The problem was that during his time running the parks side the guideline from corporate was to extract earnings from the parks side to subsidize the IP side… a policy which he continued as CEO but to a greater degree than previously.
The Marvel deal working out, was, in my opinion, mostly dumb luck. The attempt to exactly replicate that deal down to the dollar figure with star wars is the kind of unimaginative shit that MBA’s do to ruin large corporations.
Also it’s really hard to overstate how much more IP you get for 4B with Marvel vs Star Wars. Star Wars is the equivalent of like 2 maybe 3 marvel comic book series worth of IP. Also Marvel had collected far less lifetime revenue at the point of purchase (and thus had more potential future earnings before getting to the more spent state it’s in in 2024) than Star Wars.
Then you have the talent relations side of things where the MBA’s have done everything humanly possible to screw with the ecosystem that produces their product. MBA’s spreadsheets will tell you that cacao farmers in west Africa earning less than a dollar a day cost <10% of the all in revenue of the global chocolate business and are thus the best employees in the world… and it sure does seem to be the goal internally to get the content creation talent as close to that state as humanly possible.
Honestly this entire era of late state capitalism is a major pet peeve of mine. I look at anything anywhere and I see it. It disgusts me, not because I’m some kind of leftist, but because I love the game of business. It’s a fascinating process and there’s absolutely no reason for it to be run in the profoundly antihuman ways it is now. It isn’t more efficient, it isn’t producing more of anything, it isn’t producing anything cheaper, it doesn’t drive innovation in producing better products, and because it doesn’t do any of those things it doesn’t make society in the aggregate richer. It’s cancer.
And to prove my point you go exactly one notch more benevolent than the norm out there in the market and you CRUSH. Because this is the low content thread and it’s Saturday I’m going to turn this into a really really long post and give a couple of examples.
First let’s talk about Costco. Costco is more benevolent than average on two relationships and a normal American sociopathic corporation in other respects.
They are better to their customers than almost any other retailer basically settling the profit they’re going to take from that customer up front for the year and then letting that customer go out and buy as much retail stuff at extremely near cost as they want as long as they buy it in bulk. This ups their purchase order size with vendors per acquired customer and lets them guarantee a certain amount of revenue per customer that doesn’t really fluctuate with how much the customer shops at Costco. Then there’s the credit card business which is so good that I frequently joke that Costco is just the worlds most elaborate credit card rewards program all the time and it kills. But the customer experience is buying good quality for an excellent price with a ton of other benefits tied in. Even the credit card is a legitimately competitive cash back card and if you’re feeling lazy about optimizing credit card rewards it’s not an especially big mistake to spend every single dollar in your lifestyle that doesn’t require cash through it.
The direct employees are the next group who they treat better than average. Costco has figured out that if you have good long tenured employees spending their entire 30+ year career with Costco that’s an amazing outcome. They promote aggressively from within, they pay the lower tier employees either a living wage or at least substantially better than other retailers. This ends up costing about the same as churning people in grinding poverty through a high turnover system that provides the kind of customer experience you would expect from the human equivalent of a gestation crate. When it costs a little more that little more cost ends up dumping straight into the customer experience. And since when I earlier said they were selling their products at or near cost that included the cost of paying the employees in he store (who they need fewer of because the employees very much want to keep their worth caring about job) if it costs a little more you can just adjust the cost of the products you’re selling for way lower per unit prices than your customers can get anywhere else to cover it. And the customer experience is better so they come back for that anyway so there’s literally no harm to the shareholder being done here.
Where Costco returns to being a brutal capitalist killing machine is in the vendor relations department. The company firmly believes in delivering the best quality at the lowest price to their customers… and they are willing to color pretty far outside the lines of good ethical practices to make that happen. Knocking off suppliers under their own Kirkland label is standard operating procedure, and woe betide any company that finds itself depending on their business to justify their existence. These people are viewed as being at least a full letter grade harsher than Walmart, who ironically because they were one of the very early adopters of the modern style of vendor relations have now become one of the higher reputation large customers out there, which is fucking nuts. The only reason this doesn’t devolve rapidly into really dangerous health code violations taking place is that Costco is extremely rigorous about quality standards. Do your best not to think about the kinds of labor practices taking place in factories around the world that have the misfortune of being captured by Costco corporate and are in the process of being bled dry.
As someone whose job involves spending a shitload of money on trucking I sympathize with Costco corporate here. ‘Relationship sales’ has been code for other companies sales teams taking your purchasing guys out to lunch a bunch and you paying 15% more than made sense for decades. In a world where there’s dozens of new ventures starting any given moment a long term relationship frequently turns into a sinkhole where you’ve basically all but agreed to support an entire town somewhere in Asia at a certain price point, forever, even as cheaper options open up closer to the jungle where the new raw resources are being exploited. Before you know it you’re paying more than you should to people who cost double what your competitor is paying the new guys.
Alternatively you can turn into a purchasing predator the way Walmart popularized. Be active about finding new sources of everything all the time. All existing vendors have to keep up with the market rate, which is the lowest price someone will sell you what you need at an acceptable quality level, or expect to become a backup vendor. When you buy use your size to bully down the company your buying from’s profit margins.
And that works. I’ll use my own industry to demonstrate. A freight broker that normally makes 15% margins will happily take your business at 9% because 9% of ten million dollars is 900 grand… and now instead of all that work being done for account managers earning pay that makes sense at 15% it’s going to be done by 20 dollar an hour call center workers plus the guy who sold the account putting out fires all day. Look at that, the labor conditions just changed from 10 american dream jobs to one rich guy and 9 people who will never be able to afford to own a home.
That style of purchasing is the norm now with big corporations. They are the mailed fist of the monopsony. They’ve kept conditions pretty pleasant up top for the consumers because that’s how we’ve been looking at antitrust this last few decades, but down belowdecks on the purchasing side they’re in full blown conquest mode. They aren’t just squeezing the living daylights out of their employees and their vendors employees they’re also squeezing the life out of any small scale capitalist that engages with them without finding some poor people to exploit to keep the costs down. And I mean exploit hard. The situations you should be thinking about here are Amazon delivery companies and fast food franchisees (who now that they are unnecessary the big fast food chains are in the process of squeezing out). That hard. Hard enough you’re also squeezing value out of local anti poverty resources hard.
So yeah I don’t have any gigantic American corporations for customers. My one experience with it wasn’t super fun, and the only capacity I could ever seen myself serving in for them is super expensive backup plan. Not because I can’t work cheaper but because I’m not interested in it. Mid sized private companies without enough leverage over the relationship to boss anyone around please. I will handle all of your freight for a reasonable enough price, I will pay the trucks the market price, and I’ll pay my staff well enough that they’ll be good at their jobs and not quit ever. I will then pay myself a very nice living and you will have the ability to buy spot trucking a competitive price and things will run very smoothly for everyone. This works for me and the way I want my life to go, and there are enough medium sized companies out there that I do way better than I ever thought I would.
/Costco part of rant.
Next we have Berkshire Hathaway. In what ways is it benevolent?
Well firstly there are the people silently riding along with the autistic man’s bets… the shareholders. There has never been anything remotely as crazy as being able to invest in Warren Buffett’s legacy investment portfolio for absolutely no fee in the history of finance. It is a historical artifact, a unique event, a symptom of the fact that when Warren says he’s doing it for the love of the game he fucking means it. There have probably been people as good at trading and investing in the history of Wall Street, maybe, but they for sure charged at least 2 and 20. You stick 2 and 20 on top of Berkshire Hathaway’s returns since Warren bought it and it looks a lot less great. The sheer number of people, most of whom were just upper middle class people in Omaha, NE at the right time and the right place who got filthy disgustingly rich, for free, is crazy.
Next we have the kind of people who go out and create a really viable business. These people frequently find themselves in a situation where they are being offered an enormous amount of money to sell the thing they spent their life building to slimy assholes who are going to do filthy things to it. Most of them end up taking the money and not making eye contact with anyone on the way out the door as they watch it begin to catch fire in the background as they climb into their limo and wipe away a tear with 10k in freshly minted cash. Warren Buffett offers a competitive option to the slime. If you offer Berkshire Hathaway a mild but viable discount they will cash you out. They will leave you in charge of the direction of the business, they like what you’ve done with the place it’s a viable business. You don’t have to grow it to a billion locations, you don’t have to lay everyone off, you don’t have to raid the pension obligations, in fact the pension obligations are now on the most solvent entity on earth that can’t print US Dollars, Euros, British Pounds, Swiss Francs, or Yen. Yes I consider BRK to be substantially more solvent than anything backed by the CCP don’t @ me lol. Go on live your life hang out with the grandkids, and we won’t torch your legacy we’ll let it go on earning the money it natively earns out into the sunset. When it stops working we’ll shut it down, but since we aren’t going to fuck with the quality that’ll probably be a long time. That’s pretty much the deal that acquired all those tiny to very large private companies.
And year after year it throws off absurd ridiculous amounts of cash. It’s components do all the stuff corporations do, all the exploiting, all the price gouging, whatever the core corporation did when it was bought they mostly didn’t change it. Just about the only way to get in real trouble is to embarrass Berkshire Hathaway the corporation. But these companies at least aren’t going through the short term quarterly squeeze process anymore because Berkshire Hathaway isn’t. They aren’t cooking the results to look better, they aren’t trading altitude for speed, they’re just competently running those internal businesses using the same people who have always been running those machines with the long term in mind. When they have something they want to invest in or expand to that makes good business sense a check arrives in the mail to do that from corporate. And on it goes marching to the beat of a guy who does the exact same thing every day, all day, is the best in the world at it, and really prefers to think about mostly it and how things relate to it. And it happens to be allocating capital and he has opted out of this whole period of capitalism in his own direct dealings. You aren’t hearing about a bunch of layoffs at BRK subsidiaries because the economy is down and they need to hit their numbers this quarter. That isn’t how corporate thinks about the world. The quantity of raw pain that saves and the quantity of waste it prevents is probably calculable but I’m definitely not doing all that lol.
Still a guy who is balls deep in investing in oil companies the second they look like a good bet. For him it’s the game > everything absolutely including the entire human race. He’s not there to moralize he’s there to play the game. That’s why he’s pro being taxed he would like the government to take more money and leave him the fuck alone to play his game. In fact he probably thinks his score would get higher in the game if consumers had a little more money to spend that’s why he’s been moaning about class warfare every now and then the last decade.
At the end of the day my issue is that cruelty is not an essential component of business, and I actually think it tends to be inefficient. A lot of the time when I see something go catastrophically wrong the thing at the bottom of the ‘one off event that doesn’t count against anyone’s metrics’ is the MBA’s grinding the cost down below the point where it was sustainable and something important breaking. My own industry this last few years has been just wrecked by fraud because everyone overautomated chasing lower costs and built brittle systems with bad security that were low hanging fruit for international organized crime. I’m sorry but I’m an actual business person and can absolutely see the line of causality between that low price point and the disaster that followed it’s wildly obvious. I got double brokered exactly once… and the scammers did not get paid. I can assure you that multiple major Armenian criminal organizations did not target my industry all day every day for years because the yield on calling my office was high. It was 0. They called thousands and thousands of times. All of it the MBA’s fault forcing freight brokerages to attempt to fill skill roles with cheaper employees and heavy use of software automation on both the customer and brokerage level.
This isn’t me advocating for overpaying for stuff that’s a weakness as well that can absolutely ruin you, but underpaying causes exponential increases in risk lol. It is almost never worth it to the point where trying to learn how to do it is a bad tendency for being good at capitalism and kinda makes you a scumbag in general.
