MBAs may be the worst tech influences possible, and every investor that disagrees can take some time to reflect on how their perspective is probably based on rent-seeking behavior. We'll get there.
The Problem with MBAs
I'm going to say that it's not really MBAs specifically, but the influences are all effects from that house and they get all the blame. The issue is sometimes described as "growth at any cost" or "number go up" which are actually fine descriptors, but lack the specific actionable problems to hold someone accountable for.
The problem isn't that the growth must happen, it's that "at any cost" contains no nuance. Tech debt gets a lot of (arguably stupid) discussion in our world. Tech debt is useful. If I can solve a problem in 10% of the time today, and do it right later when it makes more sense to do so with clearer requirements or understanding or just plain time, that's fine. If a surgery to save someone's life is a bit more haphazard in that they just have to do the surgery equivalent of duct tape to stabilize the patient and will go in and do a proper structural work to fix it all properly later, that's actually both common and very valuable.
Somehow in tech we have two problems with the same concept. The first is that engineers are idiots and can't define what tech debt is other than "I don't like how this was done" in a business perspective. That's a topic for another day. The other is the business never gives a damn about the proper fix later. It's never funded, or given the time, or whatever. They don't see the point. That's also a topic for another day.
MBA-ificition Problems
The problems with MBA-ification is that it is a disease spread from carrion. Vultures and rats serve a purpose in the ecosystem. They basically extract the last value from a dying thing. Things have to die, that's OK, some can live a long time even in business like a bakery or a bar that lasts a thousand years is actually fantastic. Progress means something isn't as relevant. This is actually where MBAs do great, like taking the yellow pages phone book industry and keeping that going where it's useful and continuing to extract maximum value from the laggards there.
The problem is they spread out from the Private Equity firms (again, you can see how some are useful but they are just extracting value at the end of the day, like the financial vultures they are). A Private Equity firm is there to make something an immediate investment value. I agree with the concept that the purpose of a business is to "maximize shareholder value" but unlike that statement I have to append "over the long term" because that's super important for where the value to shareholders and society is.
Shareholders extracting value from a dead industry is actually pretty great. Not for me, of course. I don't need a phone book. However, I know a woman without a bank account, and I know she has many friends that also don't have a bank account, and not for "living off grid" purposes. They just live a very different life. There's probably someone out there that wants phone books and is willing to give up value for that, be it monetary or being influenced by the ad placements in it. If you run a local business and you want the patronage of the people who use phone books, well, there's a good exchange of value there. Do it.
Tech Doesn't Need This Shit
The issue is in tech, we don't need this. That's sort of a lie, because mainframes exist and IBM needs to extract value from the aging real estate holders who invest in commercial real estate or a dozen other industries that can't modernize (looking at you, old banking). That's fine, innovation will displace them somewhere and sometime, who knows or cares when. When someone invents something better as defined by a large enough audience.
Why are they in startups? Why is growth necessary for a startup? If I start a tech company that makes $30 million a year in profit for the 17 employees it has, why does that need to grow?
It fucking doesn't!
The Best Startups
Craigslist has apparently never had more than 100 people, and still operates after almost 3 decades. It was founded by 2 non-programmers who just wanted to do a thing. Great. What would growth benefit it?
Why is email still used as the core communication platform between business alongside plain old telephones for the entire world? There's not even an exception. Who owns email? Where's the extraction of value?
You know who keeps trying to extract value from that? "Unified Communication Systems" vendors. The only problem is their UCS doesn't work with anyone else's UCS and you can't port your data between them if you want to switch and of course it breaks in subtle ways because the MBAs are in charge, not the product or engineering folks trying to build a great experience.
That's the issue. Email is a shit experience. It's still better than the MBAs can come up with. Open source isn't the only answer, of course. There's a reason Google Docs started with the ability to import and export to Word. Interop has always been the key.
The best startups aren't trying to grow.
Investors agree with me
Smart investors aren't speculative. Warren Buffet and Charlie Munger may be reviled by people who hate rich people for no reason, but they invest in Coca Cola. You know why? They'll tell you. They see modest growth as they deliver more product to more people who want that product. It's growth that is helped by marketing and improvements to the product over time. Do I agree with that? No, I'm not in soda, but I agree with the philosophy. They produce something people want. I don't want it, but people do, and I'm not going to be a dictator and tell them they can't want that. Is it bad for them? Shut up! This isn't the point!
Do you know what an MBA would do? They'd put fucking cocaine back in the formula if they could, because that would make the number go up! Would it last? No. No it would not. Someone would shut it down, be it government, or a very effective anti-drug campaign, or whatever. If it can't sustain itself and society in some niche, it doesn't last. Things need to grow somewhat organically, somewhat deliberate for the value of its customers, not just the MBAs who don't even see customers.
Aligned Incentives
As I dive in to specific problems I see (you can follow the series via tag) I'm going to harp on aligned incentives a lot, because that's what matters. Do people agree it is a win-win scenario or not? That's what growth is in every case. I give you two chickens that you see as more valuable than the two bags of rice that I see as more valuable. We both win, our diet improves with the diversity of nutrients, and society is better because our families grow and provide more value as they figure out their specialization in this world.
MBAs don't have aligned incentives outside of some of the carrion examples above. MBAs are for numbers. They can't see what a customer even is if it's not some metric they can't fathom Goodhart's Law against. They don't talk to people, they tell people what numbers are and wonder why people hate them. They attend parties based on how much they make and don't get any respect unless someone else is interested in the numbers, continuing the cycle.
Can a business grow and make investors great returns? Yes. Many VCs have a good approach to this, like Berkshire Hathaway in its non-tech. Some tech VCs might, I don't know, but I'm sure they exist.
The problem is the MBA-ification phenomenon continues despite them, and they won't necessarily clean house. It's not just enshittification as Cory Doctorow talks about. It's that the incentives aren't aligned in the first place. Microsoft grew because they stopped fighting open source. We use the web because the many vendors agreed on a standard set of things that ended the browser wars in some ways and enabled anyone to participate (a counter rant for another day).
MBA-ification is a problem. The solution is to talk about specific mechanisms it's a problem and how to not fall in those traps, so the number go up people can be more like a good investor in the future rather than a private equity vulture preying on a newborn. That's what this series will explore.