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Share Dialog
Share Dialog
Innovation is not profitable, until it is
Shareholders demand profits in the near term
The growing strength of Shareholders in Business around the world stifle innovation in some businesses and increase risk in others
Shareholders are the people who own the shares of a given company, entity or firm with the intent to make money. What is most important here is the time horizon associated with investors.
Let us examine cryptocurrencies for a second. Jim Cramer, our favorite market menace, said recently that he doesn’t understand why people are holding ‘Solana & Litecoin’. He has deemed them unprofitable and unworthy, furthermore he has deemed cryptocurrency an unsafe investment on the grounds that he doesn’t like the banks that hold the coins.
https://www.cnbc.com/video/2022/12/23/jim-cramer-i-would-not-touch-crypto-in-a-million-years.html
It is easier to understand why people still hold crypto which is likely because they either self custody and don’t trust banks (following the FTX debacle) or because they believe it is profitable.
Why do people hold particular cryptocurrencies? It is likely an individual conviction that one day it will be profitable. I hold Ether, Bitcoin, and many more currencies with the intent that one day they will be profitable.
Stockholders, or shareholders, have an extremely low time horizon these days and the intent is to get in and get out.
Without loyalty to the company, these hungry for profit people stand yelling at the gates of a company to be profitable. And when a company is profitable, they demand it become more profitable. And when profits no longer grow, stocks are sold.
Innovation is not profitable. In fact, it is down right stupid initially. Investors laud companies like Apple, Google, & Amazon right now but the praise was not present when they began the journey to their current stature. Innovation is normally at the cost of hundreds, if not thousands, of complete failures which result in the development of newer technologies.
The answer is simple. Innovation left when shareholders entered the room. A shareholder is an individual who holds shares, and nothing more. Innovation comes after the work of brilliant minds and investors. The word investor comes from Latin, a language that IS NOT DEAD, of the word investire. Vestire, which is a suffix in the Latin word, means to clothe in. The word Investor, even from its Latin Roots, suggest immersion into a given subject or idea. The idea of wearing ones investments as if they were your clothes is an expression of commitment to the entity.
The Shareholder is not as committed as the investor. The shareholder is there solely to reap profits and run away with them. For example, during the time of Blockbuster Netflix came to meet the company about a potential buy. In 2000, Netflix offered to sell itself to Blockbuster for 50 million dollars. At the time, the Blockbuster company, saw its current marketplace and saw it as immediately profitable, and myopia led the company to fail to see Netflix as a viable way to entertain and expand in the future. The Investment into Netflix would likely have received scrutiny, especially since the Price to Earnings ratio wouldn’t be positive until 2004. The company operated under a loss and was seen as unprofitable to the shareholders, and thusly was viewed as a waste of human energy. We all know that Netflix became a hugely successful company, and Blockbuster would fail.
The Second World War, a devastating and destructive human event, produced the computer, radar & penicillin. These technologies that revolutionized communication, information, & health care were the result of large nation states launching blows toward one another with human life, metal, and huge amounts of fossil fuels with the intent of forcing the will of one nation upon another.
War is a contest of wills. Weapons, armies, fleets and fortresses are simply the means by which one breaks the will of their enemy. - Mike Duncan, Hero of Two Worlds
Those who take up the mantle of a new technology have to persevere in frigid and lonesome world of impeded progress - but progress nonetheless - are a rare specimen. People thought cars were not gonna replace horses. People thought at home computers were a horrible idea. People even believe that cryptocurrency is dumb and useless. The media ripped the internet to shreds time and time again. Yet, here we are. Innovation happens on the backs of giants, and fueled by dedicated investors.
Innovation cannot be born of shareholders who choke a board of directors to continue to churn out profits. This environment encourages these boards to look at where they are and improve their productivity and efficiency, rather than look out to where they could be. This often materializes in overworked & underpaid employees, further stifling innovation and productivity, and a flurry of other changes that turn the once malleable industries of old into the stubborn industries of new. The only thing that is guaranteed is change and companies that solidify obstinate ordinances will fail in the future. Fighting the Future is foolish.
The flaky nature of investors has changed the nature of assets and innovation. Every company that is listed is required to produce profit. While Elon Musk, may be an ambiguous figure, the act of taking a public company private offers change the underlying incentive structure. Twitter was experiencing issues with revenue and has been recently been discovered having taken government money to allow them to spy on American Citizens and manipulate public opinion. These monies were likely used to bolster revenue. Would companies be so manipulated if there was no strong desire to increase revenue?
Risk is something that I spend my life thinking about. As a day trader, molecular biologist (the job I am paid for) and social scientist, I find myself attempting to measure the risk of any given action and curtailing it. Chief officers and these boards are no different. Their bonuses are based on shareholder returns rather than company successes.
“We choose to go to the moon in this decade and do other things, not because they are easy, but because they are hard.” - President John Fitzgerald Kennedy
President Kennedy, God rest his soul, set the United States on the path to reach the moon in the year 1969. In this project, there was about 25.4 billion dollars spent which would be 152 billion dollars today. This would be about 4.6% of the nation’s GDP, some 1 trillion dollars today. The project would lead to our global positioning systems (GPS) as well as many other telecommunication technologies we use today.
“In order to get something you’ve never had, you have to do something you’ve never done.” - President Thomas Jefferson
Companies are ran by boards of men and women who are purposed with increasing shareholder value. The result is new forms of fraud due to feed the bottomless & insatiable pit of promised growth and prosperity that encourages the buying and holding of the asset in question. Something that has been interesting brewing at the company known as Boeing for a very long time. The company, like many others began looking to appease its shareholders for their benefit, and subsequently began outsourcing the production of some its planes to reduce the cost of production. The company that was lauded for bringing innovative ideas in aerospace engineering was now looking to cut cost. In doing so, the malfunctions on these great planes became greater and greater in seriousness over the years. Even if I am wrong about the loss in innovation among these persons, how is it possible to innovate and develop new technologies when your planes are being developed miles away and assembled on site.
The financial industry takes many risk to return profits to its many investors each year, none more infamous than the increase of subprime mortgages and mortgage backed securities in the early 2000’s, leading to the Great Recession. The Federal Reserve Bank, in an effort to encourage growth, turned to quantitative easing in the 2010’s resulting in great wealth inequality in the United States and abroad. The stakeholders rewarded in the Federal Reserve’s game are those who benefit from it most, the rich and wealthy.
Prior to shareholder deification, companies took risk that often resulted in innovative ways to attack new industries and attempt new ideas. After shareholders and returns took the thrown, ideas shifted to a new direction. Companies began taking risk, not to create something new, but to maximize shareholder return and keep the company looking healthy. The result is companies scared to innovate and happy to lug complications and realities under the rug.
I sat in on an Origin Protocol Discord Call recently and listened to someone present an idea to the DAO. It was an interesting call that was interrupted by an interloper who managed to get to the call stage and say, “Origin Protocol is going to zero.” It was not a fun thing to hear because the price had fallen so much in 2022. I believe in the protocol, particularly the stable coin project that is brewing under the DAO. Whether, I am wrong or right I do not know, but I can tell you that I do not hurt the collective of people who are involved.
Shareholders hold innovation hostage in the world of traditional finance and cryptocurrencies should take these notes. We cannot jump on every train purely for profits, excusing our degenerate portfolios. We have to find projects that speak to us and stick with them working toward to goal of developing that project. The committed cadre of investors, thinkers, and contributors will produce the future, whereas the shareholders will often absorb the wealth created by yesterday’s innovators.
Why do people still hold Solana & Litecoin? It is because they investigated the risk, liabilities, assets and capabilities of each respective technology and deemed it worthy of the current sacrifice. The hold time of an asset in cryptocurrency markets, I would guess, is slightly higher than that of regular markets. It has everything to do with the hashtags on twitter, the chat rooms on discord and the memes we create as we suffer together to support the necessary advancement of the technologies we believe in. Jim Cramer, a champion of tradition finance and the institutions that hold her up ask us why we are committed as they are dumbfounded by the principles we hold near and dear. It is in these moments like this where there are many calling us stupid & ludicrous because they do not understand, that we realize why we misspell HOLD for HODL. Why we call ourselves degenerates! No sensible man would do what we do, because we are fueled by a passion for things that have not been seen nor materialized. Because we are innovators.
Innovation is not profitable, until it is
Shareholders demand profits in the near term
The growing strength of Shareholders in Business around the world stifle innovation in some businesses and increase risk in others
Shareholders are the people who own the shares of a given company, entity or firm with the intent to make money. What is most important here is the time horizon associated with investors.
Let us examine cryptocurrencies for a second. Jim Cramer, our favorite market menace, said recently that he doesn’t understand why people are holding ‘Solana & Litecoin’. He has deemed them unprofitable and unworthy, furthermore he has deemed cryptocurrency an unsafe investment on the grounds that he doesn’t like the banks that hold the coins.
https://www.cnbc.com/video/2022/12/23/jim-cramer-i-would-not-touch-crypto-in-a-million-years.html
It is easier to understand why people still hold crypto which is likely because they either self custody and don’t trust banks (following the FTX debacle) or because they believe it is profitable.
Why do people hold particular cryptocurrencies? It is likely an individual conviction that one day it will be profitable. I hold Ether, Bitcoin, and many more currencies with the intent that one day they will be profitable.
Stockholders, or shareholders, have an extremely low time horizon these days and the intent is to get in and get out.
Without loyalty to the company, these hungry for profit people stand yelling at the gates of a company to be profitable. And when a company is profitable, they demand it become more profitable. And when profits no longer grow, stocks are sold.
Innovation is not profitable. In fact, it is down right stupid initially. Investors laud companies like Apple, Google, & Amazon right now but the praise was not present when they began the journey to their current stature. Innovation is normally at the cost of hundreds, if not thousands, of complete failures which result in the development of newer technologies.
The answer is simple. Innovation left when shareholders entered the room. A shareholder is an individual who holds shares, and nothing more. Innovation comes after the work of brilliant minds and investors. The word investor comes from Latin, a language that IS NOT DEAD, of the word investire. Vestire, which is a suffix in the Latin word, means to clothe in. The word Investor, even from its Latin Roots, suggest immersion into a given subject or idea. The idea of wearing ones investments as if they were your clothes is an expression of commitment to the entity.
The Shareholder is not as committed as the investor. The shareholder is there solely to reap profits and run away with them. For example, during the time of Blockbuster Netflix came to meet the company about a potential buy. In 2000, Netflix offered to sell itself to Blockbuster for 50 million dollars. At the time, the Blockbuster company, saw its current marketplace and saw it as immediately profitable, and myopia led the company to fail to see Netflix as a viable way to entertain and expand in the future. The Investment into Netflix would likely have received scrutiny, especially since the Price to Earnings ratio wouldn’t be positive until 2004. The company operated under a loss and was seen as unprofitable to the shareholders, and thusly was viewed as a waste of human energy. We all know that Netflix became a hugely successful company, and Blockbuster would fail.
The Second World War, a devastating and destructive human event, produced the computer, radar & penicillin. These technologies that revolutionized communication, information, & health care were the result of large nation states launching blows toward one another with human life, metal, and huge amounts of fossil fuels with the intent of forcing the will of one nation upon another.
War is a contest of wills. Weapons, armies, fleets and fortresses are simply the means by which one breaks the will of their enemy. - Mike Duncan, Hero of Two Worlds
Those who take up the mantle of a new technology have to persevere in frigid and lonesome world of impeded progress - but progress nonetheless - are a rare specimen. People thought cars were not gonna replace horses. People thought at home computers were a horrible idea. People even believe that cryptocurrency is dumb and useless. The media ripped the internet to shreds time and time again. Yet, here we are. Innovation happens on the backs of giants, and fueled by dedicated investors.
Innovation cannot be born of shareholders who choke a board of directors to continue to churn out profits. This environment encourages these boards to look at where they are and improve their productivity and efficiency, rather than look out to where they could be. This often materializes in overworked & underpaid employees, further stifling innovation and productivity, and a flurry of other changes that turn the once malleable industries of old into the stubborn industries of new. The only thing that is guaranteed is change and companies that solidify obstinate ordinances will fail in the future. Fighting the Future is foolish.
The flaky nature of investors has changed the nature of assets and innovation. Every company that is listed is required to produce profit. While Elon Musk, may be an ambiguous figure, the act of taking a public company private offers change the underlying incentive structure. Twitter was experiencing issues with revenue and has been recently been discovered having taken government money to allow them to spy on American Citizens and manipulate public opinion. These monies were likely used to bolster revenue. Would companies be so manipulated if there was no strong desire to increase revenue?
Risk is something that I spend my life thinking about. As a day trader, molecular biologist (the job I am paid for) and social scientist, I find myself attempting to measure the risk of any given action and curtailing it. Chief officers and these boards are no different. Their bonuses are based on shareholder returns rather than company successes.
“We choose to go to the moon in this decade and do other things, not because they are easy, but because they are hard.” - President John Fitzgerald Kennedy
President Kennedy, God rest his soul, set the United States on the path to reach the moon in the year 1969. In this project, there was about 25.4 billion dollars spent which would be 152 billion dollars today. This would be about 4.6% of the nation’s GDP, some 1 trillion dollars today. The project would lead to our global positioning systems (GPS) as well as many other telecommunication technologies we use today.
“In order to get something you’ve never had, you have to do something you’ve never done.” - President Thomas Jefferson
Companies are ran by boards of men and women who are purposed with increasing shareholder value. The result is new forms of fraud due to feed the bottomless & insatiable pit of promised growth and prosperity that encourages the buying and holding of the asset in question. Something that has been interesting brewing at the company known as Boeing for a very long time. The company, like many others began looking to appease its shareholders for their benefit, and subsequently began outsourcing the production of some its planes to reduce the cost of production. The company that was lauded for bringing innovative ideas in aerospace engineering was now looking to cut cost. In doing so, the malfunctions on these great planes became greater and greater in seriousness over the years. Even if I am wrong about the loss in innovation among these persons, how is it possible to innovate and develop new technologies when your planes are being developed miles away and assembled on site.
The financial industry takes many risk to return profits to its many investors each year, none more infamous than the increase of subprime mortgages and mortgage backed securities in the early 2000’s, leading to the Great Recession. The Federal Reserve Bank, in an effort to encourage growth, turned to quantitative easing in the 2010’s resulting in great wealth inequality in the United States and abroad. The stakeholders rewarded in the Federal Reserve’s game are those who benefit from it most, the rich and wealthy.
Prior to shareholder deification, companies took risk that often resulted in innovative ways to attack new industries and attempt new ideas. After shareholders and returns took the thrown, ideas shifted to a new direction. Companies began taking risk, not to create something new, but to maximize shareholder return and keep the company looking healthy. The result is companies scared to innovate and happy to lug complications and realities under the rug.
I sat in on an Origin Protocol Discord Call recently and listened to someone present an idea to the DAO. It was an interesting call that was interrupted by an interloper who managed to get to the call stage and say, “Origin Protocol is going to zero.” It was not a fun thing to hear because the price had fallen so much in 2022. I believe in the protocol, particularly the stable coin project that is brewing under the DAO. Whether, I am wrong or right I do not know, but I can tell you that I do not hurt the collective of people who are involved.
Shareholders hold innovation hostage in the world of traditional finance and cryptocurrencies should take these notes. We cannot jump on every train purely for profits, excusing our degenerate portfolios. We have to find projects that speak to us and stick with them working toward to goal of developing that project. The committed cadre of investors, thinkers, and contributors will produce the future, whereas the shareholders will often absorb the wealth created by yesterday’s innovators.
Why do people still hold Solana & Litecoin? It is because they investigated the risk, liabilities, assets and capabilities of each respective technology and deemed it worthy of the current sacrifice. The hold time of an asset in cryptocurrency markets, I would guess, is slightly higher than that of regular markets. It has everything to do with the hashtags on twitter, the chat rooms on discord and the memes we create as we suffer together to support the necessary advancement of the technologies we believe in. Jim Cramer, a champion of tradition finance and the institutions that hold her up ask us why we are committed as they are dumbfounded by the principles we hold near and dear. It is in these moments like this where there are many calling us stupid & ludicrous because they do not understand, that we realize why we misspell HOLD for HODL. Why we call ourselves degenerates! No sensible man would do what we do, because we are fueled by a passion for things that have not been seen nor materialized. Because we are innovators.
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