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Speaker 1: Zone Media. Hello, and welcome to Better Offline. I'm your

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Speaker 1: host ed Zetron. In the next two episodes, I'm going

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Speaker 1: to walk you through a theory I have about how

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Speaker 1: the tech industry and CATALYSM at large became the playground

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Speaker 1: of asshole do nothing management dictators that see human beings

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Speaker 1: as assets and the customer as kind of an annoying

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Speaker 1: diversion from growth. But before I go any further, please

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Speaker 1: check the episode details of this for a URL that

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Speaker 1: has sources for everything that I'm talking about in this

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Speaker 1: and future episodes. I want you all to be able

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Speaker 1: to follow along with everything I'm saying. Don't take my

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Speaker 1: word for it, take the many, many links that I've included.

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Speaker 1: It's important that you're just as informed as I am here.

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Speaker 1: But now to the episode, and I promise you, once

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Speaker 1: we're done with this two parter, every thing that's happening

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Speaker 1: will make a little bit more sense, even though it

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Speaker 1: all feels just chaotic and offensively stupid, disconnected from reality

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Speaker 1: in many ways. I've been working on this episode and

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Speaker 1: its follow up for years, watching these trends, getting steadily

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Speaker 1: more pissed off. As you've probably heard, Unable to see

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Speaker 1: the big picture, because I've been picking up things as

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Speaker 1: I go, even since twenty twenty, when I started writing

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Speaker 1: my newsletter, there was something going on that I just

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Speaker 1: couldn't quite get. It's been really hard to understand how

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Speaker 1: companies like Meta can run terrible companies with decaying services

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Speaker 1: that are also somehow wildly profitable, or how Meta, Microsoft

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Speaker 1: and Google keep proliferating this unprofitable, unsustainable generative AI tech

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Speaker 1: that takes water from the desert and strains our power

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Speaker 1: grids to produce these deeply mediocre outcomes based on incredibly

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Speaker 1: vague promises, and then see their stock presses go up

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Speaker 1: despite them not making any money. And I've been craving

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Speaker 1: this way too expe the whole growth at all cost mindset.

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Speaker 1: I've explained what it is so many times, but there

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Speaker 1: is an answer, and it's fairly simple. The customer, and

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Speaker 1: by extension, the service provided to the customer, isn't really

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Speaker 1: the primary concern of many many companies these days. It's

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Speaker 1: all about shareholder value. And while this may seem a

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Speaker 1: little bit obvious, it requires also a little bit of

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Speaker 1: a history lesson to really explain how profoundly damaging what

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Speaker 1: I call the shareholder supremacy really is. And I know

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Speaker 1: you're probably going to think, well, we all knew the

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Speaker 1: increasing shareholder value was what stocks were about, right, I

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Speaker 1: really need you to understand what that means. Our journey

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Speaker 1: takes us back almost one hundred years, long before the

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Speaker 1: creation of the Internet, the iPhone, Facebook, the Better Offline podcast,

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Speaker 1: you know, the major things in the tech industry. We're

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Speaker 1: going to talk about the figures that predate the villains

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Speaker 1: I've covered in the past, the Altman's, the Sun Darpichais,

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Speaker 1: the probagar Ragavans of the world. But despite their historical

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Speaker 1: distance from this current era, these past figures are important

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Speaker 1: to know and understand because they fundamentally shaped the culture

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Speaker 1: and the psychology of today's managerial elite, and crucially built

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Speaker 1: the incentive structures that guide companies into hell. These stories

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Speaker 1: explain the often paradoxical motivations of modern capitalism, where those

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Speaker 1: who make short term decisions that invariably result in long

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Speaker 1: term pain and in many cases decline, see a big reward,

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Speaker 1: whereas those who built sustainable businesses that actually innovate and

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Speaker 1: don't treat their customers and employees like don't are ignored.

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Speaker 1: If not actively maligned for a lack of growth, but

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Speaker 1: like I said, it's time for a history lesson. In

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Speaker 1: nineteen sixteen, the Ford Motor Company had an idea to

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Speaker 1: use its surplus capital to invest in new plants to

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Speaker 1: increase productions of Ford's model T car, which the company

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Speaker 1: had continually made cheaper, or keeping wages for its workers.

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Speaker 1: High Ford, who I should be clear, was a horrible

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Speaker 1: piece of shit thankfully burning in hell right now, intended

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Speaker 1: to cut dividends to shareholders in favor of investing in

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Speaker 1: its employees and infrastructure, which anchored minority shareholders who already

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Speaker 1: incensed that Ford had prioritized the company's success and its

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Speaker 1: employees happiness over making the stock price go up, leading

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Speaker 1: to the famous Dodge versus Ford Motor Company case that

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Speaker 1: would define and ultimately doom modern capitalism and in many

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Speaker 1: ways birth the growth of all costs rot economy. The

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Speaker 1: Michigan Supreme Court found that a business corporation is organized

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Speaker 1: and carried on primarily for the profit of the stockholders,

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Speaker 1: and that the powers of the directors are to be

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Speaker 1: employed for that end, and intimated that cash surpluses should

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Speaker 1: not be saved to invest in upcoming projects, but distributed

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Speaker 1: to shareholders. Because Ford had shown that it was good

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Speaker 1: at making money, Ford was directly forbidden from lowering prices

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Speaker 1: and raising employee salaries and forced to issue a dividend

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Speaker 1: by a court. That's the free market, baby, That's how

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Speaker 1: it used to work, and I guess that's how it

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Speaker 1: works nowadays anyway. To be clear, the statement around corporation's

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Speaker 1: duty towards shareholders was made a beta dicta. This means

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Speaker 1: it was not actually legally binding, despite over one hundred

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Speaker 1: years of people acting as if it was, citing it

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Speaker 1: in cases, using it as a justification to destroy so

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Speaker 1: many lives in favor of growth. This statement not even

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Speaker 1: a legal precedent. A statement was the beginning of what

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Speaker 1: I called the shareholder supremacy. When companies moved away from

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Speaker 1: building lasting, sustainable companies that created things that instead became

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Speaker 1: these nasty growth bitches that focused on pleasing shareholders. It

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Speaker 1: birthed a short term mindset focused on increasingly abstracting a

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Speaker 1: company away from the production of goods or services and

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Speaker 1: promoting growth mechanics that increased stock valuations and made for

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Speaker 1: better balance sheets. The cult of shareholder supremacy, which some

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Speaker 1: people call shareholder primacy is one disconnected from production, and

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Speaker 1: I'd argue humanity it's solf. It's this weird, continual shell

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Speaker 1: game where companies do things not to produce, like an

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Speaker 1: outcome in real life or a thing that people like

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Speaker 1: and pay for, but to manipulate investors in the markets themselves,

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Speaker 1: though at this point kind of feels like investors and

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Speaker 1: markets are kind of in on the con These tactics

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Speaker 1: should be immediately recognizable to anyone who's followed my work

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Speaker 1: over the last few years. If a company share price

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Speaker 1: to clients and management smells a shareholder revolt, they can

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Speaker 1: induce their numbers by laying off a few thousand workers

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Speaker 1: or adopting of specious new technology like generative AYI or

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Speaker 1: the metaverse and then doing a big media blitz to

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Speaker 1: show everyone how cool and growth hungry they are. Or

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Speaker 1: they can do the really annoying thing, which is a

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Speaker 1: share buyback program where the company just buys its own stock,

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Speaker 1: which then bumps the value of the stock. That whole

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Speaker 1: situation I really need to look into more because it

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Speaker 1: doesn't seem good. And also on top of that, that

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Speaker 1: money is being diverted away from research and development. And

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Speaker 1: employees sees. And it was this movement, this shareholder supremacy movement,

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Speaker 1: that created the nebulous creature known as management. I realize

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Speaker 1: there are many definitions of management, but the manager we

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Speaker 1: see today is a figurehead that exists at increased company

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Speaker 1: value and make speeches rather than have any kind of

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Speaker 1: domain expertise or bona fides. They're just a person with

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Speaker 1: the ability to move numbers around and point of people

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Speaker 1: and say get this done, even if this, in this

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Speaker 1: case means makes something worse as a means of cutting

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Speaker 1: costs or layoff a few thousand people so that number

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Speaker 1: go up in the eyes of the shareholders supremacist. The

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Speaker 1: CEO of a tech company isn't someone that builds, or

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Speaker 1: invests in or proliferates technology, but a kind of stage

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Speaker 1: magician accountant hybrid that uses a combination of sleight of hand,

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Speaker 1: and they promises to convince those around them that a

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Speaker 1: company is of future, occasionally resulting in the company developing

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Speaker 1: something involving technology. Yet it took decades for the damage

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Speaker 1: from Ford versus Dodge to really set in when in

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Speaker 1: nineteen sixty A horrible little Man, a goblin creature worse

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Speaker 1: than hell called Jack Welch would join a company called

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Speaker 1: General Electric, one founded co founded i should say, by

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Speaker 1: light bulb inventor Thomas Edison, to sell things like light

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Speaker 1: bobs and refrigerators, and yes, I know, a bunch of

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Speaker 1: military stuff too, but putting that aside for a second.

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Speaker 1: Welch originally joined the company as a junior chemical engineer,

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Speaker 1: a job he lasted him for roughly one year before

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Speaker 1: he was given the power of the manager. I really

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Speaker 1: cannot express enough how bad Jack Welch was for the world.

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Speaker 1: He is damaged to the world itself, to global economies,

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Speaker 1: to the hundreds of thousands of people laid off because

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Speaker 1: he taught people how to do this. He is on

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Speaker 1: the scale of a war criminal. I'm sure he has

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Speaker 1: led to actual deaths, but he's definitely ruined lives. He

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Speaker 1: showed corporate America how unprofitable having a soul was. He is,

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Speaker 1: to quote Robert Evans on behind the bastards. The reason

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Speaker 1: you were laid off, you and every single other person

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Speaker 1: who was laid off to make a company more money.

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Speaker 1: But I'll get to them. Eight years into his tenure,

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Speaker 1: Welsh would become the VP and head of General Electrics

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Speaker 1: Plastics division, and to quote David Gallis's The Man who

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Speaker 1: Broke Capitalism, believed that business was a Darwinian competition where

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Speaker 1: he was better than the rest, which caused him to

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Speaker 1: push g to the limits. In practice, this meant that Welch,

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Speaker 1: as the manager of a factory trying to develop a

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Speaker 1: new kind of plastic in nineteen sixty three, continually pushed

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Speaker 1: his team to move faster, run more experiments, whatever it took,

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Speaker 1: which led to a massive explosion at the factory thanks

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Speaker 1: to Welsh pushing his scientists to use an untested process

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Speaker 1: where oxygen moved through a highly volatile solution. If you've

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Speaker 1: listened to the Behind the bar Asked episode, don't worry.

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Speaker 1: I'm not going to go over all of it, and

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Speaker 1: I have my own nasty little take now. Kind of

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Speaker 1: like Robert said on Behind the Bastards, one would think

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Speaker 1: that you'd get fired for blowing up a factory, especially

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Speaker 1: if it was your decision making that led to the explosion,

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Speaker 1: But this story instead became a kind of noxious management

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Speaker 1: consultant fable about failure and was, to quote David Gellis,

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Speaker 1: a point of pride for Welch, one that demonstrated a

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Speaker 1: healthy appetite for risk. Welch became g's head of Plastics

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Speaker 1: five years later in nineteen sixty eight, and would use

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Speaker 1: his aggressive and dangerous tactics to grow Moral, a kind

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Speaker 1: of plastic that's well suited for things like electronics, into

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Speaker 1: a billion dollar business, and crucially, becoming head of plastics

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Speaker 1: gave Welch his very first stock options and potentially his

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Speaker 1: first erection, which in turn began his obsession with stock

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Speaker 1: valuations and I'm, of course referring to the stock options

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Speaker 1: giving him that obsession. In nineteen seventy seven, Welch was

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Speaker 1: one of a chosen few in line to take over

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Speaker 1: the then CEO, Reg Jones, and was handed a series

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Speaker 1: of business units to run as a test to see

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Speaker 1: if he had it in him, including G's appliance businesses

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Speaker 1: and most important of all, ge Credit, which I'll get

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Speaker 1: back to in a minute, because it's extremely bad what

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Speaker 1: happens with that. As Gellis recounts, Welch decided that despite

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Speaker 1: its profitability and continued growth, Appliances would face competition from

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Speaker 1: overseas and that the right move was to start laying

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Speaker 1: people off. This was a huge success at the company

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Speaker 1: in so far as it boosted profits, and other divisions

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Speaker 1: copied his idea gleefully firing thousands of people from a

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Speaker 1: company that grew successful by investing in making itself a

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Speaker 1: great place to work. It's so good. I love all

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Speaker 1: of this. It makes me happy. I don't feel angry

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Speaker 1: at all anyway. To quote gallous, Welch dispensed with the

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Speaker 1: notion that mass layoffs were a measure of last resort

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Speaker 1: and labor was a cost, not an asset. Before Welch,

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Speaker 1: layoffs were something that happened when the company was collapsing,

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Speaker 1: not as a means of boosting one's balance sheet. Thank you,

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Speaker 1: Jack Welch, Thank you very fucking much. I'm actually not

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Speaker 1: being angry enough here. There is no way to show

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Speaker 1: how angry a person should be at Jack Welch for this.

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Speaker 1: I hope he burns in goddamn hell with Henry Kissinger, Anna,

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Speaker 1: Ronald Reagan and Maggie Thatcher and the rest of these bastards.

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Speaker 1: I should do a shirt around the assholes. That does

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Speaker 1: sound good, anyway. Forget all that for a second. We

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Speaker 1: have a podcast to record, continuing the story about this

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Speaker 1: piece of shit. Welch would become CEO in nineteen eighty

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Speaker 1: one and in the space of two years, would layoff

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Speaker 1: over seventy two thousand people. One tactic he would employee

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Speaker 1: with stack ranking, or so known as their vitality curve,

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Speaker 1: or as you'll soon understand why, rank and yank, where

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Speaker 1: high ranking managers were forced to rank their subordinates and

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Speaker 1: fire the bottom ten percent. This tactic later spread to

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Speaker 1: and poison countless other companies, including Amazon, Google, Activision, Blizzard,

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Speaker 1: and Microsoft, which has since stopped using it. It's worth noting, though,

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Speaker 1: that not every implementation of stack ranking usually results in

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Speaker 1: immediate payroll carts. Those perceived as low performers may be

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Speaker 1: denied bonuses or raises, or issued warnings or put on

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Speaker 1: a performance improvement plan, which is almost always a precursor

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Speaker 1: to a firing, kind of like taking a break from

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Speaker 1: a relationship, or they're just encouraged to leave or bullied

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Speaker 1: into doing so. But even in the most benign for

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Speaker 1: lack of a better word, form, it's a pretty horrendous

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Speaker 1: management tool. If you have a team of ten excellent workers,

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Speaker 1: but only eight can get a bonus or a positive ranking,

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Speaker 1: you have two left out who were considered inadequate, not

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Speaker 1: based on a lipmus of whether they're good at their jobs,

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Speaker 1: but whether they're not as good at their jobs as

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Speaker 1: other people. You pretty much guaranteed to kill morale and

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Speaker 1: team cohesion. But perhaps that was the point. Welch's nasty,

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Speaker 1: shitty little philosophies have deeply damaged the concept of management itself,

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Speaker 1: turning managers into these tiny little accountants that see labor,

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Speaker 1: as Welsch did, as a cost center, and managers as

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Speaker 1: this protected class above the fray. They don't do work.

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Speaker 1: They tell you to do work. Their job is showing

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Speaker 1: your work to someone else and saying it's theirs. They're

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Speaker 1: the ones telling you that you must come back to

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Speaker 1: the office, despite the fact that you can't tell what

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Speaker 1: the hell they're doing all day. They're there all the time,

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Speaker 1: but they don't seem to produce anything other than reports.

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Speaker 1: These people are a direct symptom of the poison in

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Speaker 1: the veins of capitalism, which I know is far from

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Speaker 1: god damn perfect, but it's so much worse than it

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Speaker 1: was caused by Jack Welch, who reframed the definition of

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Speaker 1: a good company to mean one that grows profits while

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Speaker 1: controlling labor costs, and this is how Jack Welch got

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Speaker 1: the nickname neutron Jack, referring to the thermonuclear bond that

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Speaker 1: kills people but leaves infrastructure intact. But I mentioned GE

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Speaker 1: credit earlier for a reason. G credit was where Jack

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Speaker 1: Welch would really make his marking get into the guts

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Speaker 1: of the business. General Electric was at a time a reliable, profitable,

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Speaker 1: and sustainable company, and was able to fairly easily mobilize capital, which,

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Speaker 1: of course Jack Welch loved, claiming that compared to the

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Speaker 1: industrial operations, I did know this business seemed an easy

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Speaker 1: way to make money, and that you didn't have to

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Speaker 1: invest heavily in R and D, build factories and bend

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Speaker 1: metal to make money off of credit. In the first

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Speaker 1: few years of his tenure, Welch would aggressively expand, According

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Speaker 1: to David Ellis, is the man who destroyed capitalism, G credit,

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Speaker 1: buying up companies that had nothing to do with manufacturing,

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Speaker 1: including Kidder Peabody, an investment bank that would eventually turn

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Speaker 1: out to have falsified three hundred and fifty million dollars

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Speaker 1: in profits, a thing that also didn't get Jack Welsh fired.

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Speaker 1: G Capital would expand internationally, ballooning to three hundred and

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Speaker 1: seventy billion dollars in assets by the time that Welch

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Speaker 1: left the company in two thousand and one. According to Gallison,

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Speaker 1: likely referencing a CNN article and including the links a

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Speaker 1: one point, G Capital was America's largest equipment leaser, leasing

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Speaker 1: hundreds of thousands of vehicles, handling credit operations for companies

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Speaker 1: like Kodak, becoming a backbone of America's increasingly debt ridden economy.

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Speaker 1: To quote Gallus, by the time that Welch left, G

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Speaker 1: Capital was effectively a giant, unregulated bank investing in all

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Speaker 1: kinds of risky debt instruments, including insurance products, credit cards.

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Speaker 1: I think even like tai auto loans. It's so weird.

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Speaker 1: And crucially, Welch's legacy is one where at the time

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Speaker 1: he was considered a genius that had taken General Electrics

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Speaker 1: market cap, which is just the sum of all available shares,

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Speaker 1: from fourteen billion dollars to four hundred billion dollars, all

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Speaker 1: through a very specific kind of financial trickery where g

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Speaker 1: would move things around, laying people off, buying new companies,

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Speaker 1: selling old companies, getting into new industries to match the

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Speaker 1: numerical analyst expectations and make earnings targets. In a fawning

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Speaker 1: and quite embarrassing piece from nineteen ninety seven, years before

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Speaker 1: Welch would leave and G Credit would actually lead to

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Speaker 1: its collapse in some levels, reporter John Curran describes how

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Speaker 1: G Capital grew by seeing new opportunities and immediately growing

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Speaker 1: a new business in any new market it could, taking

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Speaker 1: advantage of Capital's low cost of funds. At one point,

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Speaker 1: both leasing equipment to companies and buying it back, refurnishing

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Speaker 1: it and selling it to other companies, which isn't necessarily

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Speaker 1: a bad business, but but at this point, how many

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Speaker 1: goddamn businesses can you be in Jack where you can't

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Speaker 1: be in any You're burning in hell? What a shame.

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Speaker 1: In the space of a few decades, Welch had taken

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Speaker 1: General Electric from a company that made light bulbs and

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Speaker 1: refrigerators and plastics to one that continually played with the

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Speaker 1: numbers as a means of boosting its stock price, including

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Speaker 1: a ten billion dollar stock buy back in nineteen ninety

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Speaker 1: and The New York Times as John Hallushah noted that

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Speaker 1: g was only investing two point four percent of its

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Speaker 1: revenues in research and development, nearly a full percentage point

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Speaker 1: below in the national average at the time. At this point,

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Speaker 1: I really want to take a step back and just

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Speaker 1: point at that, which is this was the first company

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Speaker 1: that really just fucked with capitalism. And there's a whole

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Speaker 1: separate episode if I wanted to win. The economist Milton Freeman,

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Speaker 1: who is also a scumbag boy also Hope is burning

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Speaker 1: in hell rant side note, what ge went from, what

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Speaker 1: G became. G was able to raise these funds. They

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Speaker 1: were able to grow so big and do all this

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Speaker 1: stuff because they come He was so reliable, They didn't

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Speaker 1: have terrible turnover, They had happy employees, they had sustainable products,

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Speaker 1: they had their own products, their own patents, they owned,

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Speaker 1: they had scientists that worked there for decades. And then

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Speaker 1: Jack Welch came along and destroyed all of that while

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Speaker 1: making it quote a better company, what a worse company.

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Speaker 1: This is the man who taught the market how to

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Speaker 1: eat shit and love it. I am sorry, that's gross,

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Speaker 1: but that's really what we're looking at here. To be clear,

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Speaker 1: at this point, General Electric was an absolute dog of

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Speaker 1: a company. As David Gellis noted in a Reddit thread,

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Speaker 1: Welch operated at a time before Sarbines Oxley a sweeping

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Speaker 1: series of financial reforms instituted after the Enron scandal that

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Speaker 1: required companies to do these annoying little things like disclose

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Speaker 1: off balance sheet financial arrangements. So you know a series

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Speaker 1: of loans or credit agreements you made with someone that

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Speaker 1: are not on your balance sheet. I have no idea

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Speaker 1: how that was e and many other financial disclosures were

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Speaker 1: also required that would have likely made what Jack Welch

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Speaker 1: was doing before this a lot harder to play, which

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00:20:09,960 --> 00:20:13,359
Speaker 1: Welsh claimed in two thousand and two would suck risk

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Speaker 1: out of the system and cause people to not go

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Speaker 1: for their dream gross way of pertinent Jack, but also wrong.

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Speaker 1: These things only made people get a little bit clever.

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Speaker 1: But Welch's tenure was one that destroyed General Electric's ability

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Speaker 1: to innovate while turning it into one of the most

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Speaker 1: wildly profitable companies in the world, all through this nihilistic

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Speaker 1: form of capitalism where growth is really all that matters,

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Speaker 1: even if it means making worse products, constantly entering and

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Speaker 1: exiting industries, reducing spending in research and development for the

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Speaker 1: products that made your company's name, outsourcing multiple parts of

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Speaker 1: the company to avoid paying benefits and higher American wages

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Speaker 1: and generally treating human beings like an inanimate asset. And yeah,

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Speaker 1: if you're thinking this sounds like every company, this is

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Speaker 1: why this is the guy. As a result of all

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Speaker 1: of this, when Welch left General Electric, it entered a

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Speaker 1: prolonged period of the client as it became obvious that

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Speaker 1: it had become, as Gellis had called it, a giant

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Speaker 1: previously at least unregulated bank one operating in too many

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Speaker 1: industries in a new regulatory environment that worked against them.

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Speaker 1: General Electric, in its bloated messi asset portfolio, were central

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Speaker 1: to the two thousand and eight financial crisis, with G

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Speaker 1: capital overexposed to the crisis while also invested in subprime

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Speaker 1: mortgages that would eventually see the company find one and

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Speaker 1: a half billion dollars by the SEC. Though g would

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Speaker 1: still make nearly half of its profits from its financial

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Speaker 1: arm in twenty thirteen, it would also sell off most

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Speaker 1: of it for twenty six and a half billion dollars

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Speaker 1: starting in twenty fifteen. And while one might say wow,

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Speaker 1: this was a great moment where the company moved away

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Speaker 1: from Jack Welch's legacy, the company would then proudly announce

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Speaker 1: that this would allow them to return ninety billion dollars

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Speaker 1: to investors in the form of stockby and dividends by

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Speaker 1: twenty eighteen, promise I'm not actually sure it ever kept,

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Speaker 1: though it recently announced it planned a fifteen billion dollar

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Speaker 1: buyback in May. Ah nah, Well, this just kind of

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Speaker 1: seems like a con. I realized that this was an

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Speaker 1: extremely long and arduous history lesson, but it's necessary to

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Speaker 1: express the incredible evil and darkness that was Jack Welch

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Speaker 1: and his horrifying legacy is poisonous philosophy, that everything must grow,

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Speaker 1: that the value of the company is only that which

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Speaker 1: it returns to the shareholders, and that human beings are

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Speaker 1: a cost to be moderated. These are all things that

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Speaker 1: have been inherited by companies you know today, not just

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Speaker 1: in tech as well, but I mean, look at Meta,

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Speaker 1: look at Google, look at Microsoft. Microsoft. I think this

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Speaker 1: week laid off over one thousand people and they posted

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Speaker 1: I think over over ten billion dollars a profit, maybe

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Speaker 1: more than that. It's all Jack Welch. It's all MBAs

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Speaker 1: following Jack Welch. During Jack Welch's tenure, by the way,

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Speaker 1: he ran something that I found really gross on top

388
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Speaker 1: of all the other stuff that was gross, and it

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00:23:18,640 --> 00:23:21,320
Speaker 1: was something that David Gallis referred to as a campaign

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Speaker 1: against loyalty, claiming that the psychological contract has to change

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Speaker 1: and that loyalty, to Jack Welch was not giving time

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Speaker 1: to some corporate entity in return for shielding and protection

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Speaker 1: from the outside world. You know, some kind of value

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Speaker 1: exchange where your labor is traded and they keep you

395
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Speaker 1: because you're good at the job and you want the

396
00:23:38,960 --> 00:23:41,919
Speaker 1: job done well. No, no, no. What Jack Welch believed

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Speaker 1: loyalty was was an infinity among people who want to

398
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Speaker 1: grapple with the outside world and win, I assume by

399
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Speaker 1: blowing up factories and acquiring fraudulent investment banks, you know,

400
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Speaker 1: moving fast and breaking things, the meritocracy, making the numbers

401
00:23:59,400 --> 00:24:03,760
Speaker 1: look right. All of these things that you hear, all

402
00:24:03,800 --> 00:24:06,520
Speaker 1: of these things that Jack Welch did, have been picked

403
00:24:06,560 --> 00:24:09,160
Speaker 1: up and run with by companies that you've worked for,

404
00:24:09,400 --> 00:24:12,720
Speaker 1: Companies that you've worked with, Companies that you've seen fire

405
00:24:12,760 --> 00:24:16,760
Speaker 1: people as they make billions of dollars. Where do you

406
00:24:16,840 --> 00:24:19,800
Speaker 1: think these people learned it from? Where do you think

407
00:24:19,960 --> 00:24:23,240
Speaker 1: people gained the ability to run a company that binged

408
00:24:23,280 --> 00:24:27,119
Speaker 1: and purged assets like Google, taking on entirely new, unrelated

409
00:24:27,119 --> 00:24:29,680
Speaker 1: business lines as a means of expressing growth to the markets,

410
00:24:30,040 --> 00:24:33,560
Speaker 1: like Facebook did when it acquired Oculus and WhatsApp. And still,

411
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Speaker 1: despite your legacy being one of abject destruction and recklessness,

412
00:24:37,480 --> 00:24:41,440
Speaker 1: like Mark Zuckerberg, you still get called an amazing leader

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Speaker 1: by The New York Times as recently as twenty twenty two.

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Speaker 1: After hundreds of articles and multiple books talk about how

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00:24:46,800 --> 00:24:49,520
Speaker 1: bad you are a business, there's still people telling you

416
00:24:49,520 --> 00:24:54,040
Speaker 1: you're good. Why do you think Mark Zuckerberg is still celebrated?

417
00:24:54,160 --> 00:24:57,159
Speaker 1: Why do you think that Wanka gets to fuck around

418
00:24:57,200 --> 00:25:01,240
Speaker 1: on a goddamn hoverboard sailing across with an American flag

419
00:25:01,240 --> 00:25:04,680
Speaker 1: and people go ooh, mister Zuckerberg, You're so impressive. Fuck

420
00:25:04,720 --> 00:25:07,680
Speaker 1: that guy, Fuck them all. I'm sorry, I know i'm ranting.

421
00:25:07,760 --> 00:25:10,480
Speaker 1: I'm no, I'm pissed. But when I read this story back,

422
00:25:11,200 --> 00:25:14,199
Speaker 1: when I see this, it's like watching someone give a

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00:25:14,280 --> 00:25:17,040
Speaker 1: disease to someone else deliberately and then check in to

424
00:25:17,080 --> 00:25:21,560
Speaker 1: make sure they're still sick years later. And the anger

425
00:25:21,600 --> 00:25:24,080
Speaker 1: I feel, as I've mentioned in other episodes, is because

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Speaker 1: Jack Welch is also the reason why there's not as

427
00:25:27,119 --> 00:25:30,600
Speaker 1: much money going into research and development. He showed tech

428
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Speaker 1: companies how to do it. He showed other companies how

429
00:25:33,160 --> 00:25:35,840
Speaker 1: to do it. This man is the outbreak monkey of

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00:25:35,920 --> 00:25:41,200
Speaker 1: the rot economy. His dark influence has deeply poisoned American

431
00:25:41,240 --> 00:25:44,800
Speaker 1: capitalism and created an environment where the only good companies

432
00:25:44,800 --> 00:25:49,040
Speaker 1: are those that grow forever. His acolytes include David Calhoun,

433
00:25:49,359 --> 00:25:51,840
Speaker 1: once considered in line to replace him at GE, who

434
00:25:51,920 --> 00:25:54,560
Speaker 1: later moved on to Boeing, where he worked as a

435
00:25:54,600 --> 00:25:57,520
Speaker 1: director of the board from two thousand and nine until

436
00:25:57,520 --> 00:26:00,520
Speaker 1: he became the lead independent director in twenty eighteen and

437
00:26:00,560 --> 00:26:03,560
Speaker 1: then chairman in twenty nineteen and then CEO in twenty twenty,

438
00:26:03,840 --> 00:26:06,159
Speaker 1: a period in which he was accused of strip mining

439
00:26:06,200 --> 00:26:11,040
Speaker 1: Boeing by pushing to cut costs with aggressive outsourcing. Hey,

440
00:26:11,160 --> 00:26:14,800
Speaker 1: if you worked out weathers is going yep. During his tenure,

441
00:26:15,280 --> 00:26:18,520
Speaker 1: two Boeing seven three seven Max eights crashed, one in

442
00:26:18,600 --> 00:26:21,480
Speaker 1: twenty eighteen just outside of Jakarta, killing one hundred and

443
00:26:21,560 --> 00:26:24,680
Speaker 1: eighty nine people, and another in twenty nineteen en route

444
00:26:24,800 --> 00:26:27,520
Speaker 1: Nairobi that killed one hundred and fifty seven, followed by

445
00:26:27,560 --> 00:26:30,320
Speaker 1: a door flying off an Alaska Airlines fight in January

446
00:26:30,359 --> 00:26:33,520
Speaker 1: twenty twenty four that led to an investigation where Alaska

447
00:26:33,560 --> 00:26:37,160
Speaker 1: Airlines claim that it found many loose bolts on its

448
00:26:37,200 --> 00:26:41,240
Speaker 1: now grounded Boeing Max nine planes. Bob Nardelli, one of

449
00:26:41,280 --> 00:26:43,640
Speaker 1: the three finalists at g that competed to take over

450
00:26:43,680 --> 00:26:45,680
Speaker 1: if the Welch got the job, went on to become

451
00:26:45,720 --> 00:26:48,199
Speaker 1: the CEO of the Home Depot in two thousand. He

452
00:26:48,240 --> 00:26:51,359
Speaker 1: boosted profits immediately by aggressively cutting costs, and when the

453
00:26:51,359 --> 00:26:54,640
Speaker 1: stock didn't stay competitive with lows, which is for non

454
00:26:54,640 --> 00:26:58,280
Speaker 1: American listeners. Another hardware store, nar Delli, chose to cut

455
00:26:58,280 --> 00:27:01,200
Speaker 1: experienced full time employees in favor of part time workers,

456
00:27:01,600 --> 00:27:05,040
Speaker 1: eroding Home Depots already shaky position in the market, until

457
00:27:05,080 --> 00:27:07,240
Speaker 1: he was paid two hundred and ten million dollars to

458
00:27:07,320 --> 00:27:10,440
Speaker 1: leave the company in two thousand and seven. Robert Sophie,

459
00:27:10,440 --> 00:27:13,120
Speaker 1: I will take two hundred and ten million dollars. That's

460
00:27:13,160 --> 00:27:18,560
Speaker 1: my cost. Otherwise the podcast will continue. Every single one

461
00:27:18,600 --> 00:27:22,560
Speaker 1: of these men fails upwards because shareholders supremacy is what

462
00:27:22,640 --> 00:27:27,359
Speaker 1: truly dominates the markets and modern capitalism. It's this sense

463
00:27:27,680 --> 00:27:30,640
Speaker 1: that what matters is growth and shareholder value, even if

464
00:27:30,680 --> 00:27:34,119
Speaker 1: shareholder value really means making a very specific group of

465
00:27:34,160 --> 00:27:38,280
Speaker 1: people richer and showing perpetual growth to match the numbers

466
00:27:38,440 --> 00:27:43,399
Speaker 1: of Wall Street. Welch himself he had this one really

467
00:27:43,480 --> 00:27:46,720
Speaker 1: disgraceful way of putting it, that you can't grow long

468
00:27:46,800 --> 00:27:49,560
Speaker 1: term if you can't eat short term, and that the

469
00:27:49,600 --> 00:27:54,080
Speaker 1: main social responsibility for a company is to win. The

470
00:27:54,119 --> 00:27:56,800
Speaker 1: crucial way to summarize Jack Welch was that he was

471
00:27:56,880 --> 00:27:59,639
Speaker 1: for the majority of his career not actually engaging in

472
00:27:59,640 --> 00:28:03,119
Speaker 1: the pross of labor or doing any work. He started

473
00:28:03,160 --> 00:28:05,720
Speaker 1: as a chemical engineer at General Electric in nineteen sixty,

474
00:28:05,760 --> 00:28:08,359
Speaker 1: but was a high ranking manager three years later, no

475
00:28:08,440 --> 00:28:11,520
Speaker 1: longer participating in the actual process that made the company rich.

476
00:28:12,119 --> 00:28:15,359
Speaker 1: As Welch grew more powerful in the organization, he further

477
00:28:15,480 --> 00:28:18,000
Speaker 1: distanced himself in production. By the time he was CEO

478
00:28:18,040 --> 00:28:20,240
Speaker 1: in nineteen eighty one, Jack Welch hadn't done a real

479
00:28:20,320 --> 00:28:23,919
Speaker 1: job in nearly twenty years. Under Welch, General Electric distance

480
00:28:24,000 --> 00:28:27,639
Speaker 1: itself from producing things too, and taught the economy that

481
00:28:27,640 --> 00:28:29,320
Speaker 1: one didn't have to run a good business to be

482
00:28:29,359 --> 00:28:32,600
Speaker 1: a good company, just one with the right numbers. And

483
00:28:32,680 --> 00:28:35,240
Speaker 1: Knowing all of this, it's important to note that Welch

484
00:28:35,440 --> 00:28:39,160
Speaker 1: was until fairly recently, as I've mentioned, considered a hero,

485
00:28:40,800 --> 00:28:43,960
Speaker 1: and somehow one of the first people to criticize him

486
00:28:44,000 --> 00:28:47,600
Speaker 1: was Malcolm Gladwell in October twenty twenty two, only a

487
00:28:47,600 --> 00:28:49,840
Speaker 1: couple of weeks before The New York Times would publish

488
00:28:49,880 --> 00:28:52,840
Speaker 1: a piece calling Welch an amazing leader who inspired his

489
00:28:52,920 --> 00:28:58,400
Speaker 1: colleagues to accomplish more. Because Welch's horrifying methods were so

490
00:28:58,520 --> 00:29:01,240
Speaker 1: effective at boosting stock prey, he was at a time

491
00:29:01,320 --> 00:29:04,800
Speaker 1: considered one of America's greatest CEOs, with Forbes calling him

492
00:29:04,840 --> 00:29:08,000
Speaker 1: a managerial genius and one of the greatest business minds

493
00:29:08,040 --> 00:29:11,600
Speaker 1: of the time. No hate to my friends at Forbes,

494
00:29:11,640 --> 00:29:15,080
Speaker 1: but you also put Sam Bakmanfree Elizabeth Holmes on the

495
00:29:15,120 --> 00:29:19,000
Speaker 1: cover you gave the Clink, or Guy thirty under thirty,

496
00:29:19,040 --> 00:29:22,400
Speaker 1: despite that all being made up to you gotta lie.

497
00:29:22,440 --> 00:29:25,800
Speaker 1: Actually check these companies out anyway. The problem is that

498
00:29:25,840 --> 00:29:29,000
Speaker 1: the Moniker greatest CEO, in part thanks to Welch, no

499
00:29:29,040 --> 00:29:32,440
Speaker 1: longer means somebody who makes a good company with happy

500
00:29:32,480 --> 00:29:35,160
Speaker 1: customers and sustainable profits that will stand the test of time.

501
00:29:35,680 --> 00:29:38,400
Speaker 1: A CEO is no longer a person that built a

502
00:29:38,400 --> 00:29:40,760
Speaker 1: company and runs it to provide a service, but the

503
00:29:40,840 --> 00:29:43,640
Speaker 1: person that can make the company look good on paper,

504
00:29:44,160 --> 00:29:46,640
Speaker 1: meaning that the company in question looks like it's growing,

505
00:29:47,080 --> 00:29:49,960
Speaker 1: either in quarterly earnings or when presented to a dipsh

506
00:29:50,000 --> 00:29:53,640
Speaker 1: adventure capitalist that hasn't participated in any kind of work

507
00:29:53,720 --> 00:29:58,000
Speaker 1: or production in years or decades. Executives of companies are

508
00:29:58,000 --> 00:30:01,480
Speaker 1: no longer people that built things, that take that expertise

509
00:30:01,480 --> 00:30:04,200
Speaker 1: and maybe try and build it further on a national

510
00:30:04,280 --> 00:30:08,040
Speaker 1: or global scale. But this rotating cast of like skexist

511
00:30:08,160 --> 00:30:11,520
Speaker 1: style people from the dark Crystal with Masters of business

512
00:30:11,560 --> 00:30:16,000
Speaker 1: administration from Ivy League universities that all have had jobs

513
00:30:16,040 --> 00:30:18,320
Speaker 1: with product in the name for ten years or twenty

514
00:30:18,400 --> 00:30:22,280
Speaker 1: years beforehand. People that have the right credentials who can

515
00:30:22,320 --> 00:30:26,240
Speaker 1: continually fail at their jobs, much like prabagar Ragavan did

516
00:30:26,240 --> 00:30:29,040
Speaker 1: when he took over Google Search after running Yahoo into

517
00:30:29,120 --> 00:30:32,880
Speaker 1: the ground, because they're not measured at being good at anything,

518
00:30:32,880 --> 00:30:37,040
Speaker 1: because really, what is a CEO at this point? They're

519
00:30:37,040 --> 00:30:39,760
Speaker 1: not measured on efficacy. They're measured on their ability to

520
00:30:39,800 --> 00:30:43,440
Speaker 1: increase numbers, to make the number go up, and these

521
00:30:43,480 --> 00:30:47,800
Speaker 1: metrics are often esoteric ways to express growth, something that

522
00:30:47,920 --> 00:30:51,479
Speaker 1: David Gellis reports was commonplace in Welch's world, where senior

523
00:30:51,520 --> 00:30:55,040
Speaker 1: management would just adjust inventory to show the appearance of profit.

524
00:30:55,400 --> 00:30:58,080
Speaker 1: Feeling that and this is a quote that the only

525
00:30:58,120 --> 00:31:01,080
Speaker 1: way to achieve the enormous increases in sales and profits

526
00:31:01,280 --> 00:31:05,840
Speaker 1: was to bend the rules. Little note for edheads here,

527
00:31:06,160 --> 00:31:09,840
Speaker 1: go back to the Facebook episode the Facebook two party did,

528
00:31:09,880 --> 00:31:12,520
Speaker 1: but specifically the people killing Facebook. There was a bit

529
00:31:12,600 --> 00:31:17,800
Speaker 1: in that episode where I mentioned how people were trying

530
00:31:17,840 --> 00:31:19,640
Speaker 1: not to gain the system, they were afraid of being

531
00:31:19,680 --> 00:31:22,680
Speaker 1: allowed to gain the system because Mark Zuckerberg wanted ten

532
00:31:22,720 --> 00:31:26,000
Speaker 1: percent year over year perpetual growth in these growth metrics.

533
00:31:26,240 --> 00:31:30,160
Speaker 1: It's the same thing, and it's all thanks to Jack Welch,

534
00:31:30,280 --> 00:31:33,840
Speaker 1: who gave birth to this monstrous fake business person and

535
00:31:33,960 --> 00:31:38,240
Speaker 1: this culture of the overpaid and ever distant manager and

536
00:31:38,320 --> 00:31:41,200
Speaker 1: chief executive, a con artist that moves numbers around to

537
00:31:41,240 --> 00:31:43,840
Speaker 1: make rich people happy, one that will never and maybe

538
00:31:43,880 --> 00:31:47,880
Speaker 1: never has participated in the value exchange that makes them rich,

539
00:31:48,440 --> 00:31:51,640
Speaker 1: or while lacking any real appreciation or respect for labor

540
00:31:52,120 --> 00:31:56,480
Speaker 1: or the products, or the company or really anything, all

541
00:31:56,520 --> 00:31:59,400
Speaker 1: while demanding complete fealty from the workers that they have

542
00:31:59,480 --> 00:32:03,600
Speaker 1: no respect for. These people have now mentored themselves across

543
00:32:03,640 --> 00:32:07,040
Speaker 1: generations of business freaks, hiring them and training others to

544
00:32:07,120 --> 00:32:10,680
Speaker 1: be like them, poisoning private and public companies and investment

545
00:32:10,720 --> 00:32:15,880
Speaker 1: firms and landlords. And they're everywhere now, these people, these

546
00:32:15,920 --> 00:32:19,480
Speaker 1: people who find ways to abstract themselves away from creating

547
00:32:19,600 --> 00:32:23,040
Speaker 1: value while extracting as much of it as possible. And

548
00:32:23,080 --> 00:32:27,200
Speaker 1: it's exactly this type of person that's currently destroying Silicon Valley.

549
00:32:27,960 --> 00:32:31,280
Speaker 1: In the next episode, I'll show you exactly how damaging

550
00:32:31,480 --> 00:32:33,720
Speaker 1: Jack Welch's growth. The all cost legacy has been to

551
00:32:33,760 --> 00:32:37,000
Speaker 1: the tech industry, leading to the rise of a special

552
00:32:37,080 --> 00:32:41,080
Speaker 1: kind of specious management consultant personality that creates nothing while

553
00:32:41,080 --> 00:32:46,000
Speaker 1: taking everything. Here's a preview, though. Want to know who

554
00:32:46,440 --> 00:32:51,640
Speaker 1: recommends Jack Welch's winning yet, Sam Oltman. Anyway, see your

555
00:32:51,680 --> 00:33:02,719
Speaker 1: next episode. Thank you for listening to Better Offline. The

556
00:33:02,840 --> 00:33:06,040
Speaker 1: editor and composer of the Better Offline theme song is Matasowski.

557
00:33:06,360 --> 00:33:08,120
Speaker 1: You can check out more of his music and audio

558
00:33:08,200 --> 00:33:12,040
Speaker 1: projects at Mattasowski dot com, m A T T O.

559
00:33:12,240 --> 00:33:16,400
Speaker 1: S O W s ki dot com. You can email

560
00:33:16,400 --> 00:33:18,880
Speaker 1: me at easy at Better offline dot com, or visit

561
00:33:18,880 --> 00:33:21,240
Speaker 1: Better Offline dot com to find more podcast links, and

562
00:33:21,280 --> 00:33:24,400
Speaker 1: of course my newsletter. I also really recommend you go

563
00:33:24,440 --> 00:33:27,040
Speaker 1: to chat dot Where's youreed dot at to visit the discord,

564
00:33:27,320 --> 00:33:29,600
Speaker 1: and go to our slash Better Offline to check out

565
00:33:29,640 --> 00:33:34,000
Speaker 1: our reddit. Thank you so much for listening. Better Offline

566
00:33:34,080 --> 00:33:36,239
Speaker 1: is a production of cool Zone Media. For more from

567
00:33:36,320 --> 00:33:40,000
Speaker 1: cool Zone Media, visit our website cool Zonemedia dot com,

568
00:33:40,080 --> 00:33:43,000
Speaker 1: or check us out on the iHeartRadio app, Apple Podcasts,

569
00:33:43,040 --> 00:34:03,680
Speaker 1: or wherever you get your podcasts, wos, Sponge,