The Emperor Has No Clothes (and it's quite funny to watch)

Many children's tales have a relatively simple moral like "don't lie" or "hard work pays off." Don't get me wrong, these are quite important (and, quite frankly, some adults would do well to remember them). But many others are far more profound and sometimes go over children's heads - or at least they did for me; maybe I'm just dumb. For example, Alice in Wonderland is full of incredibly poignant critiques of society.

Pictured: The non-working wealthy and those who obediently and blindly follow them, even though they won't see the fruits of their labor.

If you couldn't tell from the title, one of my personal favorite stories is that of The Emperor's New Clothes. For those who haven't read it in a while or missed it somehow, here's a really super basic watered-down version. Story time!

Some travelers came to town who claim to be tailors from a far off land. They say they can make the finest clothing imaginable. The emperor hears about them and asks for a suit. They take his measurements and tell the emperor that they are giving him a particularly special set of clothing. The thread that they will be using can not be seen by those who are stupid or incompetent. The emperor likes this idea, so he tells them to get to work.

Spoiler alert, the thread isn't real. But the travelers get to "work", going through the motions of working a loom and whatnot, with nothing in them. Eventually, they "finish". They present the emperor with his new "suit".

Pictured: Like this, but, you know, with nothing in it.

The emperor (and literally everyone else in the room) can see that there's nothing. But they don't want to be thought as incompetent, so they just nod and exclaim at how beautiful the "suit" is. A parade is planned to show off the new clothes. All in the town come to see this new suit. The emperor prances about, completely nude. Everyone murmurs with awe at how beautiful the clothes are. Eventually, a child who is unconcerned with people's opinions just shouts "The emperor is naked!" The crowd slowly realizes that the kid is right, the emperor is super embarrassed, and the travelers get run out of town.

The business world has no clothes. I'm lucky enough to get a front row seat.

To be clear, I'm not shaming any individual person working in business. I'm talking about large businesses (particularly public/venture capital backed companies and investment funds) as entities.

These businesses like to project success. But internally, it's a shit show.

For these entities, it isn't enough to be a successful business. They have a pressure to grow indefinitely, which is impossible. But they have to use every resource at their disposal to try. This leads to many companies being extremely leveraged (debt ridden); one bad quarter can cause chaos. And, for public companies, you can see for yourself. Public companies are required to publish "risk factors" in their quarterly and yearly reports. For example, Alphabet (parent company of Google) has this to say (full report is here):

We generate a significant portion of our revenues from advertising. Reduced spending by advertisers, a loss of partners, or new and existing technologies that block ads online and/or affect our ability to customize ads could harm our business. We generated more than 80% of total revenues from online advertising in 2022. Many of our advertisers, companies that distribute our products and services, digital publishers, and content providers can terminate their contracts with us at any time.

If you assume things will stay the same or get better, it won't be a problem. But, as pointed out in these risk factors, even the largest and most successful companies are vulnerable. And they'll even tell you exactly what events would spell their doom.

Once you see businesses this way, it's eye opening:

• Marketing and advertising is not "building a brand", it's institutionalized begging.

• Mergers and acquisitions are done to fuel the pressure to indefinitely grow (and it doesn't always end well).

• "Just in time" supply lines, which are increasingly common because they eliminate many inventory costs, means that a single event can stop production in its tracks.

• Entire sectors of industry once thought indispensable (and therefore immortal) have been killed by advancements in technology and resulting changes to consumer behavior (like online shopping).

Pictured: What ads are really saying.

It can be useful to let entities live in their own world. Design by committee does enable us to have a lot of nice things. But don't forget that you, as the consumer, are what companies live and die by. They've just done a good job at convincing the world that they hold all the cards.

There are two flavors of people watching the emperor: those that wish they could see the clothes and those who are internally laughing at the absurdity of it all. For those still caught up in the illusion, it can lead to people taking bad advice from how companies are run. I know many people who are obsessed with money and accumulating more at all costs. There are those who believe money can solve all problems or bridge any gap (but some things are just not for sale). And those individuals are nearly universally miserable because they keep accumulating empty wealth. It would almost be fun to watch people run themselves ragged for no good reason (just making way more cash than they need) if it wasn't sad.

So watch the emperor dance in the nude trying to accomplish an impossible task. They will do some amazing things trying. But you and I know that they are just doomed to fail eventually.