Mathew's comments - Latest Comments in Dual-class stock = enlightened dictatorship

Re: Dual-class stock = enlightened dictatorship

mathewi — Wed, 07 May 2008 03:19:03 -0000

A strong, visionary leader is one thing, Markus -- someone with
complete dominance through absolute voting control is another.

Re: Dual-class stock = enlightened dictatorship

Markus — Wed, 07 May 2008 03:15:27 -0000

Is there a single powerful web company without a dictator/dictators at the top ?

Microsoft
Oracle
Apple
Google ?

Visionary people are people who do what everyone else thinks is impossible. What group of common share holders want to let someone go off and do what is "impossible"

Re: Dual-class stock = enlightened dictatorship

bbluesman — Wed, 07 May 2008 01:24:17 -0000

haha! I mean I don't mind links to them or whoever but just get tired of seeing the same names over and over. My gag reflexometer starts going wild.

Re: Dual-class stock = enlightened dictatorship

mathewi — Wed, 07 May 2008 01:14:04 -0000

Come on -- I hardly mention Louis Gray at all :-)

Re: Dual-class stock = enlightened dictatorship

bbluesman — Wed, 07 May 2008 00:50:05 -0000

Dude I love your writing but if you mention Kara Swisher, Mike Arrington or Louis gray one more time I think I'll scream. Kthxbai!

Re: Dual-class stock = enlightened dictatorship

John K — Tue, 06 May 2008 23:27:32 -0000

I had similar thoughts - didn't express it as well as "dictatorship", but I think the "commitments" that Andreessen pre-supposes would be totally un-enforceable.

http://gotads.blogspot.com/2008/05/andreessen-l...

Re: Dual-class stock = enlightened dictatorship

mathewi — Tue, 06 May 2008 22:02:03 -0000

Thanks, Mark. I think your wording would work as well.

Re: Dual-class stock = enlightened dictatorship

MarkDykeman — Tue, 06 May 2008 21:57:45 -0000

Mathew, I would reword your core argument to say: "multiple-voting shares protect incompetent, complacent or simply unsuccessful owner/managers that should be replaced, but cannot be." It seems like you're attributing personality or sentience to an organization, but perhaps we're saying the same thing anyway.

Another thought: your concern about centralization of power, though a good one, is virtually inescapable from a practical point of view because a large class of shareholders cannot direct the day-to-day operations of a corporation. You can still have decentralized decision making and activity, but standards, strategy, and overall direction has to occur from a central source. At best, boards are part coach, part watchdog, and part referee. They can throw incompetent management out of the game, guide them, or reprimand them, but they really can't play the game themselves.

Having said that... I would be wary of investing heavily in a company with such a control and ownership structure. If I had confidence in the individuals involved, I'd be OK with it, but it would take significant trust.

Now I've got to go check my mutual funds....

Re: Dual-class stock = enlightened dictatorship

mathewi — Tue, 06 May 2008 19:50:03 -0000

Brian, you are right about the public reporting aspect, in which as
you get larger you eventually have to start filing public financial
statements -- although of course that assumes you have issued shares
to lots of people, which isn't always necessary either. And that was
part of the impetus for Google to do an IPO, although the desire of
their backers to get some liquidity was also a factor.

As for fiduciary duty, I'm not a lawyer so I don't know the exact
details -- but I assume that having voting control simply makes it
easier to do certain things, and then it's up to the non-voting or
restricted shareholders to make a case for why it might be harmful to
them (in the same way that eBay is arguing in its case against
Craigslist).

Re: Dual-class stock = enlightened dictatorship

Brian Sullivan — Tue, 06 May 2008 19:12:27 -0000

Is the "Don't go Public" option really an option? I think in the US anyway once you get to a certain number of individuals holding shares -- like when you give key employees shares you end up having to report as a public company with none of the benefits.

If I recall this drove Google (and maybe Yahoo) public (or was a significant factor in the decision).

I am not totally sure I understand this dual class share option as it relates to public companies anyway. Doesn't fiduciary duty still apply?