A recent article in the NYTimes, Short-Term Thinking Is Poisoning American Business, talks about the short term focus:
Public Companies: “being evaluated by investors on their ability to produce immediate financial value, almost always in the form of value-extracting activities such as cost-cutting, price increases, share buybacks or other forms of financial engineering.”
Private Companies: “Ownership of America’s privately held companies has shifted away from long-term operators, like family-owned businesses, to third-party investors. The “exit-seeking” nature of virtually all of these institutional funds means investors seek to sell the businesses they acquire, and make a profitable exit, within five to 10 years.”
Customers and Employees: “as a result, a growing mismatch between the horizons of investors who control more of our private companies and the horizons of the employees, customers and suppliers who depend on them.”
We’ve discussed in the past about the efficiency of our Employee-Owned Company model. We don’t have to pay an investor, which allows our employees to make more money and our customers to have lower prices.
The point of this article is more strategic than that. It is saying that most companies are making decisions for the short run, and not the long run. Yet customers are looking for a stable platform they can learn and continue to evolve with and aggregate data and experience over the course of many years (who likes change!). Employees are looking for stable, well paid jobs that they enjoy (who likes interviewing!).
Our employee owned structure makes us fundamentally different. By having a long time horizon we ensure we invest in things like infrastructure, sales tax compliance, PCI security and other “boring” things that assure we will be here for many years to come. Customers and employees are not required to change.
As some of our competitors go thru the cycles of their “exits” (see the Crowdrise example), we continue to stay on our path of building great technology for our customers. An acquired company may have excitement for the quarter, but we will have the ongoing stability to continuously improve. Without the distraction of the goals of a larger company influencing the investments and direction over time.
This is why we continue to have great years, as outlined in our 2019 Year in Review.
