It’s not an “AI revolution.” It’s an extraction cycle. Here is the biological reality of how Private Equity hollows out the future.

It Started in the Trees

In 1904, a NYC zookeeper noticed something wrong with the zoo’s chestnut trees. Something was making the bark crack, bursting with orange pustules. Something had infected America’s chestnut trees, and New York was ground zero. The infection spread 50 miles per year. Within 50 years, the American Chestnut was functionally extinct. Every now and then, a shrub will sprout from the dormant roots of a previous tree, only to be struck down again when it gets mature enough to catch the infection.

The infection had arrived from China via a Japanese nursery in New York: Cryphonectria parasitica, a relatively benign tree fungus that has been living on Asian chestnut for over a millennium. In Asia, the fungus had coevolved alongside the native chestnut trees. As the fungus-infected trees evolved, they developed countermeasures. Fungus strains that attacked too aggressively would kill their host and die alongside them. The most successful strains evolved to an equilibrium, gentle enough to let the trees spread and flourish, aggressive enough to spread along with their fostered ecosystem.

There is no morality to this, only biology. The fungus has no intentions or strategy. It simply perceives food and goes after it. It eats as much and as fast as it can. The limiting factor was killing the host and dying along with it, not restraint. The fungus doesn’t have long-term perception. That is an illusion created by slow evolution.

When this same fungus infected American trees that lacked natural defenses, it overwhelmed them, killed them, and ran out of its new food supply. The mutual destruction of fungus and tree is not the story; it is the template.

A New Infection

Private Equity is not evil. The best way to understand organizations is to think of them as organisms. They have instincts, drives, metabolisms, perceptions, and reactions. PE has evolved to maximize short-term returns on investments, flippers that follow the shortest path to wealth extraction.

Like Cryphonectria parasitica, PE is quickly spreading across the business ecosystem. PE started in turnaround investments or in undervalued assets. Over the last 10 years, US private market fund assets grew by over 300%, from $1.81 trillion to $7.26 trillion. It is spreading not just in size but also in the types of markets and industries it operates in. It is picking up established companies, residential real estate, and core infrastructure and services. 

When PE encounters industries that have coevolved with profit-extraction pressure, such as hospitality, retail, and manufacturing, there are natural checks. The feedback is fast, the customer can leave, and the quality signal is immediate. The organism moderates its consumption accordingly.

In other cases, it is the American Chestnut.

Healthcare Is Dying

PE investment in US healthcare has grown more than twentyfold over the last two decades. Firms have invested over a trillion dollars in the sector and now own an estimated 488 hospitals, tens of thousands of physician practices, and, in some regions, more than half of all emergency room staffing.

The peer-reviewed outcomes data are unambiguous. A landmark study published in the Review of Financial Studies found that PE ownership of nursing homes increased the short-term mortality of Medicare patients by ten to eleven percent. Over twelve years, this led to an estimated 20,150 additional deaths. After a PE acquisition, nursing home staffing hours declined by three percent per day,  antipsychotic drug use increased by fifty percent, substituting a cheap pill for an expensive human being. 

Lease payments at acquired facilities increased by 75%, interest payments by over 300%, and management fees by nearly 8%. Cash on hand dropped by 38%. The money was not disappearing; it was being redirected from patient care to investor returns. Taxpayer spending per patient episode increased by eleven percent. PE-owned hospitals showed a 25% increase in hospital-acquired conditions: falls, infections, the events most sensitive to nurse-to-patient ratios, which they had been gutting.

Biologists can describe how the parasitic fungus metabolizes the chestnut tree, dissolves it from the inside, and absorbs its nutrients. In the same biological certainty, PE absorbs wealth from the health care companies it infects. The patient care and host organization are hollowed out from the inside, with nutrients extracted by the parasite. The researchers describe the recurring pattern of shifting operating costs away from patient care and towards monitoring fees, lease payments, and interest. Properties are sold to the parent companies and leased back to the health care providers at a fee. They are charged a fee, managed by the parent company. They are charged interest on loans from the parent company back to itself. 

Healthcare customers cannot easily switch care. In many cases, the current choice is the only option they have. The PE doesn’t intend to kill healthcare, but long-term patient impacts don’t register on short-term quarterly profit reports.  PE doesn’t have the long-term perception to see the damage done to the host.

Investing in Higher Education

The timelines for seeing the impacts of hollowing out education are even longer, but the pattern in for-profit higher education is identical. 

A peer-reviewed study of 88 PE deals across nearly a thousand schools found that PE buyouts led to higher tuition, higher per-student debt, lower graduation rates, lower loan repayment rates, and lower earnings for graduates. Loan repayment rates at PE-owned schools averaged 32%, compared to 47% at community colleges. 

Students at PE-backed colleges often saw a decline in their earnings five or six years after attending — even while carrying more debt than peers at public institutions.

Former executives at PE-backed colleges described being explicitly pressured to maximize enrollment and operating margins, regardless of regulatory compliance. The fraud was predictable: boiler-room recruiting, inflated graduation statistics, worthless credentials. 

Education Management Corp, owned by a Goldman Sachs private equity arm and Providence Equity Partners, paid $95.5 million to the Department of Justice to settle claims of illegal recruiting and consumer fraud. When Vatterott College, owned by TA Associates, collapsed, students received less than 24 hours’ notice. 

Vatterott still owes $244 million to the Department of Education — unpaid. ITT Tech’s collapse required $500 million in federal loan forgiveness. In each case, the private equity firms had already exited. 

The students were left with the debt. Taxpayers absorbed the rest.

The host had been consumed. The parasite had moved on.

What Happened to Knowledge Work

How did knowledge workers go from talent to be invested in to cost centers to be cut? How did creative workers go from labs driving innovation to boiler rooms managed by anxiety? No longer rock stars, knowledge workers are slow and lazy cogs that management distrusts and resents having to pay for.

Despite what executives are saying, it has nothing to do with AI. It is about executives and investors who can’t stop talking about AI.

Knowledge work is not the same as healthcare or education. People can switch software more easily than switching insurance providers or universities, but software companies are trying to create the same hostage situations. People cannot easily migrate their social networks, their subscription, and all their data. The cloud has gone from digital freedom to digital leverage, just the way people who leave North Korea for official events are forced to leave family members behind; digital companies hold on to our data for us.

The PE playbook is now being applied to software companies, media organizations, staffing firms, and technology platforms at scale, and the early results are consistent with what happened in hospitals and universities.

PE involvement in technology deals now exceeds 50% of deal volumes and values. Zendesk, once a well-regarded customer service software company, was acquired by a PE consortium for $10.2 billion in 2022. Multiple rounds of layoffs followed. Employee reviews were candid: “After private equity, raises and promotions became very limited. Since the PE acquisition, there have been multiple rounds of layoffs, which have affected morale.” 

Vice Media, once valued at $5.7 billion and genuinely respected for its journalism, filed for bankruptcy and was sold for $350 million to a PE consortium led by Fortress Investment Group. Under PE ownership, the website shut down entirely. Legal filings showed Vice executives extracted $11 million in compensation in the year before bankruptcy, while freelancers lost income without severance. BuzzFeed followed a parallel arc, selling its Complex division and cutting 16% of staff. Across the media sector, companies announced more than 21,000 job cuts in 2023, up 467% from the prior year.

Cory Doctorow has described this degradation as enshittification: the predictable stages by which a product decays as ownership shifts from serving users to extracting from them. First, the product is good. Then it extracts from users to serve investors. Then it extracts from everyone while providing less and less. The process is incremental, deniable, and familiar to anyone who has watched a beloved tool turn bloated, a platform fill with ads, a newsroom hollow out. 

The blight does not announce itself, and the host usually doesn’t notice until it is too late.

You Cannot Spell Pervasive Without PE

Like the American Chestnut, the Knowledge Economy didn’t co-evolve with its parasite. It didn’t evolve natural defenses. Knowledge work came from big science, big military, and Venture Capital. These systems focused on long-term bets to build new markets and new wealth. 

They created labs, incubators, and start-ups. The end goals were new products and markets that created whole new areas of wealth. Knowledge work’s explosion over the past half-century has not been one of relentless optimization and extraction, but of growing and creation. 

The success of big military and VC funding infected the entire industry with their ethos. Many organizations that were not core to the knowledge economy adopted the language of VCs, using terms like “bets,” “innovation labs,” and “wealth creation.” The rise of PE has seen the same cross-infection. 

PE’s growth has reshaped what “good management” looks like across the entire business culture. When PE-owned companies dominate an industry, they set the competitive benchmarks. A non-PE competitor watching a PE-owned rival cut costs and hit short-term numbers faces pressure to match those numbers or explain to its own board why it isn’t. The infection spreads through imitation and competitive pressure, not acquisition. The fungus does not need to directly touch every tree to poison the soil.

VC itself has shifted. The patient, decade-long bets that built Bell Labs or funded the early internet, have given way to a VC culture increasingly focused on growth-at-all-costs, followed by a quick IPO or acquisition exit. The time horizons compressed. The language stayed the same — innovation, disruption, bets — but the underlying metabolism changed. Knowledge work companies that think of themselves as VC-spirited are often running a model closer to PE than they realize.

PE is private, but the behavioral logic it represents is also the logic imposed on public companies by the quarterly earnings culture. A publicly traded knowledge economy company with no PE involvement still faces a board and shareholders asking the same questions a PE owner would: what did you do for me this quarter, what are you cutting, and how are you explaining this headcount?

Investors are the common vector. They are comparing all their investments through the lens dominated by PE: maximize short-term returns, treat everything else as a variable cost, hollow out, and move on.

Activist investors infect non-PE boards and bring along short-term demands. Nelson Peltz pressured Disney to slash and burn park staff and the long-term value of one of Disney’s crown jewels for short-term stock gains. Behind the boards is the informal network of influence between execs and investors, where these pressures cross between organizations. 

Sick trees weaken the whole forest.

It’s a Matter of Timescales

The fungus killed American Chestnuts and itself because it didn’t have a feedback loop fast enough to adjust course. When it co-evolved in Asia, the long timelines allowed evolution to provide those feedback loops.

The parasite doesn’t have to kill the host if the host can make the parasite feel pain fast enough for the parasite to perceive it in its short-term perception.

In 2007, Blackstone acquired Hilton Hotels in a $26.2 billion deal, just before the Great Recession. What could have easily been catastrophic has been described as one of the most successful leveraged buyouts in private equity history. 

By the time Blackstone fully exited in 2018, it had realized roughly $14 billion in profit, more than tripling its investment. During that period, Hilton was named World’s Best Workplace. Blackstone invested in culture, brought in strong leadership, expanded internationally, and held the company for eleven years.

Why? Not because Blackstone had superior values. Because hospitality gave it faster feedback.

An empty hotel room is a visible signal today, not in seven years. A bad review lands this week. Occupancy rates are reported monthly. Franchise owners with contractual standing track daily revenue per available room. The damage caused by poor management was perceptible within the organism’s sensory range, so the organism adapted. It cultivated the host rather than consuming it prematurely, because premature consumption would have cost money before exit.

Health care patients take months for their poor health care to impact the bottom line. Universities take decades to fail.  Building a knowledge-worker talent pool and creating the next new thing lies somewhere between the two. All is invisible to quarterly financials. 

It surfaces in mortality statistics assembled by academic researchers years after the exit. The student who took on debt under false pretenses doesn’t come to a class action suit for decades. The feedback loop is so long that it exists entirely outside the organism’s perceptual horizon. The host is consumed before the consequences register.

The American chestnut in Asia survived because the feedback loop was tight. Over millennia, fungal strains that killed their hosts too quickly died with them. Only the moderate strains survived. The fungus learned restraint because the consequences of excess were immediate and personal. The American chestnut had no such history. Neither do most knowledge economy companies acquired by private equity today.

Building an Immunity Response

PE will not change its nature.  Organisms do not change their nature. The question is whether the environment can be changed to make the damage perceptible before the exit. Shorten the feedback loop until it falls within the parasite’s sensing range. That’s not a boycott. It is an immune response. 

Spot the Short-Term Investor

Organisms survive by recognizing what is “self” and what is “foreign.” In our economy, that means learning to ask: Who actually owns this?

For a software engineer, designer, or researcher, “knowing who you work for” is a matter of career survival. In the knowledge economy, your skills, your network, and your mental health are the nutrients.

When you join a company, you are entering a symbiosis. A long-term owner (like a founder-led firm or a stable public company) wants to cultivate you because your growth increases the host’s value. But when a firm is acquired by a parasite in its “extraction phase,” you are no longer being cultivated; you are being metabolized.

Watch for a shift from innovation to efficiency, cutting long-term employees, and a focus on exit.

The same logic applies to our physical world. Communities across the globe are learning the hard way what happens when you sell “vitals” to organizations with short perceptual horizons.

The UK water crisis is a tragic example of when short-term investors buy public infrastructure. The “parasite” followed its nature. It extracted billions in dividends and executive bonuses while loading the utility with debt. Because the feedback loop for a crumbling underground pipe is measured in decades, not quarters, the investors were able to exit with their pockets full before the sewage reached the rivers.

The community is left with the bill, the debt, and the rot.

Whether it is your local hospital, your water supply, or the fiber-optic cables that power your town, these are not just assets; they are the soil of the ecosystem. We must treat the sale of core infrastructure to short-term extractors as a biological threat. 

Regulation

Regulation is the voice of the people. If the trees could consciously negotiate with the fungus, that would be regulation. It is the ecosystem’s citizens negotiating what is acceptable to the ecosystem. It is powerful but slow. It is fair, but easily subverted by the systems of wealth and influence, which heavily favor the PE.

For decades, Americans were locked to their phone company by their phone number. A new law in 2003 gave users the right to own their numbers, and phone companies had to let users transfer them to another carrier. All of a sudden, bad customer experience matters. The hostage situation was broken, and dissatisfied users could quickly leave. 

Mandating good behavior is normally ineffective. Regulations that create faster feedback loops work with the natural behaviors of short-sighted organizations. Bad behavior is toxic to users, but now it shows up in quarterly financials, and the PE is starting to see that it is toxic to itself, too.

The equivalent interventions in the knowledge economy exist and are being debated: mandatory data portability requirements that lower switching costs so that product degradation immediately results in lost customers rather than trapped ones; mandatory reporting of quality and outcome metrics by ownership entity rather than just by operating name, so that a PE firm’s track record attaches to it through every acquisition; clawback provisions that hold PE owners liable for demonstrated harms discovered after exit, within a meaningful window, so that the consequences of extraction cannot be fully escaped by completing the sale.

Each of these is a mechanism for compressing the feedback loop. None of them requires PE to change its nature. They require the environment to change so that the organism perceives the damage it is causing before it can exit.

You do not need to make PE virtuous. You need to make extraction visible and painful fast enough that the organism responds.

Speeding Up Enshittification Feedback

Two recent cases show what happens when enshittification is visible and rapid, and the alternatives are accessible enough to reach.

When Elon Musk acquired Twitter in 2022 and began systematically degrading it: gutting content moderation, reinstating banned accounts, tilting the algorithm toward inflammatory content, turning verification into a pay-to-play mechanism; the damage was visible in real time to the exact users Twitter’s value depended on most: journalists, academics, brands, and the high-agency knowledge workers who had made the platform the first place professional news broke. 

These users could see what was happening. They called it out. Crucially, they could and did leave. Under Musk’s ownership, X lost an average of 14% of its users monthly. US advertising revenue fell at least 55% year over year in every month since the acquisition, with the steepest decline of 78% in December 2022. Major advertisers, including IBM, Apple, and Paramount, paused spending entirely. The company’s estimated value has dropped by 75% since the purchase. The feedback was fast because the enshittification was dramatic and public, and the switching cost was real but not insurmountable. The organism felt the consequences before the exit.

More recently, in February 2026, the US Department of Defense approached both OpenAI and Anthropic to provide AI services for military applications, including surveillance and autonomous weapons. Anthropic declined. Hours later, OpenAI, whose CEO had publicly supported Anthropic’s position that same morning, signed the deal. 

The feedback loop was near-instantaneous. Within 24 hours, Claude had climbed to number one on the US Apple App Store, displacing ChatGPT for the first time. At its peak, the “QuitGPT” documented over 2.5 million people pledging to cancel their subscriptions. ChatGPT daily uninstalls spiked 295% above their average. 

The users who switched were not casual ones. They were software developers, researchers, and knowledge workers: the cohort that evangelizes products, writes the tutorials, and recommends tools to teams and clients. OpenAI’s CEO later admitted the decision had “looked opportunistic and sloppy.” 

The organism received the signal fast enough to feel it.

Evolve or Die

The US Healthcare system is on life support. Our higher education system and student debts are faltering under their own load. The Federal Reserve household survey found that students who went to college are paying more to service their debts than to put into their own retirements, and students who went to for-profit schools are more than twice as likely to be behind on their loans as students at public universities. 

The knowledge work market is going to crash. The infection is here and widespread. Regulation will not fix the feedback loops fast enough, and PE will continue its grim harvest. 

As a customer, as an employee, as a community, avoid short-term investors, especially when they invest in long-term services and infrastructure. They should not own our homes, our utilities, our healthcare, or our knowledge economy. Be the feedback loop. Demand regulation. Be the defenses.

We have to be fast, but we can survive if we understand what we are up against. You don’t reason with fungus, you treat it.