Pretty much all businesses used to be basically ephemeral until about 150 years ago. The whole idea of a business that is intended to run perpetually just didn't exist in the West, and anything that ran long was tied to a family that plied a trade. Businesses were also a lot easier to understand: a corporation might run a ship or a mine, and go out of business (still having made everyone a lot richer) when the captain of the ship retires or the mine dries up. In fact, the way we value businesses today still somewhat applies that model.
Most attempts at perpetual businesses today fail after less than 100 years, too, so it looks like we haven't figured out how to actually make a perpetual business - aside from a few notable examples like Zildjian (the cymbal company). Most of the success stories here are businesses with modest ambitions under the tight control of a single family.
I think you could argue that the idea that a business has to be a long-lasting perpetual enterprise comes from an increase in the power of business managers, at the expense of both investors and employees. These long-lasting businesses give managers a chance to build empires and personally enrich themselves without worrying about anything so pedestrian as figuring out when to return cash to shareholders ("they can have a tiny dividend if they whine too much, but don't get in the way of the expansion of my empire").
> Most of the success stories here are businesses with modest ambitions under the tight control of a single family.
Companies that aren’t afraid to really shift gears whenever necessary also do well. Take Nintendo - founded in 1889 as a playing card company that later became an overly ambitious toy company…
During that era they also invented that classic scissors-mechanism extendable hand (“Ultra Hand”). That was a bestseller for years before the NES.
I know this was intended to be sarcastic, but it is the exception that proves the rule. The big East India Companies (both the Dutch and English ones) only really lasted so long because of governmental charters that granted them valuable monopolies on trade, and they later became models for Standard Oil and other similar monopolistic businesses that really kicked off the era of the perpetual company. However, they were basically arms of their respective imperial governments.
"Exception that proves the rule" requires the example to be notable specifically because the example violates the rule. In this case, the East India Company is not notable because it was long-lived.
It certainly is notable for its longevity, outliving most of today's companies. And there is a good reason for that longevity: its special arrangement with the crown.
But if your assertion is "we used to have a lot of business in the past that failed quickly," I would hope you would offer some data to backup that assertion.
You can definitely find diaries from the Gold Rushes of the 1800's where the author will write something to the effect of "me and twelve other men formed a company last night", matter-of-factly. This is among reports of various threats to life and limb that were normal to that time and place.
The companies usually failed within a few weeks because of infighting.
Starting a business is really challenging, as anyone who has tried it knows. Trying to make the finances work in something ephemeral is likely even more challenging. In any case, most businesses fail so ephemeral business is sort of the default unless you succeed.
There are individual businessmen who ride different business waves (like getting into frozen yogurt a little over a decade ago). But the skill those people have is in marketing and raising money and that transfers pretty well to different business types. There's also a whole world of business outside of tech that most of HN is not familiar with, and many of those people do extremely well for themselves. They also tend to be less idealistic and more focused on the money, which probably helps with adapting the business over time and figuring out what product/service the market actually values.
Starting a trade business is orders of magnitude easier, especially right now with a shortage.
I helped a friend lease a floor sander and they make almost what I do in tech after a couple years (I took a pay cut for reduced work load; not making FAANG cash) Bought their own floor sander.
The VC-tech bubble really screwed up the economics for the majority. Will be great if higher rates mean bunch of people working for funds and yet another clone of bear are scooping ice cream in a few years
If we removed VC backing, the world would be a better place. Sure, less businesses, but they'd exist for tangible reasons, rather than just being short-term vehicles to make VCs richer with no longer-term vision to actually solve problems.
The people giving VCs money aren't dumb and VC has been a pretty good asset class over the past two decades, which is when it really exploded in size. It's a self-correcting problem, when VC returns are no longer attractive (might be starting already) the fund sizes will go down and only the lucky and/or skilled firms will remain.
> There's also a whole world of business outside of tech that most of HN is not familiar with
I once read that the most reliably money-making business in America is a car wash. Comes with a built-in monopoly because people will only drive so far to wash their car and reliably generates low 7 figures in sales. Plenty of repeat customers and low churn if you meet a quality bar.
But who wants a 70% chance at being a millionaire, when there's 0.01% chance at being a billionaire on offer? We on HN know what we want. (numbers for thought experiment purposefully chosen to have a similar expected value)
Unfortunately things like car washes are zero sum games - if there already is one "in town" and you open a second all your business at best comes from what the other already had, and in the worst case it starts a price war and make far less.
Sure I won't go to the next town for my car washes, but just on my short route to the office I pass 3, and I know of a couple more that would be an insignificant detour. I think this is pretty typical for most city dwellers. (not to mention I work from home most days)
This is exactly it - and the car washes that "make the money" are more and more the ones attached to gas stations, where they have the latest robotic car ticklers.
Some people (larger trucks, etc) might still pay to use the manual car wash, but the costs are very similar and most will just use the gas station one.
It's like laundromats - there's a very defined market in an area for them, and if you supply that market you can do well, but if it's already supplied you're in for a world of hurt.
Marketing can increase the size of the market. Making deals with other businesses can too (they pay a fixed monthly fee and get unlimited washes for all their cars, etc.). I used to wash my car myself but the automated car wash is so convenient I just go there instead. There's also a customer service aspect. I used to go to a more expensive car wash because the employees there were really friendly and at the other one they weren't.
Then there's the business aspect of starting this sort of business: deciding on what location is best, whether it's even a good business to start, etc. This is one area where people who want to be tech entrepreneurs are handicapping themselves and people who just go into business to make money do better. Lots of people think, "I need to start an AI startup" or devops, or whatever, instead of asking what opportunity is best for them.
To some extent marketing can help you, but for the most part car washes are a fixed game. Unless you are using marketing for a price war people who see your ads are likely to go to the other car wash anyway.
Don't get me wrong, marketing is very important. However there is only so much you can grow the pie for many businesses no matter how much you do. There is also a limit to the number of people you can attract away from your competitors. (the limit is different depending on how you compare on price and quality of course)
There's an entire income/asset range where the former isn't enough to justify passing up the latter. E.g. if you already have $3M+ in the bank, the marginal utility of that extra million is starting to diminish.
Now, a roll with a decent chance at $1B sounds much better.
And, flip side, if you have almost no money and almost no experience, you might also take the first one - because it leaves you with a 100% marketable set of skills that'll likely translate into much more than 1M.
If you have $3M in the bank then you are already a millionaire and the choice as framed above doesn't make sense anymore. It's not a 70% chance of being a millionaire—it's a 100% chance of being one already with a 70% chance of making another million which, as you say, looks a lot different to somebody who already has $3M than to somebody who has < $1M.
No, I don't think we are in full agreement. In the part of my comment after "as you say", I did call out that her reasoning re: the marginal utility of $1M for someone who has $3M vs. ~$0 is (imo) correct, so we do have that common ground, but you ought to read the part of my comment before "as you say" and compare it to the context of the comments above it.
You might accuse me of splitting hairs, but I think it's an important distinction in the context of vkou's comment and parents.
I actively look for sales of car washes, laundromats, and other such businesses.
Most of the time it’s more than the amount of money I’d have, and I’d have to get lucky to make the numbers work to even break even. And I’d only have one shot.
I don’t know which deals you’re finding but everything I find is more than just a 70/30 risk.
One community focusing on this is r/sweatystartups - which often discusses how to start a pressure washing business, or how to scale their lawn care service.
A single car wash isn't making most people a millionaire.
After a low 7 figures in sales, you've got to subtract costs and wages, and the money left over will hopefully cover your family's living expenses. Being able to save up a million is going to be tough. And starting a car wash from scratch probably isn't going to wind up being worth close to a million either, in most locations, in terms of being able to sell the business.
If you run a network of 10 car washes then sure, but good luck with that. The market is already pretty saturated so building up a profitable network is going to be tough.
How does one get a car wash in the first place? It seems to me that either:
a. You start a new car wash which, given that the market for car washes is already saturated, probably has a much lower success rate than 70%. You also need to be able to afford the startup costs, which are substantial.
b. You buy it, in which case you already have money, and you're probably better off investing in index funds.
c. You inherit it.
It seems like the best way to have a successful car wash is to be born into it. But that's true of many things, and not necessarily relevant to those of us who head the misfortune to be born to parents who don't own a car wash.
I know someone who owns several and is quite wealthy. He started out owning a small, shitty car wash and he gradually built/acquired more and upgraded them. You succeed in business the same way you succeed in any other aspect of life, you either get lucky or you work hard or some combination. In his case it was mostly hard work over at least a decade.
The fixation so many people in the comments have on starting a carwash is why most businesses fail. The right approach is to figure out what you're likely to succeed at and start that business, not to pick one because it has a high valuation and copy it (this is how must tech entrepreneurs work). Maybe the carwash market is saturated, some other market isn't and someone will make a bunch of money filling that gap.
If you get back down to basics, as business is an equitable arrangement where you offer to solve a problem, in exchange for making a profit in the process.
At some point, the problem may no longer exist, or you may not be able to continue to make a profit. That's OK! You can pivot, or move on to another business.
What I would love to see represented is some thinking around what should happen as a matter of best practice when you decide to fold the business. There's likely paying customers left behind - to use an extreme example, let's consider the case of artificial vision where people are left with implants that often no longer work, that nobody will remove:
The right thing for customers of course would be to open source the technology so they can pursue other avenues. The friction with this idea is that, maintaining ownership of the IP might be valuable later (someone may want to buy it, some new opportunity to build on the tech may arise). It would be great if there was a government institution which would compensate such businesses for their tech to open source it.
>It would be great if there was a government institution which would compensate such businesses for their tech to open source it.
Wouldn't that just incentivise more negative behaviour from businesses, since investors would know should they go bust, the government will buy all their IP?
It seems potentially more sensible to pass a law that the IP of any business that fails becomes public domain.
> Wouldn't that just incentivise more negative behaviour from businesses, since investors would know should they go bust, the government will buy all their IP?
All businesses who would use such a scheme would be started by friends of politicians and public servants, with the sole goal of getting this tax payer buy-out for worthless IP.
This sort of negativity you can use to shut down changing anything, about anything, in any system.
It's not inappropriate, but it is important to just have it inform the debate instead of ruling the debate. Yes, there should be constraints put in place to limit the potential for abuse, and as well oversight to ensure that people are following those constraints appropriately.
"But then the oversight program will be targeted!" I hear you say. Yes, yes it will. And sometimes by policy makers with undue interest in weakening oversight. Sometimes just infiltrated by monied interests who stand to benefit.
It's not negativity, it is realism. Wherever the government gets involved corruption ensues. It is a rule, not an exception. Abuse is not potential, it is guaranteed - due to the kind of people involved. Especially when business owners can benefit from corruption. Strict constraints to deter abuse are always put in place in these programs, and they are always completely inefficient and/or supervised by people who are in on the scheme.
I don't see it as negativity to be against the worst imaginable solution to a problem. It doesn't mean I suggest doing nothing.
> Wherever the government gets involved corruption ensues. It is a rule, not an exception.
This is true. If your requirement is to never implement some system which can be abused (even a little bit), you are against government in any form. If you're not advocating for no government and you're OK with a little bit of abuse, then it's an argument over scale.
There will always be some abuse, but the key to any program or system is to minimize the potential for abuse. There's abuse in the US welfare system, but broadly the consensus among anyone but partisan pundits is that the good the system does far outweighs the abuse within the system.
> Strict constraints to deter abuse are always put in place in these programs, and they are always completely inefficient and/or supervised by people who are in on the scheme.
This is not true, and completely defeatist. If you think the US Government is hopelessly corrupted by vested interests - you have not spent time in a country with a hopelessly corrupt government.
The US Government is mildly corrupt, not wildly corrupt:
> I don't see it as negativity to be against the worst imaginable solution to a problem.
More negativity. I can think of far worse solutions than what I have suggested.
If you're simply advocating for the private sector to solve the problem instead of the government getting involved, I am wondering where you live where the private sector left to its own devices doesn't rampantly pillage to its heart's content. I'd like to move there!
There is a widespread false idea that there exist some kind of system in governance, but this has never existed. It is just humans in an eternal power struggle. Whenever the "system" or rules don't benefit the rulers, they are not valid. It's a system to the extent that it exists inside the heads of the people who believe in that system. And most of people have a warped idea of what that system even nominally is, because their idea of it is by how they've been told by parents, teachers and other uninformed. Almost nobody has actually sat down and read the laws, the acts, and other documents.
Saying the government should solve this lost IP problem is like saying that God will fix it or the King will fix it. And the "government should solve it" argument is always a top comment on any HN thread, no matter what is the subject matter. Isn't something strange if we always have the same solution no matter the problem? What is the purpose of discussion if all problems present or future are already solved?
I haven't mentioned the US government, I'm not from there. I'm from a place where corruption is rife within government on all levels, and in most private businesses - who of course work together with politicians and public servants for this goal. And that is a nation who is far less corrupt than the US in the corruption perception index - which doesn't really say anything about actual corruption, just what people responded in a form. The general population is ignorant and don't even understand what corruption is, they think getting illicit funds from the government to your business is just being smart.
The private sector can only pillage if they have the help of government. Having the government buy obsolete IP is a recipe for more pillaging.
I do not know what to tell you. The history of my country is filled with examples of the government successfully addressing problems too big (or too inconvenient) for the private industry to address. To the extent the private industry is enabled by the government to pillage, it is lack of regulation or lack of enforcement. The solution to that is more governance, not less. The private industry will not decide to do what is best for consumers, or the environment, or healthy competition. They will maximize profit at all costs every time.
Some examples of problems too big in my country for private industry: Water Pollution. By every conceivable metric the situation is drastically improved since the 1970's when the Clean Water Act was passed. Lake Erie no longer catches fire! Chicago built a 30+ mile giant underground tunnel to route the city's sewage to a holding quarry for treatment at immense effort and expense. No private company has the resources to do something like that - just ask Elon about Hyperloop!
Consumers in my country are paying more for most things because antitrust enforcement fell out of vogue because the system was infiltrated by vested interests. The solution to that problem is more governance and not less; the private industry will not refuse to concentrate power and will not decide to split up monopolies or stop colluding via oligopolies.
I have no doubt the problems you are describing in your country are real. What I am not hearing is solutions. Just complaints.
Again - there are many examples of governance being a force for good. In fact, the successes of government are more defined by a lack of tragedies. Like a good DBA or SRE team, and similarly underappreciated.
> I have no doubt the problems you are describing in your country are real. What I am not hearing is solutions. Just complaints.
The best solution is individual. It is probably the only solution. Individual as in you do what you can to protect your person, your property, and your labour from the government. Apart from that I can only use words try to wake people up from the cult of government worship, but I'm aware of the futility of it. People will eagerly send their own children to die in a ditch by artillery fire in order to protect their false idol of government.
>At some point, the problem may no longer exist, or you may not be able to continue to make a profit. That's OK! You can pivot, or move on to another business.
Does your landlord take pivots as currency?
Anyway, I agree but for people complaining about layoffs. At some point, your job may no longer exist, or you may not be able to continue to take a salary. That's OK! You can pivot, or move on to another career.
I could imagine something like the Consumer Product Safety Commission tasked with recovering and open sourcing IP from shut down companies with products in people’s hands.
Around 2000 I was in Stanford’s executive education program and the discussion at hand was a case study about a company that faced a disruption with a large cash reserve on hand. The question was what the leadership team should do, and the answers were all variations of “spend the money”. Except one - a lone voice allowing that the company could return the funds to investors and call it a day.
Pure heresy. Return the funds, allow investors to decide how/when/if to reinvest? Soundly rejected by the presenter and audience.
I wonder if that’d go differently today? I hope so.
It's funny how this is a weird or foreign idea to so many. I teach in IT, so I'm soaked in all the "entrepeneurship" stuff; but somewhere else here had it right. One way to think of a business is that it's simply a machine to solve a problem. It doesn't have to be a self-sustaining money maker.
I'd go so far as to argue that generally, the former is probably better for the world.
Anecdotally, this 100% describes why I started a business. Like many people, I fantasized about the idea of "having a business" but didn't do anything at all serious toward that. For me, it wasn't until an opportunity arose that had not much to do with "making money" per se. Specifically, I'm close to people who tried to start a Black news channel, and the website was trash; I knew I could to a LOT better, and I thought the whole idea was good. The channel didn't work out, everyone had other jobs, and so I don't have much of a business anymore AND THATS FINE.
Agree, "a business is simply a machine to solve a problem." The problem is when keeping the business alive as long as possible becomes the core problem to solve.
Fidget spinners made a lot of money for about 3 months. Most were made in China, where everything is considered efemeral. That is the fundamental difference between them and a lot of US companies. Here everyone wants to set up a business for ROI or MRR, with the ultimate exit being IPO at which point a company is expected to never die, else the last purchasers of the stock are left holding the bag.
Could your company make a quick buck on the next fidget spinner craze? Not that I think you should, but you should clarify why not. It might illuminate something.
The factories that made the fidget spinners are still in business. Amazon, who sold the fidget spinners, is, last I checked, still in business. The brick and mortar shop down at the mall that sold them is definitely out of business, but I don't think that's because fidget spinners themselves lost their luster.
I don't really know how it works over there, but were many of the Chinese companies producing fidget spinners specifically fidget spinner companies? I imagined they were generic factories that made spinners for other more ephemeral companies. But once the fidget spinner craze was over they could just retool for their next customer.
That's right. Chinese companies see everything as a short term opportunity. The future is uncertain. U.S. companies are usually more future focused and less nimble as a result. It's an interesting difference, but I'm not sure it means anything.
That is so Silicon Valley. 30 years as the longest span? There are businesses here in Munich that have been around longer than the US has existed. They are not "investable", though, they just go about doing good solid products that people need.
If you need a "we" to normalize something for you, you probably shouldn't be doing something in the first place. At that point, you're doing it for the validation of a generalized other, not serving customers. If you want to do it, just do it.
And people are welcome to do it, but as a business owner I'd much rather find a profitable business/moat and exploit it indefinitely (see Charlie Munger's point about how cola has no taste memory leading to Coca-Cola making for a great business).
it's a compelling idea imo, if one considers the many ills wrought by organizations which outlive their usefulness and turn to parasitism
but we must also heavily penalize hollow businesses, which exist mainly to funnel preexisting wealth to founders/employees before evaporating
a similar concept could be fruitful in material technology as well, where ephemeral doesn't mean "obsolete in 2 years so we can sell you a new one", but rather "can be dis/reassembled into something else when one chooses, or, if disposed of, will biodegrade into ecologically benign constituents"
> but we must also heavily penalize hollow businesses, which exist mainly to funnel preexisting wealth to founders/employees before evaporating
What does this mean? Isn't all wealth that can be used to purchase goods or services "pre-existing" and by definition going to the owners of companies if they manage to make a profit? I might be missing something because it seems you just described all businesses so I wouldn't know who you're advocating to penalize or how we'd distinguish them from the businesses that aren't "hollow".
I can come up with some scenarios that maybe you'd have a problem with, but it's not clear which ones, or why?
One of the names for this is 'control fraud' and its very common. To pick an exotic example, people in the United States create software companies to impress rich fools, borrow their money on promises that it will get really big, and pay themselves and their friends generous wages which they keep even if the company collapses. People who run this scam often spend money very fast (they call it a 'burn rate') to impress investors about how big they will be one day even if it hurts their ability to create a proffitable business within the next five to ten years! Foreigners and their wacky scams!
on one side of the spectrum you have Theranos, all manner of predatory financial instruments, need I go on? while on the other extreme you have a cabbage in your garden, which we call a "primary producer" for good reason: it's a fully automated business which for a bit of tending will yield you dinner
sure, we're surfing an energy gradient, all of us children of the sun's benevolent surfeit, wealth already exists, fine. is there a definitive, one-size-fits-all criterion here? no, but you get the picture
To be fair to theranos, there were very intelligent people trying to do something incredible and had an actual product they wanted to make. If they had been able to do accomplish even some of what Holmes claimed they could, they would have had a real impact.
Unfortunately the business was run by a set of sociopaths supervised by a board of geriatrics with no experience in the industry.
> the business was run by a set of sociopaths supervised by a board of geriatrics with no experience in the industry
...is far too often the case, so if one is gifted and fortunate enough to choose who one works for, one lesson might be: put serious effort and consideration into the decision
> but rather "can be dis/reassembled into something else when one chooses,
That doesn't happen often enough to matter. Not everyone is/want to be a maker. or would even bother even if it is simple
> or, if disposed of, will biodegrade into ecologically benign constituents"
That should already be a thing. Hell, add the utilization to product price that then can be paid to recycling company on utilization. That way products actually cheap/easy to recycle would also be cheaper
No we shouldn't. In fact we should denormalize a lot of dysfunctional business models, the transactional, excessively financialised, dehumanised business that has become the norm.
A business is group of people building things together. Its a family. Its a village. We dont want ephemeral families, we dont want ephemeral communities.
What we have is not working (pun). The overall drift of the last decades has led to an ephemeral society, made us unhappy, insecure, unstable. We need to go back to more grounded forms.
Businesses, Families, and Villages are fundamentally different creations. Unless you are going with the "company town" idea of a business. A business has a many to one relationship in regards to effort and goals. A Village has a many to many relationship. And a Family has a one to many relationship (though admittedly, at a certain scale, villages and families becomes very similar, but I think that's because a family naturally grows into a village given enough time). If a business has a one/many to many relationship, then it would be aimless and probably be a terrible business (as such things are determined).
There is a reason society has created these as distinct types of entity, because each has a strength that it serves and they are not interchangeable. So while I agree that ephemeral families and communities are not good, that doesn't impact the value of ephemeral businesses.
For the record, I'm undecided on ephemeral businesses, but I think its a valid conversation to have and might yield interesting insights.
There are plenty of ephemeral communities that work. There are conferences, conventions, festivals, and sporting events. Lots of them are run by permanent organizations, but many are run by temporary organizations for each event.
A good example is science fiction Worldcon where there is permanent org that does selection of place for each year and each con is run by local non-profit.
A historical example was trading expeditions where each trip of sailing vessel was financed separately.
And attending people travel on foot, sleep in tents, hunt and gather their food while the conventions are held outside in a clearing of the woods or you need something non-ephemeral such as hotels, restaurants, roads, etc.?
The vessel was also (hopefully) non-ephemeral and lasted for many expeditions, but needed repairs, maintenance, etc. and likely its captain and crew were capable of sailing because of the years of experience.
While organizing a convention or a trading expedition can be ephemeral, it is only possible because all the other non-ephemeral and needed businesses exist.
I think we all will be happier if we stop treating the vast majority of our life as a monetary transaction. If you accept being a disposable cog, you become a disposable cog.
"Family" is an exaggeration, but work as a meaningful, socially and emotionally enriching activity is not a luxury. Its what most people would be more comfortable with.
There is nothing inevitable in the current shape of businesses. They are, ahem, ephemeral optimizations, based on very specific contractual arrangements.
> A business is group of people building things together.
Disagree. A business is an operation meant to make money for investors. Things that call themselves businesses and don't do that over a period of X are failing, as businesses, for the duration X.
A business is an organization, and organizations don't have to be businesses, even if they share some of the same attributes such as concern for expenses, desire to gather extra resources to protect against uncertain events, etc.
Some organizations that are businesses maybe shouldn't be businesses, but they'd be OK as organizations.
Stable organizations would be great. The name for ones that stick around a long time is "institutions." They need stable physical places and surroundings, which is hard when land and real estate is considered an investment vehicle and the value is constantly increasing.
> A business is an operation meant to make money for investors.
please stop repeating Friedmannite vacuities as if they are laws of nature. What exactly is a business is defined by contractual arrangements that have nothing inevitable about them. Nothing.
Money did not exist before it was invented. Its a social construct and actually idiotically simple. "Investors" did not exist before the invention of the corporation and the countless legalities, contracts, incentives and behaviors that shape it.
A business is fundamentally a group of (non-related) people building something together (a service, a product, something desirable by others). Obviously some quid-pro-quo is required for them to be incentivized. Everything else in how the business is structured is up for grabs. The employees can be owners. The business can be non-profit. The extent of liability of members varies. The expected lifespan may be "eternal" or "ephemeral". Etc.
I think if/when we start looking at our organizational arrangements with a critical eye instead of being dazed and confused we'll enter a better period of social and economic development. The prime objective is to have as many people be as happy, as productive, as creative as possible, for the longest periods of their lives. We are very far from that.
To clarify, I think groups of people building something together is valid and doesn't have to be in the context of a business as per my previous post, and maybe should be done more often.
Your first post sort of conflated "business" and "family" and no ... that's a bad thing. Businesses shouldn't get to call themselves family. I don't want the place I have to go to get money to live (which I wouldn't need to do if I was rich) to impose any emotional/moral obligation like a family. If a job starts treating me badly it's great to able to get another job without dealing with the ethical "is it right to abandon your family" type questions.
> Money did not exist before it was invented.
Inventions are children of necessity.
Money (of some kind) can only not exist if a static group of people are in a perfectly static environment where all their economic needs are met.
When the environment is only a little dynamic, historically enforcement of a "static environment" has been attempted with rigid social rules and hierarchies, but things like the plague, droughts, floods, and natural disasters don't listen to them.
When environments are dynamic and experience changes--drastic or gradual--different skills and tools will be needed to adapt. Markets will pop up. A human-independent store of value among peers in a large enough group of people will always be necessary.
There are finite-life businesses. Venture capital funds are finite-life, usually about ten years. Then they return the profits to the investors. VC firms, if successful, create new funds and have them overlap. Sometimes a VC firm just runs down, and the remaining funds eventually mature and are dissolved.
Single-film production companies are finite-life investment vehicles. They put up the money to make a movie, and, after the movie has been released, pay off the investors and dissolve. But that's more of a financial construct than an operating company.
A construction consortium is a true finite-life operating company. These are companies established to build some big project, and shut down when it's finished. The first big one was Six Companies, created to build Hoover Dam.
So ephemeral businesses are already a normal concept.
A construction consortium is a true finite-life operating company. These are companies established to build some big project, and shut down when it's finished. The first big one was Six Companies, created to build Hoover Dam.
Not just large consortia like that. At least in Canada, it's common that Foo Inc. will create Foo 1234 Main Street Inc. as a wholly-owned subsidiary to construct a single condo tower. I think it's a matter of limiting their liability (or at least keeping potential liabilities from one project from affecting other projects). A few years later once the construction is finished, the company is wound up.
The normalization of ephemeral businesses would be harmful in at least one respect -- customers wouldn't be able to know who they're doing business with and avoid the ones that they would prefer to avoid.
I’m not confident that is the case anyway. Modern business has a level of complexity that a given customer has to prioritize the levels of avoidance they can tolerate. You might avoid businesses that have a bad reputation of workers rights, sustainable resourcing, customer privacy, humane treatment of animals, responsible security disclosure, etc. but can you avoid all of those things if you wanted?
It's certainly not possible to avoid every business who has practices you disagree with, even if you're fully aware of their practices. But you can to some degree, and that's far better than nothing. It would be a shame to make doing that even more difficult than it is.
I've been mulling a Crowdfunding project for a while to make a product I have in mind. It is not a big product, not something 'everyone needs', and it doesn't have enough utility or audience to sustain a company around it. I want to make it, and I want to distribute it, but I don't want to operate a business and I don't want to simply give away the thing I made.
I want an ephemeral business - something that will last long enough that I can make my thing and be done. But I don't want all the overhead of creating a company just to do the darn thing.
Movie and Theater is sort of both ephemeral and not - there's theaters, production companies, theater troops, etc. which are more permanent, but assembling them into a project is like building a working city from ready-made components, and then disassembling it once you're done.
Right, I was looking to see if anybody made this comment. It also seems common for real estate developers. See also "joint ventures" and other subsidiary structures of large companies which may encapsulate certain activities and their corresponding risks and liabilities.
I’ve found this idea to be unappreciated; I bet most people think that a business dying means they failed, but in a strict sense a business only failed if it didn’t generate net positive cash over its lifespan.
Seems like most businesses would rather reinvest the resources they already have - being in a position of some success makes it easier to find more. Fad toys are a good example: do you cash in on the fad and ride it out smoothly until demand dies, or do you try to parlay into some bigger brand? Popsocket did this pretty successfully, but plenty others probably failed.
All else equal I think a longer term success is more admirable, but many companies end up existing primarily to keep themselves alive. They acquire startups and ride out brand well beyond their useful life. At what point do these companies become net harmful?
Some businesses last for decades, some only for a few short years. The reasons are varied. Nothing that really needs to be normalized here. It is what it is, don't overthink it.
The problem is the institutions that are okay with being ephemeral evaporate away when their job is done, leaving behind a salty brine of institutions that aren't. In any system where there is selective pressure, survival becomes incredibly selected for, often being prioritized over all else.
Hollywood films are the ultimate ephemeral business. Thousands of cast and crew, hundreds of millions of dollars spent in a few years of intense activity, then a skeleton crew of lawyers and accountants collecting residuals.
No we should not, at least for businesses that sell physical things. It’s been bugging me a lot that many Chinese vendors bypass the EU‘s 2 year warranty laws by simply ceasing to exist.
This seems to me to be written exclusively from the business operator's perspective. And that's completely okay. And HN is probably an appropriate venue to post it. But if you flip it around and look at it from the customer perspective, it seems to be an argument for a transactional focus. The business is focused on deriving value from a small number of transactions before evaporating into the ether.
Psychologists who study brands tell us that people who like brands like them (in part) because they guarantee a minimum level of quality. Sometimes that "quality" is the lack of expense. I'm thinking of Costco's "Kirkland" brand. For instance, I shop at Uwajimaya here in Seattle because I associate a minimum quality level with their seafood. I buy gas for my gas-burner at Chevron, Shell or Arco because I once got a tank of bad gas from Marathon. I wear Hoka running shoes because my shins stopped hurting after I bought them.
It took years for these companies to establish their brands.
A short-lived company is fine, but if you're competing in a space where there's a competitor with an established brand story, there may be a number of customers who favor a "least bad experience" over your "more great experience." (This assumes you can make something that is a "more great experience.")
David Graber in Debt: The First 5000 Years, notes the correlation to the development of professional militaries with the rise of cash. The implication here is cash is useful for people who invade your turf and steal your things, but credit might be a better idea for someone with whom you want to have an extended community relationship.
Or at least that's the theory.
But what I see from this is "I don't want to bother with establishing a relationship with my customer." This is fine, of course. Even the carpet dealers I drink tea with in Istanbul know our relationship is fleeting.
But if you're going to focus on transactions rather than relationships, I fear that puts you in the quadrant where you're competing on price. Why would anyone trust you if they know you won't be around next month? You can't say it's quality, because quality usually requires a guarantee. Mediocrity even requires a warranty. Neither of these are possible if your company vanishes into thin air every month. The only possible axis to compete would be price. Is that where you want to start out? Competing on price?
Still... I think it's great someone's out there asking these questions and I would love to be proven wrong. Also, adding some data like "what is the average lifetime of a small business with $XXX of capitalization in market YYY?" might make the argument a bit more compelling. I know that data's out there somewhere.
Ephemerality is the only workable solution to mission drift in an organization.
The vast majority of entrepreneurs don't set out to create surveillance capitalism[1] or enslave children[2], but over time the pressures of keeping the business alive and growing force you to make compromises. The compromises are small, but each one takes you farther and farther from your values. Eventually you end up doing things that are abhorrent to any normal person, but seem normal to you because they're not that different from the thing you did before. This happens with all kinds of organizations including nonprofits, churches, etc.
One of the things I've observed in the success of organizations such as 12-step groups, is that they have principles which they can and do "die" for--rules like "We would rather dissolve the group than do X". Groups in a 12-step program are autonomous--they follow certain principles (traditions) and often groups die off rather than break tradition. Similarly, impermanence is a core feature of Temporary Autonomous Zones (TAZs)[3] which allows it to avoid perversion of its ideals.
I think ephemerality is a good idea for businesses, as I think it's a key step in the direction of making capitalism more ethical. Businesses which can't operate ethically should fail, and our society should have safety nets for dealing with that (and other reasons a business should fail). But that's such a fundamental shift in thinking about business. Half of HN seems to think that if a company is making money it must be because they're good, despite extraordinary evidence to the contrary so we have to keep letting those businesses do what they're doing, without any regulation. I'm not sure how we can get to a future where businesses behave ethically when the unethical businesses have successfully sold the idea that their success can only have been achieved ethically, as a rule of economics.
Most attempts at perpetual businesses today fail after less than 100 years, too, so it looks like we haven't figured out how to actually make a perpetual business - aside from a few notable examples like Zildjian (the cymbal company). Most of the success stories here are businesses with modest ambitions under the tight control of a single family.
I think you could argue that the idea that a business has to be a long-lasting perpetual enterprise comes from an increase in the power of business managers, at the expense of both investors and employees. These long-lasting businesses give managers a chance to build empires and personally enrich themselves without worrying about anything so pedestrian as figuring out when to return cash to shareholders ("they can have a tiny dividend if they whine too much, but don't get in the way of the expansion of my empire").