This is why I always gravitate towards software projects that are centered around making money (within ethical bounds, of course). The closer to the bottom line my code is, the larger the sales and support team is around my code, and the more customers there are (real paying customers, not internal employees who like to be called customers) using my code, the better.
It may sound overly hard-nosed and cynical to some people, but I find it's just the opposite. The drive to make more money is the only thing that trumps every other petty motivation people follow at work. It trumps favoritism, empire building, and intra-office rivalries. It trumps good ol' boys networks and tech bro networks. Money brings people into the same room who would never normally be in a room together, and they do it willingly. It forces people in power to listen to small fries. While money corrupts on an individual level, it purifies on an institutional level. Its universally accepted value allows a variety of individual motives to flourish.
This seems to change once a company goes public and hits a certain size, as the flow of money becomes less and less tied to actual sales and consumer behavior and more and more based on financial engineering and stock price.
I dunno. In my experience, Google was easily the most ethical company I've worked for on a "per capita" basis. The big thing Google has going against it is the size of its user base. Every little bit of evil multiplied out by billions of users ends up having a large impact.
But for two companies of an equal size, I don't think a company with an ad-driven revenue model is necessarily going to be less ethical. The sales and marketing people I've worked with at other companies were far, far worse than people at Google, and their evil was only limited by the scaling limits of their sales tactics.
Google is still a young company for it’s size. Ethically it’s been getting worse over time, which makes it’s current state less meaningful long term than the direction it’s headed.
It could be argued that Google is getting more evil relative to its size, not its age. Ergo, you can’t extrapolate the trend unless you expect them to keep growing infinitely.
Well, every ad-driven revenue model is at odds with privacy. There is zero chance that Google is going to support any privacy measure that will block themselves from spying on users. Google not only wants all your data to reside on their servers so they can mine it, but they're actively setting up tollbooths on the internet to take a cut from every online transaction. "Oh hey you Googled Tylers Texas BBQ, that must mean Google should get a cut from the order". Frankly its a bit scary that people honestly (and I truly believe you to be honest) believe Google could be a "most ethical" company.
> Well, every ad-driven revenue model is at odds with privacy.
The correct statement is "every business model is at odds with privacy".
Do you think your ISP isn't spying on you just because you pay them? Similarly you can sell ads without spying on your users, TV does that. And tracking user data is useful for businesses even if they don't sell ads etc.
VPN’s for example are not adverse to customer privacy. Generally customer data isn’t worth much, so every business is balancing that vs direct sales. Where an ISP has minimal fear, at the extreme other end, a brothel has serious risks.
Healthcare is an interesting example where regulations have shaped the landscape and similar regulations can easily hit other industries.
Agreed 100% -> Frankly its a bit scary that people honestly (and I truly believe you to be honest) believe Google could be a "most ethical" company.
Among my friends there are so many that work for dodgy companies and believe they are doing something good
In Seattle my friends and I ran into a girl who worked for a spybar/spy install bar company and she was completely OK with it. She actually liked working there
Of course, now it turns out that Google, Facebook, Amazon do far worse stuff than spyware companies
*
reminds me of an old quote - It is impossible to make a man realize something when his pay check depends on him not realizing it
The statement that a company is the "most ethical" is a relative one. It doesn't imply that the company is ethical, or a net good to the world. It simply means that it is relatively better than the others.
> every ad-driven revenue model is at odds with privacy
I agree with this statement (assuming you're talking about personally targeted ads). Believe it or not though, there are ways to be evil that don't require invading people's privacy, and there are a lot of companies out there that engage in this sort of bad behavior.
I'm not saying that Google is perfectly ethical. I'm just saying that the other companies I've worked at have been worse, and that the heuristic of "avoid ad-based business models" won't necessarily steer you in the direction of an ethical career.
I worked for Google as well. They are fine as far as I can tell.
But similarly, the rank-and-file and the proclaimed policies at places like Bloomberg and Goldman Sachs were just as fine.
Especially Bloomberg seemed to go to crazy lengths to be squeaky clean in all respects. Eg when you leave Bloomberg they immediately put you on garden leave, and (here's the squeaky clean part:) then pay out your remaining leave instead of folding that into your one-month gardening leave.
My experience with free (as in beer) software and services is that it's usually offered as a "strategic offering", maybe as an attempt to commoditize your complement(?) but I'm speculating here. The downside is that the wider business does not care that much about your software. It needs to work, but just enough that customers don't use your complement. And critically, when it comes to prioritization of resources (especially the most senior people who could mentor you), they would rather put their best people in other parts of the business.
I've become of the mindset that if you want to build best-in-class software with a best-in-class team, you should see if you can draw a direct line from the product to the revenue, or at least the core mission of the business.
Preface: Might be easier to read my comment withOUT the parenthesis. Then go back and read with them.
I fully agree with you guys on a macro-scale. I didn't have this position years ago but now it's a firm position.
But my observation is that no one (read: a significant majority) is financially sovereign (FS), therefore they mis-calculate the time/labor costs and it's economic value/costs.
To think of this another way, if your (financial/material/etc) lives depended the Amish's* jam or chairs (or anything else they make). You can depend on their work, up to a certain scale. But even most software projects don't have this dependability because software is generally repackaged to fit a narrow use-case.
Iff (if and only if) the Amish were to embrace the automation technology, then you could depend on the Amish scaling for whatever you need.
Financial sovereignty is very powerful but the drawbacks are that the team, to do all the needed work, might not be FS. (Hence why I mention the Amish) This FS doesn't scale (this could with the Amish; if they wanted to provide jam to everyone, etc) with the complexity of the problem nor the robustness of the problem being solved. Another important drawback is that those that are FS tend to be myopic to those that aren't (i.e. their market/customers). This problem is pretty big as well. To find a product/service that solves all these criteria is immense and dare I say, improbable, hence my agreement to the two comments above. The simple solution is to try and align with the better alternative that have a positive feedback loop (i.e. monetary gain to improve the work).
* Note: I do understand that Amish charge money for jam/chairs/etc but the cost is tends to be nominal/small.
Just candid feedback here, I think you are being downvoted because your comment is actually quite hard to digest. And here, not event blaming it on the parentheses.
Thanks for the feedback! I was going to edit it but looks like I can't.
Regardless, the main idea is that I support greed as a motivator because financially sovereign teams don't exist nor scale enough to support a given cause (especially if it's a very difficult problem).
I lamented about this to a friend of mine recently. The first half of my short career were at companies where all we had were users. Endless customer support and feedback, endless eyeballs looking at anything you build. Every decision was based on ... reality.
The second half of my career, even at larger places, was building MVPs where you go forever without a single user ever seriously using it.
This duality in my work experience created an odd existential crisis. Push to prod after awhile felt like fake urgency. Ideas being thrown around by team members after awhile felt like needlessness. New hires and growth initiatives felt stupid, we barely saturate the existing team. Demos/Presentations felt futile, with a part of your soul just screaming ‘Who the fuck uses this!’.
This is where I am with my current gig. We are abstracted so far from the actual user that it feels like a useless amount of urgency for no particular reason. And middle management is more experienced in hardware than software, so they keep trying to use the "we will just hire more contractors to make it happen faster!" strategy. Feels like needless stress to build something nobody is really going to use anyway. And on top of that, I don't even get to do any code, I'm too senior, so all they want me to do now is draw up architecture diagrams.
I'm thinking about jumping ship and taking a pay cut if necessary just to get back to something where I can actually solve real problems building software I know people will actually use. It's so much more satisfying to work on something you know is useful.
It is a nice reality check where if you break something too bad, you have tens of thousand / hundreds / millions / ?? people breathing down your neck in like a few hours.
I never really considered that without that it would get too loopy.
Something about your quote screams "maybe true in a perfectly efficient/functioning economy", but my gut says, maybe not always true when there are inefficiencies.
There are tangible and intangible costs and benefits to every pursuit (interesting example, externalities in economics). Focusing on only tangible benefits (money) does, to me, seem very common - rarely do I see intangibles being considered.
For example, how many times I see profitable companies making money hand over fist, but when you look at their operations internally, they are completely inefficient and chaotic, maybe even damaging. Like, if they did things even 10% more effectively (let's say at a bit of reasonable cost), they would make even more profit. But doing so takes hard work, they are already making so much money, so they have no desire to look further.
If the profit is so good, that ignoring the money "left on the table" doesn't cause enough pain for the subject involved - well, I think that also creates inefficiencies, complacency, etc.
I also think, when profit is "so good" that other efficiencies go by the wayside, the same behaviors you describe continue. I don't find that the other behaviors go away, really.
I once heard a quote that said, if you wanted any data project funded, convince the CFO that it makes money and they'll go for it. Much like the approaches of TCO, ROI, NPV, IRR, etc - prove the profitable case and you'd think people would buy in.
I have found something like this to be somewhat true - except in companies where they are already making so much money, they don't care about doing the right (or "better") thing. The "more money" they could make is imaginary to them, and they are happy with how much they are already raking in. Until it's super, super tangible/convincing.
I think you're identifying the difference between lots of money being made available to a team and revenue being the main focus of that team. Not the same.
For example, the Fed can shower Wall St. with all the money it wants to, and it may actually make teams inside those companies less efficient and less of a joy to work for. Although money is available, making money is not the main goal of the team.
Or take a fictional company with 100 projects and 1,000 engineers, where only 1 project with 10 engineers makes 90% of the revenue. The 99 other teams at the company are probably not going to have the best culture because the revenue incentive isn't present on those teams. They might just exist to check some compliance checkbox or stroke the ego of some middle manager.
What I'm talking about is not necessarily the availability of money, but a direct relationship of your project to the money-making potential of the company. Big difference.
Hmm, I see the clarification you're making here. Availability of money <> revenue impact, I get it.
Still, seeing that a project is revenue-impacting or revenue-generating (has the relationship to the money-making potential of the company) is relative to the individuals who are viewing it. For example, if there is an effort you could do that generates 2x revenue, but those in charge of your company choose not to pursue it "because they are already making a ton of money and cannot see past the costs".
I guess this comes down to how good of a business leader one has.
I have so many times seen good projects/ideas, ideas that can clearly make money, even lots of money - but in the wrong company, with the wrong people, or attitudes, or beliefs - don't matter. These are the times when, if you are the person with such an project or idea, you ask whether or not you are the right "fit" for the organization - since they are not recognizing or prioritizing the value of your project/idea.
I suppose you could look at this as efficient capital allocation, if you assumed perfect business leadership. Perfect business leaders would only pursue the revenue generating activities that made the most sense.
I would argue that we are far from perfect, and that we often let ego, opinion, culture (or even "data") influence our decision-making about revenue-generating activities.. which brings us back to the point that culture is still relevant. Something that popped to mind related to this is the "Ultimatum game" from psychology/economics [1].
There are some problems with a focus on making money.
Alas, when you remove that particular focus, you don't end up with something pure left over. But more often with the worst pathologies organisations have to offer. As the original commenter points out:
> The drive to make more money is the only thing that trumps every other petty motivation people follow at work. It trumps favoritism, empire building, and intra-office rivalries. It trumps good ol' boys networks and tech bro networks. Money brings people into the same room who would never normally be in a room together, and they do it willingly. It forces people in power to listen to small fries. While money corrupts on an individual level, it purifies on an institutional level. Its universally accepted value allows a variety of individual motives to flourish.
"while money corrupts on an individual level, it purifies on an institutional level."
Adam Smith wrote both "The Wealth of Nations" and also "The Theory of Moral Sentiments." Your comment is deeply insightful, and it is a feature of markets that wasn't missed by him. So dismayed that I think a lot of people overlook this important effect.
An almost lossless compression is "people act in their interests", which is orthogonal to subjective judgement like purity and thus revealing the paradox or have I missed something? It is a very 1776 understanding of markets. A 2000 understanding is more like "Sufficiently Powerful Optimization Of Any Known Target Destroys All Value". At scale institutions don't purify, they consume.
I was really reflecting more about my own experience working on different teams over the years than making a blanket statement about economics.
I've found that the most dynamic and egalitarian teams are the ones that focus on making money because those are the ones where people are incentivized to keep an open mind and expect compensation for greater effort. On government and charitable projects, not so much. I don't really know why, but like the author, I suspected incentives have something to do with it. When your project is just a cost center, anything out of the norm will be seen as another risk or cost to avoid. As an engineer, this doesn't produce a great culture.
It surprised me to learn this because, like many commenters, I always associated corruption and overall shadiness with making money. But my career has shown me that there's either no correlation or the opposite. At least at the team or project level.
Without money you have a cool place to work until they close. Without money and you have crapy cowokers it still is a crappy place to work until they close. With money a cool place to work can last a long time. With money and you have crapy cowokers it still is a crappy place to work but still have a job.
I mostly agree. Minor correction: by itself it doesn't matter too much how large the sales team is or how many customers there are. What matter is how much money there is to be made.
In my experience, internal customers are also fine, _if_ they are close to the money making side of the company, and especially if they have alternatives. Think eg traders in an investment bank.
Stock price should be the outcome of making money.
Financial engineering, when done right, is just a set of optimizations that makes sense at larger scales given the regulatory and market environment.
A lot of superfluous financial engineering would disappear with simpler policies. Eg many jurisdictions tax interest payments less than dividend payments (or stock buybacks).
Companies respond to that incentive by shifting the ratio of debt to equity.
Put both on equal footing, and companies would be less interested in loading up their balance sheet with debt.
(And stock buybacks are perfectly harmless. They are economically exactly equivalent to dividend payments, and have the essentially the same effect on a company's balance sheet.)
Wouldn't fintech be the ultimate distillation of this?
You (often) don't have any product, you just have the money, and the purpose of the engineering is to increase its amount. Seems like a powerful motivator as long as everyone's getting a sufficiently motivating cut.
The positive aspect of money is that people focus on creating valuable products instead of on navel-gazing / politics / whatever. Fintech kind of places the cart before the horse in that regard, don't you think? I wouldn't really know - I have never worked for a fintech project.
I also haven't worked in fintech so I'm speculating.
You want to make software that adds value either way. But this way the value is directly generated for your employer, with no customer in the middle.
I'm not saying that eliminates other influences, certainly I think (and have heard) this leads to workplaces dominated by strong and often eccentric personalities, which has its downsides.
But insofar as a programmer is motivated by creating value, and by value we mean money here, I can't think of a way to be closer to it without being independent.
I work in fintech. You are right, money is the product.
The personality cliché in finance is the risk taking one. Men are more frequently found in riskier professions, including dangerous jobs like oil drilling.
Some fintech companies actually do produce a software product for finance. However, many of them work for banks or funds to generate capital gains beyond a wage or salary.
Regardless of personalities, the most important factor is profit. Everything else is secondary. It is not as flashy or famous as big tech companies, but this profit is paid in bonuses that far exceed the highest salaries for tech workers.
If you work for Netflix, maybe you get a free subscription. If you work for a restaurant, maybe you get a free box of takeout at the end of the day. If you work in the business of money, your incentive is large bonuses.
> Regardless of personalities, the most important factor is profit. Everything else is secondary. It is not as flashy or famous as big tech companies, but this profit is paid in bonuses that far exceed the highest salaries for tech workers.
Depends a bit on what part of fintech you are working on.
There's lots of rank-and-file employees whose good salaries actually mostly depends on competition from tech companies. With a low-risk lifestyle mostly comparable to said tech companies.
To get the crazy bonuses, you need to move closer to the traders and some of the quants (or get very lucky). But generally those people work a lot harder and longer.
I've worked in tech companies (like Google and Facebook) and in those low-risk fintech roles (at eg Bloomberg and Goldman).
It seems that the finance industry as a whole seems to be moving away from the heroic model with enormous bonuses to the tech company model with good salaries.
The latter is cheaper and more predictable, and it fits the organisations as more and more work becomes automated.
(That observation is about companies like eg Goldman and only meant to capture an average. They still have plenty of individuals pulling heroics; and there are still plenty of hedge funds and similar on the old model.)
As another example, take high frequency trading market makers. They generally don't have any human traders at all, because humans would be way too slow. So their very nature forces them to become closer to tech companies in organisation.
The best first resource for any interest about the inside of finance is Matt Levine's column Money Stuff. He's currently on a break, but he has years of backlog you can read.
In many fintech endeavors, the participants have different time horizons and different payment schedules, so there seems to be a pretty persistent trend for the short term participants to take their money upfront and leave the long term participants holding the bag.
I don't think it's accidental that investment bankers, the people who should be most savvy in valuing complex securities, get cash bonuses, while software engineers get options which take years to vest and in pre-IPO companies may not even be readily traded once they vest.
In one notable transactions, investment bankers got their bonuses as toxic assets.
That was a genius move. It got those assets of Credit Suisse's balance sheet, looked good in PR, and receiving bankers were happy because those assets were worth more in the end than they looked like during the height of the panic when the transfer happened.
As for software engineers: there's a tax dodge in them getting stock options in pre-IPO companies.
But in my one startup job, I negotiated a cash bonus, because we couldn't agree on how to value the options they were originally offering. (Basically, I thought they were next to useless, and the company obviously pretended otherwise.)
While Google, Microsoft etc are hiring, a software engineer who accepts a bad deal in options only has herself to blame.
(Stock options can also be a good deal. But they are hard to value.)
If you are in trouble, you need the best people you can afford.
If anything, it should perhaps boggle our mind more anyone got bonuses in eg 2007 that weren't clawed back later.
In general, I don't think bonuses by themselves are a problem. It's just a different way to structure total comp. And if you restrict bonuses, you just force banks to pay higher base salaries instead.
To make banks behave better, I would suggest abolishing (government-backstopped) deposit insurance. That way depositors will keep a sharper eye on their banks, and hopefully pro-actively move their funds to institutions with a reputation for low risk and transparency.
(Depositors who want to simulate the current regime could just pick a bank that for their money that invests only in short term government debt.)
This has been my general experience too, the more a company is focused on revenue, often the experience is better and it does cut through the bullshit. One of the worse companies I worked for was one that had LOTs of money at its disposal, there wasn't really any focus on making money, but building massive projects, and the amount of politics, waste, and empire building was crazy.
For a business, culture is made up of the behaviors that management reward. Most of the reward is money, immediate or deferred, and some of it is in accolades, social respect, and other forms of promotion.
The revenue model drives the behavior of the salespeople. If you sell small subscriptions, no individual customer is important but marketing is. If you sell multi-year service contracts that take six months to sign, your individual customers are important and the salespeople bringing them in are important.
If the company perceives that it is selling a high-value service, the development teams are important. When the company is selling a low-margin commodity, the people who can improve the cost structure are the heroes.
I'm sure you know this but this phrase simply means that it is better to have a good culture than a good strategy, broadly speaking. Mind you, I'm not saying this is true or not.
Your phrase:
>>so without strategy, culture starves?
Seems to be argumentative for argument's sake without taking into account the intended meaning of the original phrase. Not surprised you pissed them off.
As a long time Microsoft customer, this is why I'm not loving the Nadella age.
Sure, free VS Code is nice, but Ballmer was trying to sell me Windows licenses. That's simple, it's clear. Nadella, instead, said some blarb about could and mobile, made Windows free, and added bucketloads of telemetry.
Currently I still have the idea that Windows exists to sell me office and azure licenses, which is less bad than why Android exists, but sooner or later they'll have finalised whatever shady revenue model 180 they're in the middle of and I'll have to consider alternatives.
I think this is almost the inevitable path of public companies. Even worse if its not founder run, but manager run. In that case the incentive structure is inevitably going to be about share prices. And share price incentives will slowly erode any culture into driving revenue higher and higher.
Of course there is always the possibility of staying private, but it seems unlikely if you've taken VC money, or have to fund expansion to get to profitability, which most tech companies do.
Sometimes I look at Adobe's stock history in awe and then realize the only thing that has really changed over the years is that they moved from a license model to a SaaS model...so instead of paying a few hundred dollars for a Photoshop license you can use for life you get to pay $50/mo for a bundle forever.
I hate it but you arguably couldn't use them for life unless you wanted to run some old version of the OS they came out on in a VM. OSes change, the deprecate and remove old features. You can't run Photoshop CS6 (the last non SaaS version) on Catalina.
In the past I got by on 1 upgrade every 4 years or about $50 a year. Now it's $120 a year. Before the incentives were aligned. Add new amazing features or I'm not upgrading. Now the incentives are not aligned. The more money they spend on dev the less money they make. The are 100s of features I see on cheap or free iOS image editing apps I'd have expected to see long ago in Photoshop or Lightroom but Adobe no longer has any incentive to add features. As just one example, the features of the Focos app. Being able to create an AI generated depth mask would be extremely useful in Photoshop.
I'm sure you can make excuses why this isn't a valid data point but look at Wikipedia's Photoshop feature list by version. Notice how before SaaS each version shows about 4-5 paragraphs of new features, after SaaS each version is just a single paragraph of mostly minor re-workings of existing features
A company is an interconnected system. Culture begets revenue model, revenue model begets culture. You can't have a revenue model that works without a culture that executes it, nor vice versa.
> FedEx needed to move/sort their packages more quickly, so instead of paying employees per hour, they paid them per shift. productivity increased dramatically (employees now had less incentive to take longer hours to do the same amount of work).
That's the way incentives work iff the employees had control over the hours worked. If instead their managers had this control, the incentive would be to make your employees work longer hours, because you don't have to pay them more.
This really speaks to me and is one of the driving philosophies when we created our pricing model for Warmintro, which ironically has a mission very close to the author's example: "to give people the power to build community and bring the world closer together."
We make it easy for private groups to create their own online community portals, and it would be very hard to stay true to community-focused ideals, if our revenue didn't match the mission.
For this very reason, a sizeable chunk of our customers migrate to us from Facebook groups due to privacy concerns. Facebook makes money on your data and by serving you ads, that is the direction that everything they do leans. The groups that they host suffer from that fact.
We made Warmintro paid from the very beginning. It made things harder for us in many ways since we acquire initial customers more slowly, but it also guarantees the direction of our priorities. Because at the end of the day, how you make money determines the ultimate direction of any for-profit company.
“I think that over time, the revenue model is the dominant term.”
Nah. The profit model. This has consequences for both the users and employees. The stockholders have shoved their way to the front, and their mercenaries are armed.
I did a summer internship at Google in 2009. The "don't be evil" ethos was clearly on the decline as it stood in the way of several major business directions.
Better said - the revenue model is the ultimate reflection of your culture.
I'm working on a startup right now that has this understanding at the core.
We are building a revenue model with a fixed margin of profit.
In our company, no matter how many costs the teams cut, they'll always end up with the same short-term profit. So - it's pointless to screw the customer to try and get some kind of short term win.
Their job won't be to manage the P&L, their job will be to reinvest all the remaining margin into the customer experience.
We got this idea from Costco, who do something a bit similar.
In terms of Google, I don't have an easy solution, but it's clear that Google's internal incentives (actual culture) are overriding whatever barrier is in place (that thing is called culture).
> Their job won't be to manage the P&L, their job will be to reinvest all the remaining margin into the customer experience.
Just listened to this 2013 talk [0] by Thom Hartmann, who made a quite cogent case that a high marginal tax rate (90% under Eisenhower, 74% under LBJ) was good for business and workers alike: business owners were incentivized to expense and reinvest as much as possible, including into hiring, wages, and benefits. That reinvestment came to benefit the owner when they sold the business, at the drastically lower capital gains rate.
Curious that in the absence of a more stern tax incentive, there seems to be a strategy of implementing a self-imposed profit cap. (I'll have to research the Costco case further, I didn't know that.)
To be clear, we're talking about a profit margin cap.
Our bet is that in 2030, we'll be a massive business because of the volume we're driving, which will come from the customer satisfaction that is derived from our continuous reinvestment into the business.
This is Costco's business in a nutshell - satisfaction drives scale, they reinvest the benefits of scale into their customer satisfaction (good products at low prices), and the resulting customer satisfaction drives more sales which means more scale, and on it goes.
Amazon is trying to get at something similar with their 'it's always Day 1' and 'customer obsession' refrains, but this effectively relies on Jeff Bezos staying alive or his successor being equally effective.
We believe that that's a bad structure in the long term. If
we can build the right long-term economic incentives directly into the business structure and then allow it to play out for long enough to prove the benefit, then that should hopefully limit tinkering by our successors.
We are also building some other culture-reinforcing mechanisms into the business, such as ensuring that ALL employees, including devs, execs, office cleaners, etc, regularly speak with customers. It will be part of your contract upon signing with the company that you must speak with X customers per week.
This way, we won't be tempted to make an anti-customer decision, as ALL of us will face the heat on our phone calls for the coming weeks and months.
We're setting a fixed margin. 14% (exact number TBD) of all revenue will go into a profit account. And that will be the profit, it can be reinvested into the business only as capital spend.
86% of revenue is what the rest of the team will need to work with. They will be required to spend that 86%, all of it, on team and customer satisfaction (improving the product, improving the service, reducing the price).
They'll primarily be measured on customer satisfaction. All promotions (unless you're in a role that is directly tied to say, online conversion rate), hiring, firing, and ongoing management will be based on metrics around how happy our customers are.
Our profits will increase with volume, because we'll have happy customers.
Note, an analog to this model is very common in the franchising industry. Many franchises take a fixed percentage of revenue as their 'take', but in our case the business 'take' will simply go to a profit account.
We won't do 14% on day one, it will take a little while to get there, but that model will be our overall guidepost.
While "Culture Eats Strategy for Breakfast" -- https://culturematters.com/culture-eats-strategy-for-breakfa... -- it's possible to have an awesome culture and an unprofitable business. As long as you make enough to be a going concern then culture trumps anything that would lead to a short-term gain in revenue which jeopardizes the culture of the organization.
My last role was for an awesome team building a product that ended up making no money , which lead to most of us getting the sack once Covid came along (that and half the board defrauding the company to the tune of billions). We all knew that the product would flop, but no one at a level to change the strategy wanted to hear it. Perhaps that was a cultural problem, but I'd say that culture and strategy are inherently interconnected.
What about competition? This factor seems to be missing from the analysis. If you have many companies competing for ad revenue (a la old school TV and radio), are things maybe a little better? (I anticipate pushback re: NPR, PBS, or subscription supported cable. But surely it's worth considering?)
(author) Good point. I'm not sure how competition would net out. If you're the only game in town, you can set the rules. On one hand, you can get away with bad things if you want to. On the other hand, you're less susceptible to competitive pressures so if you want to keep things clean, it might be easier.
What it's doing right now, or what it does habitually, or what it can do, or something else? Is the purpose of my toaster to sit there broken, because it's broken right now? This isn't very useful by itself imo.
I agree that public funding is a great way to fund free products and services. The issue is that getting public funding is a major pain right now. It can take months of paperwork. And it's not really "we" who decide what to fund - it's one or more government employees.
I'd love to see Participatory Budgeting take off. It would be awesome if we could all vote on which products and services deserve public funding. And it would be even better if we could use technology to decide what to fund much faster than we do today.
Actually, I think it does. Their revenue model is "get people to voluntarily donate". So, that means they have to make a product that is easy to use (low barrier to entry for new user), and valuable to the user (so after using it for the 10th, 100th, 1000th time, you eventually think, "I should give them some $ every month). Like public radio, they have a business model that does not involve ads or fees. But it definitely drives what they do and how they do it.
True, but it's run by a massive network of volunteers; they are very carefully curated towards one specific goal and definitely aren't a general framework for a business
Culture isn't even in the Top 3 and might not even be in the Top 5
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One very important Caveat
In today's zero interest rate, Fed printing press environment
where money is DESPERATE for any kind of return
Growth will sometimes trump Monetization and even Product Market Fit
VCs will focus on Growth above all else because with Growth you can raise enough money to 'brute force' Product Market Fit
Culture, as opposed to what all the 'gurus' and 'politically correct people' say and pretend
is not as important as any of the above
You can see a lot of successful companies that don't necessarily have very good culture
Culture is something that will matter 10 to 20 years down the line once you're a big or very big company
If you don't have Product Market Fit, you won't survive
If you don't have good monetization/profitability you won't last very long (unless Product Market Fit and/or growth is massive)
If you don't have Growth, then you will always remain small/much smaller than you could be
One thing a lot of people in US/UK/Canada (have lived in all 3 countries) believe VERY STRONGLY IN and which people from China/India/Africa (worked with all; non work friends from all places) don't believe in AT ALL
is this Western Dream State of a company also being focused on saving pandas and bald eagles and world peace
It's almost as if in the West it's not enough to be successful you also have to
A) Pretend you never intended to be successful. It was a happy byproduct of wanting to make the world a better place
B) Start talking non stop about how much you will donate to charity
C) Start saying 'it was all luck' and 'not the better people won' etc
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This is also reflected in a different way
In the West people are super likely to be made a fool of by a company pretending to be virtuous
Google and Facebook are good examples
They work so hard to pretend all their unethical steps are 'mistakes' or 'one off instances'
people in the West just buy it hook, line and sinker
things like: Even after we turned off the setting to track location, Google was still tracking it
things like: Instagram had camera on all the time, it was just a bug and had nothing to do with ad targeting and spying
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For all the talk of China and INdia and South East Asia and Africa being corrupt
companies like this are very quickly identified to be scum and taken down, sometimes even by the Government
Basically, the people who control Europe and US are very, very good at making it seem all magical fantasy land
Snowden is a good example. He's basically being treated as if HE was the one doing all the spying and illegal surveillance
This is borne out in my experience with a company that had moderate layoffs + completely replaced the executive team. Despite the gut renovation, the company didn't change much in practice because our core business model was the only thing that couldn't change. We just became more effective.
I worked at Google from 2010-2015. When I looked for another job, I wanted to avoid the thing that bothered me about working at a FAANG. I didn't have a clear understanding of how my contributions affected the bottom line. In fact, when I left, I asked a bunch of current employees the same question: "Did Google make money on my employment?" I got every answer you can imagine.
"Of course they did, you helped grow an ecosystem with network effects, so the value you added was intangible but incalculably large."
"Of course they didn't. You grew the output of a product that people can use for free, so your work was mostly a loss leader."
Anyways, when I looked for a new job, I had a simple requirement. I wanted to work for a business model that I wanted to improve. Etsy fit the bill. A marketplace for small businesses to sell unique goods. I could feel good about improving this business model: improving our top line meant that more small businesses got sales. I can live with that.
Flash forward a year, and Etsy was in serious trouble. Growth was decelerating. Our core product was neglected in favor of newer offerings that had a long way to go to get traction. So we had some major gut renovation: new CEO. New CTO. New CFO. Two rounds of layoffs. A bunch of people left because the culture was gone. You think to yourself, "OK, that's it, the foxes are in the henhouse. What's going to change?" And it turns out that you can't change that much! Our core business was to connect small businesses making special items to a global audience. So that's what the foxes had to work with: A two-sided marketplace where they needed to please both the existing sellers (so that they didn't just shut down their shop in favor of all of the other marketplaces they were using) and improve the site for our buyers. So they brushed the dust off of the core marketplace, assigned a bunch of people to focus on improving sales, and the results speak for themselves. Even ignoring Covid-related effects, our marketplace was healthier, growth was accelerating, and morale was up. And some of the people that left because it wasn't the same anymore? They came back. We have a lot of "boomerangs" from that era.
I like point of incentives that OP brought up, you can also see that in some things that Etsy sellers hate. For example, the people who made Etsy set the fees way too low. It's hard to walk that back. So you can see the executives try to find ways to bring the fees more in line with what Ebay or Amazon might get. The best they've come up with is improving an offering and restructuring the fees at the same time. "New: off-site ads are new and improved, and if you get a sale, we charge %12" type stuff. If you're a seller that's mad at Etsy, that's the kind of thing that you're going to complain about - us following our own incentives.
Based on a few years trying to drive this for a major high tech some time ago: The two sided markets are the holy grail if some managers are to believed. When you are The Market it can be pure gold. But if there are no barriers to entry it gets difficult. For small companies barriers to entry can be difficult. For large companies engineering them requires very careful consideration of anti-trust law. So starting small one can speculate on may dominate the market eventually but that takes a lot more stamina than most companies have. And some companies embark on this platform pathway as a way to avoid facing the troubles at their core. They start the journey not well provisioned and it does not end well.
This is a trick question, author seems to be vouching for blending the culture into the business model ("...the better a product is, the better off the company is and its users are").
I do wonder how well can it fit the Betteridge Law of Headlines ?
(Author) ha! I didn't know about that law. I guess this doesn't really fit the law because my answer would be yes, revenue model IS more important than culture. With a lot of caveats I cover in the article.
It may sound overly hard-nosed and cynical to some people, but I find it's just the opposite. The drive to make more money is the only thing that trumps every other petty motivation people follow at work. It trumps favoritism, empire building, and intra-office rivalries. It trumps good ol' boys networks and tech bro networks. Money brings people into the same room who would never normally be in a room together, and they do it willingly. It forces people in power to listen to small fries. While money corrupts on an individual level, it purifies on an institutional level. Its universally accepted value allows a variety of individual motives to flourish.
This seems to change once a company goes public and hits a certain size, as the flow of money becomes less and less tied to actual sales and consumer behavior and more and more based on financial engineering and stock price.