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Summary Post-Growth Entrepreneurship lectures & videos
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Post-Growth Entrepreneurship lectures & videosLecture 1. The Status Quo: Capital, Scale, Exit
Business incubator = an organization that supports start-ups or individual entrepreneurs in
developing their businesses. This support may include providing services such as
management training, office space, capital, networking opportunities, and technical support.
The goal of a business incubator is to help start-ups grow and become successful.
“How can we use capitalism as a tool to fight neoliberalism”
Examining the status quo → how are things nowadays and what is wrong with them?
● Financial extraction = refers to processes by which companies or individuals
generate profits at the expense of the broader economy, community, or environment,
without contributing proportionately to the productive capacity or welfare of those
entities. This can occur through strategies such as excessive dividend payments,
buying up their own shares to drive up the price, or exploiting regulatory loopholes to
minimize taxes. Such practices can lead to inequality, reduced investment in key
sectors, and an undermining of economic stability
Financial extraction has multiple layers:
1. Micro: personal debt
2. Meso: corporate equity and debt financing
3. Macro: international development loans
The startup Ecosystem → Valuations
● Apply the stock price from the latest funding round to all outstanding shares
○ In the startup ecosystem, valuations are determined by applying the stock
price from the latest funding round to all outstanding shares of the company.
This method calculates the company's current market value based on the
price investors are willing to pay for its shares during the most recent
investment round. It's a way to estimate how much the entire company is
worth by multiplying the price per share by the total number of shares.
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,Lecture 2. Examining Incentives
Post Growth Entrepreneurship is the practice of creating and running non-extractive
businesses.
The Silicon Valley Model
1. Capital
a. Seed financing, VC rounds, angel investment, convertible loans
b. Investors now have control
c. VC is overhyped
2. Scale
a. What are we scaling?
b. Venture capital as an accelerator? But what are we accelerating? Are we
accelerating profitability? Are we accelerating customer acquisition?
i. Remember: VC does not always scale profitability
ii. Having capital does not make your more profitable and it certainly
does not make you more profitable faster
c. 90% of the startups fail.
3. Exit
a. Financial value is pulled out of business
b. Startup are like farmed chickens
c. The startup ecosystem as a casino for investors
d. Exits are destructive
It is stated that you have to grow exponentially as a company. You have to follow the curve
of the Silicon Valley Model. But this is precisely not the case, if you only focus on growing
then other things are not focused on this often has negative consequences for the rest of the
company such as customer service.
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, ● Startups have become unprofitable and are now just "shell operations" for cash
collection.
○ "Shell operations" refer to companies that function as an "empty shell." This
means they have little or no actual business operations or assets.
● Softbank's massive investments have caused a shock wave in Silicon Valley.
● The practice of "pump and dump" destroys the basic economics of industries and
causes them to evolve artificially and incorrectly
○ The term "pump and dump" refers to a manipulative market practice in
which the price of a stock is artificially inflated (pumped) by false or
misleading statements, causing the stock price to rise. Then the perpetrators
of the scam (dump) sell their overvalued shares at this inflated price. Once
they have sold their shares and the promotion stops, the price usually drops
sharply, resulting in losses for the misled investors.
● We deploy startups as if they are kind of ‘plofkippen’
● Startups are produced on the assembly line, they seem to be companies that are
very well put together and have grown rapidly. But when they are then sold, often all
that remains of the startup is a shell
Who pays for this?
● Question: when unprofitable companies are bleeding cash - whose money are they
spending?
● Pension funds contribute 65% of the capital to the US VC market
○ "VC funds" stands for "venture capital funds." These are investment funds
that provide capital to startups and young companies with high growth
potential in exchange for equity, or an ownership stake. Venture capitalists
(VCs) are investors who often provide venture capital and are usually
interested in companies developing innovative technology, products or
services that have the potential to disrupt markets and generate significant
financial returns.
● 90% of VCs fail to keep pace with the stock market since 2000
● Institutional investors typically allocated 90% of IPO shares.
○ When a private company first sells shares of stock to the public, this process
is known as an initial public offering (IPO). In essence, an IPO means that a
company's ownership is transitioning from private ownership to public
ownership.
3
, A critical view of the venture capital (VC) industry and the distribution of risk and profit in the
startup ecosystem, particularly with respect to Initial Public Offerings (IPOs):
● LPs are bleeding cash both pre- and post-IPO, and 90% of startups fail. Who is
winning?
○ LPs, or Limited Partners, are the investors in VC funds. They lose money
("bleeding cash") both pre- and post-IPOs of startups. Since about 90% of
startups fail, it begs the question of who actually wins in this scenario.
● VCs live off the "fee stream" (2 and 20)
○ This refers to the standard compensation structure in the VC industry, where
fund managers typically receive 2% management fee of total fund assets per
year, plus 20% of profits (called "carried interest"). Even if investments don't
perform well, VC fund managers still earn their management fee.
● Normal people bear the risk, fund managers always win
○ The implication here is that the "normal people”, bear the risks. Meanwhile,
fund managers always win because they get both the fixed management fee
and a share of the profits.
Enshittification = a 4 step process that shows how companies get really bad and eventually
die.
● Cory Doctorow: “first platforms are good to their users:
● Then they abuse their users to make things better for their business customers:
● Finally, they abuse those business customers to claw back all the value for
themselves
● Then, they die”
How Enshittification works:
● How it manifests:
○ Ads clogging up your social feeds
■ As platforms grow, they often turn to advertising for revenue
generation, leading to an excess of ads that can disrupt the user
experience.
○ Algorithms swapping your friends and interests for “high engagement” content
■ In an effort to maximize user engagement and, consequently,
advertising revenue, platforms might prioritize content that generates
high interaction, even if it means deprioritizing content from friends
and followed interests.
○ Content creators can’t reach audiences as well
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