Everyone Is A Zombie
Photo by Oliver Oudomsouk
What happens when a business keeps growing, generating revenue, and operating long after its leadership, culture, and processes have begun to deteriorate? From private equity and the end of cheap money to corporate bureaucracy, founder burnout, and artificial intelligence, Everyone Is a Zombie examines the uncomfortable possibility that a financially successful business isn't necessarily a healthy one.
Last week, I opened the latest newsletter from the sly smirkers at Not Very Private Equity. The subject line of that edition was, “Leverage Was The Product.”
I smirked myself and thought:
Oh... this should be a dandy of a read!
My inner voice did not have to wait long. The introduction opened with:
“Bloomberg declared the leveraged buyout dead on Wednesday.”
As one can imagine, I happened to smirk again.
But—
It gets better!
“Paul Davies's column was headlined ‘The End of Private Equity's Leveraged Buyout Era Is Nigh’, which is the headline you get when a model has been quietly broken for four years and a columnist finally has a free afternoon.”
ChuckleChuckleChuckle
Then:
“For forty years nobody needed to say it. You bought a company with other people's debt, rates drifted down, multiples drifted up, and the operating plan was something you showed LPs between the fundraising and the exit, ideally in a font nobody could read. The middle bit was mostly about not breaching a covenant.”
And later…
“Buy good businesses. Run them well. Keep them for decades. Go easy on the borrowing.”
Wait…
What?
Did someone just imply that dreaded word of…
Then, the real laugh riot arrived:
“Davies's diagnosis is that the industry has reached acceptance, the last stage of grief, over its 2017 to 2021 vintages. He is right about the mood. We would go further on the cause. The grief is for a product, and the product was cheap debt. Everything else, the sector theses, the hundred-day plans, the value-creation decks, was packaging (expensive packaging, ask the consultants).”
Apparently, someone finally informed Private Equity that ZIRP ended.
And what are we left with? Overpriced consultant slide decks proclaiming a future of profitability so big, so bright, that nobody could fully focus on operating an actual...
Business.
This piece is not a Socialist Screed against Venture Capital or Private Equity. I have a lot of respect and genuine interest in their peculiar, mathematical minds and pursuit of market opportunities—and their operational instinct in transforming companies so haphazardly run that the only way to save them is to Mitt Romney their entire operations and leadership.
Yes. Really. Sometimes processes and people need to be burned down and started over.
But…
Somewhere in that messy middle of operational and financial turnaround, servicing the debt begins to matter more than building the long-term, foundational processes and people the business actually needs.
I know.
I worked for a company that went private during a PE takeover. I’ve seen the presentations. The emails. Listened to Regional Leadership trumpet that a Brand New Day Was Dawning.
But eventually…
That Bright Beautiful Takeover begins to…
Fade.
The promises, the initiatives, the changes, the challenges—all of that transformation shared on those elegant, inspirational slide decks created by entry-level MBAs—begin to…
Atrophy—
As the Company Realigns and the rusted machinery restarts, with very little repair or maintenance along the way…
The operations begin to wear down.
And the leadership settles comfortably into their offices, roles, and boardroom suites.
Everything becomes a little…
Diseased—
Sales continue. Revenue flows. But servicing the debt becomes a greater priority, and soon…
People and Departments are…
Separated and Consolidated—
And the company lurches into…
Zombie mode.
Zombie culture isn't just a symptom or classification for Silicon Valley startups. It's something much older, embedded in the monolithic corporate culture that has dominated our business thinking for generations.
Let us unpack the last 200 years:
The Industrial Revolution gave us plumes of smoke, conveyor belts, and the Titans of Industry. Then came Frederick Taylor and The Scientific Approach to Business, with that irresistible theory that human work could be studied, measured, standardized, and optimized.
And as companies grew, bureaucratic hierarchies multiplied. Managers… well, managed managers. Then Consultants appeared with elaborate ideas about how to organize, reorganize, and reorganize the reorganization!
And at some juncture in that twentieth-century corporate spectacle, we elevated the executive into something approaching an Oracle CEO and created an entire New York Times Bestseller genre of Leadership Culture, Management Gurus, and Inspirational Transformation!
Meanwhile, an entirely different machinery was developing…
The Bretton Woods monetary order unraveled. Financial deregulation distorted the flow of capital, while Greenspan and his monetary maestro wizardry fed Wall Street's addiction to cheap money, amid the printing presses, quantitative easing, and the increasingly lunatic financial engineering that made debt look like wealth followed by all those lovely crashes, bailouts, and eventually…
ZIRP.
Yes, I know. I just recounted different histories, institutions and economic forces, but combined, they helped construct an extraordinary delusion about business:
That everything can be measured, optimized, financed and transformed.
And now…
Everything and Everybody is just another Zombie eating itself to stay alive long enough to service debts, leadership gurus, six-, seven-, and eight-figure salaries, and Shareholder—
Excuse me…
Stakeholder Capitalism.
And…
This is what founders, owners, and entrepreneurs wanna recreate?
And Here We Are…
Everything I've just gleefully satirized about the last 200 years of business leaves us with some questions:
Why Did We Stop Serving The Business? Why Did We Stop Serving People And Processes?
Is the answer simply rapacious capitalistic profiteering?
Did We Allow The Business To Control Us? Did we really just Set It And Forget?
From global corporations and Silicon Valley startups to Main Street mom-and-pops, the Zombie-fication of everything isn't so simple.
It's a harder, more nuanced, more complicated argument involving politics, finance, culture, business philosophies, and something we often don't particularly want to examine:
As we say at NorthBreak:
Humans Gonna Human.
We're fragile creatures, often driven by fear, scarcity, power, and some dark Jungian Ego.
And changing our behavior is, well…
Difficult.
Imagine standing before your team and announcing:
“Hey, everyone! The reason this company, this business, this great idea filled with human creativity, ambition, hope, and dreams has failed—or sold out—is because I, the founder, succumbed to my own human frailties!”
I mean, great story for your six-month tour of the Business Podcast circuit after you've plunged that startup into the VC funding abyss.
But, hey, maybe it's the basis for your next TED Talk.
Wait?
Is that still a thing?
Either way, how does a founder or owner admit their own complicity in the dysfunction and Zombie-fication of their beloved business?
Sure, you could hire a Fractional CFO, spend seven figures on one of the Big Boy Consultants, five figures for a two-hour session with the latest famous YouTube Business Guru, or even hire NorthBreak.
But—
Are you really gonna change after someone else…
Fixed Your Business?
I mean, Humans Gonna Human, and re-Zombie-fying your business is always a possibility.
And what happens when…
AI really exposes the disease ravaging your Zombie Business?
AI And Your Zombie Business
What happens if you and your AI Guru sit down in the conference room of your business, flip open the laptop, and open your favorite frontier-model chatbot?
What if you and your Finance Guru do the same?
What if AI has become so advanced that it's absorbed all the software, systems, and processes you previously used to run your business?
And you ask:
“Hey, My Favorite Chatbot! Run The Numbers And Tell Me About The Health Of My Business!”
And it responds:
“Bro… 🤣 This Business Is A Zombie! Here Are All The Numbers…”
And it unspools the most beautifully accurate, yet most irrefutably horrific indictment of your business.
What do you do?
Deny it?
I mean, humans are really good at denying The Truth.
But this time…
You can't dismiss the numbers or blame the seven figure consultants. You can't proclaim the model doesn't understand your business, your vision, your leadership, or your Unique Value Proposition.
Because, remember, this Super Intelligence Model was released with a 1,000,000% Accuracy Rating. There is no chance for any old-school hallucinations. No mumbo-jumbo confabulations of ideas, numbers, random hopes, dreams, and beautifully constructed bullshit.
This model is practically a Neuralink implant. It intimately knows your business, its people and all your dirty decisions.
And worse…
It knows you.
Your hopes. Your dreams. Your lies and all of the mistakes. And all those little compromises, rationalizations, and uncomfortable truths you've spent years burying beneath the grand ambitions of the business you created.
And now…
It's all there.
Right. On. The. Screen.
Now what?
Have it craft you an excuse? A full forensic evaluation?
Maybe you sneer at its response.
Because, you know, you're Too Big To Fail. You're One of The Smartest Guys In The Room.
Maybe borrow more money?
Sorry. JPMorgan is gonna want your financial chat logs.
Have investors?
The agent has already transmitted the financial analysis over to them.
Yikes.
Yes, I may have ventured into futuristic, dystopian satire, but in our present world, where Private Equity has finally admitted the party is over, the last bottle of Clicquot has been emptied, and financial markets are enamored with debt-laden buildouts for AI infrastructure, you gotta ask…
Is Everything Really A Zombie?
And…
What's actually behind your own business?
Do the Numbers really reflect the productivity, the people, the processes, the culture?
Is any of it sustainable? Are you working, thinking, operating at sustainable levels?
And!
What if The Market does…
Crack?
Do you have the capital to survive? The people? The processes?
Fuck, The Will?
Will the AI buildout prove to be the greatest financial ruse ever, making the Internet Bubble Burst look like…
I dunno.
A lame children's party bubble machine.
Oh!
And what happens if the Market does crack and your competitors all fail?
Do you have the operational structure, culture, people, processes, and personal leadership ability to absorb the market's needs?
And yes…
What if, in five years, that Super Intelligent Model with its 1,000,000% Accuracy Rating exposes all your competitors?
Or…
You?
And—
What if we're already zombies and don't know it?