Contrary to popular belief, the doctrine of shareholder primacy is a recent invention. For most of corporate history, companies were chartered for a specific public benefit, and subverting that mission purely for shareholder profit would have been considered a crime.
Data since 2008 shows that companies with so-called "bad governance"—often founder-controlled with less board independence—have, in aggregate, financially outperformed those following conventional "good governance" best practices, challenging the entire framework.
The "best practice" of loading boards with independent directors is flawed because they often lack significant ownership. Their loyalty trends towards the norms of the broader financial system and their professional network, rather than the unique, long-term mission of the company they govern.
Companies naturally deviate from their core values due to an unconscious influence called "financial gravity." This force alters behavior as leaders imagine what might please investors, leading to compromised decisions long before any direct pressure is applied.
The trend of using AI to rapidly generate code without deep human comprehension ("vibe coding") creates software no one can fully evaluate. This practice is setting the stage for a catastrophic "Chernobyl moment" when such code is deployed in a mission-critical application.
Passive funds from firms like Vanguard and Blackrock outsource their proxy voting to advisors like ISS. These advisors advocate for shareholder primacy in ways that are often inversely correlated with long-term value creation, distorting corporate governance at a massive scale.
Using AI to merely generate artifacts fosters overconfidence due to the "authorship fallacy," where you love what you create regardless of quality. A better approach is using AI as a Socratic tutor to teach you a process, enhancing your skills rather than replacing them.
An alternative corporate structure where a for-profit company is overseen by a nonprofit foundation (e.g., Zeiss, Novo Nordisk, Hershey's) dramatically increases longevity. Data shows these companies have a 60% chance of reaching age 50, versus just 10% for conventional firms.
Most founders don't realize the standard "any lawful purpose" clause in their corporate charter creates a fiduciary duty to maximize shareholder value. This seemingly innocuous phrase can legally compel a founder to accept a buyout from an undesirable acquirer, even with founder control.