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Amazon is Just Walmart on Digital Drugs

Linked by Paul Ciano on May 4, 2016


When you see the founders of Twitter on the floor of the stock exchange getting to ring the opening bell and you see all of the traders and billionaires applauding them, that’s not because they’ve done something disruptive. It’s because, if anything, what they’ve done is affirmed the centrality of venture capital to the whole system. No, it’s the opposite of disruption at that point. That’s really because they’re not recognizing that this operating system of corporate capitalism is itself arbitrary. It was put in place.

That’s the problem that Walmart has. Walmart has made so many towns bankrupt through the way that they operate that many Walmarts are going out of business because they no longer have customers who are wealthy enough to even shop at a Walmart. That’s the problem. Instead, what a digital business would look to do is how do I create a company? How do I create a model that not at my expense, but how does my very business model make the people who interact with me wealthier? That’s when you start to see oh, there’s this other economic reality that’s so much more consonant with the way digital networks actually function.

If the President asked me what they should do, it would be something really as simple as start taxing capital gains more than you tax regular earnings. Right now, our taxation system is designed to discourage people from earning money with a job or earning money by creating value and to encourage people to make money simply by having capital. That’s the problem. We’ve got to reverse that on a policy level, but until we do, it’s a matter of scaling down. When you create a business, think about not how is this business going to scale up but how can it scale down? How can it stay the size? How can I avoid taking venture capital? How can I avoid having those guys with money become the boss? Because they’re going to make me take my great idea for an app, my great idea for a website, and they’re going to make me pivot to something very, very different, because the object of the game for them is not to create a sustainable company. The object of the game for them is to create something you can sell.

Shareholder owned businesses always mock family businesses that it’s small, it’s nothing, it’s stupid, but family businesses are optimized for the long term. They’re optimized to be sustainable. The only time they don’t do as well as shareholder owned corporations is during boom cycles, during bubbles. If it’s not a bubble and, frankly, you don’t want to grow during a bubble because then you’re part of what pops. Family businesses do much, much better in downturns, because they’re geared for the long term.

Paul Ciano

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