Why focusing just on “maximizing shareholder revenue” actually often ends up hurting shareholders anyway

General

We already know that in many situations when actors only act in their own self interest it can often leave everybody worse off. Yet the idea of simply being laser focused on “maximizing shareholder value” is clung to like a religion.

And that’s simply because it’s the easiest way to be precise about the rules. When we make it fuzzy it makes us all uncomfortable. Reality is way more nuanced than we like. We keep chasing the ultimate answer, the golden rule, the essential nugget that can somehow free us from this discomfort of not knowing. There’s peace in simplicity. I love a hammer while I get a little stressed by a multi-tool.

But a hammer can’t do everything I need. I need the right tool for the right task and many tasks require several tools together.

Here’s a great post that goes into some of the unexpected consequences of this mindset. It’s a little too dramatic but it makes some good points.

All this was done in service of a lunatic religion of “maximizing shareholder value.” “MSV” by now has been proven a moronic canard – even onetime shareholder icon Jack Welch said ten years ago it was “the dumbest idea in the world” – and it’s had the result of promoting a generation of corporate leaders who are skilled at firing people, hustling public subsidies, and borrowing money to fund stock awards for themselves, but apparently know jack about anything else.

Lemonade: innovative insurance done right

General

I recently started using Lemonade as my insurance company for renter’s insurance. It seemed quite interesting and innovative and I was impressed by the whole process of signing up. It’s a hassle-free insurance company with a very transparent business model.

They have an innovative way of structuring the pool. They cap their upside by charging a flat overhead rate on each policy. And any money left behind in the risk pool gets 100% donated. They have no incentive to deny claims as leftover funds in the pool is not a source of income for them. You also get to pick your pool’s cause. My pool is Code to Inspire. If the amount claimed by insured folks in my risk pool is less than the total premiums we all paid into the pool, then the difference will get donated and will be used to teach Afghan girls how to code.

But you never really know how good an insurance company is until you have a claim. Of course, I was never hoping to have to find this out. But some misfortune struck and I had to go through a claim.

The claim process was painless. It’s all done through a chatbot interface, but it was nuanced and human enough that I didn’t mind it at all. It really felt like having a conversation with a friend, as one by one I added the items I was claiming, taking pictures of receipts etc. I didn’t speak to anyone. Instead of a phone call, I was asked to record myself on video describing what happened. Now, I am not sure if a human just saw that video, or if they did a neural network based analysis of my micro-expressions to decide if I was speaking the truth.

Whatever they did, it took a total of 17 absolute hrs from the time I submitted the claim to the time it was approved. I woke up this morning with an email in my inbox that my claim was approved and the funds were already on their way. Here’s the approval email I got, with animated gifs and everything!

I doubt insurance could be made any better!