Monopolise how you do, not what you hold
A novel business strategy to take the decaying world by storm.
The corporation is dead
One thing I’ve heralded the death of in many topical contexts on Twitter is the death of the corporation as a vehicle of social change. Anyone who has been paying a modicum of attention to recent events within the last several years viscerally knows this to some extent already. Companies have been exploited by governments as a control point to enforce behaviours onto the public by threat of firing that would be illegal for them to do directly.
This is only the most recent foray into power abuse, atop a backdrop of culture war crusades, cancel culture, and poor financial models arbitrarily dictating the life and death of culturally valuable ventures like video games and film.
Isn’t it stupid that a game studio is hanging by life-and-death on the thread of even a single title bombing or succeeding financially? Most major (i.e. solvent) publishers like EA and Activision-Blizzard are far from popular with the public. It can’t continue sucking this much.
Exit the corporation, enter the association
One basic question prompted by this premise is, “OK, if corporations are out, what’s in, then?” The answer is simple: corporations without the corporation. Don’t take this too literally. Legal vehicles like LLCs and capital C corporations will not be going away any time soon. No, what will be going by the wayside is the company – the office with its desks by the row, the unpaid interns fetching coffee, the upstairs-downstairs social dichotomy reminiscent of Downton Abbey. Those are going away, and they’re going fast. Photographers, take your pics while you still have the chance.
I think a good positive framing for what this actually is is the association. This could be a Hollywood-style project-oriented LLC, that becomes a hollow shell corporation once the movie is made, but applied to video games or really any form of entertainment + publishing. It could also be completely devoid of any legal vehicle at all – just an association of friends and colleagues who share some business of some kind. How much actually has to be on the books about business? The truth is, you should have a much greater share of your paperwork concerning taxes than you probably do, at least when it comes to compliance. Only take the government seriously when they need to be taken seriously. You must use your best judgment for where the line is on that.
Some nuance about monopoly
OK, so corporations are out, not legally but culturally, and associations are in. What’s the play here, then?
See, Peter Thiel was both right and wrong. Competition is for losers, but only within a narrow band. His wisdom about monopoly only applies for a company that, in a broad sense, does one or two things at most. If you have a software company that makes some SaaS contraption, or if you are a construction company, or if you are a mining/quarrying company, or if you’re a gas station store magnate, you would be well-served by his advice. But who said the conventional logic of narrow band business is sacred? Is there some UNIX principles of business I don’t know about?
When you engage in what I’ve come to call broad band business — that is, business that is highly multidisciplinary and cross-functional — his monopoly logic falls apart pretty quickly.
An example of broad band business dealing
Say I want to build an apartment complex, and I want to build it great. I’m absolutely stubborn and I’m not going to settle for anything less than a major leap forward in the living standards of the American working class. How would I approach this as a business?
Firstly, I define my financial model. The complex is going to be shorting the local rental market. We’re going to charge as little as we can reasonably get away with, ballpark $300-$600 per month per unit, and call it a day. We’ll pay for operating costs out of the rentals and keep a good chunk of change to funnel into some wealth management firm.
We’re going to have these apartments built beautifully. They’ll use German passivhaus energy-efficient construction. They’ll use solid construction too, with plenty of genuine, cheap pine wood walling in a clapboard exterior. And we’ll scale it big — at a minimum we’ll have 1,500 apartment units on a campus-style 50 acre lot. These will be true studio apartments with reinforced steel framing and soundproof concrete walls. Each person will have their own range, fridge, counter space and shower + bathroom facilities. There will be plenty of outlets, their own breaker box, all NEMA 5-20R outlets. We’ll even have a natural gas hookup to have the option of gas range installs. Throw in a dedicated filtration system. Laundry and elevators at both ends of every building wing, on every floor. Build a mess hall, too, because a lot of people don’t have time to cook. Absorb the cost of that into the rent. Provide shared taps of distilled water too. Take care of people. Give them the things they need to live! Did I even mention the networking setup?
To be honest, from a conventional real estate perspective, this is asinine. You probably see the above like a Christmas wishlist from a 5-year-old who’s destined to be an architect when he grows up. The costs to have these things would be astronomical… if you built it like anybody else would build an apartment complex.
For this to be practical, you have to be categorically ruthless in insisting on doing every aspect of the business yourself. You need to hire a construction foreman that can manage and direct the labour that screws everything together. You need to build your own partnerships for raw materials. You need to buy your own equipment. The scariest part is, you might even have to be stubborn when it comes to taking funding for the project. Most financiers want to make their money back on a pretty short time frame these days. You gotta be honest and tell them that isn’t happening off the backs of the working poor, not this time. There’s more important things to do than profit here, after all.
What you find when you do things yourself, and bite the very unpleasant bullet early on, is that you keep all of the change that would have been profits for some other business that solely does that on a subcontracting basis. This means that all those nice things about passivhaus and distilled water won’t be so expensive after all – because you buckled down and did the digging yourself, instead of paying some sclerotic company to do it for you and leave you wondering if they even did a good job.
It’s not just about money
This is more than just profits realised, though. One of the reasons that corporations are dying as a vehicle of change is cost disease. That, coupled with forced regulatory compliance, drives costs up immensely for no real value gain on the part of the real, physical human beings actually living these things out. It makes a spreadsheet go up for some bureaucrat in New York, so a bunch of other bozos in DC can make content-free gestures towards it. Everyone else is losing out.
Broad band business practises give you something absolutely priceless that has massive consequences both financially and legally: they give you latitude. You finally can operate your business like Mayor McSim, and zoom in to whatever details you need to in order to make sure things are running smoothly. You will learn a lot, and you’ll have everything you gained from the venture too, if you choose to keep it. How does another construction project sound after sweating through the first one? Not so bad, I’d gander.
This is the hallmark of the new kings
If you commit to this strategy of doing every necessary operation yourself – and by “yourself” I mean people you’re either in charge of or you genuinely trust, not subcontractors or third parties that set their own rates and schedules – and you see it through, you have averted an ocean of malfeasance and peril that the vast majority of your “competitors” are currently drowning in, squirming desperately with huge law firms on retainer burning billions upon billions of dollars just to stay above water. You avoid every kind of risk that is currently ruining everything for so many people across all bands of society. Or, more exactly, you get to directly apprehend that risk with direct strategies and direct decision-making, as opposed to laying victim to it as some institutional process that you can’t overrule. You are the real boss, because you decided to remain so.
By committing to a broad band business strategy, you accept the new reality of how business is done today, and you get to see to a brighter future that incumbents do not. And by the time people do come around to what you’ve done, you’ll be sitting pretty already anyway, and competition doesn’t really mean a thing.
This has been a free post on my Substack, where I post a lot about my research endeavours in computer science, but also talk a lot about business, social change, and technology. This is definitely one of the more generalist posts I’ve authored, and it was a fun one. I hope you enjoyed reading it even more than I enjoyed writing it. If technology is your bag but you also genuinely care about social stuff, consider subscribing! I’ll always strive to make about a third of my posts free.