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Does enshitification happen because companies are publicly-traded? (beehaw.org)

submitted 6 months ago by [email protected] to c/[email protected]

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Isn't that a prerequisite for enshitification? Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders, even if that means utterly ruining their original product (Reddit, Boeing, etc.), yes? What do you think?

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[–] [email protected] 5 points 6 months ago (1 children)

No. Enshittification happens because of venture capitalism.

Startup companies get a lot of money early on with the hopes that, after the investment cash is spent, there will be a profitable company left in its place. That company can become publicly traded or get sold to another company. The key is that the investors make their money off the startup.

The flip side is that, without venture capitalist companies, a lot of these companies wouldn't get the opportunity to grow.

[–] [email protected] 1 points 6 months ago

it's both publicly-traded companies and VC-owned companies. any product that is required to constantly report their earnings and risk their company being dissolved if they don't increase profits year-to-year.