<p>This post is inspired by Marc Benioff (The CEO of Salesforce).</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!36yT!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa3cc9cb9-476f-4bae-bd50-0235ea272f0c_548x459.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="440.5729927007299" src="https://substackcdn.com/image/fetch/$s_!36yT!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2Fa3cc9cb9-476f-4bae-bd50-0235ea272f0c_548x459.png" width="526" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p>The job of management is to <strong>maximize shareholders’ value</strong>, and the way they do that makes some C-level executives better (and more valuable) than others.</p><p>Most CEOs are <strong>storytellers</strong>.</p><p>To maximize shareholders’ value, they need to maintain good relationships with a range of stakeholders, from employees to customers and suppliers to lenders and investors. </p><p><strong>Storytelling is one way to excite the stakeholders. </strong>I don’t hate it. I don’t mind it. But there is one slight challenge. </p><p><strong>The company has to deliver on the story.</strong></p><div><hr /></div><p><strong>1.0 The pattern</strong></p><p>Historically, there’s been a pattern.</p><ul><li><p>A new technology emerges</p></li><li><p>New companies emerge with an exciting future</p></li><li><p>Investors get excited</p></li><li><p>New metrics appear (that sound positive)</p></li><li><p>The metrics are accepted, quoted by analysts, despite not being the right ones to focus on</p></li></ul><p>In the dot-com era, metrics such as <strong>eyeballs</strong>, <strong>page views</strong>,<strong> clicks</strong>, and <strong>click-through rates</strong> appeared. Suddenly, these metrics were in press releases as proof that a company is doing well, despite not having significant revenues (and despite the fact that all of these metrics can be gamed). </p><p>Valuations were also based on these metrics.</p><p>Eventually, well, we all know what happened.</p><div><hr /></div><p><strong>2.0 The AI era</strong></p><p>In the AI era, we have “tokens”. </p><p>For context: tokens are the unit of measurement that companies use to describe usage. Any prompt to an AI model, and its response, is being measured in tokens. So, on the surface, tokens as a metric make sense.</p><p>I’ll argue that tokens are comparable to eyeballs in the dot-com era. How many tokens were processed is a great metric for certain operating activities, but:</p><ul><li><p>It can be gamed</p></li><li><p>It says nothing about the margins</p></li></ul><p>The second point is the most important one.</p><p>Generating tokens costs money, and companies can reduce the price even below cost to increase the demand. But that’s not a business; it’s a subsidy that is not sustainable. </p><p><strong>Only because there’s activity, it doesn’t mean that value has been created.</strong></p><p>I found a response to Marc that I 100% agree with.</p><div class="captioned-image-container"><figure><a class="image-link image2 is-viewable-img" href="https://substackcdn.com/image/fetch/$s_!g97F!,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F67f77edf-b39a-489b-9073-55784adef87d_541x444.png" target="_blank"><div class="image2-inset"><source type="image/webp" /><img alt="" class="sizing-normal" height="444" src="https://substackcdn.com/image/fetch/$s_!g97F!,w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F67f77edf-b39a-489b-9073-55784adef87d_541x444.png" width="541" /><div class="image-link-expand"><div class="pencraft pc-display-flex pc-gap-8 pc-reset"><button class="pencraft pc-reset pencraft icon-container restack-image" tabindex="0" type="button"><svg fill="none" height="20" stroke="var(--color-fg-primary)" stroke-linecap="round" stroke-linejoin="round" stroke-width="1.5" viewBox="0 0 20 20" width="20" xmlns="http://www.w3.org/2000/svg"><g><title></title><path d="M2.53001 7.81595C3.49179 4.73911 6.43281 2.5 9.91173 2.5C13.1684 2.5 15.9537 4.46214 17.0852 7.23684L17.6179 8.67647M17.6179 8.67647L18.5002 4.26471M17.6179 8.67647L13.6473 6.91176M17.4995 12.1841C16.5378 15.2609 13.5967 17.5 10.1178 17.5C6.86118 17.5 4.07589 15.5379 2.94432 12.7632L2.41165 11.3235M2.41165 11.3235L1.5293 15.7353M2.41165 11.3235L6.38224 13.0882"></path></g></svg></button><button class="pencraft pc-reset pencraft icon-container view-image" tabindex="0" type="button"><svg class="lucide lucide-maximize2 lucide-maximize-2" fill="none" height="20" stroke="currentColor" stroke-linecap="round" stroke-linejoin="round" stroke-width="2" viewBox="0 0 24 24" width="20" xmlns="http://www.w3.org/2000/svg"><polyline points="15 3 21 3 21 9"></polyline><polyline points="9 21 3 21 3 15"></polyline><line x1="21" x2="14" y1="3" y2="10"></line><line x1="3" x2="10" y1="21" y2="14"></line></svg></button></div></div></div></a></figure></div><p>Nothing against Salesforce, I hope they do well.</p><div><hr /></div><p><strong>3.0 Some fun examples</strong></p><p>Here are companies that had very positive press releases (and went bankrupt):</p><ul><li><p><strong>Pets.com</strong> focused on (and achieved superb) <strong>brand awareness</strong> by overspending on marketing (including a Super Bowl ad).</p></li><li><p><strong>WeWork</strong> reported “Community adjusted EBITDA“, which basically removed a lot of very real expenses, to turn a $1 billion loss into “profit”.</p></li><li><p><strong>Theranos</strong> reported number of partnerships, test volumes, and market reach (that turned out to be misleading or fabricated).</p></li></ul><p>All of these metrics have something in common. <strong>They are not a good representation of whether value has been created (or destroyed).</strong></p><p>So be careful, just because something sounds positive doesn’t mean it is.</p><p class="button-wrapper"><a class="button primary" href="https://thefinancecorner.substack.com/subscribe?"><span>Subscribe now</span></a></p>