Modern finance

Have you seen businesses that behave like sociopaths? Laying off good employees at random to boost a quarterly report, cutting the value provided to its customers, breaking promises to employees?

Modern finance is the true villain; it removes businesses from the hands of the real founders who understand it and puts it in the hands of clueless MBAs and greedy financiers.

I have spoken with many other founders who sell all or part of their businesses to a wide variety of finance types (IPOs, mergers and acquisitions, private equity, venture capitalists, angel investors, etc). A common theme is that these founders believed the smart finance guys would provide something of value to the business other than money. I have never heard any founder say they received anything worthwhile but the money. And this is the best case scenario.

Much more common is that the founder leaves with a big bundle of money or is forced out by the financiers, then the financiers appoint hired gun CEOs whose sole job is to goose profits as much as possible short term so the financiers can flip the business. The hired gun CEO is usually totally clueless as to how the business works and stumbles around blindly swinging at random projects. This person usually has an enormous ego and is painful for everyone to deal with.

I am all for the free market, but I think that something is broken here. My theory is that due to the way we allow banks (finance orgs) to use our currency to loan out far more than they have on deposit leads to this situation. Think about it- what if you were allowed to loan money to your friends for interest you did not actually have? If we did not allow banks to loan money they do not have, then the whole predatory finance industry would die out very quickly for a lack of capital. The only purchases of businesses would be those where there is a truly good business purpose.

Published by

Joel Gross

Joel Gross is the CEO of Coalition Technologies.

Leave a Reply

Your email address will not be published. Required fields are marked *