Back in July 2019, one of my favourite writers, Matt Levine, wrote this excellent article. I won’t indent it all, but the relevant bits that he wrote are in italics:

My basic view of share buybacks is:

1. Investors give companies money to go do projects that they hope will be profitable.

2. If the projects are profitable, the companies should give money back to the investors.

This is, it seems to me, a very straightforward Finance 101 sort of model, and tends to support share buybacks. The alternative model, the one that is suspicious of share buybacks, seems to be something like this:

1. Investors give companies money to build businesses that they hope will be profitable.

2. If a company’s projects are profitable, it should go invest the profits in other projects that will also be profitable.

One thing that you can say about my model is that it has a certain old-timey flavor. In the olden days, you’d start a company and call it like Pennsylvania Tin Folding Ltd., and its purpose would be to fold tin in Pennsylvania, and it would never occur to you to fold tin in Ohio, or to fold nickel, or to twist tin, or to do anything else not in the name. You’d raise money from investors for a purpose, and do the purpose, and if it was profitable you’d give the money to the investors; you’d stay in your lane.

In modern times, you start a company and call it like Alphabet Inc., and its purpose is be to sell online advertisements against search results, and when that turns out to be an extraordinarily lucrative business it will get into other businesses like email and self-driving cars and human immortality. And no one thinks this is the least bit weird; everyone says “well of course who should end the tyranny of death if not the search-ad guys?” And this becomes the normal way of thinking, so that any profitable mobile-phone or social-networking or whatever company that doesn’t plow its profits back into grandiose moonshot projects is somehow failing in its duty to humanity. How are we going to fund our most ambitious collective goals, if not by social-media startup founders making whimsical decisions about what to do with their retained earnings?

Money Stuff: Deutsche Bank Starts Shrinking

I thought of the above article when reading these two very harsh criticisms of the last few years of business-decisions at PokerStars, which relate to the company focusing more on Wall Street financial deals, than on High Street product improvements in its core business.

First, former PokerStars Global Creative Director Chris Herd:

For more than a dozen years I had a front-row seat to watch the PokerStars brand evolve from a small-but-good poker brand back in 2006, to become theglobally-dominant-and-brilliant poker brand. And then subsequently it morphed into a huge-but-rather-average gaming brand. 

Two questions ring out when I reflect on my time there…

1. What made it so brilliant in the beginning? 

2. What changed to make it so average today?

The simple one word answer to both questions is ‘focus’. 

Initially, an absolute laser-like focus within the company was what enabled PokerStars to become a great brand. And subsequently, a sudden and dramatic loss of focus served to dissolve PokerStars from BRAND towards BLAND. 


And secondly, a former manager in PokerStars marketing team (and several other teams over the years) and long-time former Isle of Man resident, Bob Dix:

It’s a small but dangerous shift from being laser-focused on poker, to acting like you are poker. There were lots of areas of the game yet to conquer (e.g. WSOP had much bigger live prize pools, Zynga had far more players), but in that one change of mindset, victory was declared, and some of the focus was lost.

If I had to pinpoint the start of the decline though, I’d say it was the acquisition of Full Tilt. I love that Isai wanted to make the poker community financially whole, but there was also an insidious end game at work.

The Full Tilt acquisition meant there were now two brands under one umbrella with two very different sets of values. To preserve harmony and focus, they needed to be integrated or jettisoned. Instead, they were given the leeway to compete, differentiate and resist. The relationship between arch-rivals was understandably toxic and began to poison the company culture.

The Mighty Have Fallen

All three articles are very persuasive to me. Focus on what you are good at – and leave the rest to others.