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I am glad someone brought this point up. It reminds me of the story of Drexel Burnham Lambert and Michael Milken.

Connie Bruck's book on him and his company* provides good context for how and why Milken and his junk bond raiders and the Gordon Gekkos were able to upend corporate America in the 80s. It's because the prior couple decades had fat cat CEOs and middle management that coasted on empires founded by the prior generation. Gekko's speech about Teldar Paper's middle management was not an inaccurate metaphor. There is a trend now that executive tenures are getting shorter, no doubt in part because many are now held to higher standards than many in the 60s and 70s.

There are founders who start companies with bad intentions of using the company as a financial vehicle to funnel money to themselves with as little work as possible, as opposed to founders who start companies to create external value for humanity. The first set of founders and CEOs should be constrained.

All that said, I am still pro-Long Term Stock Exchange because there are issues with the quarterly cadence and high-frequency trading. Don't know if LTSE will be the solution but I support experimentation.

* https://www.amazon.com/Predators-Ball-Burnham-JunkBond-Raide...

https://www.nytimes.com/2018/10/23/business/dealbook/ceo-ten...




It seems to me that the problem with public markets isn't so much the timing but the presence of a profit motive. Trying to beat the S&P 500 over any period from 1 year to 50 years seems like a daunting task.

Being in public markets forces a company to care about maximizing the return on capital. Different CEOs have different abilities to communicate the timeline investors should actually expect returns. Bezos seems exceptionally talented at extending the expected timelines of profitability when communicating to investors.

The real benefit of private companies appears to be the secrecy and the freedom to do things without any hint of a profit motive. SpaceX stands as a shining example. Their goal is to get to Mars. They won't go public unless they already regularly go to Mars or maybe if they desperately need the money.

Another example is Chick-fil-A, the third-largest fast-food chain in the US. They close their restaurants on Sundays due to religious reasons. This costs the company almost 15% of revenue. Whether or not you agree with the policy, it's hard to imagine it would last long if Chick-fil-A was public.

The real value of staying private is not disclosing financials and getting to do whatever you want. The goal of your private company doesn't have to be maximizing returns if you don't want it to be.

An LTSE seems to only offer value for CEOs who have trouble communicating the strategy and long term vision of the company. Amazon doesn't have any trouble with that communication. Neither does Alphabet. Maybe placing your company in an LTSE will providing useful signaling but I'm not sure about the real impact it'll make outside of the retail investment market.




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