I really like Cringley's article. That said there's something important that was left out:
The wealth of a business owner does not come from income but from the value of his or her stake in the business. Ultimately this wealth is "paper" wealth untill the company is sold.
That means if it is best for owners to sell, they'll "package" the company for sale (this often involves actually reducing the value of the company to a level that someone will buy it). What's more, a lot of the actions that appear shortsighted are acutally long term maneuvers to sell out. Closing down R&D to make your books look attractive is one way to do this. With businesses, "let the buyer beware" is the rule, not the exception.
One condition that universally sucks is when something happens that makes it appear that the owners of a company's wealth is at risk. Then owners pressure managers to make shortsighted decisions to protect their wealth and often attempt to prematurely sell the company. The results are often mass layoffs and the buyer gets a firm that is cancerous and consumes their company or personal wealth as well.
At present I own a company. I know my employees will not like it when I decide to sell it. I can't guarantee that they will all come out ahead, but I'll try my best. The reason I started this company was to build it up, and then sell it so that I and my fellow investors could get rich. My employees benefit by having great jobs and some, through ownership options, will be rewarded when the sale happens.
At present I own a company. I know my employees will not like it when I decide to sell it. I can't guarantee that they will all come out ahead, but I'll try my best.
You might want to consider an ESOP. [esopassociation.org] This was recently implemented at my company (They're aiming for 50% ownership over then next 5 years), and I think it's the greatest thing since slice bread.
In a nutshell: The employees buy shares of the company from the founders. The founders are then able to get equity out of the company w/out selling out to a bunch of outsiders who don't care about long term health of the place, and the employees get to become "stakeholders" in the place that they work. Everybody wins. You might want to consider it.
In a nutshell: The employees buy shares of the company from the founders. The founders are then able to get equity out of the company w/out selling out to a bunch of outsiders who don't care about long term health of the place, and the employees get to become "stakeholders" in the place that they work. Everybody wins. You might want to consider it.
I once worked for a company that did something like this. I won't bore you with the details, so let me summarize it thusly: pretty much everyone who participated got shafted.
Stuff like ESOP and ESPP can be a bit of fun, but it's no substitute for cold, hard cash. What would you say if the company proposed paying you in lottery tickets?
My company matches 10% of my salary and uses it to buy shares in the ESOP. This is seperate from my 401(K) matching, and does not come out of my salary. I consider it a great benefit, but I wouldn't consider it a substitute for salary.
I have to protest about your "bit of fun" comment. Assuming a large enough stake, ESOPs fundamentally change the power structure of a company. While that's fun on some level, it's not trivial.
I have to protest about your "bit of fun" comment. Assuming a large enough stake, ESOPs fundamentally change the power structure of a company. While that's fun on some level, it's not trivial.
Point taken - the stake in my example was too small to be meaningful.
Promptness is its own reward, if one lives by the clock instead of the sword.
Easier to fail than to succeed (Score:4, Interesting)
The wealth of a business owner does not come from income but from the value of his or her stake in the business. Ultimately this wealth is "paper" wealth untill the company is sold.
That means if it is best for owners to sell, they'll "package" the company for sale (this often involves actually reducing the value of the company to a level that someone will buy it). What's more, a lot of the actions that appear shortsighted are acutally long term maneuvers to sell out. Closing down R&D to make your books look attractive is one way to do this. With businesses, "let the buyer beware" is the rule, not the exception.
One condition that universally sucks is when something happens that makes it appear that the owners of a company's wealth is at risk. Then owners pressure managers to make shortsighted decisions to protect their wealth and often attempt to prematurely sell the company. The results are often mass layoffs and the buyer gets a firm that is cancerous and consumes their company or personal wealth as well.
At present I own a company. I know my employees will not like it when I decide to sell it. I can't guarantee that they will all come out ahead, but I'll try my best. The reason I started this company was to build it up, and then sell it so that I and my fellow investors could get rich. My employees benefit by having great jobs and some, through ownership options, will be rewarded when the sale happens.
$G
Re:Easier to fail than to succeed (Score:3, Interesting)
You might want to consider an ESOP. [esopassociation.org] This was recently implemented at my company (They're aiming for 50% ownership over then next 5 years), and I think it's the greatest thing since slice bread.
In a nutshell: The employees buy shares of the company from the founders. The founders are then able to get equity out of the company w/out selling out to a bunch of outsiders who don't care about long term health of the place, and the employees get to become "stakeholders" in the place that they work. Everybody wins. You might want to consider it.
Re:Easier to fail than to succeed (Score:2)
I once worked for a company that did something like this. I won't bore you with the details, so let me summarize it thusly: pretty much everyone who participated got shafted.
Stuff like ESOP and ESPP can be a bit of fun, but it's no substitute for cold, hard cash. What would you say if the company proposed paying you in lottery tickets?
Re:Easier to fail than to succeed (Score:2)
My company matches 10% of my salary and uses it to buy shares in the ESOP. This is seperate from my 401(K) matching, and does not come out of my salary. I consider it a great benefit, but I wouldn't consider it a substitute for salary.
I have to protest about your "bit of fun" comment. Assuming a large enough stake, ESOPs fundamentally change the power structure of a company. While that's fun on some level, it's not trivial.
Re:Easier to fail than to succeed (Score:1)
Point taken - the stake in my example was too small to be meaningful.