The World's Dumbest Idea: Maximizing Shareholder Value [pdf] - <AUTHOR> https://www.gmo.com/America/CMSAttachmentDownload.aspx?target=JUBRxi51IIBoe1yul9uERnfCmQoglFl9k5qwJSfHx8w%2fWCnFLmEb2MC9GoFnZVlslR5NzCRY1ajgn503icBv67VQg%2fNVUMWsYvi3A2%2fL%2bS28A7Pthjp7LmOfLYQfHMJc <comment><USER3> The great irony is that Montier tests his argument by comparing the returns on shares of a company that claimed to be trying to maximize shareholder value with returns on shares of one that didn't. He evaluates his claim by the criterion he's railing against: "See?" he seems to say. "IBM tried to maximize shareholder value and J&J didn't, and J&J's stock did better! Therefore maximizing shareholder value is stupid!"

I'm not sure where on the list of world's stupidest ideas to put this idea that you can judge a measuring stick by using it to measure its advocates. All Montier has succeeded in demonstrating is that (a) the goal of maximizing shareholder value is so sacrosanct that even someone trying to undermine that goal naturally identifies good results with high share prices and bad with low; and that (b) Montier is really not arguing against the goal of maximizing shareholder value at all, but against the idea that explicitly trying to do so is effective.

And it does seem that maximizing shareholder value is a sort of financial anti-Heisenbug: don't worry about it and there's no problem, but the more intently you focus on it, the worse things get.

<comment><USER4> I don't think there's necessarily any great irony here. It's certainly possible that the same metric could be both (1) foolish to optimize and (2) a reliable indicator of success.

Think of yourself trying to solve a maze -- because there are cul-de-sacs, if you took the naive strategy of directly minimizing distance to the goal, you'll just become stuck in a dead end. Yet if you do reach the goal (by another means) the distance will still be minimal (zero). This is basically the concept of local optima in optimization.

Of course, there are other situations, where through careless optimization a measure can become entirely disconnected from the holistic concept it is designed to encourage. Think for example of using "lines of code" as a heuristic for programmer productivity; I could unroll loops to maximize that measure and achieve a much higher value than the most truly productive programmer.

So the question is whether long-term shareholder value is of the first or second type. I think it may be difficult for it to be entirely disconnected from success, although I agree that it is foolish to optimize directly.

<comment><USER3> Yes, I take your point, which is more precise and better argued than the author's. That is, I think your distillation of his argument misrepresents it by stripping out the logical inconsistencies (and the irony).

Montier's letter is rather more muddled than your comment. He suggests not only that optimizing returns in the short run is a poor strategy for creating long-term value for shareholders, but that the benchmark of share value (even over the long run) is a deficient measure of corporate performance. Everything Montier writes suggests that he believes companies did better (in some sense that he never quite articulates) in the era when managers ran their firms as they saw fit, before the idea took hold that they should try to maximize share value.

So the irony of his argument is the incongruity of demeaning the very benchmark he uses to suggest that J&J has somehow been a better managed company than IBM; the major arc of his argument vitiates the evidence he uses to support it. It is ironic, in the comedic sense, that Montier seems to be so imbedded in the culture of maximizing shareholder value that he invokes that criterion, seemingly reflexively, in the course of his argument against it.

But it's a logical and rhetorical mess, too. Montier's argument is analogous in your maze-solving formulation to claiming that the final distance from the exit is a poor measure of the performance of a maze-solving algorithm while at the same time maintaining that greedy algorithms are worse than random algorithms because it turns out that the greedy ones end up farther from the exit. If you accept the first claim, then the second is a non-sequitur, and advancing the second argument undermines the first.

</comment></comment></comment><comment><USER5> Define Value:

Person A wants long term growth of the share price so they can sell down in many years to fund their retirement.

Person B wants rapid growth in the share price (even if it eventually kills the company) so they can sell it soon.

Person C isn't much concerned by share price growth, as long as the dividends keep coming each year.

Person D invested because they want to support environmentally-friendly companies.

Person E isn't concerned about tree-huggers, but a lot of people in his town are employed by the company so he wants to support them.

Your challenge, should you choose to accept it: Which of these Shareholders' Value will you maximize?

<comment><USER6> Google at some point stated they will always prioritize long term interests of their users vs. short term interests of their shareholders (paraphrasing). I think that's the key - when you focus on your users, financial success follows and stock price will reflect that.

As far as satisfying the shareholders, A and C wouldn't invest in the same company (growth vs. mature), Bs are speculators which you should almost always ignore (except when you need to throw them a bone to avoid activist situation). D/E don't really exist in the world of institutional investors, which are the investors you would have a dialog with (retail investors are generally just along for the ride).

<comment><USER7> _> Google at some point stated they will always prioritize long term interests of their users vs. short term interests of their shareholders (paraphrasing)_

They say that, but they don't actually do that. If they were prioritizing the long-term interests of their users, they wouldn't be giving away their core services for free and funding them with advertising revenues. That may seem better for users in the short term, but in the long term it means that only services that promise advertising revenues are available; services that lots of users like (e.g., Google Reader), but which don't generate enough advertising revenue, get shut down, no matter what the impact is on users. The best thing for the long-term interests of users is for Google to charge users directly for services; yes, figuring out how to do this for something like Google search is a hard problem, but what is Google for if not to solve hard problems that no other company is in a position to solve?

More here:

[http://blog.peterdonis.com/opinions/monopoly- money.html](http://blog.peterdonis.com/opinions/monopoly-money.html)

<comment><USER8> Yes, the past 10 years have shown that Google's management has been disastrous for the company's long term profits and goals.

<comment><USER9> No, it's disastrous for the _users '_ goals.

</comment></comment></comment></comment></comment><comment><USER10> While Montier makes a good (and unoriginal) point, I'm not convinced by his argument.

The first example: IBM and JnJ are in wildly different industries, competing in different markets against different competitors employing vastly different strategies. To use an arbitrary time period (who is to say IBM's returns 10 years from now won't trounce JnJ's), and employ a metric (shareholder returns) that is often out of whack with reality (as Montier himself would acknowledge) isn't persuasive enough for me.

The second macro example of comparing returns between two totally different time periods also isn't exactly apples to apples either. And also completely ignores the effects of hundreds of other potentially significant factors (interest rates, gdp levels, global trade etc)

This article seems to be a strong case of confirmation bias on his part. Ironical given that he's written a popular book on behavioral investing. (And yes this comment can also be viewed as suffering from a similar bias)

Yes SVM has pitfalls, yes focusing on the customer should be a high priority, however the agency problems Montier describes (management extracting undue value) are solved by neither.

Borrowing from churchill(?) — SVM might be the dumbest idea in how we organize our public markets, except for all the others.

</comment><comment><USER11> My standard reply to these posts:

I highly recommend to just get the book [1], it's written very well and in layman terms but here's an extract taken from a review [2] of the same:

"Stout traces the birth of this "fable" to the "oversized effects of a single outdated and widely misunderstood judicial opinion." Dodge v. Ford Motor Company was a 1919 decision of the Michigan Supreme Court. The opinion's status as a meaningful legal precedent on the issue of corporate purpose is tenuous at best. Yet, its facts "are familiar to virtually every student who has taken a course in corporate law." As Stout has observed in the past, "[t]he case is old, it hails from a state court that plays only a marginal role in the corporate law arena, and it involves a conflict between controlling and minority shareholders" more than an issue of corporate purpose generally. The chapter explains quite well that any idea that corporate law, as a positive matter, affirmatively requires companies to maximize shareholder wealth turns out to be spurious. In fact, none of the three sources of corporate law (internal corporate law, state statutes and judicial opinions) expressly require shareholder primacy as most typically describe it. To the contrary, through the routine application of the business judgment rule, courts regularly provide prophylactic protection for the informed and non- conflicted decisions of corporate boards"

[1] "The Shareholder Value Myth: How Putting Shareholders First Harms Investors, Corporations, and the Public" by Lynn Stout [http://www.amazon.co.uk/The-Shareholder-Value-Myth- Sharehold...](http://www.amazon.co.uk/The-Shareholder-Value-Myth- Shareholders/dp/1605098132) [2] [http://arizonastatelawjournal.org/book- review-the-shareholde...](http://arizonastatelawjournal.org/book-review-the- shareholder-value-myth-how-putting-shareholders-first-harms-investors- corporations-and-the-public-by-lynn-stout/)

<comment><USER12> I also recommend Professor Stout's book, and especially to fellow specialists and governance wonks. Not because I agree with her main thrust, her characterization of the orthodox view, or her conclusions about it, but because resisting the book in good conscience requires summoning foundational primary sources that practitioners don't have to handle very often. If you lead right, it's good to fight a southpaw from time to time.

When recommending it to those who aren't corporate attorneys or otherwise involved in the subject matter, I include a caveat: If this is the only book you read on corporate governance, be aware that it's a controversial and contrarian book packaged for non-lawyers. If its subject were political, I could find and recommend a book arguing the opposite view it in a similar style. I'm not aware of any legal rebuttal that isn't presented in more traditionally legal, less approachable form. It's been reviewed in legal journals, but even most lawyers consider those long-winded and dense.

</comment></comment><comment><USER13> "Maximizing shareholder value" has indeed gotten out of hand. There are several reasons for this.

One is tax policy. A corporation can pay for its capital in three ways: 1) dividends on stock, 2) interest on loans, and 3) stock buybacks to increase the stock price. The first is taxed more highly than the second two. This has a huge influence on corporate behavior. Because payments on loans are not taxed, converting equity to debt increases profits. This funds the entire "private equity" industry, which is really about leveraged buyouts. This bias in favor of loans also increases the involvement of the banking industry in corporate finance.

Loans and investments aren't really that different. They once were; lenders expected to be paid back. Then came junk bonds, where the interest rate is cranked up to compensate for the risk, and the securitiziation of debt, which allowed off-loading the risk onto other investors. (See 2008 financial crisis.)

There's an occasional call to "end the double taxation of dividends". Taxing interest paid and stock buybacks at the same rate would be equally effective. This would be a good time to do that economically, because interest rates are so low.

Stock buybacks are mostly a tax dodge. But that's not the full reason for their popularity. For stockholders, they're no better than dividends. But for stock _option_ holders, which usually include the CEO, they're a windfall. Option holders get nothing when the company pays a dividend and the stock price remains the same. But in a buyback, the stock goes up and they win big. This is one of the major factors driving CEO pay upward. (If you assume CEOs are rational actors as regards their own compensation, much corporate behavior becomes clearer.) Japan doesn't allow stock buybacks for most types of corporations. The US does. It doesn't really benefit anybody but management.

So that's the tax policy argument. It's dull, but important.

As for why companies prioritize shareholders so much, more than they used to, the reason is simple - less fear by companies. Companies used to be afraid that overdoing it would lead to government action. Their business might be nationalized, taken over by the Government. Britain did that to the rail, coal, steel, airline, power and telephone industries. The US never went quite that far, but electric power and telephone companies used to be regulated utilities with rate-of-return regulation, and the airline and trucking industries were regulated by the Civil Aeronautics Board and the Interstate Commerce Commission. In the US, this was a political compromise between big business and small business. Small businesses didn't want big monopolies to have control over their essential services, like power and transportation.

All this changed starting in the late 1970s. Nationalized and regulated businesses were stable, but seemed inefficient. They had no incentive to take risks to improve. The history of the Reagan era is well known, so that doesn't have to be repeated here, but reviewing the history of deregulation is useful. What seems to happen in deregulation of regulated monopolies is that a large number of new companies enter the field, and prices go down. Then most of the new companies go bust, and the winners consolidate. The result tends to be deregulated monopolies. Look at the last 30 years of the telephone industry, from AT&T to lots of little companies and back to AT&T.

There's another source for the decrease in corporate fear - the end of communism. It's hard to realize this now, but from the 1930s through the 1970s, there was real worry in the US that communism might beat capitalism economically. By the 1950s and 1960s, the USSR had a successful space program and was industrializing rapidly. Capitalism had serious ideological competition. In the 1980s, though, it became clear that the USSR couldn't make their system work. It worked for some of the big, centralized stuff - coal, steel, power, and such. But the rest of the economy didn't work very well. With that threat removed, companies could stop worrying about socialism and communism gaining popularity.

Related to this was the decline in labor unions. This has a lot of causes, but the biggest one is simply that unions peaked in the era when industry centered around huge plants with huge numbers of semi-skilled employees. Those were the situations in which unions had the most leverage. There were once steel mills which employed 5,000 people with shovels. If you visit a steel mill today, there will be some shovels around, but they're just for cleanup. You'll see a lot of machinery and not many people. Manufacturing employs 7% of the US workforce. It was around 40% in 1950.

Labor unions once had a big influence on working conditions. When a sizable portion of the workforce was unionized, non-union businesses tended to have working conditions not much worse than union shops. Companies didn't want a labor-organizing campaign. So the 8 hour day and the 40 hour week were standard, and pay tended to follow union levels in non-union businesses. That's disappeared.

As a result of these changes, there's no major political opposition left to "maximizing shareholder value". That's why we're where we are now.

<comment><USER14> So if I'm understanding you correctly, a dividend is just as good as a buyback from the POV of a shareholder but a buyback is preferred because it makes options holders more money. If this is the case, can you explain why there are companies that issue dividends at all? Are these companies that are paying their execs with few options?

How are buybacks a tax dodge? If they have the desired effect of boosting share price, then there will be increased taxes paid by shareholders when those positions are exited, no?

<comment><USER15> While both are indeed taxed, dividends are taxed as ordinary income, whereas gains from sale of stock are considered and taxed as capital gains. In the US at least, the capital gains rate is somewhere around 1/4 to 1/2 of the ordinary income rate, so it's much more "tax efficient" to do a buyback than to pay dividends.

<comment><USER16> Uh, what about Qualified Dividends? [http://en.wikipedia.org/wiki/Qualified_dividend](http://en.wikipedia.org/wiki/Qualified_dividend)

<comment><USER15> Very good point, I was unaware these were still in effect (haven't been a US tax payer in several years).

</comment></comment></comment></comment></comment><comment><USER17> Maximizing shareholder value is not the dumbest idea per se - the flaw is that maximizing shareholder value does not maximize the value of the business.

Businesses do not exist in empty space but within a society and their primary responsibility is to provide value to this society by providing jobs, goods, services, taxes, research, you name it. Investment and growth are not primary goals, they are just means to the aforementioned responsibilities.

People should invest in a business because of its intrinsic value and not define the value of business by their investments. Financial gains should only be an additional incentive and protection against the risks of investments but not the sole reason for the investment.

If you could argue that maximizing shareholder value naturally aligns with maximizing intrinsic value all would be fine but I can not see how this could be true. It may sometimes be true for long-term investments but for short-term investments the contrary seems to be true. If you only care about the next quarter cutting wages and quality is the easy way to maximize shareholder value but is diametrically opposed to maximizing intrinsic value.

</comment><comment><USER18> The "dumbest idea in the world" phrasing borrowed by the headline didn't originate with some wild-eyed lefty or academic, but is attributed to Jack Welch, celebrated former CEO of GE.

<comment><USER19> Yeah, and he admitted himself that retrospectively it was not such a good one."Shareholder value is an outcome—not a strategy." \- Jack Welch [http://www.businessweek.com/bwdaily/dnflash/content/mar2009/...](http://www.businessweek.com/bwdaily/dnflash/content/mar2009/db20090316_630496.htm))

<comment><USER20> That 'strategy' quote is a far more intelligent than the title quote. It completely and concisely sums up the correct argument in 8 words, and it does it better than the paper linked.

</comment></comment></comment><comment><USER21> This article isn't very good.

I actually agree with the idea. The quote about shareholder value being a dumb idea from Jack Welch, yeah, sure.

This article is sloppy though. The author side-by-side compares economists speaking in abstract aggregates, press releases from PR-generating-feel-good- organizations (the CEO roundtable thing), publicly stated metrics used by companies for success (IBM), and distribution/influencer strategies (Johnson and Johnson).

It just seems like throwing a lot at the wall and seeing what sticks. Pulling out a 1980's feel-good-PR and contrasting that against Johnson and Johnson remaining focused on doctors, nurses, families...

That's before getting into cherry-picking, survivor's bias, good and bad strategy (Rumelt would savage later-day IBM, not for being profit-focused, but because "doubling earnings per share" is not a strategy)...

...ok, too many problems to list them all. Agree with the general idea; the article isn't so well-thought though.

</comment><comment><USER22> Some discussion

[http://www.economist.com/blogs/buttonwood/2014/12/investing-...](http://www.economist.com/blogs/buttonwood/2014/12/investing- ceo-pay-and-economy)

[http://www.businessinsider.com/gmos-montier-maximizing- share...](http://www.businessinsider.com/gmos-montier-maximizing-shareholder- value-is-the-worlds-worst-idea-2014-12)

[http://www.bloomberg.com/news/2014-12-03/shareholder- value-f...](http://www.bloomberg.com/news/2014-12-03/shareholder-value-focus- seen-as-dumbest-idea-chart-of-the-day.html)

like a lot of things in economics, a lot of things could have been going on during the switch from 'managerialism' to 'shareholder value' paradigm, so it's not necessarily true that it caused returns to go down. in context the effect Montier talks about is quite small. but it does seem clear that it didn't cause returns to go up meaningfully across the board.

in fact, the effect Montier cites seems to go away if you do a slightly more sophisticated calculation

[http://3rdmoment.blogspot.com/2014/12/stock-performance- in-e...](http://3rdmoment.blogspot.com/2014/12/stock-performance-in-era-of- shareholder.html)

there are a lot of studies that show companies where management has skin in the game do measurably better than companies where they don't.

that being said, there aren't data that would tell you, companies where the CEO will earn $1m or $10m depending on how well the company performs don't do as well as companies where the CEO will earn $20m or $200m.

edit: the question of impact of CEO incentives on stock performance is probably more complicated than what I said. I've seen a lot of studies that show that incentives impact management behavior. but probably most of those behaviors relate to short-term stock outperformance. whether those changes result in long-term outperformance is another question, and whether the incentives even reward long-term outperformance is complicated. [https://hbr.org/1990/05/ceo-incentives-its-not-how-much- you-...](https://hbr.org/1990/05/ceo-incentives-its-not-how-much-you-pay-but- how)

<comment><USER23> >there are a lot of studies that show companies where management has skin in the game do measurably better than companies where they don't.

There are studies that show that management 'skin in the game' compensation policies have cause an epidemic of control fraud:

[http://neweconomicperspectives.org/2014/11/ceo- compensation-...](http://neweconomicperspectives.org/2014/11/ceo-compensation- cheaters-prosper.html)

>that being said, there aren't data that would tell you, companies where the CEO will earn $1m or $10m depending on how well the company performs don't do as well as companies where the CEO will earn $20m or $200m.

Actually there is data, but it demonstrates the exact opposite:

[http://online.wsj.com/public/resources/documents/CEOperforma...](http://online.wsj.com/public/resources/documents/CEOperformance122509.pdf)

Lower paid CEOs perform better.

<comment><USER24> There is an alternative explanation for the data, which is that desperate companies that know they're in trouble have to pay more to hire a 'good' CEO who might be able to get them out (because the CEO does not want to be saddled with a bad track record). This explanation also jives with the fact that equity compensation is negatively correlated with stock performance, as the companies in trouble often give the executives less salary and more stock options, to incentivize sustainable growth.

<comment><USER23> There are plenty of no-evidence explanations exculpating the poor CEOs. This is true.

</comment></comment></comment></comment><comment><USER25> For such a bold claim I expected a more in depth analysis rather than this amalgamation of statistics. For example, nobody would argue against the fact that executive compensation has gone through the roof. However his argument for directly relating executive compensation to SVM is lackluster at best:

> _We can see this has been a driving force behind the rise of the 1% thanks > to a study by Bakija, Cole, and Heim (2012). The rise in incomes of the top > 1% has been driven largely by executives and those in finance. In fact, > executives and those in finance accounted for some 58% of the expansion of > the income for the top 1%, and 67% of the increase in incomes for the top > 0.1% between 1979 and 2005. Thus, there can be little doubt that SVM has > played a major role in the increased inequality that we have witnessed_

He makes a solid argument against companies which employ flawed executive compensation programs - which are without a doubt very common. But so are companies which try to increase shareholder value. Simple correlation doesn't imply causation here. If there's any case to be made here, it's that a flawed compensation scheme leads to a short term optimization of shareholder value (ie. propagation of SVM) and not the other way around.

His argument for the decline in labour share of GDP is even more spurious:

> _The role of SVM in declining labour share should be obvious, because it is > the flip-side of the profit share of GDP. If firms are trying to maximize > profits, they will be squeezing labour at every turn (ultimately creating a > fallacy of composition where they are undermining demand for their own > products by destroying income)._

He completely omits the rising productivity in many industries which simply require a smaller workforce for the same output.

Pointing out well known flaws in an established economic system is hardly noteworthy. Potential alternatives would be much more interesting to talk about.

</comment><comment><USER26> Fwiw, I thought Montier to be a well-respected behavioral economist where behavioral is in reaction to the failure of previous economic models in 2008 (the Global Financial Crisis).

Behavioral puts human psychology back into the picture.

Montier argues that SVM (shareholder value maximization) is the fig leaf that covers the change in incentivization of CEOs, and one assumes other corporate officers, away from salary and bonus to stock options. Which has been key in bifurcating the 1% away from everyone else.

Or as they say in finance, when a CEO says shareholder maximization, he or she is talking their own book. They're the shareholder they want to maximize.

SVM reframes the dialog in terms of what many people consider legitimate - return money to shareholders - and away from, say, value to employees or to society more generally. Which puts me in mind of another expression, "job creators."

</comment><comment><USER27> The concept of maximizing shareholder value being the only true purpose of a company, taken at its literal sense, is an idea that's rotten to the core. This type of thinking is a natural consequence of the selfish individuals that to some degree all of us are. Taking human natural flaws into account, it is simply irresponsible to adopt such a philosophy. It will be exploited. This type of company suffers from an inherent vulnerability. At some point, true motives, such as provision of quality services and goods, could be distorted and even replaced by fallacious motives. As is seen in the world today.

</comment><comment><USER28> The author isn't arguing against maximizing shareholder value, he's highlighting the misunderstanding of what maximizing shareholder value is. Current intro-level schools of thought on how to value projects, raise money for those projects, and what to do with the money left over, start with a perfect-world scenario [1]. This scenario's cornerstone centers around the idea markets are perfectly efficient, there are no taxes, management incentives align with shareholders, there are no taxes, there are no bankruptcy costs, and possibly one more.

In this world, there is no difference in value to a company to raise money via debt or via equity. However, if we start to violate the 5-6 founding assumptions (i.e. we enter the real world) we find that there significant differences in value of a firm in a given industry who use debt or equity to raise money (or any flavor of security between debt and equity), who pay management via different bonus structures, who keep cash on hand versus pay it out, have underlying assets which are easily saleable or not, and who have different risk profiles.

Maximizing shareholder value is a nice tool to use when evaluating key financial decisions (e.g. how levered a firm should be), but as the other points out is misused or abused due to misaligned management incentives. However, tbe idea isn't intrinsically dumb, the misunderstanding of the value of the idea and how it should be used is what's sometimes wrong and sometimes harmful.

[1] [http://en.m.wikipedia.org/wiki/Modigliani%E2%80%93Miller_the...](http://en.m.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem)

</comment><comment><USER29> I always say if maximizing shareholder value is the goal, most companies should liquidate all their assets and become hedge funds investing in industries with higher returns. Yeah, it's tongue in cheek, but it make the point. Companies need to do what they do best, and if investors think that's a good idea they can invest. Then we can get away from the short term thinking, which is even better for the shareholders.

</comment><comment><USER30> "Yet, Johnson & Johnson has delivered considerably more return to shareholders than IBM has managed over the same time period."

good lord, treating IBM and JNJ the same? not to mention assuming companies in their various stages should have comparable growth.

you always see these days a new tech company come out 'we are different (like everyone else), we do not care about our stock price blablabla. it doesnt take them very long before they realize that their stock price is critical to their survival.

as almost every tech found out after spitting such garbage, when their stock plummets their talent leaves. they would also find it hard acquiring talent. This is especially true when stock options are a significant incentive - as it almost always is.

this is not to mention the many various social effects of a company whose stock is always in the gutter. you lose customers, become the butt of jokes, etc etc (even though these things have no direct tie to stock price).

</comment><comment><USER31> On the flipside, this type of greedy setup actually may be much better or easier for smart companies focused on innovation and research to operate in, as long as they have trained their shareholders they can invest and innovate while others have to cut and slash.

Apple, Amazon and Facebook to name three have really set the precedent that they use their money to stay in the game. Amazon invests nearly everything back in. That is actually valuable today more than EPS/P/E Ratios in the best innovative companies. Innovate and win and the shareholders will follow, follow your shareholders only and go right off the cliff to mediocrity.

Companies should be run with stakeholders as the focus. Shareholders being one, but the products/employees/customers/economy they are just as important to success and real growth.

</comment><comment><USER32> Link is down for me - is this the same article?

[http://www.forbes.com/sites/stevedenning/2011/11/28/maximizi...](http://www.forbes.com/sites/stevedenning/2011/11/28/maximizing- shareholder-value-the-dumbest-idea-in-the-world/)

<comment><USER33> No. Oddly similar title, but different article.

<comment><USER34> They are both quoting Jack Welch, who called it the dumbest idea in the world.

</comment></comment></comment><comment><USER35> If the link doesn't work, you can read it here: [https://view- api.box.com/1/sessions/6570005e923b4513914b56fa...](https://view- api.box.com/1/sessions/6570005e923b4513914b56fa1145c4b8/view)

</comment><comment><USER36> The headline wouldn't be as provocative if it were correct: "The World's Dumbest Idea: Maximizing Short Term Shareholder Value".

The author seems to argue that switching from long term to short term shareholder value maximization hasn't really increased shareholder value (and might have decreased it). So I gather that he is in fact in favor of maximizing shareholder value but that it should be performed on a longer basis.

</comment><comment><USER37> Cached version to those who cannot access the resource:

[https://web.archive.org/web/20141206170332/https://www.gmo.c...](https://web.archive.org/web/20141206170332/https://www.gmo.com/America/CMSAttachmentDownload.aspx?target=JUBRxi51IIBoe1yul9uERnfCmQoglFl9k5qwJSfHx8w%2fWCnFLmEb2MC9GoFnZVlslR5NzCRY1ajgn503icBv67VQg%2fNVUMWsYvi3A2%2fL%2bS28A7Pthjp7LmOfLYQfHMJc)

</comment><comment><USER38> I agree, that the purpose of value maximizing can only be accomplished as a side effect, but this bad orientation is only part of the problem of current application of shares, I think that the additional problem lies in their distribution (both the actual distribution, and the logic behind it). Shares could solve the tragedy of the commons problem, but their current application necessarily fails.

</comment><comment><USER39> This relates

[http://www.ted.com/talks/nick_hanauer_beware_fellow_plutocra...](http://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitchforks_are_coming)

I agree with the overall statement but not necessarily all of the analysis. I believe "stakeholder capitalism" is a better corporate structure.

Corporate bylaws would need to be changed to accommodate this.

</comment><comment><USER40>
        ➔ host www.gmo.com
        Host www.gmo.com not found: 3(NXDOMAIN)

This is using Google's DNS servers.

<comment><USER9> [https://www.whatsmydns.net/#A/www.gmo.com](https://www.whatsmydns.net/#A/www.gmo.com) shows two different IPs: 126.96.36.199 and 18.104.22.168, and Mountain View (Google) is giving NXDOMAIN. But if I query 184.108.40.206 from my computer on the east coast I get 22.214.171.124, so maybe some of Google's servers are giving conflicting responses?

</comment></comment><comment><USER41> Im all for questioning assumptions. But i dont see him put forward a clear alternative.

And he is comparing change in stock prices based on corporate mantras. He doesnt even adjust for industry, or compare to the overall market during that time. That makes no sense, why is this #1.

<comment><USER42> I agree with the comparison sort of being apples to oranges, but the key point is it's bad to have the majority of CEO's pay be Stock+Options because that will lead to:

\- The CEO will push the company to focus on SVM \- The increase in wage gap due to high exec pay, like the 1%. \- The company might not be helping it's longevity

An alternative would be not to pay exec's with Stock+Options, but focus on Salary+Bonus.

</comment></comment><comment><USER43> Shareholders are cost centers, nothing more.

Put that into your quarterly corporate pipe and smoke it.

</comment><comment><USER44> A few early-stage-company-related thoughts (in no particular order).

Some prelim. thoughts: Maximizing shareholder value is accomplished by increasing the value of shares, and presumably share value is the most widely- agreed-upon way to value a business - whether or not it is accurate or takes into account everything it should is another matter, but if you assume that share value is intended to capture the financial value of the business, then to say I want to max. SH value is basically the same thing as saying I want to increase the value of the business, which I think for the most part is a good and acceptable goal.

Here's what I think some of the problems are:

1\. Conflation of SHs/Board/Managers.

To me, the real issue here is more that people in power (who are often SHs themselves - CEOs, boards, large SHs) use the "SMV" principal to hide behind self-interested actions - I totally admit this is there prerogative, but it's pretty annoying to see them try to dress it up in some abstract corporate governance value system.

This happens a lot for public companies with activist SHs and/or PE firms - see: Carl Icahn, who buys big stock positions, then publicly pushes management to take actions like sell or spin-off segments in the name of "shareholder value" when just the act of this publishing an open letter or pushing for his own board candidates, etc. will increase the value of his holdings in that very same company - yes, he is trying to max. SH value because he is a major SH!

This also happens with public company CEOs whose comp. is tied to and/or made up of equity, as is pretty much always the case these days. Lots of interesting literature out there about how careerist CEOs (who don't plan on staying at one company for more than a few years) will take highly risky short-term-stock-value-increasing actions that are bad for long-term value, etc.

Interestingly, this is especially true in early-stage companies, where Founders/VCs are often the biggest SHs, on the board and in key management positions (VCs sometimes take operating roles in companies as they hit growth stages or if there has been founder trouble, etc.)

This conflict comes into relief w/r/t to exits where liquidation preference get triggered: sometimes happens that VCs who control the board and hold preferred stock push for a deal where the preferred get $$ back but common gets nothing, even if the common think that it's a bad deal and want to keep pushing ahead in hopes that they can improve the business and exit with some value going to all stakeholders, not just preferred. This was litigated in Trados (see link below), and the court said that in that case, it was OK that the VCs made the deal happen.

Trados summary: [http://www.bingham.com/Alerts/2013/10/In-Re-Trados- Incorpora...](http://www.bingham.com/Alerts/2013/10/In-Re-Trados-Incorporated- Shareholder-Litigation)

(Not equity related, but a new instance of this is the reverse, and plays out in acqui-hire deals: founders are given great job opportunities and RSUs from acquiring company, but VCs get very little if anything and non-technical employees are out of the job. I think in most cases it's a totally fair outcome, just interesting to think about how it works in other instances where the value measurement is different - in acquihires, skill of individuals is the value, not the business, so stock value of the co. plays a much smaller role and the power then rests in the individual holding the skills/ability, not the VCs or the employees running business operations, etc.)

2\. Even if it is not the stated or intended goal (as I sincerely believe most good entrepreneurs start business for more than pure financial gain - <USER2> to just work for a hedge fund), almost all tech startups rely on maximizing shareholder value to properly incentivize founders, early employees and attract capital to a much higher degree than public companies. The interesting difference at the early-stage as compared to public companies is that, with no public market, the constituencies are relatively few in number and far more concentrated (founders are board members, managers and SHs, VCs are SHs and board members and advisors, employees are equity holders, very few customers at first, if at all, etc. - as discussed above, this happens a bit in the public market but not in such a concentrated way), so the incentives are much more easily aligned.

VCs are pretty-much-always looking for equity upside, and founders & employees (to significantly varying degrees haha) are more-often-than-not foregoing secure/higher salaries in exchange for potential equity upside - put another way, all founders, VCs and employees pretty much hope for an exit in which their equity is 10X what they had to pay for it.

Again, no founder/VC is saying the goal is to maximize SH value, but at the end of the day we as a community more or less measure success through share value.

That all being said, I love to think about exceptions to this rule: Craiglists = awesome (I hope they beat eBay in court), Kahn Academy is amazing.

Would love to learn about some more!

<comment><USER12> Great stuff. Bonus karma for "w/r/t" and Trados. A few thoughts:

Risk is also a big part of shareholder value. Some stockholders may want exposure to an operation in the company's industry that isn't highly correlated to the market en masse, with higher risk and possible reward. (This is akin to the VC outlook, backed by redemption rights to pull the plug on any would-be "lifestyle businesses". It also sounds in Trados.) Others, including insiders, may have no way to diversify portfolios that are very heavy in the company's stock, and so prefer less or different risk.

You hint at this by your comment on short-termism of careerist managers, and implicitly by picking stock price (rather than, e.g., book) as value. The trouble with market value of securities is that potential purchasers are diverse in their risk appetites and so value diversely. A buyer and a seller might meet at a price by very different calculations. A price of $x per share doesn't mean that all prospective buyers would value the security at $x, or even that all current holders value at $x. Increasing $x by taking risk that's at odds with shareholder A's portfolio needs doesn't benefit A like it benefits others who need that exposure, especially if A can't efficiently trade for a more suitable substitute.

With respect to acqui-hires, I've seen enough variety and change to wonder whether I've enough firm ground to park a generalization. I've yet to hear of a structure that's purpose-built for locking in people so VCs can extract ransom on acqui-hire (perhaps using debt?). In terms of hired employee talent, there isn't much in the way of leverage against the at-will nature of employment and acqui-hirers' willingness to buy out options and sweat equity. Especially in a state like California that doesn't enforce many non-competes, that raises the question of why the hiring bother with acquiring at all. All sides involved---VCs, companies, and personnel---may be eyeing other benefits. As an entrepreneur (or an investor), "acquired" sounds much better than "abandoned". Talent likes to walk a bridge, rather than take a leap of faith, and keep good teams together. VCs would rather have a runner, but as dogs go, it's not so bad to put more of "your people" in a large company with cash to spend. It may be easier to buy with stock or options than justify an out-sized compensation plan award to existing employees. All the deals I've seen seem "personal" in these kinds of ways. Maybe the personal touch is the real story. Maybe it's just what I've seen and heard.

Concerning alignment in start-ups, I think it's worth pointing out that a lot of language goes into aligning those involved, resulting in potentially many series of diverse equity securities, plus notes and other instruments in between and all around. Everybody wants to get rich, sure, and when people are getting rich, even board meetings can be fun. Nothing like a new-money down- round to remember the house is built on fault lines.

</comment></comment><comment><USER45> I am sorry but this seems like complete left wing rethoric bullshit. I can pick data too.

</comment><comment><USER46> GMO is the laughingstock of the HF community... trying to make a name for themselves with a permabear outlook.

Their index and commodity projections are truly hilarious and they've been claiming this sort of shit for years, generating bottom-decile returns.</comment>


Big Numbers and Air Travel - <AUTHOR> http://scienceblogs.com/goodmath/2010/01/big_numbers_and_air_travel.php?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+scienceblogs%2FCyKN+%28Good+Math%2C+Bad+Math%29 <comment><USER2> but... being blown up is scary!

Yeah, a little cross-discipline cost-benefit analysis wouldn't hurt. What's the return on investment of the US military, for example? I bet in any scenario less a global thermonuclear exchange, it's a very expensive way of saving lives.</comment>


Ask HN: Does anyone have any experience with civil/env. engineering startups? - <AUTHOR>

I'm a software developer that works for an engineering firm. A few of us here are thinking about creating a civil/environmental engineering startup. Naturally, a startup in this field would have some differences to a company focusing on web development. Does anyone on HN have any experience in this area? How did you go about landing clients in the beginning? Were there any pitfalls that I should be aware of? <comment><USER2> I've done some work with environmental GIS and meteorological services, and the one thing that really caught us off guard in sales was the need for whitepapers for sales purposes. I blew a huge lead due to unpreparedness- never again. We had pdf pitches prepared with comparison charts and the like, but what really sells, and what matters most is a 3-5 page whitepaper outlining your technical competency in the utmost detail.

Also, factor in switching costs when getting out there. We hit a wall when we discovered that even though our services were 9x more detailed and 10% more accurate in our environmental assessment, the people we were selling to had a through infrastructure built around dealing with the existing crappy data and services. It was such a barrier that we had to reposition everything. It happened early though, so we were still in the "feel it out stage."

<comment><AUTHOR> Thanks for the tip about the white papers. We do a lot of that at our existing company so it's good to know it will be useful if we decide to branch off.</comment></comment>


Fast Programmable Match-Action Processing in Hardware for SDN (2013) [pdf] - <AUTHOR> http://yuba.stanford.edu/~grg/docs/sdn-chip-sigcomm-2013.pdf <comment><USER2> So this is special hardware for a Software Defined Network? I thought SDN was meant to work on COTS hardware?</comment>


At Least Two More Planets May Exist Beyond Pluto - <AUTHOR> http://news.discovery.com/space/astronomy/at-least-two-more-planets-may-exist-beyond-pluto-150116.htm

<comment><USER2> The article points out that the theory is based on perceived anomalies from the expected orbit of other dwarf bodies. The researchers have also not ruled out a few other causes for orbital differences, including capture or being nudged. The good part of all this (aside the poorly worded space.com headline) is that now the wonky orbit has been identified, it should be easier to correlate it (or not) to other bodies with further study.</comment>


Trust in Automation - <AUTHOR> http://breandan.net/2017/02/02/trust-in-automation/ <comment><AUTHOR> Hey HN, author here! Thanks for reading. If you got through this article, I'm interested in hearing your thoughts! Feel free to PM me (@breandan or bre @ ndan .co). You might also enjoy reading about some of other articles I wrote about notation [1] or democratising education [2]:

[1]: [http://breandan.net/2015/02/01/shorthand/](http://breandan.net/2015/02/01/shorthand/)

[2]: [http://breandan.net/2016/04/13/equal-education-in- china/](http://breandan.net/2016/04/13/equal-education-in-china/)

<comment><USER2> Great article - I really enjoyed it. Who are you? Your blog doesn't have an about page.

<comment><AUTHOR> Thanks for the feedback! Thought about it, although I'd rather the writing speak for itself. I'm just a guy who enjoys writing. If you enjoy reading, you're welcome to follow me on GitHub or Twitter, sometimes I post interesting stuff:

[https://github.com/breandan](https://github.com/breandan)

[https://twitter.com/breandan](https://twitter.com/breandan)

</comment></comment></comment><comment><USER3> Im not so much worryied about jon doe beeing unemployed, he will cope, but what about his boss, sitting alone in a big empty house, with no real power about anything, what about the psychological needs of power animals? What if you are just a glorified financial janitor? Sell it all and start a gang, to have that feeling of people looking up to you again?

<comment><USER4> I expect they'll do what they did in high school: sports.

</comment></comment><comment><USER5> If China's population is ~1.3 billion, then how will trains move ~3 billion in the largest migration in human history?

<comment><AUTHOR> Author here. Passengers take multiple journerys during Spring Festival. After some fact-checking, 2.9B appears to be the total number of passenger journeys [1] (not just train journeys), which is estimated to be ~332 million in 2016 [2], according to the Information Office of the Ministry of Transport. However, Chinese state sources have a history of inflating their own statistics [3], so the true number of passengers journeys is probably less that reported. I have updated the post to clarify, thanks for reading carefully!

[1]: [https://en.wikipedia.org/wiki/Chunyun](https://en.wikipedia.org/wiki/Chunyun)

[2]: [http://edition.cnn.com/2016/02/02/travel/china-guangzhou- rai...](http://edition.cnn.com/2016/02/02/travel/china-guangzhou-railway- station-chunyun-crowds/)

[3]: [http://money.cnn.com/2017/01/18/news/economy/china- province-...](http://money.cnn.com/2017/01/18/news/economy/china-province- falsified-economic-data/)

<comment><USER5> Thank you! =) Pretty interesting article.

</comment></comment></comment><comment> m-alshandawely I totally agree with most of what you say and can't deny it is quite scary but one thing that machines will not be able to replace creativity. Machines can't think outside the box. In a clothes factory machines may saw the same dress over and over but once people stop buying because it is so bored of same thing manufacturer will end up with massive loss. They can play the same song over and over but we get bored. So as long as we get bored of reputations we will survive

<comment><AUTHOR> [https://medium.com/@ArtificialExperience/creativeai-9d4b2346...](https://medium.com/@ArtificialExperience/creativeai-9d4b2346faf3)

</comment></comment><comment><USER6> This is something I've thought about. If AI creates post-scarcity paradise what do people do? Automation could theoretically create unlimited luxuries particularly suited to you but then you just become a blob hitting the pleasure button, fun for a while but ultimately unfulfilling. People find joy where they will, I for one praise our incoming AI overlords and welcome their arrival with open arms!

</comment><comment><USER7> This is a fantastic writeup, couldn't have written it better myself. Thank you.</comment>


Ask HN: Can everyone be an Entrepreneur? - <AUTHOR>

What if everyone in a society wanted and possessed the skills necessary (for simplicity's sake we knew for certain what these skills were) to be an entrepreneur, would it be possible?<p>At what population percentage (in your opinion) would the number of new ventures stagnate and the need for labor be too high? <comment><USER2> Neat question. I don't think it'd be the need for labor as much as the need for ear plugs. Imagine if everyone around you was an entrepreneur trying to constantly solve every last problem in your work and personal life. How many pitches would you get a day? If all of them were even half as driven as a founder in a startup, people would hardly talk about anything else. It would be overwhelming and there would be 0 demand for most of these products and services.

</comment><comment><USER3> There are ways to work together as independents replacing traditional labour relations, this is called 'stakeholdership'.

Like that you are not an employee, but an entrepreneur in your own right and your 'output' is rewarded entirely in shares in the profits (or turnover, dependent on the arrangement).

So, with that model you could theoretically approach 100% entrepreneurship.</comment>


Node web API boilerplate with focus on separation of concerns and scalability - <AUTHOR> https://github.com/talyssonoc/node-api-boilerplate <comment><AUTHOR> It's not a framework, it's a boilerplate with an architecture focused on scalability, not just the old controllers/models/services folders. It comes ready to be used on production, to write tests and to use a SQL database. Check the repo wiki ([https://github.com/talyssonoc/node-api- boilerplate/wiki](https://github.com/talyssonoc/node-api-boilerplate/wiki)) as well to more details about the architecture, configuration and features.

The documentation is still in the first version so feel free to ask and suggest changes.</comment>


12 Resources To Help Generate More Leads - <AUTHOR> http://www.evergage.com/blog/12-resources-help-generate-more-leads

<comment><USER2> This is solid advice: "You need to find the balance between what you're giving away and the barrier to getting it." It's a common mistake to overlook this.</comment>


Covid-19's stop-gap solution until vaccines and antivirals are ready - <AUTHOR> https://www.globalhealthnow.org/2020-03/covid-19s-stop-gap-solution-until-vaccines-and-antivirals-are-ready <comment><USER2> This crisis is the first event in my lifetime that's given me any optimism about our ability, as a global civilization, to solve problems and get things done. I don't feel like we've seen humanity at its best in several decades. Shame it always takes a catastrophe (and an immediate one at that; see climate change) to bring it out.

<comment><USER3> > This crisis is the first event in my lifetime that's given me any optimism > about our ability, as a global civilization, to solve problems and get > things done.

would you mind elaborating? because i find it extremely difficult how one could hold such an optimistic and apparent naive opinion.

from where i sit, this crisis is showing the exact opposite. there is very little international communication and cooperation, and even internal to countries, like in the u.s., there is very little communication and cooperation. aside from a few outliers, the while thing has just been wave after wave of delayed and reactive actions that were underprepared to begin with.

people keep thinking we'll solve this with technology (the typical human way), but what would have been better is if everyone simply communicated, listened, and cooperated.

the human race could not face a _dumber_ enemy. think about it. if everyone on earth just sat still for a couple of weeks, this thing would just vanish. can you imagine a more simple foe? and yet, this thing is crippling econmies, healthcare, and more.

<comment><USER4> I think you're paying too much attention to Trump and politics. The people actually getting work done are cooperating and moving at a pace that has really never been done. The articles I've read and podcasts I've heard with scientist all echo the same sentiment. Ignore Trump and the politics, the science is happening at a pace unseen before.

> the while thing has just been wave after wave of delayed and reactive > actions that were underprepared to begin with.

I do agree the US has been slow to ramp up, but that is quickly changing. Although, I would once again offer up to ignore Trump and watch the governors. They have been acting quickly and decisively.

Underprepared with respect to supplies is always easy to say in hindsight because now we know the war we are fighting. There is a saying that armies are always tooled to fight the _last_ war. Until you know what the next war will be, it's impossible to fully prepare.

> if everyone on earth just sat still for a couple of weeks, this thing would > just vanish.

IMO, that is naive and optimistic. The problem, for lack of a better word, is that the large majority of cases (80-90%?) are mild. For many, it's mild enough that they would have not deviated from their normal routine. Once this thing escaped China, and definitely once it got out of SEA, it was going to be incredibly hard to stomp out without herd immunity either through infection or vaccine.

<comment><USER5> I too share a dim view of the world's ability to work together. Even now when faced with such a disease that is essentially everyone's problem, countries first and foremost chose to safeguard their own interests at the expense of others. It is a situation where if we survive, we did so because we worked together and if we die, it is because we only cared for ourselves and nobody else. If course this is oversimplifying a very complex interplay of things but my drift is that no country seems to be able to look beyond their borders and see that if we were to win this, we have to work together.

Even more dismaying is the refusal to lift sanctions on Iran. Even a narrowly crafted exception to the sanctions for supplies needed to combat the onslaught of the virus would be good but so far nothing. This is according to what I have read this far and if this is in error, I would be happy to be shown that.

<comment><USER4> I view a pandemic like what happens in an airline emergency. The first thing you do is put on your own oxygen mask to make sure you are stabilized before helping others. It sounds selfish, but if the most powerful options lose control because they are busy helping others then they can cause everyone to lose.

Also, let me say that I'm not saying it's all rainbows and butterflies out there. I just think about all the things that were going to end humankind in my lifetime alone, yet here we are arguably in the best position we have ever been to fight something like this. As a kid we were genuinely afraid of nuclear war. Then there was the HIV epidemic. Y2K, tech bubble busting, 2008 financial crisis, and all the smaller things in between I'm forgetting about.

I look out and see the people on ground sharing information, being incredibly cooperative, and trying to stabilize their situation so then they can effectively help others. That is why I'm optimistic we'll work through this.

</comment></comment></comment></comment></comment><comment><USER6> Some emerging theories of pathology suggest that lung function can be increased by reinflating collapsed alveoli with constant pressure: [https://emcrit.org/pulmcrit/cpap-covid/](https://emcrit.org/pulmcrit/cpap- covid/). It describes cases where oxygen supplementation could be reduced or eliminated.

This development ([https://www.isinnova.it/easy- covid19-eng/](https://www.isinnova.it/easy-covid19-eng/)) looks very promising for 'sub-intensive' cases -- adapting decathlon mask/snorkel with a 3D printed valve to provide positive air pressure (to help reinflate lungs) without intubation or leaking contaminated exhaust. If the closed mask method could be used successfully to prevent serious cases from progressing to ICU (or more importantly, keep people in their homes a little longer), it could have a huge impact on reducing load in the hospital system.

<comment><USER7> I don't know where to ask.. is vaporized cbd helpful ? it's said to be a potent anti inflammatory compounds and also help cleansing cells through apoptosis.

<comment><USER8> I am not a doctor but if it is indeed anti-inflammatory and causes apoptosis it sounds more likely to be harmful than to be helpful. I suspect apoptosis (or rather what happens is that cells get hijacked by the virus and then the immune systems kills the hijacked cells) is what causes most of the lung damage and inflammation is an important part of the response from the immune system so I would not mess with that more than necessary.

<comment><USER7> good point, although reduce inflammation would clearly help respiratory distress.. I'll dig further

</comment></comment></comment></comment><comment><AUTHOR> Formal writeup here: [https://www.jci.org/articles/view/138003](https://www.jci.org/articles/view/138003)

Edit: lots of interesting details. a couple takeaways:

1\. "Depending on the antibody amount and composition, the protection conferred by the transferred immunoglobulin can last from weeks to months."

2\. One of the proposed deployments is to protect frontline health care workers from infection (and remove their need to quarantine) until a vaccine can be developed

3\. This treatment was apparently used for quite a few other outbreaks, including the 1918 flu epidemic, MERS, and there is a report of it being used against the novel Coronavirus in China

<comment><USER9> It's really only a solution for healthcare workers due to the amount of work required to harvest and transfer immunoglobulin.

I think a far more scalable solution for the general public is the use of existing anti-viral drugs.

</comment></comment><comment><USER10> This may be a stupid question. But can the antibodies be synthesized based on samples from recovered patients? If not, why?

<comment><USER11> That's basically what a [https://en.wikipedia.org/wiki/Monoclonal_antibody](https://en.wikipedia.org/wiki/Monoclonal_antibody) is - and those are by far the most expensive drugs there are, with costs in the $100,000/person range.

<comment><USER12> What would the costs look like if the market scaled up by 1000 or 10000x?

<comment><USER13> The cost comes from the nonscalability of both the production and the use.

<comment><USER14> What are the main obstacles to scalability of production and of use?

Could the former be amenable to treatment as an engineering problem? There are a lot of motivated engineering minds right now.

<comment><USER13> I'm not a professional in that area, just based on what I've read, so in case of doubt, check better sources:

If you use human donors, you need trained doctors spending time and equipment to select the donors, handle the donors, take care of them during the donation which takes hours (the needle is stuck in their vein during that time), trained professionals using expensive equipment to process the donation, and then trained doctors to perform the infusion on the patient, an hour or two, but you still want keep the patient in the hospital overnight in case of complications, which do happen often enough that it was practice to do so: as in, once in thousand. At the end all that work, it is relatively sure that the described work could result in protection of exactly one patient more than before you started. The percentage of known complications and the potential for failure in every step is what makes it non scalable.

With non human donors you can avoid some work, but the second part remains: it's not "just a shot" like when you do a vaccination which is scalable.

And while vaccination is scalable, if you're going to vaccinate billions, you also want to be very sure you aren't harming them, that's why speeding up vaccine production is not scalable. Even producing the vaccines is not easy at all to scale.

It's not that nobody has attempted hard to achieve this up to now.

<comment><USER14> Thanks, that's quite informative.

In a critical situation such as the pandemic, it seems to me, from a project management and engineering perspective, that it might be worth ramping up production of a vaccine (or several) even before it has passed later stage trials, and maybe even pre-distribute it a bit to national storage facilities. So if the trials look great and the side effects are sufficiently minimal, the delay for manufacture and distribution will be reduced after the trials.

But I guess I see all sorts of political problems with that, if the trials are good but the side effects are a problem, or say it causes a horrible desease for 0.1% of people down the line. The pressure to use the product would be immense, despite the trial saying no this is not safe.

<comment><USER13> Long term, THE major problem is the expectation to _profit_ _every time_ , stupidly, nobody with the money cares if one of that times the whole world gets infected:

[https://www.newyorker.com/news/news-desk/how-long-will-it- ta...](https://www.newyorker.com/news/news-desk/how-long-will-it-take-to- develop-a-coronavirus-vaccine)

"There may never be a market for a vaccine at the end of the development process, because the epidemic is contained, or never comes to pass. Then, traditionally, if there is an epidemic, it may take hold in a developing country where _the costs of research and development cannot be recouped_. "The resources and expertise sit in biotech and pharma, and they've got their business model," Grant said. " _They're not charities. They can't do this stuff for free._ ""

The "investors" just want the _growth_ of their money, even the money they make would become meaningless after the pandemics that's efficient enough. The nature is indeed capable to set its own growth not caring about the "interests of investors."

Obviously the whole structure as well as the priorities just have to be set differently. The next time could be even much worse than now.

Which must be a political decision for change, not a technological "invention". The technology is not a "deux ex machina" \-- the natural limitations are real. Some solutions exist but simply can't be expected to "make profit every time." So how can it be done? Taxes. What was too dangerous selling point for generations of politicians? "Less taxes."

[https://en.wikipedia.org/wiki/Deus_ex_machina](https://en.wikipedia.org/wiki/Deus_ex_machina)

But the taxes are even now used, and spent in mind boggling amount, just for other priorities, year after year:

[https://www.nytimes.com/2019/08/21/magazine/f35-joint- strike...](https://www.nytimes.com/2019/08/21/magazine/f35-joint-strike- fighter-program.html)

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER15> My knowledge about industrial manufacturing is slim to none so can someone explain please why is it not possible to (globally) ramp up production of face masks and ventilators to a virtually unlimited quantity?

What exactly is the bottleneck? Are we lacking materials, labour or the technical know-how? Are the factories currently producing them so advanced and hard to reproduce?

<comment><USER16> Same as many other problems (eg global warming) - the market economy can't deliver a solution because it's not short teem profitable for the relevant actors.

<comment><USER17> It could be priced to be short term profitable, but then the sellers would get accused of price gouging.

<comment><USER18> If manufacturers sold direct-to-consumers, they wouldn't. Problem with price gouging happens because of _resellers_ , and that money does not work as a signal for manufacturers.

The solution for undersupply in times of emergency is, IMO, to ban resale. Some countries, including mine, went that route now.

</comment></comment></comment></comment><comment><USER19> Could somebody with medical knowledge speak to the lifetime of exogenous antibodies in another person's blood?

And, does their presence in any way "train" the host immune system to make more? Or is the benefit solely from the introduced antibodies?

<comment><USER20> The half-life of exogenous antibodies is around one month:

[https://pubmed.ncbi.nlm.nih.gov/3183495/](https://pubmed.ncbi.nlm.nih.gov/3183495/)

The benefit is solely from the antibodies attacking and reducing the level of virus in the body, it does NOT induce an immune response from the body (though that will happen anyway as the body mounts it's normal immune response to the virus)

<comment><USER21> So it does not interfere with the body's own immune response, and in the end the patient should be immune in their own right (for however long that lasts)?

Almost sounds too good to be true. I wonder what the real downside risks are.

<comment><USER22> IVIG is an extremely common treatment, used for immunocompromised patients, or sometimes after a stem cell transplant to bolster the immune system while it recovers.

It's not typically used in healthy adults as a way to treat a specific known pathogen because, well, we usually have much better options. Aside from being somewhat pricey, side effects are mild and it should be fairly effective.

<comment><USER23> How similar is this to the antibodies that are injected to a RH- mother just after the delivery of a RH+ baby to prevent the formation of their own antibodies that would attack the next baby? [https://en.wikipedia.org/wiki/Rho(D)_immune_globulin](https://en.wikipedia.org/wiki/Rho\(D\)_immune_globulin)

</comment></comment></comment></comment></comment><comment><USER24> _" Yes. In fact, the Chinese sent 90 tons of plasma to Italy."_

That's impressive. I wonder how many individual donations that maps to. And how many people that could treat.

Edit: Trying to answer my own question. Typical blood donation is 470ml. That weighs about 0.5 kilograms. Plasma is roughly half of what's in your blood, so half that again... 0.25 kilograms. So assuming they meant metric ton (1000Kg), 4000 individual donations per ton. 90 tons is then 360,000 donations. Did I miss some math? That's, um...wow. Maybe the 90 tons includes bags, boxes, pallets, etc?

No idea how many that treats though.

<comment><USER25> There don't exist 360.000 recovered humans at the moment. At least officially.

<comment><USER24> Yeah, that's why I keep looking at my math, though it seems straightforward. That 90 tons must be off somehow.

<comment><USER26> Presumably, they also have to keep the plasma cool, I am guessing some of that 90-tonne wait could be attributed to cooling gels/liquids of some kind to keep it stable for transport. Admittedly, I don't know how they would even transport this over long distances like that.

</comment></comment></comment></comment><comment><USER27> While viable and potentially lifesaving, the risks associated with this type of treatment are significant and should not be downplayed.

Edit: This is the line I am objecting to: " _it can be used for prevention of infection for people who are being exposed_ or it could be used for therapy for those who are sick." This is not something to generally be handing out to people after simple exposure. For one thing the benifit is short term.

<comment><USER28> Can you please explain? On the surface this all sounds great, then again, on the surface a lot of things sound great.

Especially looking for clarity around this part:

Are there side-effects to using this?

Plasma is very safe. It is screened for bloodborne pathogens and blood typed so you don't have a transfusion reaction. Blood transfusion is one of the most regulated industries in the United States. It's one of the safest things available.

<comment><USER29> > Plasma is very safe. It is screened for bloodborne pathogens

For those we know. In some countries with centralized organizations handling transfusions, both HIV and hepatis were spread before they knew to test them -- then even after they learned. People sued for willful poisoning in Europe, as there was documented evidence the persons taking the decision were told about the risks yet decided to ignore them against experts advice. To the best of my knowledge, nobody was convicted, ever.

> Blood transfusion is one of the most regulated industries

Now, given that background, do you think regulations will protect you from unknown pathogens? Or from known ones if someone decides not to bother with the testing?

<comment><USER30> That was a huge failure on [1] the Canadian Red Cross. They knew the blood was tainted but wanted to use up existing supply. They were buying blood from prisoner populations, didn't bother to do testing that would have detected most of the Hepatitis C cases, and infected more then 2000 Canadians with HIV. This was a giant screw up I have heard many times because back just before it went public the doctors wanted to give my dad a transfusion for a massive cut he sustained at work. He refused saying no way he trusts the blood. It was just a gut feeling. The doctor said he was making a foolish decision. Two weeks later it was all over the paper. So of course my dad took the paper to his next doctors appointment to get his stitches out and asked the doctor what he thought of his decision now. [1]: [https://www.cbc.ca/strombo/news/canadas- tainted-blood-scanda...](https://www.cbc.ca/strombo/news/canadas-tainted- blood-scandal)

<comment><USER29> Or maybe it was Canada, I can't say for sure. I just wouldn't call that a screw up, but deliberate risk taking by managers ignoring experts.

Tell us, what was the doctor reply? That your dad was lucky?

But luck favors the prepared mind - or something like that.

</comment></comment></comment></comment></comment><comment><USER31> Dumb question: infusing someone with antibodies-containing plasma from a recovered patient will help the receiver develop their own antibodies ?

<comment><USER32> No

<comment><USER31> Thanks.

</comment></comment></comment><comment><USER33> Why do they keep saying 'until vaccines are ready' as though it's a foregone conclusion that we can make a vaccine for this? Is this type of virus always a good one to make vaccines for?

There are tons of viruses we have failed to vaccinate for, despite trying for 30 or 40 years. People seem to be universally saying a vaccine is '12-18 months away'. Is this just misinformation?

I would love to hear from an expert about this.

<comment><USER25> Because, there are multiple teams of companies and scientists around the globe, that all report that they'll have candidates ready in the very near future, i.e. 3-4 weeks. Which means they are convinced the vaccines work. But since vaccines are given to a large number of people, you have to make sure that there is a very low number of adverse effects. And that takes most of the time. But the vaccine candidates are almost ready.

</comment></comment><comment><USER34> China sent 90 tons of plasma to Italy? I don't understand. A ton is 1000 liters. A single blood donation is usually 500ml , not sure how much plasma that would produce. But this means that they had at least 180K donations which seem implausible. Could someone please explain?

<comment><USER35> Perhaps the plasma is packaged? I'd expect there'd be a fair amount (20-50%?) of non-plasma in those 90 tons.

</comment></comment><comment><USER36> > clinical trials could begin in 3–4 weeks provided that they clear all the > regulatory steps. If that happens ...

Can someone break this down day by day as to why 3-4 weeks are necessary and proper to get through the very first regulatory hurdle?

</comment><comment><USER37> >> You're making sure that there are antibodies in there and that they would be effective?

> Exactly. Exactly—that we have a potent unit. We think that one person can > treat two people.

Does this work in an ongoing chain? For example if person A's plasma is used to treat B, can we take from B and treat C as well?

Or does the quality of the anti-bodies depend purely on the immune system of the hose?

<comment><USER22> Once someone has been exposed and recovered, they should have the antibody concentration required to be become a donor themselves.

The required number of cells we're taking about is high enough that you're not transfusing A->B and then recovering A from B's plasma and going on to give A->C.

But while B is infected they will make their own antibodies and after they recover they could then be a donor as in B->C.

As TFA mentions, China doesn't even bother testing the level of antibodies, they just collect the plasma from anyone recovered. 90 tons to Italy... is a lot of plasma.

At least for IVIG the plasma is pooled from a large number of donors for each transfusion ultimately given to a patient. So it's more a question of the average antibody load than needing to gauge each individual donor's levels.

> _Each IVIG preparation is made from the pooled plasma of 3,000-10,000 blood > donors, which is then purified to contain more than 90% antibodies._ [1]

I think we need to start collecting plasma from recovered positive cases today. I get that for a trial you do want to have a measured baseline of antibodies. But we can start stockpiling and pooling COVID antibody plasma even without the antibody testing.

[1] - [https://www.rheumaderm-society.org/ivig/](https://www.rheumaderm- society.org/ivig/)

</comment></comment><comment><USER38> China now has a lot of donors for plasma with antibodies. That's why they can stop the shutdown and start tracing outbreaks and treating patients.

</comment><comment> alok-g Does someone know how much of this needs to be injected to be effective?

<comment><USER24> Not a real answer, but the article says one person can treat two people. So somewhere around 0.25 to 0.35 liters is a rough guess, assuming "one person" means "one typical blood product donation".

<comment> alok-g Got you. Thanks.

</comment></comment></comment><comment><USER39> Vaccines should be the better idea rather go behind launching tons of ventilators. Even there were people not educated and still not care about the issues. For those people antivirals don't be the right choice, looks like vaccines are the best prevention - Early vaccines. How about trying the Ebola vaccines - I think that can be a preventive measure right.?

</comment><comment><USER40> I don't see why people think we will hold out 18 months for a vaccine to be developed and tested, society would fall apart by then. I don't see it lasting longer than 2-3 months quarantine and then the common people will just go out anyway, especially in the USA where there's not much of a safety net.

<comment><USER33> There won't be a safety net anywhere if they require everyone to be quarantined for 18 months. The government can print money by changing a number in a computer, but they can't print sandwiches that way. Eventually dumping money into the economy where very little is being produced just leads to runaway inflation.

</comment></comment><comment><USER41> Why this article does not mention chloroquine at all, though?

</comment><comment><USER42> Problem with vaccines is that there is as yet no evidence that humans develop immunity to COVID-19. No immunity, no vaccine.

Hopefully that changes soon.

<comment><USER43> [https://twitter.com/NAChristakis/status/1240689935557865472](https://twitter.com/NAChristakis/status/1240689935557865472)

Details a study on a different Coronavirus in 1990. There is definitely some immunity, but its complicated.

</comment></comment><comment><USER44> Antivirals are ready. HCQ was mass produced for decades, and ramping it up is trivial, and already done.

The first vaccines, BGM, will be ready in summer. This was already applied en masse in the UK in the 60ies, and is in stage 3 testing.

What else: Vitamin C is ready.

Self made masks are better than no masks.

Ramping up tests kits are the most important part until summer. There's a new faster one in testing, which needs 20min, and will cost €15.

Contact-less thermometers can be imported en masse from China.

Creating antibodies from plasma is not really viable for billions. The rest is.</comment>


Show HN: Headlights.io - A Different way to Lease Transfer - <AUTHOR> http://headlights.io <comment><AUTHOR> My partner and I started this project after I had a really bad experience trying to get out of an existing car lease. I either had to cough up the remaining lease amount up front, which was thousands of dollars I couldn't afford, or try to trade it. The two main competitors in the trading space required an upfront payment just to list my vehicle, with no guarantees of a take-over. We're hoping to help people in similar situations with a leased car, or have people take over leases instead of getting a new one to avoid a similar situation.</comment>


Does Deep Learning Still Need Backpropagation? - <AUTHOR> https://medium.com/syncedreview/does-deep-learning-still-need-backpropagation-fb32bf636a80 <comment><USER2> Mentions a so called HSIC bottleneck, maximizing mutual information between hidden states and labels, minimizing mutual dependence between input and hidden states (?)

PDF here

[https://arxiv.org/pdf/1908.01580v1.pdf](https://arxiv.org/pdf/1908.01580v1.pdf)

Another place I recently saw Reproducing Kernel Hilbert Spaces was in Stein Variational Gradient Descent (PyMC3 implements it). It seems like a clever basis set but have to admit I don't understand what's going on.</comment>


Our fictional pundit predicted more correct primary results than Nate Silver did - <AUTHOR> https://www.washingtonpost.com/posteverything/wp/2016/05/09/our-fictional-pundit-predicted-more-correct-primary-results-than-nate-silver-did/ <comment><USER2> Yeesh, that guy never heard of Paul the Octopus...

And the magical, "subjective", idea of talking to the voters to gauge support that would solve everything? That's what polls __are__, does he not know?</comment>


Australia Post looks to drones as letter volumes fall - <AUTHOR> http://mobile.reuters.com/article/idUSKCN0XD04L <comment><USER2> It was interesting that in the announcement of this by Australia Post they cited the example of using drones for 'last mile' stuff in rural properties where the driver goes to the gate and then uses the drone to deliver to a property. Not sure if it was just to appeal to the outback romanticism considering I doubt most of those folks get mail delivered anyway.

</comment><comment><USER3> It's ridiculous how many letters I get that are incorrectly delivered that should have been sent elsewhere. I welcome this if it eliminates these errors.</comment>


How to reach your ideal body weight fast? - <AUTHOR> https://pinoyathletics.info/how-to-reach-your-ideal-body-weight-fast/ <comment><USER2> It was so hard for me to lose wieght that I literally starved myself cut down meals to one or two a day with smaller portions.

<comment><AUTHOR> I guess it can depend on your body type which unfortunately usually genetic. This is why its not good that fat people are stereotyped as lazy. When it can often be genetically pre-determined.</comment></comment>


Weekly FPV #1 - <AUTHOR> https://weeklyfpv.com/weekly-fpv-1/ <comment><AUTHOR> Hey everyone, this is the first edition of a weekly newsletter I am creating to help people stay up to date with what is happening in the fast-paced world of FPV. It's a work in progress and I would appreciate any suggestions!</comment>


Ask HN: Is Reddit Blocking Tor? - <AUTHOR> From this morning I'm unable to open Reddit.com through Tor 8.5.3 (based on Mozilla Firefox 60.7.0esr) (64-bit) is anyone else experiencing this? <comment><USER2> Yes, they blacklisted all exit nodes...

[https://old.reddit.com](https://old.reddit.com) does not block Tor users (yet).</comment>


Remind HN: Cowardice - DanI-S

If you are asked to do something to which you are morally opposed, and out of fear for personal loss you do not make your voice of opposition clearly heard, then you are a coward.<p>Our world was been built by numerous hands, many fine cowards amongst them. But you may have heroes, and I doubt that they are cowards. <comment><AUTHOR> "If you are asked to do something to which you are morally opposed, and out of fear for personal loss you do not make your voice of opposition clearly heard, then you are a coward."

... or you are a victim of abuse and crime. I don't think I can fault people with top secret clearance for keeping their mouths shut (at least not all of them) and continuing doing what they're told. Basically the same scandal that rocked the Catholic Church might soon rock our government. It's a fine line though, because at a certain point, you're no longer the victim but the abuser/criminal perpetuating the cycle of evil.

Also remind HN: [http://www.acm.org/about/code-of- ethics](http://www.acm.org/about/code-of-ethics)

</comment><comment><USER2> That's kind of a loaded statement that seems acceptable when taken at face value (and applied to the topic you are likely alluding to), but in reality, cannot be used as a maxim for every circumstance. If what is considered ethical is what does the most good for the greatest number of people, then everything gets much more complicated.

For example, what if you are an elected official who is elected by constituents who are in favor of something you are morally opposed to? Although doing what is morally right (to you as an individual) is one approach and advocated by philosophers such as Kant, it's not the only logical, ethical outcome. In such a case doing what is morally right as an individual could be considered selfish as it hurts more people than it helps (obviously depends on the issue).

A utilitarian approach, where one factors in what is the "greatest good" for the greatest number of people could be an equally valid solution. That "greater good" could be in conflict with the politician's morals as well (as the politician could have been elected by the constituents for certain platforms, but not others). Such decisions could also result in personal loss (as you mentioned) for the subject in question, but are the "right" thing to do when considering more than just an individual.

Nothing is simple about ethics, otherwise we would have solved all of our problems a long time ago with a single, valid approach.</comment>