Profiting from the Churn

Met a dude when I first moved to Austin, a banking and finance guy who felt I was in need of his great wisdom, and he described to me what he called a sweetheart opportunity.

“It’s like Facebook for hunters,” he explained, saying that people would likely adopt an entirely new social media platform because they were afraid that Facebook might tag their hunting trophy photos as offensive.

The revenue model?

Advertising, which means that the business model only works if the social media platform was able to attract and retain a large quantity of users.

Now, I would describe the business idea as ridiculous; I’ve unfortunately seen my share of murder photos and videos on Facebook’s platform, so I’m pretty sure that Facebook doesn’t flag hunting photos as offensive. 🙄

True, they’ve become a little bit more vigilant in the last 18 months, but mostly relating to what this week’s committees consider disinformation.

In any event: these guys got their dumb business idea funded, to the tune of millions of dollars, and they made sure that the executive crew received compensation they considered equitable and appropriate, which means solidly in the six digits.

Of course the business model was not sustainable, so one might assume that the founders would go back to the basics and reassess their business model.

I mean, eventually they would run out of money, you know?

Facing an existential corporate crisis, one might assume that a reassessment of the business model would be most logical and responsible next step.

Indeed, that’s precisely why the banking and finance guy was pitching me to their executive team; they needed a revenue turnaround fast, and more than anything needed to introduce a diversified revenue model vis-à-vis their failed advertising revenue plan.

I know a thing or two about how to pull this off; I’ve been a product manager for years (Which is not the same thing as a project manager, mind you), and my sweet spot is in the domain of mergers and acquisitions, fixing shitty technological architectures and introducing diversified revenue models to make the acquisition beneficial to the bottom line.

This is the sort of thing the private equity firms do, right? They bring in somebody who can access the frailty of their financial and technological architecture and recommend a triage and remediation strategy.

Of course that’s not how things played out, as is frequently the case.

The executive committee doubled down on their chosen model, probably out of ego and inertia, and probably because they didn’t have the chops to admit that they committed to a poorly-conceived business model.

As I recall, they were grasping for some scapegoat which removed them from having any responsibility for the business failure.

But another reason is that there’s a built-in incentive to stay the course, right? Maybe they’ll restructure the business, probably file bankruptcy, or maybe just find a buyer, lather rinse repeat.

In fact, the guys really felt that they would be able to receive tens of millions of dollars for their shitty business idea, tantamount to somebody expecting to receive $75,000 for a 1988 Ford Taurus.

Remember, the executives were ultimately compensated, and sure they burned a few million dollars of other people’s money, but one of the great myths of our culture is that there is a scarcity of financial resources. Indeed, there’s more than enough money, it’s just spent on stupid bullshit like “Facebook for hunters.”

From the perspective of the individual executive, their gambit worked. They were compensated a large quantity of money in reward for delivering a business model so idiotic it should’ve never been allowed to leave the station, so to speak.

Generally speaking, this phenomenon is called “profiting from the churn,“ which means that there are those who profit from the unprofitable and unsustainable launch of poorly-vetted business ideas, and they are able to do so with great repetition because there are certain reward mechanisms that shield them from negative consequences.

This phenomenon of “profiting from the churn“ is deeply fascinating, because once you know how to spot it (tip: it’s in the KPIs), you realize that a significant portion of what’s considered entrepreneurial endeavor or capitalistic enterprise is actually nothing but destructive chaos.

It’s in this precise manner that people like Donald Trump are assessed as a business genius, when in fact the guy is quantitatively a failure at entrepreneurialism, but a fantastic spokesperson for destructive capitalism.

Introducing metaphor, a story or a movie (such as The Grapes of Wrath) is typically assessed as having either a happy or sad ending depending upon where the author deposits the “the end“ upon the story arc.

Indeed, life itself has a beginning, middle, and an end, at least as it pertains to the life of a person, a plant, an animal, etc.

But in the context of business, we are talking about entities which transcend the life of any particular individual, so it’s a little bit more difficult to pinpoint when the entity was born and when it died, and therefore whether or not a story is assessed as having a good or a bad ending.

What’s a corporation?

“…a collection of many individuals united into one body, under a special denomination, having perpetual succession under an artificial form, and vested, by the policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued, of enjoying privileges and immunities in common, and of exercising a variety of political rights, more or less extensive, according to the design of its institution, or the powers conferred upon it, either at the time of its creation or at any subsequent period of its existence.”

So says Stewart Kyd (1793 — 1794), in “A Treatise on the Law of Corporations.”

Like a serpent, corporations are capable of shedding their skins, reborn under a different name, and thus obfuscating a model that’s ultimately unprofitable and therefore unsustainable.

Same is true of governments, no?

And therefore we have a culture of “successful businessmen“ who have ultimately failed to deliver a single financially sustainable model, more likely they “profit from the churn“ as they oversee the shedding of the serpent’s skin to the chaotic and destructive detriment of society.

Someone help me out with this: is Amazon yet profitable? Has Elon Musk (who is not an inventor, but rather a finance guy cosplaying as an engineer) figured out how to turn his Tesla acquisition into a cash-positive enterprise?

Without the constant influx of speculative investment predicated upon perceived future valuation through the lens of destructive capitalism, would these businesses be able to survive even a single day?

It’s in this context that we should be very leery of those who claim that “private sector best practices“ are our salvation as it pertains to the stewardship of public entity resources.

To be clear: I resent that the average “public servant” enjoys compensation and benefits as well as a quality of living sometimes orders of magnitude better than the average taxpayer.

And yes. I’m aware that there’s like 11 billionaires that have all of the money, I know I know.

But there’s a lot of public servants who were able to continue earning hundreds of thousands of dollars of salary while basically taking the Covid pandemic off, and I can tell you that this fuels significant resentment among taxpayers, who become deeply committed to a reckoning to what they considered private sector wisdom.

And at least philosophically, I really do believe that competition is good for business, but it depends upon the nature of competition, right?

Too many who are assessed as thought leaders in the world of business are demonstratively incapable of designing and implementing a financially self-supporting model.

Indeed, their assessed value as a “business leader“ is typically the byproduct of a public that fundamentally does not understand that these are nothing more than individuals who are savvy about profiting from the churn of destructive chaos.

It’s crazy shit.

I’m a fan of anarchism, which encourages individual responsibility and self-governance, but I’m also mature enough to recognize that that is a philosophical ideal which must be reconciled to the real world.

That’s the motherfucker about this whole mess: the “real world” is one where the private sector “thought leaders” are mostly good at the grift, the eternal destructive churn, and few indeed are those who know how to create authentic and sustainable value.

The great State of Texas, a magical place which entertains the preposterous belief that it could stand alone as its own country, is filthy with worthless jackasses who authentically believe themselves to be geniuses in the entrepreneurial misuse of public resources, and so substantial is their hubris that they cannot admit their own folly, even when confronted with overwhelming evidence of their incompetency.

They talk mad shit as they burn the entire place down, and are quick to receive a bail out of federal resources when the heat is too much, but for the most part they are a well-fed and pampered class of idiots.

And so I’m considering creating an award, something that acknowledges the “great thought leaders of anarchy.”

There are those who radicalize ordinary citizens better than anything someone like myself could ever accomplish, and sometimes I’m astounded by how good they are at destroying confidence in our system, even as they strut and continue to run their mouths.

Here in Texas, they drive ridiculous and underutilized pick up trucks that cost $75,000, and for the most part they wear loose fitting pajamas because they cannot fit comfortably into any other type of clothing. Viewed from the outside looking in, it’s the most ridiculous theater ever, and holy shit people love the act.

I remember reading about how the United States detained and deported hundreds of anarchists back in the 1800s, maybe because they were throwing bombs, I don’t know. 🤷‍♂️

But holy shit, I would contend that the very best spokespersons for anarchism are in the realm of politics, straddling that line between that part of the private sector that profits from the churn, and those “public servants“ who likewise profit from the irresponsible squander of the commons, waddling from one buffet to the next in their elastic eating pants, while running their mouths about muh freedom.

It’s in that context that I am not surprised that there’s a growing element of propagandists who falsely contend that the communist party of china (the CPC) would represent a more responsible example of governance than what we have here in the United States.

At least I believe their contention is false; I believe the Chinese government to be corrupt, inefficient, and above all things: dishonest and untrustworthy. Certainly authoritarian, and therefore counter to my convictions as an anarchist.

But sometimes I wonder. 🤔

Sometimes there’s examples of public sector malfeasance that really are astonishing, and maybe the entangled business interest with China among both so-called Republicans and so called Democrats isn’t an accident.

Generally speaking, those who accuse others the loudest of collaboration with the Chinese government are demonstratively in their back pocket, but the public has been propagandized into a political version of Pittsburgh Steelers versus the Dallas Cowboys, so the gambit works: loyal fans of Republicans authentically believe that the Democrats are agents of the Chinese government, and vice versa.

Truth is, almost all of them are. Just follow the money.

As implied, those who profit from the churn in both the private and public sector actually have a vested interest in the shedding of the serpents skin, so to speak.

It’s possible and even likely that there is indeed no honor among thieves, and despite their caustic rhetoric, it seems likely that a substantial number of so-called business leaders and public servants are ultimately loyal only to themselves, and therefore angling for opportunity without regard or respect to national loyalty, and certainly with no regard to what’s best for the least of these my brothers, so to speak.

Anyway, this is the sort of bullshit I think about when I am framing and hanging sheet rock, because who am I? A nobody who does physical labor so he can feed his three daughters. A guy who sleeps on the floor and boasts a net worth of three dollars in small bills.

There are times when I think that maybe the “the end“ of the story will emphasize the contributions of nobodies like myself, because as far as I can tell, too many of the “leaders“ are actively destroying the system for which they are responsible.