Comment by TulliusCicero

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.

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

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.

The wealthiest 10% of Americans own like 90% of stocks, and the top 1% own 50%. While the poorest 50% of the population own about 1% of the stock market.

So "publicly" traded (the term public ownership can be confusing because it can also mean state control) just means it's open for the elite to invest in.

"The major reason is they are a private company with good business..."

This is unquestionably, undoubtedly incorrect. It is a really low information meme that's racing around the Internet right now. If you want a contemporary counterexample take a look at NASCAR. They're also not publicly traded, they're family owned, yet they are abusive toward drivers, teams and fans, and they're gradually ruining the sport that made them rich. We know all of this because it got so bad Michael Jordan decided to sue them and there's a ton of information coming out in discovery at the moment.

The real reason Valve are being the "good guys" at the moment (not really, but yes they're doing some amazing stuff for Linux) is because they feel threatened by Windows and Microsoft, they perceive a long term competitive threat to Steam. Competition makes businesses both private and public work for your dollar. The US economy has been characterized by a decrease in competition and an increase in monopolies for decades now which is the root of many price hikes and anti-consumer practices.

I think there should perhaps be a law that any corporation automatically has a new class of un-tradeable VOTING shares, worth 50% of the overall vote, held by the employees. Everybody with an employment contract with this company is entitled to 1 vote, no more, no less; whether they're the janitor or the CEO.

Employees of a company are the ones who are the most affected by the company's decisions, it's only fair that they have a say.

You can at least in part blame Milton Friedman for this mess. His reframing of ficudiary duty as profit maximisation in his "shareholder theory" has done a tremendous amount of damage. The wariness of people when it comes to public companies is a direct consequence of this.

My understanding of the contemporary argument against publicly traded companies, though I'm not completely convinced of them personally, are that the fiduciary obligations inevitably drive those bad behaviors, and/or that shareholders often demand short term returns at the expense of long term value.

As far as "fixing" the problem, I think it would be important to expand voters' influence over the company in addition to voting changes like you described. I don't know how to make it feasible, but IMO voters should be able to influence or directly decide much lower level business decisions than they currently do

> (There's also strange situations like Google/Alphabet, which is publicly owned, but effectively does not allow shareholders to vote on anything.)

You mean the special class B shares that gives 10 votes per share, right? It isn't just Google though. Facebook and Snapchat also do the same thing, iirc?

>On paper it should be a good thing

Not really. Most people have terribly low time preference. Democracy for example is a very bad idea when you account for that (read Hoppe for a detailed explanation). Public company ownership is much better because it doesn't suffer from one vote per person, but still susceptible to much of the same management problems, specially in a society that already favors lower time preference by other means.

It's a common pattern. If you're in their service area compare both the food served by, and the employment practices of In-n-out Burger (private) vs McDonald's (public).

>and the company should be able to be externally steered via regular elections in a manner that benefits the public and not just its founders.

Why would anyone believe that this means an organization is well run, or to everyone's benefit? Here in Germany we're notoriously unfriendly to public companies, most of the (well functioning) Mittelstand is private and family owned. And I pray to god it stays that way because I'd rather trust a company whose leaders have their family name and reputation staked on it for the next three generations than I do the amorphous blob called "the public". As Kierkegaard said, in the crowd nobody is responsible.

If you want to see what happens under public ownership visit a public bathroom. I don't want anything externally steered by nobody in particular, I want something steered by a handful of people with names and addresses.

[dead]

Yes, exactly. It's kind of a wink-wink nudge-nudge at this point. A company citing "public good" under the guise of "shareholder value" is not actually supporting the public good at all.

Not that I condone capitalism, or socialism, or communism, or fascism, or any ism for that matter. Ism's in my opinion are not good. A person should not believe in an ism, he should believe in himself.

But a private company, at this point, can arguably affect the greater good just as much as a public company. The rich are getting richer, and the corporate model is just there to support that transfer of wealth.

That's not unique to AI though. That's very common for tech startups.

If they keep doing it, it must be because sometimes it works.

If you want to be specific that general idea could be elaborated as "private ownership by people that only need the C-suite salary, instead of needing a C-suite plus a fat % RoI on the company's entire valuation because that's how much they just put down as a sunk cost."

In that regard "bought by PE firm" (or most any prospective buyer, really) is functionally equivalent to an IPO. Selling out is, in fact, selling out.

Private ownership is a necessary, but not sufficient, condition to have a business which has a healthy relationship with its customers. You also need the owners to be people of reasonably good character who understand that the best way to run a business is a win-win approach on both sides, not people who see nothing wrong with extracting maximum profit from the business no matter whom it hurts. The PE horror stories you hear are cases where the owners are in the latter group.

The difference is that PE firms own firms as investment vehicles, while Valve is owned by people who see making games as their calling.

No, I don't think Gabe's averse to the nice checks, but he is in a business he deeply cares about on an emotional level. He doesn't just want to milk it to the last drop, he wants to leave his mark on gaming.

Passion matters.

If you IPO but the founders still have more than half the voting rights, you can fully ignore the public in all your decision making and there is nothing the other shareholders can do.

Because it's not, all other things equal.

Valve can be Valve because HL + Steam, in the same way that Google ~2010 could not be evil because search + ad revenue.

The difference is that Google IPO'd and took market capital, and Valve didn't.

Once public investors are onboard, you maximize profits or face lawsuits.

I think the point was about publicly traded companies becoming inevitably evil due to shareholder expectations, not about private companies being inherently ethical.

Attributing it to private company behaviour really minimises what Valve chooses to do. Per your counter example: Epic Games has been having a very public meltdown this week regarding Steam's inclusion of Gen-AI labelling - here we have two private companies, with two very different priorities.

It's also worth reminding ourselves that Epic settled with the FTC for over half a billion dollars for tricking kids into making unwanted purchases in Fortnite.(1) Epic also stonewalled parents' attempts at obtaining refunds, going so far as to delete Fortnite accounts in retaliation for those who arranged charge backs.

Furthermore the FTC's evidence included internal communications showing that Epic deliberately schemed and implemented these dark patterns specifically to achieve the fraudulent result, even testing different approaches to optimise it.

https://www.ftc.gov/news-events/news/press-releases/2022/12/...

Valve's employee handbook: https://assets.sbnation.com/assets/1074301/Valve_Handbook_Lo...

They seem to have a high ownership, consensus driven organizational structure. The only time I'm aware the consensus model was violated was when Gabe overruled a veto to ship Steam with half life 2.

It's very interesting to me because it seems to operate similarly to a lot of anarchist shit I've been involved in, but at a highly effective level. And they make oodles of money.

They're the #1 most profitable per employee. There are plenty of companies more profitable than Valve, but they have more employees. Valve could hire more employees.

>There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?"

Aren't people upset about both? The whole "gamble for features" is pretty much why the mobile market and console market are divorced in audiences (or at least, community).

People are "more" upset about Valve here because this is in the console space. They've long dismissed the mobile scene as lost.

I always interpreted that as cosmetics are OK because it doesn't make the game unfair. You can't buy advancement in the game that way.

Subsidizing the game's devel/ops cost isn't a bad thing. Especially if it's optional and doesn't change the game.

> There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?" It's a clear double standard, and I've never heard an actually good explanation for it that makes it sound justifiable.

The closest I've heard to something compelling is that the digital goods aren't the same as actual physical goods, and that somehow that makes it worse, but I still don't find it particularly compelling; I've heard people (often lovingly) refer to trading cards as "cardboard crack" explicitly to joke about how ridiculous it is to be paying for stuff that's essentially just ink and paper.

> There's always this question when Valve comes up of, "why are people more upset about gambling for cosmetics in a game than gambling for power/features in a game?"

Do you have a link to this sentiment anywhere? It's the first time I'm hearing about it.

> Especially since Magic the Gathering and similar card games are very normalized, and have a straightforwardly more evil monetization strategy, since you need to do gambling there to even play the game, it's not cosmetic.

I'm not sure what you're calling "gambling" here, but the way I understand it, it's not merely "a game of chance that you pay money to play". A fundamental feature of it is that the odds are set deliberately so that you're statistically guaranteed to suffer a net loss to the other betting party ("house"). That's not quite the case for tradable items when the "house" doesn't control the price you might sell your item for; the market is the one responsible for setting the price. Note that I'm not saying that's necessarily always better -- there are lots of ways to financially screw people over besides gambling -- I'm just saying it's not gambling, and so it makes sense that people react to it differently.

For items that you can't trade (like where the platform prevents you), that's more similar to gambling in that respect, I think. But then it's less similar from the standpoint that there is zero financial redemption value for the items you win, so it's s arguably still not gambling.

It was getting out of control when tiktok "investment guides" were instructing people who don't even play the game to start buying CS skins to make a profit.

They need to keep wrecking it. Skins should just be fixed cost items.

Sure but it's just being morally lucky. They found themself in a situation where there was temporary and situational alignment, why give them any credit for that? They didn't create that situation.

It's like AMD open sourcing FSR or Meta open sourcing Llama. The outcome itself is good, but if they ever become leaders in these verticals, they will pivot to closed source quicker than you can blink, because the reason they're doing it is just coincidental to the public good, not because of a genuine motivation to do good.

yes. it aligns, for now. But only for now. all those FAANG's had the same status too, once upon a time.

Slowly getting their stuff independent of wintel gives a lot of flexibility. And the big gaming market's on phones / tablets. A steam controller could find itself paired to an iPad running steam in a year or two.

Microsoft's a competitor. And they have a reputation for being the first ally to stab you in the back (e.g. SGI / DirectX). You don't want to depend or trust them when they like the market you're in.

^ The essence of why we're doomed.

You're not forced to buy an Iphone. You also weren't forced back in the day to use Internet explorer.

We should remember our history so we aren't doomed to repeat it.

Depends on the game - some are not available anywhere else.