This is an excerpt from Empower: How to Co-Create the Future. The full 200+ page book is available by donation!

“What happens if a company realizes it’s reached a sustainable but ultimately limited level of revenue?”

-Douglas Rushkoff

excerpt from book

David Passiak: This gets into what you refer to as a growth trap: the idea that the rules of the operating system of capitalism and venture capital trap companies into raising so much money to maximize growth that they are unable to pursue sustainable business models. They need to ramp up fast to gain a monopoly and have a big home run for investors at 100X returns, becoming trapped by a relentless focus on growth.

Douglas Rushkoff: Yes. The trap is when a company has to grow and the capital gain of the shares is more important than the revenue opportunity and long-term prosperity of the underlying business. It’s even screwed up the stock market which is growth based. Consider the derivatives market—which is able to show growth in advance, to basically time-shift your growth—is so much more important in this schema that the derivatives exchange purchased the New York Stock Exchange. The stock exchange was eaten by its own abstraction. That’s how important growth is. Growth trumps the health of the underlying business.

The growth trap is part of a financial program based on selling the company again and again at larger valuations. This is the same as during the housing boom when people would buy houses and finance them by refinancing repeatedly at greater and greater valuations. What happens if a company realizes it’s reached a sustainable but ultimately limited level of revenue? What if a company can only make $2 billion a year?

Well, for Joe’s Pizzeria, that’s not a problem because Joe doesn’t have investors to pay back. He’s not running that same operating system. He’s running on the family business operating system rather than the financial services operating system. He doesn’t have to think about that. Joe can be great on making a billion dollars a year—that’s so much money—but for Twitter that is a problem.

Even though Twitter can easily pay their employees good salaries and their original investors could make great dividends quarter after quarter and year after year, that’s not the plan. That’s not the way that this operating system works. Sustainable, revenue-based digital businesses are incompatible with the underlying growth-based operating system that, as I understand it, was put in place in about the twelfth century to support the colonial expansion of Western European nations. To get out of the growth trap, we need an operating system to support the sustainable equilibrium of a digital economy.

DOUGLAS RUSHKOFF is a writer, documentarian, and lecturer whose work focuses on human autonomy in a digital age. He is the author of 15 bestselling books on media, technology, and society, including Program or Be Programmed, Present Shock, and Throwing Rocks at the Google Bus. He has made such award-winning PBS Frontline documentaries as Generation Like, Merchants of Cool, and The Persuaders, and is the author of graphic novels including Testament and Aleister & Adolf.

Rushkoff is the recipient of the Marshall McLuhan Award for his book Coercion, The Jacques Ellul Award for his documentary The Merchants of Cool, and the Neil Postman Award for Career Achievement in Public Intellectual Activity. Named one of the world’s ten most influential intellectuals by MIT, he is responsible for originating such concepts as “viral media,” “social currency,” and “digital natives.” Today, Dr. Rushkoff serves as Professor of Media Theory and Digital Economics at CUNY/Queens, where he recently founded the Laboratory for Digital Humanism and hostsits TeamHuman podcast.