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Kasey Speakman
Kasey Speakman

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Shareholder Value: the Other Pandemic

This post was inspired by Nvidia's recent announcement of the RTX 3090 TI. With its expected MSRP of $2000+, this graphics card comes at a time when many PC builders cannot find graphics cards at all. Most of them go into the hands of crypto miners or are flipped by scalpers at twice the MSRP. This is the latest example of Nvidia getting in on the scalping action too. By repackaging a lower-priced product line as a new SKU to inflate the price. Justifying it with a negligible performance increase. Then reducing or stopping production of the cheaper version. During these global hard times, Nvidia is shipping 12% more GPUs while making 84% more net income year-over-year. By squeezing it out of customers.

A Boring Dystopia

But none of this is new or surprising. (Or even among the worst examples.) It's one of the most cliche things of our time: the corporate zeitgeist of maximizing shareholder value. This philosophy seems to be accepted at every level as the way business is supposed to work.

"Jack CEO, if you can increase profitability 2% next year, the board will give you a 2 million dollar bonus." The CEO slashes employee benefits, gouges customers, and eliminates "waste" such as R&D spending. Profits and stock prices go up, making the investors hundreds of millions. The financial sector calls Jack CEO a hero. He is in higher demand because of this "success". So he'll probably be long gone when the company's market position enters the nose dive he setup. Employee hiring/retention problems and customer dissatisfaction mount as toxicity increases. The company fails to stay relevant without innovation from R&D. If the board keeps trying to find a repeat of Jack CEO's "success" the company might even get its own documentary. Like Enron or USA banks.

The story may play out in different ways, but this one illustrates the logical conclusion of focusing on shareholder value. Investors and executives get richer by sacrificing the company's future. But the giving end of the sacrifice is done by employees and customers. It's no wonder the wealth gap keeps getting wider.

Allow me to Translate

"Shareholder value" is just a dressed up word for greed. And it is enshrined in our global economic systems. Profit (or the potential thereof) is the measure of company health in financial markets. CEOs are required to prioritize it above all. Failing to do so opens the door to lawsuits. For example...

Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders.
...
Thus, I cannot accept as valid ... a corporate policy that specifically, clearly, and admittedly seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders...

This lawsuit was about a few different things. The excerpt is about Craigslist creating policies designed to prevent eBay from destroying the company's culture to chase profit. Here the judge's interpretation of the law considers this a breach of duty. As a non-lizard-person I find this horrifying.

What Now?

I don't have any easy answers. My first reaction to hearing the Nvidia announcement was: I wish more product companies were non-profits. Only this would not be a direct solution. Investor money allows companies to expand and innovate at a more rapid pace. (Initially. Before it's ultimately enslaved to profit-seeking.) Whereas non-profits have to grow very carefully. There's no extra profit to reinvest. And no investor help for expansion shortfalls. A non-profit Amazon would have failed immediately instead of "almost" being a long-term Ponzi scheme.

Many jurisdictions have legal frameworks for Benefit or Social Purpose corporations. These enable other goals (in addition to profit) to be recognized by civil law. So the company could take investors but (maybe) still win a lawsuit for refusing to treat employees like test subjects.

The main challenge with these alternatives is that they are likely to struggle to be successful in the market. It is way more effort to achieve responsibility in multiple dimensions at once. Effort that increases the bigger the company gets. Most consumers will appreciate your company's approach but actually buy the cheaper or sooner-to-market option. Or in today's world, the in-stock option.


I waited in line 5 hours for my local Best Buy to open. Unfortunately most people waited at least 9 in their tents and RVs. By the time it was my turn to pick a graphics card, the only choices left were:

  • an EVGA-price-gouged 3060 TI
    • only about 60% faster than my 7-year old 980 TI
  • a lobotomy-required EVGA 3080 TI for almost $1500
  • a white hot fury-inducing Nvidia 3080 TI at $1200

I decided to leave without buying anything. I began a lifetime boycott of Nvidia products. I waited 3 years for shortages to subside. Then bought a 9800 XT direct from AMD, because I had to boycott all their partner brands for price-gouging too.

Except that's not what happened. I spent money I didn't have to get the Nvidia 3080 TI.

I am part of the problem. But trying to find the path to change.

Top comments (8)

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amanda_goodwin_0adf25d679 profile image
Amanda Goodwin

I don't see when GPUs are going to get any more affordable. I wonder if we'll see people migrating over to devices like Steam Deck in the future and see the end of PC builds for gaming

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kspeakman profile image
Kasey Speakman

I'm tempted to go that way myself. As a bonus I would have little reason to keep using Windows with its awful data collection.

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ben profile image
Ben Halpern

My first reaction is that modern markets have become complex enough that boycotts just donโ€™t work like they might have traditionally. It seems like traditional โ€œbad pressโ€ is more avoidable than ever when taking actions that hurt the customer.

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t4rzsan profile image
Jakob Christensen

Often "bad press" happens on social media like tech Twitter and only few consumers ever discover that there is some kind of boycott going on.

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kspeakman profile image
Kasey Speakman • Edited

As long as GPU crypto mining is profitable, consumer boycotts won't do anything. And GPU manufacturers know it. It is more of an individual idealistic option to put down the hobby for a while because of profiteering. Perhaps boycott was the wrong word to use here.

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kspeakman profile image
Kasey Speakman

Agreed. A boycott, bad press, etc. don't have much effect unless there are alternatives or somebody died.

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t4rzsan profile image
Jakob Christensen

This is exactly what brought the world to its knees in 2008 when bank CEOs prioritized their own stock options over customers and sustainable business. It can only be stopped if the companies re-think their C-level payment plans.

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kspeakman profile image
Kasey Speakman • Edited

It's a systemic problem. If Jack CEO refused to cripple the company for profit, he would be replaced by someone will less scruples. If board members refused to offer the dirty deal, investors would pressure to have them replaced. When the company inevitably starts to perform poorly, investors will move on to leech another company dry. Average consumers tend to be for it too, since their retirement accounts are managed by investors. The entire system incentivizes profit first and foremost. You really have to go out of your way to setup a company for sustainable business. And it will be disadvantaged in the short term.