete control over Facebook.
llimos
I don't think Zuckerberg was ever the "I started company to solve interesting problem" or "I want make world better place" kind of person.
giantg2
I don't know the guy, but it does seem that he was doing it more for money and ego.
giantg2
Sort of. He is constrained in some ways because they are a public company (regardless of % owned).
codegeek
The moment you go public, you never have complete control no matter what the paper says. You always have to worry about shareholders, investors and others who have a big stake. Zuckerberg is no different. He may have majority control technically but he still has to answer to many people.
[deleted]
(comment deleted)
robbiejs
Human Nature. Power corrupts.
killtimeatwork
> I assume founders were people like us - normal family- what happened to them?

Why assume that? For example, Bill Gates and Steve Jobs were reputedly always extremely competitive, ruthless and success-oriented. I wouldn't say they were ever normal. Even their family background wasn't typical - Jobs was adopted, while Gates was born in a dynasty of some major law players.

peruvian
Agree. A lot of founders and would-be CEOs are power hungry freaks, and they have been for most of their life.
2rsf
Did they? maybe they simply became bigger so you see more of the same greed multiplied by their relative growth ?
markus_zhang
That's capitalism my friend. Nothing should stop the growth of profit. It has been the same from the beginning.
silvajr
I don't agree. Capitalism is just an exchange of something(work/goods) for currency. In its essence is nor good or bad. Greed is in the humans that are running the company. I tend to side more with the other responses, that as it grows it tends to lose focus of its core values (considering it ever had any) and also having to post profits for the shareholders at any costs.
3minus1
> Capitalism is just an exchange of something(work/goods) for currency.

This is kind of like saying evolution is just animals surviving and breeding. It misses the crucial concept of natural selection, where beneficial adaptations get selected and naturally propagated through the species. Similarly with capitalism, those companies that find ways to increase profits over competition via whatever means possible will also grow and become more powerful. Bemoaning greedy CEOs kind of misses the point in IMO, because as long as greedy/competitive individuals exist, they will succeed in a capitalist system.

ThrowawayR2
The people who reach the top are the people who outcompeted everyone else who wanted to be at the top, therefore, the people at the top are, nearly without exception, extremely competitive people. This applies to business, academia, and just about any other form of endeavor where only one or a few people can be at the top.

Even for individual contributors, if you want your fair share of the compensation pie, you are going to have to compete for it against your peers. Failing to do so will leave you undercompensated.

drstewart
https://en.wikipedia.org/wiki/Instrumental_convergence

>Instrumental convergence is the hypothetical tendency for most sufficiently intelligent agents to pursue potentially unbounded instrumental goals provided that their ultimate goals are themselves unlimited.

I mean canonically this is applied to AI, but no reason it should be limited to it. See also: paperclip maximizer.

beisner
Because the larger an organization grows, the fewer and fewer shared values employees in a company have. A small organization can be very value-driven: ideology is easily aligned between 10 people that have selected one another directly.

At a certain scale for a corporation, the only value that people inside a company share is the desire to make money. Literally the only value. Nothing else matters to everyone. Of course, every individual or small group will have their own unique set of values, but the only value and incentive that is aligned across everyone in the company is the pursuit of money. And so businesses, without fail, converge on this singular focus, no matter what the company convinces its employees or consumers it values.

giantg2
I think this gives a lot of insight to political issues in the US today.
Farfignoggen
How! As Markets are always supply and demand driven! And revenues pay for it all!
giantg2
How? Population increases and shared values decrease. And the number of topics and existing laws has increased, also contributing to the lack of shared values and positions.
yamrzou
This seems to be a sound argument, but it doesn't explain why this doesn't apply equally to all large organizations.

Amazon, for instance, is known to have customer obsession as its core value. I think it succeeded at maintaining it so far (at least from my perspective as a customer). And, yes, that value is helping them make more money.

Maybe, in a large organization, the leadership has an important role in instilling the right values and preventing the shift towards money as the singular focus?

Farfignoggen
It's simple and look at AMD and it's stock increases over the last 5 years and some big institutional investors jumping on board and purchasing AMD's stock. And maybe the largest of the Institutional investors getting a seat on AMD's Board of Directors or some pull in getting some influence there in choosing one of AMD's BOD Members!

So once AMD's Zen products were on the market and AMD's renewal of competition in the x86 server and consumer market was assured and AMD's CPU/GPU product lines were taking back more market share and that was then leading to more Big Institutional Investor attention! And Big Institutional investors are going to be Gross Margin focused and Lisa Su answers to AMD's Board of Directors who answer to AMD's investors.

So increasing AMD's ASP and Quarterly Gross Margin numbers is what Lisa Su is tasked to do and look at every company's Quarterly Conference Call and Gross Margins are always mentioned.

Once a company attracts the Big Retirement funds as Investors well those tend to be in for the long term as they are restricted in how they can invest, if they are a State's Retirement fund especially. And AMD's stocks where so attractive from an equity investment strategy early on when they were in the $1.97 range and beginning their rise and more than doubling every year for a while and any of the large Institutional Investors that got in at the beginnings of that are now fat with equity in AMD's shares/share value and that share price rise has leveled off for a while now at $90-$100 range . So those Institutional Investors are wanting more through increases in gross margins and higher ASPs.

AMD's Institutional Investors have so much pull now relative to their investments in AMD's stock and those fund managers Know the Retailers are making out more from the demand market pricing and that AMD who only gets its wholesale pricing and no more unless AMD's increases it's wholesale ASPs. And AMD's R&D investments are really needing to be increased as well to remain competitive with Intel and Nvidia. So Higher ASPs are required for that!

taklimakan
When companies grow, they often go public to keep growing and play against bigger competitors. When they go public, investors buy stakes in it. When investors buy stakes in it, they want a return on their investment. The key point to understand is that those investors’ job is exactly to make a profit, but that’s not always because they are sharks and want to afford a faster car. Some do. Some others may be from pension funds, insurances, retail banks or other socially relevant entities, and all of a sudden if they don’t make a profit, some family in some place might just not make enough interest to withstand inflation, and some other one might outright lose their life’s savings. The problem is not greedy players. A game that rewards unbounded greed is the problem.
zrst
yes they are people like us, and people always wanted to be happy. sticking to idealism wouldn't guarantee you to be happy.

But how about money, I'm sure everyone would happy if they have a lot of money, right? and, how about power? I have a big company and people can't get away from it, sure I'm happy with that. this what i think

draklor40
External money is, IMHO the biggest problem. When you seek investments, VC, public or otherwise, there is an expectation for the money to compound at a certain interest/multiple.

This expectations will mostly end up circumventing certain principles, because to keep with such expectations, firms will have to find various hacks and compromises. FB would not have achieved its growth for example, without providing advertisers with personal information of users.

There is no natural entity that can keep growing exponentially forever, unless it is cancerous cells. And we all know what happens to a body infested with such cancerous cells.

muzani
Habit. Something like Facebook grew at 10% a week. Many still prioritize growth as the ultimate goal. It's not all about money - growing bigger means more power, more products sold, more customers helped. Economy of scale means that the bigger you are, the lower your unit costs, and the cheaper you can sell things, the more you can pay employees.

So there's good moral reason to do this. But at some point it's easy to lose sight that revenue no longer equates to the good they do.

They do need to constantly reassess themselves, but the people who work their whole lives to join the best universities and the biggest companies are not very good at goal reassessment.

akulbe
Personally, I think a lot of this happens when companies go public.

By necessity, the priority moves from whatever the good product/service was to doing whatever it takes to earn the shareholders more value.

I don't like that this happens… but it seems like that's what a lot of folks do, when they seek their "exit".

aristofun
Who is being sucked by Facebook? How exactly google sucks people dry?

How exactly society suffers because Amazon can afford low prices (because of scale)?

aristofun
I wonder how many people silently agreed on this question implications and started answering it.

But the implications are 100% subjective at best, and totally messed up from what i know about the world.

Implication 1: people cant be greedy and making the world better at the same time.

2: Some abstract “moderate” way of doing business is good for society

3: “big” and aggressively growing companies always make people suffer

4: founders intentionally trying to make a monopoly, to bend rules

5: if you’re monopoly its only because you’re greedy and dont care about people