Chapter
The Danger of Stock Buybacks
1:13:37 - 1:20:04 (06:26)
IBM has bought back $132 billion of stock while its market cap has gone down to $113 billion in the last 15-20 years, indicating a lack of ambition and ideas. Companies engaging in this practice have no incentive to invest in R&D or other areas, leading to potential economic consequences.
Clips
The trend of companies under-investing in R&D and prioritizing share buybacks has led to strategic losses and ill positioning, as demonstrated during the pandemic.
1:13:37 - 1:16:08 (02:30)
Summary
The trend of companies under-investing in R&D and prioritizing share buybacks has led to strategic losses and ill positioning, as demonstrated during the pandemic. The compensation schemes and incentives for executive management are said to be contributing factors in creating these outcomes.
ChapterThe Danger of Stock Buybacks
EpisodeE55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
It's better for companies to focus on acquiring teams with interesting technology rather than making massive acquisitions without synergies.
1:16:08 - 1:18:26 (02:17)
Summary
It's better for companies to focus on acquiring teams with interesting technology rather than making massive acquisitions without synergies. Deconglomeration is fueled by the benefits of focus and the instinct of managers for empire building.
ChapterThe Danger of Stock Buybacks
EpisodeE55: Valuing crypto projects, Rivian worth $100B+, inflation: causes and corrections and more
PodcastAll-In with Chamath, Jason, Sacks & Friedberg
The belief that a company has nothing better to spend the money on than buying back their own stock is not ambitious enough and can result in a lack of incentive for investing in R&D or other ventures.
1:18:26 - 1:20:04 (01:37)
Summary
The belief that a company has nothing better to spend the money on than buying back their own stock is not ambitious enough and can result in a lack of incentive for investing in R&D or other ventures. Apple's recent stock buybacks illustrate this point but there is a danger in assuming the most efficient thing to do is always the correct decision.