100 years ago, in 1919, the Michigan Supreme Court made a comment in their ruling of Dodge v. Ford saying (in its common paraphrased form), “The purpose of business is to maximize shareholder value.“ In 1970, Nobel Laureate in economics Milton Friedman repeated this in an essay in the New York Times entitled “The Social Responsibility of Business is to Increase its Profits...
Change is hard. Making change happen even harder. Looking for the origins of change fits in with my questions of how things used to work three or more generates ago, and my general search for hidden assumptions. I was thus delighted today when I flipped on the Planet Money podcast, Episode 925: A Mob Boss, A Garbage Boat and Why We Recycle. I was in high school living in suburban New York when...
A hidden assumption in how the world works came up yesterday at a startup pitch event. More than once. It goes like this… When you are the speaker, someone introduces you, and at that moment the audience presumes/assumes that you are an expert in whatever topic you’ve been introduced to present. You remain an expert in the eyes of the audience until either you say something that an...
I love to uncover hidden assumptions and thus enjoy stories of the early days of some industry, where all of what we take for granted today didn’t exist. Modern portfolio theory, mutual funds, and retirement accounts are commonplace today, but were all invented and become popular between the 1960’s and 1990’s. Success by Ten is supposed to be advice for creating a $1...
Five years ago when this blog was new, I posted an Ignite talk about the true purpose of business. Two years ago, I reprised that topic to help break the myth that the (sole) purpose of business is to maximize shareholder value. My podcast is almost a year old, and last week I not only (re)explained the Ignite talk with more words, but then spent the week talking what Apple, Google, Facebook, and...
The common meme you hear in the news is that the world is changing ever fast than before. It’s not. It took mankind less time to get from the first airplane flight to the first person on the moon than from the moon to today! Computers may be faster since then and the internet may have connected them all together, but that change pales to the 19th century when mechanization led...
At a recent Seattle Impact Investing Group meeting, Leslie Christian was a guest speaker, sharing some of her wisdom on mixing impact with investing. Her wisdom is wide and deep, but one idea especially popped out: the paradigm of shareholder value, especially in regard to investors, risk, and return. Specifically, what we’re taught in Finance is the following equation: Revenues...
Apparently I’ve misunderstood the “Tragedy of the Commons” and so likely have you. This is a great example of a meme that is assumed to be both ancient and obvious, but isn’t. There was an essay entitled “Tragedy of the Commons” written back in 1833, but it was ignored until Garret Hardin published an article in Science in 1968 with the same title. It’s...
I try and keep politics off of this blog, but sometimes the coverage from politics sparks a question about entrepreneurship. Specifically today it was an explanation in The New York Times about how the law punishes conspiracy above and beyond the underlying crime. That triggered the question of what is the difference between a conspiracy and a corporation? Both are groups of people planning to...
It’s not just me who appreciates when “timeless things” are not as old as we think. Did you know that the pro/con list is less than 250 years old? That we know who invented it? That it was none other than polymath and U.S. founding father Benjamin Franklin? Beyond learning these bits of trivia, and beyond the lovely feeling of confirmation bias when others point out when we...
