Item — HN Reader

Article suggests the lack of ownership by the managerial class corrupts incentives, and that owner-operated companies will win out due to an alignment between company management and long term strategy.

Interesting to see how that's going for Facebook, Twitter.

3 comments

You could also argue how much is Elon Musk really an old school industrialist when many of his companies are very intertwined with the government. Tesla selling regulatory credits to other automakers, SpaceX with goverment contracts, ...

So I not sure if managerialism vs industrialist is the right divide here. But there is some divide that makes Elon owning Twitter more notable than Blackrock owning it for some reason.

The government has always been a customer. Companies in many industries can compete for government contracts. Going back the to industrialist days the gov was providing subsidies as well, eg. for railroads

Isn't that more of a virtue of the industries he is in rather than specifics of the companies he has built?

SpaceX gets government contracts, yes, but no more than Boeing or Lockheed Martin. You can also argue they give a lot more value for the public money they do get, relative to the industry incumbents.

Similarly, any other car company that had bothered to make a viable electric car could have cashed in on the regulatory credits. In fact Toyota, the biggest car company in the world, was doing this for a decade with the Prius, until they dropped the ball on going full electric.

That's a good point. The piece fails to address the many ills of the entrepreneurial capitalism it describes, probably owing to Silicon Valley's tendency towards self flattery. It's remarkable how poorly the industry has fared now that the Fed has closed the spigot of free money.

FTX is an example of entrepreneurial capitalism!

Too bad the piece never mentions it.

The managerial class often gets generous stock options. A lot of them prefer to convert them into cash as soon as they can, rather than to align with company interests and gamble for their own success. Perhaps it has more to do with the one guy who calls the shots more than not owning any of the company.