I was wrong five years ago! LinkedIn became indeed a $25 billion company within five years! Microsoft paid exactly $26.2 billion for the company, during what could be its version of the ‘kiss of death’ for the ‘Resumee Network’

Five years ago, in May, 2011, I had a written discussion with Conor Sen (@conorsen on Twitter), a very savvy trader / investor from Atlanta (USA) and – at the time – a prominent member of the Minyanville investment blogging community, of which I was a member too in those days.

Conor Sen declared – in an article on Minyanville – why LinkedIn would be worth $25 billion in five years (i.e. 2016). 

Although I understood his vision in that article, I did not fully buy it. As a response to his article, I declared why LinkedIn would NOT be worth $25 billion in 2016; also on Minyanville and on this very blogsite. 

At the time, the IPO of LinkedIn was an exciting event, taking place amidst the (partially successful) IPO’s of other social networks, like Facebook, Groupon and Twitter. 

Conon Sen was an investor, who especially saw the future value and yet unfulfilled promises of these social networks. He was especially enthusiastic about the future possibilities of LinkedIn (snippets from Connor's article):

So anyway, I like the data economy as an investment theme, I like LinkedIn's place in it (nobody other than Google (GOOG) or Facebook is better positioned), and I like LinkedIn's team, starting with Hoffman. What about the stock?

In 2010 it took in $243 million in revenues. In the first quarter of 2011 it took in $94 million, up 110% from $44.7 million a year ago. That makes trailing 12-month revenues $292 million. What sort of multiple does that deserve? For comparison, recent high-flyer Internet stocks like OpenTable (OPEN) SINA Corp (SINA), and Baidu (BIDU) trade at 18.9x, 17.0x, and 25.4x, respectively. Facebook 2010 revenues were roughly $2 billion, and with some estimating a current value of $70 billion, that'd put Facebook around 35x sales. LinkedIn going public at $4.5 billion, or 15.4x trailing 12-month revenues, seems entirely reasonable by comparison.

I expect this strong growth for LinkedIn to continue for years. Hoffman believes there's room for more than one online profile, with room for at least a social profile (Facebook) and a professional profile (LinkedIn). I agree, and actually believe LinkedIn's barriers to entry are higher than Facebook's. When it comes down to it, how valuable is that marginal high school friend posting Mafia Wars updates vs a marginal professional contact on LinkedIn who could one day lead to another job or professional opportunity? Hoffman envisions a world where LinkedIn, for example, would monitor analytics about trending skills and types of companies in a particular city, allowing users to see what skills are in demand and find resources to attain those skills to become more valuable in the marketplace.

At the time I – as a 'renowned' non-investor – was especially anxious about the enormous amount of ‘future growth potential’ that was priced in in stock like LinkedIn, Groupon and Facebook. To these eyes it would be nearly impossible to meet this growth potential in reality, so I reckoned that the IPO-prices were 'over the top'.

Instead of taking f.i. 15 times the annual profit, which was a usual price goal for most stocks, these tech-stocks yielded about 20-25 times the annual revenues at the time of their IPO, which seemed to be outrageous to these eyes. That was the reason that I responded to Conor in my article:

In my forecast, I take LinkedIn’s statement about future declining profitability into account, by letting it rise initially from 2012 - 2013 and letting it decline again in 2014. In 2011 the company doesn’t expect any profit at all:

2011        -/- 1% to +1% of revenue

2012        + 7%

2013        + 9%

2014        + 8%

2015        + 7%

Revenue growth and profit prognosis of LinkedIn,
estimated by Conor Sen and Ernst Labruyère
Printed first in 2011
Click to enlarge

I think that only a stock price vs. profit ratio of 15-20 times is healthy and thus a stock price vs. revenue ratio of 10 is not healthy. If you agree with this concept and with my forecast of future profits, than a market capitalization of $3.6 bln in 2015 would be more appropriate, instead of $26 bln. If you divide this through 94.5 mln shares (the total amount), the future stockprice in 2015 would be $38.5, instead of $275.

[...]

LinkedIn itself is afraid its costs may increase strongly in the coming years and its profitability may decline. Besides that, LinkedIn might not be as strong in recruitment (yet) as its most important competition: the real recruiters. And as the number of profiles in LinkedIn remains increasing, the number of unused, poorly updated and/or unusable profiles will increase to. This might turn searching for good candidates via LinkedIn into searching a needle in an enormous heystack.

And remember: the only true assets of LinkedIn are those profiles. And please remember too that Microsoft, Yahoo and Google needed desperately to diversify itself to maintain their revenue growth and profitability at the current levels. For LinkedIn that will be quite hard, as their only assets are those profiles. I’m afraid that LinkedIn might turn into a dog, instead of a cash cow. $45 per share was in my opinion already very high, but $90-$100 is ridiculous.

Suffice it to say that I have been wrong, very wrong! And the worst thing is: it is officially on record that I made a fool of myself five years ago!

No other party than Microsoft is offering $26.2 billion(!) in order to take over LinkedIn and try to integrate it in its Office Suite, for the benefit of both companies. With that $26.2 billion of Microsoft's money, Conor was right with his estimate and I was wrong. 

Here are the pertinent snippets from the Wall Street Journal:

Microsoft to Acquire LinkedIn for $26.2 Billion

Deal is for $196 per LinkedIn share, a 50% premium to Friday’s close

Microsoft has agreed to buy professional social network LinkedIn for $26.2 billion. The software giant hopes to jump-start its software packages by connecting them with LinkedIn's vast network.

Microsoft Corp. snapped up LinkedIn Corp. for $26.2 billion in the largest acquisition in its history, betting the professional social network can rev up the tech titan’s software offerings despite recent struggles by both companies.

The deal is Chief Executive Satya Nadella’s latest effort to revitalize Microsoft, which was viewed not long ago as left behind by shifts in technology. Mr. Nadella hopes the deal will open new horizons for Microsoft’s Office suite as well as LinkedIn, both of which have saturated their markets, and generally bolster Microsoft’s revenue and competitive position.

Mr. Nadella said today’s work is split between tools workers use to get their jobs done, such as Microsoft’s Office programs, and professional networks that connect workers. The deal, he said, aims to weave those two pieces together.

As for LinkedIn, the deal offers hope to renew decelerating growth as well as an exit for shareholders after the stock tumbled from a peak of $269 in February 2015 to as low as $101.11 last February.

Microsoft will pay $196 per LinkedIn share, a 50% premium to the social network’s closing price on Friday.

Of course the fact is now proven beyond a reasonable doubt that LinkedIn is worth $26.2 billion, otherwise Microsoft would not have paid that amount for it, wouldn’t it?!

Yet, I have to say that this friendly takeover of LinkedIn to Microsoft rather resembles a firesale of one desperate company to another desperate company, than a healthy merger between two strong parties.

The two snippets in red are tell-tale signals by themselves. 

Let’s be perfectly clear about it: snippets like “Both of which have saturated their markets...”, “offers hope to renew decelerating growth...” are not the remarks that you want to hear as an investor, after arguably one of the bigger friendly takeovers in history. 

In The Netherlands, this is called a situation in which “the lame person is helping the blind one”. That is seemingly an act of despair, not a case of sound judgment.

Roughly two years ago – when LinkedIn was in its heyday – I already reminded Conor of our little bet, ending in 2016. His brief, but crystalclear response was then: ‘What are you talking about, LinkedIn is already much more worth than $25 billion’. 

Of course he was right then: as a trader/ investor he already could have made a bedazzling profit in 2014 or earlier, on his initial investment from the days of LinkedIn's IPO.

My point in 2011 was, however, that having five years of solid revenue and profit growth is a helluva promise to fulfil for a quoted company. Especially when this company has little more on offer than one product (i.e. information  about worker’s resumees and companies looking for people) and a lot of future growth has already been priced in in the stock rate. 

And while Facebook and Google had ample opportunities to diversify their business during those years, I happened to see few opportunities for LinkedIn to do the same. I dare to state that I was right then. This becomes very clear when we a. look at LinkedIn’s main product and b. look at the revenue and profit development for LinkedIn.

LinkedIn still offers the same resumees for companies and the same information about vacant positions for workers and freelancers. There have been no mindboggling new inventions and groundbreaking new technologies, emerging from LinkedIn during that period. 

It is still quite the same ol’, same ol’ as five years ago... And although LinkedIn has become a little bit more exiting to use over the years, it is little more than just ‘a little bit’.

And for the revenue and profit development, let’s look at the annual data for the last five years:

Profits and Loss statement from 2016
for the period 2011-2015
Data courtesy of LinkedIn
Click to enlarge

Balance Sheet from 2016
for the period 2011-2015
Data courtesy of LinkedIn
Click to enlarge

Comparison between LinkedIn prognosis by Conor Sen and Ernst in 2011 
and the realized revenues and profits of LinkedIn during period 2011-2015
Chart created by: Ernst Labruyère
Click to enlarge

If regarding the revenue growth we compare the real P&L data with the prognosis, offered by Conor Sen in 2011 (see the first chart in this article), LinkedIn has done a fantastic job. The company outnumbered the already quite optimistic revenue growth prognosis by an average 15%.

However, when we compare my (already cautious) profit estimate (see also the first chart in this article) with the actual profit realized by LinkedIn, the company failed seriously during these last five years in turning its growing revenues into healthy profits.  

Last year the company already presented a small loss of $15 million for the year 2014, but for 2015 the company presented a quite massive loss of $166 million, or 5.5% of its revenues. 

And to keep up with the competition, the company needs to invest much money in new and improved infrastructure and technologies on a nearly daily basis; this is good for high expense levels during 2016 and far beyond. 

Then the simple question remains: when will this company finally fulfil its promise with respect to yielding a flow of healthy profits?! You perhaps will guess my answer: probably never!

And it seems that the traders and investors have also become aware of the fact that the star of LinkedIn has started to fade, as you see the plummeting of the stock rate in recent months.

All in all it was a blessing in disguise for the investors in LinkedIn that Microsoft came along with a big bag full of money last week. And perhaps Microsoft is indeed able to revive both companies, with the purchase and subsequent incorporation of LinkedIn in its Office suite. However, Microsoft’s track record with takeovers and mergers (think about Nokia) is not very promising. 

Therefore – and for other reasons - such a successful merger between LinkedIn and the Office Suite would not be my personal investor’s bet when my own money would be involved, to be honest. Microsoft’s takeover could very well be its version of the kiss of death for LinkedIn. 

But don’t trust me on this... 

A few days ago I have been proven very wrong with my 5 year old bet with Conor Sen, even though I still stand very firmly behind my reasons for making it in 2011!  

The coming referendum will become Cameron’s swan song – one way or the other. But who will gain from the emerging, political chaos in Britain?!

You had no more volunteers

So you got profiteers for to help you out

With friends like that babe

Good friends you had to do without

It never rains – Dire Straits

To these eyes PM David Cameron of the United Kingdom is what you could call a ‘just not’-politician:

• Just not tough enough as a politician;
  
• Just not convincing enough as the leader of his country and his Tory party;
  
• Just not statesman-like enough to get his fellow European Council-members at his side in the negotiations about the British conditions for EU membership;
  
• Just not elevated enough as a person to be freed from gossip and hearsay about small malversations and questionable tax tricks;
  
• Just not honest enough to be totally trusted upon by the British population or by the European citizens;
  
• Just not loyal and reliable enough to stand above the parties and keep the country together in these tough times of economic heartship and utter dividedness.

Nevertheless, since David Cameron became the prime minister of the United Kingdom in 2010, he ‘has managed to hang in there’. During his time at 10 Downing Street, he kept his nose clean enough to keep his job, in spite of a few minor incidents and scandals that really did not seem to hurt him much.

On top of that, there are few signals that the country could become subject to violent protests, on a scale that was normal in the turbulent years of his formidable predecessor, ‘Iron Lady’ Margaret Thatcher.

And during last year’s election [2015], Cameron even managed to get rid of his former coalition partner Nick Clegg of the Liberal Party. Since then the Tories have governed the country as a one party-government again, after having five coalition years with the Liberals. 

So all in all the current political situation for David Cameron seems not too bad to the uninformed eye.

Yet, there is only one circumstance that may and probably will end his political career at a blistering speed. That is the Brexit referendum, to be held in roughly one week on the 23rd of June, 2016. But why this referendum has become such a gamechanger?!  

As we all know, during his first stint as a Prime Minister Cameron felt a mounting pressure from his fellow Tories, as some of them were adamantly opposed against the European Union and they had the idea that the terms for the membership of the United Kingdom were unfair.

The pressure coming from these maverick Tory members slowly, but surely forced Cameron to organize a ‘plebiscite’ on the future of the United Kingdom, in its relation with the European Union. In 2013, roughly one-and-a-half year after the word ‘referendum’ had been mentioned first, it was a done deal. From that moment on, the rudder for Cameron's political career and – as a matter of fact – the future of his country was smashed out of his hands.

At first, the referendum – which would be organized in 2017 initially – seemed nothing more than a distant spot on the political horizon: nothing to worry about, as the moment of it was still far, far away in 2013. 

At that time, the promise of a referendum seemed first and foremost a warning signal aimed at the EU and an attempt to buy time and renegotiate the UK’s position in the European Union.

But the years passed by and Cameron’s attempts to renegotiate the position of his country turned into desperate longshots, instead of being realistic visions on a mutual, slightly altered future for the EU and the UK.

It was an impossible task: his demands and conditions for renegotiating the EU membership were simply too little for the Tories and the many disappointed citizens within the UK, but much too much for the European Council and the European Commission as a whole.

Under the pressure of the mounting immigration crisis and the enduring economic crisis in the Southern European Eurozone countries, Cameron demanded things from the EU that were violating the sheer foundations of the EU in some cases; foundations that the other EU members like France and Germany would never water down. From this situation the perfect stalemate emerged, in which the UK could not act anymore and the other EU members would not act either.

And so the referendum – to which Cameron fully owed his unexpectedly big victory after his re-election campaign in 2015 IMHO – turned into Damocles’ Sword for him. And now Cameron feels like a rabbit in the headlights of an approaching car: fascinated by what he sees, but totally clueless about what to do next.

From a non-event for anybody else than hardened political junkies and professional bawlers, the referendum has recently changed into the biggest political happening in decades for the United Kingdom and far beyond. And an event for which the outcome is utterly unpredictable.

While the referendum at first seemed to become a landslide victory for the ‘Bremainers’, the tides seem to be turning for those who advocate a Brexit. 

The latter group was in the beginning a mixture of UKIP populists, rightwing Tories, small-town nationalists and other eccentric people, but now the Brexit is becoming in fashion among a broader and more prominent group of normal citizens, politicians and renowned journalists.

Where the arguments of the Brexiteers and Bremainers inside and outside the UK (i.e. within the EU and the other European countries) were earlier a mixture of fearmongering, hyperboles and demonizing of the adversaries, the recent arguments seem to become more deliberate and more based on solid judgment of the situation at both ends. This turned the referendum into the 'talk of the town': not only for people at the far ends of the political spectrum, but also for the moderate people in the centre.

Currently the outcome is everybody’s guess... 

The bookies did not give one penny for the chances of the Brexit camp, only a few months ago, but now both sides become more and more balanced out and the momentum seems to be in the Brexit camp currently. Self-confident statements from renowned journalists in The Netherlands that the referendum would prove to be ‘little more than a storm in a teacup’ seem more and more implausible by the day. 

And PM David Cameron? The situation already went out of hand for him and is currently beyond his control. 

The reasons for this can be found in an earlier blog of mine about Cameron's ‘mega gamble’:

And so David Cameron – who is allegedly an advocate of the EU membership – is playing a massive gamble with the membership of the European Union. As that is how it will turn out for him: 

• Gamble 1: Cameron gets what he wants from the EU and advices his citizens to stay in the EU. The Brittons follow his lead.
  
• Gamble 2: Cameron does not get what he wants from the EU, but the British population wants to stay in the EU anyway.
  
• Gamble 3: Cameron gets what he wants from the EU, but the population does not listen to him and votes in favour of a Brexit anyway.
  
• Gamble 4: Cameron does not get what he wants from the EU and he successfully endorses a Brexit towards his population. 

This would lead to the following results:

In case of gamble 1: Cameron is the glorious winner of the gamble and he wins a set of privileges and concessions from the EU that is truly unprecedented, while maintaining the unity in the British Union.

This is the win-win situation for the United Kingdom, but an enormous loss of face for the EU and a definitive proof that the floodgates for political blackmail by other member states are wide open.

However, all other possibilities pose a losing situation for both PM David Cameron and the European Union as a whole.

Gamble 2: Britain votes against a Brexit, which would be ‘good’ for the EU, but Cameron has lost the last bit of credibility within and outside his country and the European Union as a whole. The only thing that he can do in this situation is resign, as nobody will take him seriously anymore. 

Gamble 3: In this case both Cameron and the EU suffer from severe loss of face. Cameron clearly loses his credibility and influence, as the Brittons blatantly do not listen to him and his advices anymore. He also can’t do anything else than resign, in this case. 

The EU on their end shows that political blackmail is a winning option and loses its face too in a very harmful way. 

Gamble 4: The EU does not lose face and so doesn’t Cameron. For the rest everybody is a loser in this situation, as a Brexit is then inevitable.

In other words: both gamble 3 and 4 have a Brexit as ultimate result. And please be aware of the following: the consequences might be severe for the UK!

Suffice it to say that gamble 1 has not played out at all. Even the most battle-hardened politician would not state that PM Cameron has returned home with ‘a winning list of priviliges and concessions’ from the EU. Camerons pathetic attempts to convince the English population and his peers in the Commons of this view anyway, were doomed to fail.

Even though Cameron still pleads for a ‘Bremain’, his words sound very hollow in the wake of his failure on accomplishing gamble 1.

Gamble 2 seemed like a dead-cert only a few months ago, but is turning into a long-shot with the Brexit and Bremain camp balancing out. For Cameron’s credibility it probably does not matter anymore.

Gamble 3 was just as dead as gamble 1 for the same reasons: Cameron did not get what he wanted at all, as the EU did not want to be blackmailed to the extent that Cameron desired.

Gamble 4 is the one that seems very plausible to play out, even if Cameron is not endorsing this gamble in the current situation.

This means that only gamble 2 and gamble 4 [actually a mixture between gamble 3 and gamble 4 – EL ] are remaining in play currently.

When gamble 2 does play out, this will still become the end of Cameron’s political career.

This is due to Cameron's lackluster defence of: 

• at one hand the values of the EU against his fellow-MP’s;
  
• and on the other hand the British values and convictions against the European Council members. 

Cameron will become a sitting duck for his adversaries all over Europe and in the UK, as he failed dramatically on both ends. Consequently, he will be gladly sacrificed by all politicians involved, even though the sigh of relief among the EU members can probably be heard on Waterloo Bridge, when this becomes the winning scenario indeed.

And this scenario will also become the end of Boris Johnson’s [the former mayor of London and the currently greatest political adversary of David Cameron – EL] political ambitions. As a matter of fact, it could lead to an implosion of the whole Tory party, as the raison d’etre of many members will have been blown to smithereens in a democratic referendum.

This might lead to new elections and a soaring popularity of UKIP, the Liberal Party and Labour, when disappointed Tories give up their membership and vote for other parties.

However, when gamble 4 plays out, Boris Johnson and Nigel Farage will be ready to collect the sweet fruits of their moral victory over Cameron. 

In this case Cameron will also be a sitting duck without any political credibility left. And Britain will be drawn into a (probably bitter) divorce from the EU after a quite long, but not very happy marriage.

So one way or the other, this period will probably become the swan song for David Cameron. And in my humble opinion, this is an appropriate fate for a politician who was simply ‘just not good, strong and honest enough’.  

Or in the words of Mark Knopfler of Dire Straits: ‘With friends like that babe... Good friends you had to do without. Oh and it never rains around here. It just comes pouring down’. 

The detached society: why personnel is more and more turning from an asset into 'a drag' for companies and why it is perfectly normal nowadays to run a multi billion euro company without having blue collar workers!

It was a small snippet in an in every respect quite interesting article in ‘Het Financieele Dagblad’ about the new distribution centre of online retail giant Bol.com in The Netherlands, that really caught my attention while reading.

In a few, well-chosen words, this snippet painted a tell-tale description of the situation on the Dutch and international labour market nowadays:

Bol.com symbolizes a rapidly changing economy.Yet, the construction process of the new distribution centre also shows that companies themselves do less and less. Bol.com employees never touch a parcel with their own hands. When the distribution centre starts its operation next year, employees of Docdata will put the ordered product in boxes. And parcel delivery service PostNL will bring the products to the customer.

Also Van Wijnen, the main contractor responsible for the construction of the distribution centre, has hardly any of their own people walking around on the terrain. The company guides 50 subcontractors and suppliers, which are all specialized in one particular part of the building process. Project manager Pieter Lammé at Van Wijnen is one of the few people who has a clear view on the big picture during the construction activities. He does that in close cooperation with project manager Joost Poelgeest of bol.com.

“When I started at Van Wijnen, 38 years ago, we still had masons, concrete workers, painters, crane operators and installers on our payroll”, according to Lammé. ‘Nowadays, we outsource all this specialist labour to other companies and freelancers. We are only directing the project’.

This is really shocking, when you let this text sink in to you: 

• The largest online retail company in The Netherlands does not have any of its own staff at all involved in what arguably belongs to its key processes: the collection, distribution and transport of sold merchandise?!
  
•  And probably neither in its most important process: the arrangement and completion of online sales!
  
• One of the largest construction companies in The Netherlands only acts as a director in a feature film, who guides a bunch of leading actors and extras into making a notable performance, but does not feel ultimately involved in the quality of the final result?! 

This means that these huge, multi-million dollar companies are actually liable for the quality of their projects, products and services, but seem not to be responsible for it at all?! 

It is almost like the people of bol.com and Van Wijnen are ‘accidental bystanders' in their own business processes: 

‘They just happen to be there when events happen and they happen to be liable for the proper execution of activities. Nevertheless, they cannot be blamed when things go awry, as their suppliers and independently working staff are actually in the lead during the execution of activities. Not them!’

Sometimes it is nearly impossible to explain 21st century businesses to say..., one’s grandfather or great grandfather. Especially, when this person was firmly based in the 20th century.

Would these two companies just be outliers in their own industry with a particularly “innovative” way of running their business, I would sigh and leave it to be. However, these companies are probably front-runners – the “best-of-breed” – who will soon be followed by their less smart competitors.

Just think about this, when companies like bol.com or Van Wijnen hardly maintain ‘blue collar’ personnel anymore while carrying out their main business, why would other large online and brick & mortar retail store chains, like Zalando, Albert Heijn, C&A, WalMart, Tesco, Lidl and Aldi do that? 

And why would other Dutch construction companies, like BAM, DuraVermeer or BallastNedam, maintain THEIR blue collar staff, when Van Wijnen shows them that they don’t need fixed staff anymore, except for a few-odd controllers, calculators, supervisors, project managers and foremen. 

This way, running a construction company is turning into running a trading and brokerage company; something that one can do, without ever having experience with bricks and mortar, concrete and steel at all. One just needs to bring together the principal with the chosen architecture, suppliers, structural engineers, freelance building professionals and executive engineers, as well as building materials and other supplies. That's all!

And what about the staff themselves, working for these companies? What will be their part in this deal?

Even though the people in the aforementioned bol.com warehouse will work ON BEHALF OF bol.com, they don’t work AT bol.com. And the worrisome part is that this staff probably also does not work at Docdata and PostNL either [the two other companies mentioned in the article – EL]...

Instead, these workers are perhaps (Dutch) people, who are hired via a temporary employment agency to escape from unemployment and boredome or to earn some income as a student. Or they might work at these companies, as ‘not-so-freelancers’ with piece-wages or a zero-hour contract, in order to collect a decent income.

Or perhaps they are foreign workers from Eastern Europe or the Far East. People, who are deployed through (sometimes shady) ‘temporary labour organizations’, whilst hoping for a better future for them and their families.

All these workers have in common that they are only useful as long as they are productive and until the moment that they can be safely replaced by robots, when these have become cheaper, more efficient, more reliable and/or quicker than manual labour.

And the people and companies working on the realization of this massive warehouse on behalf of Van Wijnen?

These are probably either larger subcontractors that let THEIR part of the job do by a bunch of ‘hired guns’ or they are freelancers themselves with a one-man business, being specialized in “something, necessary in the process somewhere”, but not useful anywhere else: working as the ultimate, one-trick pony’s!

What Van Wijnen and bol.com ultimately show is that personnel has turned from an ‘asset’ for companies into a ‘drag’, during the last decade: a burden that these companies can go easily short on, while still successfully running their multi billion dollar business.

Instead of having personnel of their own and on their own payroll, large companies like Van Wijnen and bol.com can nowadays accomplish the fulfilment of a certain task, service or project, by using a small group of subcontractors and one-man businesses. 

Or they can hire their staff via large, specialized service providers (like DocData and PostNL in the case of bol.com), ‘staff brokers’ and temporary labour organizations. In the end, this all can be topped off with an ultimately flexible shell existing of freelancers and zero-hour contract workers, who receive no warranties and a one-month time horizon for their labour efforts.

And probably everything will be secured and warranted with ironclad contracts and ‘service level agreements’ between Van Wijnen and bol.com at one side and their suppliers at the other side. Contracts and service level agreements, in which the demanded achievements and performance levels are described ‘to a T’; probably with draconian penalties for errors, general underperformance and/or workers dropping out or not showing up at all.

In the world of these companies, it seems like workers are nothing more than sustainable means of production that are deployed just for what they can do and not for who they are and what they bring with them, like brains, passion and dedication. Instead of intangible assets on the asset side of the balance sheet, such workers have turned into simple costs and expenses on the P&L table: Labour-as-a-Service!

“If people from Poland don’t work hard enough anymore to meet our performance goals, we will settle for Ukrainians or Romanians. Labour circumstances? Fair remuneration? Chances for a career, trainings and personal growth and development for these workers?! It is not our deal anymore. We pay our suppliers a fair price per item and what they pay to or do with their workers, is totally not our problem!”

And so it could turn out in this situation that the only people caring for their personnel, is the personnel itself: everybody is the owner of his own business, aka himself. All the others are none of his business, as they all need to take care of themselves.

This means: 

• There is no other responsibility for the health and wellbeing of workers for hiring companies than the absolute minimum that is required by law. This is in practice the bare minimum for which the principal company or ultimate employer is liable and not much more;
  
• There is no shared past and no mutual future between companies and their staff, as such workers can come and go and don’t bring any legacy or future obligations with them;
  
• There is no mutual solidarity between both parties:
  
• The worker does not feel responsible for any other part of the work / project than the simple part for which he is directly responsible. When the whole project or service fails, and he is not to blame for that, he does not care;
  
• The company does not feel responsible for the general well-being and future deployability of their workers, as they are only loosely connected for the time span of their contract.
  
• There is no moral obligation for the ultimate employer to find better / other employment, when jobs, projects or services are finished, or when a particular job does not fit a certain worker anymore;
  
•  Staff is hired for a certain job and when they can’t do that job satisfactorily anymore or when they are outperformed by others, they can simply be replaced.
  
• It is not the company’s responsibility anymore to put the right people at the right place. The right people for a job might stay, while the wrong people are released from the job at will; 
• And last, but not least: there is no burden or sacrifice at all in having their own personnel for these modern employers. Their workers are just a small figure on their P&L sheet and not a long term obligation / commitment of their company. 

I would like to call this situation in the business industry ‘the detached society’: a society in which interconnectedness, compassion, a shared past and future, as well as mutual responsibility between employers and workers are seen as ‘weaknesses, being bad for business’, instead of strenghts...

Such a detached society would make extremely successful and yet compassionate entrepreneurs like Frits Philips, Tomáš en Antonin Baťa, Freddy Heineken, Andrew Carnegie, George Eastman or Henry Ford feel ashamed. 

These were people who were all very focused and extremely innovative entrepreneurs, but yet had a profound feeling of responsibility for the health and physical/mental wellbeing of their personnel and for the society in which they operated, which they showed in many different areas and ways.

These entrepreneurs showed their compassion, by delivering to their workers and the societies in which they lived:

• better and safer labour circumstances;
• better housing and hygienic infrastructure ('Bata villages');
• better healthcare, when this was yet far from fashionable;
• better education and more chances for underprivileged people;
• cultural and sportive entertainment and leisure activities; 

What would these great, visionary entrepreneurs think about this ‘outsourcing of responsibility, mutual care and interconnectedness’, that is currently going on in the 21st Century?

Would they endorse this development and go with this flow? Or would they veto this way of doing business, knowing that in the end this is ‘the road to entrepreneurial hell’, for reasons of being nihilistic, narcissistic, utterly selfish and utterly short-term focused.

You know what the answer is, don't you?!

At this seems to be the moral of this story: 

• When companies only operate like trading houses and do not want to be responsible for anything else than the delivery of a certain service, product or project;
   
• And when the only party feeling responsible for their staff is the staff itself,

this leads to a detachment within companies and (in the end) within society that can be hardly repaired anymore. 

As long as the owners of such companies are seen as financial winners and not as moral losers, the deterioration of working circumstances and the detachment between staff and employers will continue.