Monday, December 22, 2008

Good politics

I worked for a pretty good company once. Then we were acquired by a much, much larger company. There were about 15,000 of them and 500 of us. One of the Senior Vice Presidents flew down to give us a pep talk.

'We like everything about you guys - you are special and that's why we bought you.'

And over the next 18 months corporate changed everything about us that was special and unique. Finally there were massive layoffs when they decided they really didn't want to be in the business we were in.

That's what this article reminded me of.

For more than 30 years the entrepreneurship-venture capital-IPO
cycle centered in Silicon Valley has generated new wealth,
commercialized innovation, and created new companies and industries.
It's also spun off millions of new jobs. The great companies created by
this process -- Intel, Apple, Google, eBay, Microsoft, Cisco, to name
just a few -- have propelled most of the growth in the U.S. economy in
the last two decades. And what began as a process almost exclusively
available to scientists and engineering Ph.D.s became open to just
about anyone with a good business plan and a healthy dose of
entrepreneurial drive.

At its best, the cycle is self-perpetuating. Entrepreneurs come up
with a new idea, form a team, write a business plan, and then pitch
their idea to venture capitalists. If they're persuaded, the VCs
invest, typically through several rounds during which the start-up
company must meet performance benchmarks. Should the company succeed,
it then makes an initial public offering of stock.

The IPO can reward the founders and venture-capital investors, and
enables the general public to participate in the company's success.
Thousands of secretaries, clerks and technicians at these companies
also have come away from the IPO richer than they ever dreamed.
Meanwhile, some of those gains are invested in new venture funds, and
the cycle begins again.

From the beginning of this decade, the process of new company creation
has been under assault by legislators and regulators. They treat it as
if it is a natural phenomenon that can be manipulated and exploited,
rather than the fragile creation of several generations of hard work,
risk-taking and inventiveness. In the name of "fairness," preventing
future Enrons, and increased oversight, Congress, the SEC and the
Financial Accounting Standards Board (FASB) have piled burdens onto the
economy that put entrepreneurship at risk.

In other words 'we appreciate everything you've accomplished and boy we sure liked the growth. We're just going to change everything around now because .. well .. screwing up a good thing is good politics.'

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