Public companies, beholden to quarterly earnings, often behave like "psychopaths," optimizing for short-term metrics at the expense of customer relationships. In contrast, founder-led or family-owned firms can invest in long-term customer value, leading to more sustainable success.

The current model of capitalism prioritizes profit above all. A more sustainable and just version would reorder the priorities: first, advance a greater cause; second, protect the people and places you operate in; and third, generate profit as the means to continue the first two indefinitely.

Contrary to the narrative that PE firms create leaner, more efficient companies, the data reveals a starkly different reality. The debt-loading and cost-cutting tactics inherent in the PE model dramatically increase a portfolio company's risk of failure.

Unlike capitalism which fosters growth through investment and innovation, "crapitalism" describes how private equity owners can hollow out a company by focusing solely on cost-cutting and value extraction. This neglects necessary investments in e-commerce and customer service, leading to the brand's decline and eventual bankruptcy.

Instead of selling to the highest bidder, the Brannock Device Co. chose its new owner through an application process. The key criterion was finding a steward who would honor the founder's values, including a commitment to keep manufacturing in Syracuse.

Traditional PE's "buy and flip" mindset creates a cultural disconnect. Lower-middle market businesses are deeply ingrained in their communities, and ignoring this legacy in favor of pure financial engineering alienates employees and loyal customers who dislike change.

Mondragon, a massive Spanish cooperative, was founded when its founders couldn't access a wealthy heir, instead pooling money from 118 church members. It shows that a community-funded, employee-owned model can achieve massive scale as an alternative to the venture capital-driven path.

Private equity giant KKR's manufacturing division has successfully implemented broad employee ownership. The motivation is not altruism but a strategy to increase profitability. By aligning incentives and moving away from an extractive mindset toward labor, they achieve better financial results, showcasing a market-driven path to inclusive capitalism.

The standard PE model is broken by its reliance on excessive debt to hit IRR targets and its short 5-7 year hold periods. This combination forces short-term, often detrimental, decisions, creating a paradigm that undermines a company's long-term health and stability.