9 ms·

Jack Dorsey giving up 30% of his stake in Square to help underserved communities

143 points by richiezc 11y ago

curiousjorge 11y ago
he should use that to save Twitter but good on him for getting his priority straight and putting human lives over some glorified text publishing app that gives the world an insight into our most mundane daily mental noise that we otherwise would've never spewed if it wasn't for such social media platforms.
stpe 11y ago
Updated title on original source: "Jack Dorsey is giving up at least 50% of his stake in Square to help underserved communities" Update: This post has been updated to correct that Dorsey will commit 10 percent of the entire company, not just his equity as previously stated. In addition, our calculations were off and I regret the error. This is commendable. Actually intending to making the world a better place (in the non HBO-Silicon-Valley-Show-way).
- rco8786 11y ago
  Jack owns ~24% of the company. It is just his equity.
  - flintchip 11y ago
    Yes, but 10% of 100% is a lot more than 10% of 24%.
    - rco8786 11y ago
      It was reported that he would be giving up 30-50%(now at least 50% apparently) of his own stake. Which comes out around 10% of the entire company, depending on what number is actually correct.
arbitrage314 11y ago
I no longer dislike Jack Dorsey! :)
- arbitrage314 11y ago
  Why did this comment get downvoted? Is it because other people like Jack Dorsey, or because other people still don't like him? :)
humility 11y ago
Does anyone else feel like it's the government's responsibility to help all the needy sections of the society, and billionaires intervening only abets and condones all the deliberate/unintentional mistakes of the former, and lets them escape it?
- msvan 11y ago
  Volunteering and donations are a much bigger thing in the US than in Sweden. Here we just tax everybody more, and that mostly takes the place of benevolent billionare philanthropists.
  - humility 11y ago
    General masses in Sweden are way better off than those in the US, I'd call that a better approach!
    - mkaziz 11y ago
      Correlation != Causation!
    - adventured 11y ago
      I wouldn't. The top 50% of Americans are better off than the top 50% of people in Sweden. That's 160 million people doing better than Sweden, I call that an extraordinary success. The bottom 1/3 are better off in Sweden than in America however, not much debate on that. Swedes in America also do better than Swedes in Sweden. There is greater opportunity for success in America than there is in Sweden as well. The US has a far greater diversity of culture overall. The US economy is far richer, 45% of all global wealth is concentrated in just 4.6% of the world's population. US universities are far superior to Sweden's. The Swedish household debt to income ratio is far worse than America's, at twice the rate of the US household levels. They've been taking on debt far beyond their means to fake some of that standard of living. Some masses of people are better off in Sweden, some are not. Sweden's unemployment rate is higher than the US. Their system was also a disaster for decades before they launched numerous reforms of the prior formulation of their welfare state, improving its overall free market friendliness.
LunaSea 11y ago
Are the "underserved communities" ex-Twitter employees ?
- butwhy 11y ago
  Yes, I'm sure the high tier engineers living in SF are very undeserved.
  - SEJeff 11y ago
    The @TwitterOSS got really hammered by the layoffs. They were real people, not just "high tier engineers". I take offense as some of my friends, real people, lost their jobs. You shouldn't make light of other people's misfortune.
    - saryant 11y ago
      I had friends at Twitter OSS too and the ones I knew are pretty well poised to do whatever they want at this point. They definitely are high tier engineers. It sucks, one of them got me my job, but they're going to be in pretty high demand.
    - Psyonic 11y ago
      I say this only partly in jest: severance == paid vacation, ex-twitter == immediate new job.
  - LunaSea 11y ago
    I should've added \s but talk about being butthurt ...
    - geofft 11y ago
      Adding a sarcasm indicator doesn't magically make sarcasm on-topic on HN.
ScottBev 11y ago
Part of helping underserved communities would be to move some of the business outside the Valley and major metro areas. Find the mid to small cities and spread the wealth.
- smtddr 11y ago
  ...well, the line between spreading the wealth and gentrification is a bit fuzzy. I'm not convinced what's happening in SF, and starting to happen in Oakland, is actually desirable by the residence that were there before tech people showed up. I think it's much better that Jack donates to help public schools, libraries, arts & crafts, other recreational activities in underserved communities.... without sending the gentrification catalyst into them.
- Edmond 11y ago
  This is quite true, the way companies hyper-concentrate is not really given much thought it seems. There are obviously benefits to concentration when it comes to fostering innovation but like everything I imagine there is a point of diminishing returns beyond which the benefits turn to negative. A similar phenomenon can be seen in the DC area, all the companies are hyper-concentrated in NoVa creating a miserable commuting situation for hundreds of thousands of area residents, meanwhile a city like Baltimore a mere 40 miles away is completely ignored when it comes to locating offices.
_lex 11y ago
Depending on how he does this and the basis of the equity, this move may be an amazing tax shield, worth WAY more than it seems. {edit} - I actually think this is exactly the strategy being applied by him and his team of tax strategists - He's using this "donation" as a tax shield and keeping the money in a foundation, which he can use to help "the underprivileged" as he pleases, instead of just paying an amazing amount of tax like Zuck did.
- murbard2 11y ago
  It's not a tax shield if you don't get to keep the money. Of course, if you were going to donate anyway, then sure, it's more tax efficient to give appreciated stocks. But calling it a tax shield makes it sound like you can stand to gain personally by doing this.
  - _lex 11y ago
    He may not keep it, but he can control it, and it will make him significantly more powerful.
  - nmjohn 11y ago
    > But calling it a tax shield makes it sound like you can stand to gain personally by doing this. One (with that much wealth) absolutely stands to gain a ton from it. A family member of mine works in financial trusts / estate planning for multi-millionaires (many times over) and this is one of the things I've heard from them used to limit tax exposure while maximizing the most typical goal - not personal wealth (these people have more money then they will ever be able to spend, that isn't the concern for them) - but rather maximizing family wealth. And once you're extremely wealthy, it's amazing how large your family becomes. Essentially - many charitable foundations are absolutely charitable in their fundamental mission, and best case are helping thousands of people with most of the money directly helping - however what happens in practice, is this foundation then has family members work for it earning somewhere between a reasonable to a completely insane salary depending on any number of factors.
    - 11y ago
cowsandmilk 11y ago
Since the article ends my mentioning Missouri, it is worth mentioning that his cofounder Jim McKelvey used his Square success to found Cultivation Capital, which is a VC focused on parts of the midwest often ignored by the coastal VCs (e.g. Missouri, Indiana, Southern Illinois, etc.)
codingdave 11y ago
My first reaction was that funding artists, musicians, and business is probably not the greatest charitable good that can be done with his money... but then I reconsidered -- It might not be the greatest good, but it is more good than leaving the money in the bank. So... OK, I'll give it a mild thumbs up.
- simonebrunozzi 11y ago
  If someone gives a fortune away for something that deems noble, I would give it a double thumbs up even if I don't completely agree with the recipient. Myself, I would have probably directed that money somewhere else, but I still plaud Jack's initiative. In addition to that, I've always had mixed feelings about him: yes, successful entrepreneur and apparently smart person, but I saw him in person at an event and I made my (bad) opinion about his personality. This gesture somehow fights against that opinion. I might start to like him after all.
- lips 11y ago
  It appeals to me personally. My personal income in NYC is much higher than the average for the area I live in, and it seems to me that many younger people around me have aspirations modeled on those they see in popular media/instagram/youtube. Photography, sound production, graphic design, illustration... these are real, if difficult careers.
- rezistik 11y ago
  Funding artists, musicians and businesses, especially in underserved communities is absolutely the best way to reduce poverty. The world doesn't have a jobs problem, it has a funding problem. It requires capital to accomplish most tasks of notable quality. Plus it circulates the money better.
- oldmanjay 11y ago
  Is there an honest belief that wealthy people keep their money sitting idle in bank accounts? That would explain a lot of the hyperbolic language around the politics of envy - it's a pretty easy (although nonsensical in reality) leap to assume the wealthy accumulate money just to keep it out of the hands of "the people."
jsprogrammer 11y ago
I'd prefer these announcements wait until the stake has been distributed. I think it's been over a year since reddit said the community would receive a 10% stake in the company (or maybe it was just a direct payout of 10% of the amount raised in a previous round). I haven't heard anything about it since.
100k 11y ago
Can anyone who's been though an IPO comment on what happened to the early employees with their 0.1% stake (of the original 10 million shares)? Everyone understands that they'll get diluted with new rounds, but when I read that Dorsey's giving away 40,000,000 shares I wonder what happened to the poor sap who started with 10,000. Do companies typically issue more options or RSUs to existing employees? How many?
- ChuckMcM 11y ago
  Varies from company to company. But every startup I've been in, and a couple of larger companies, gave "refresher" grants to folks annually. That keeps employees from being fully vested and helps skew equity toward the employees who are contributing the most.
- transitorykris 11y ago
  Dilution isn't the only possibility here. Stock splits also happen.
  - 100k 11y ago
    Thanks. I was wondering about that, but had never heard of a split in a private company.
    - tyre 11y ago
      It's more common than you think. I was an early engineer at ZenPayroll (now Gusto) and they split the stock 10-to-1 in their last round. As the company grows and the value of the stock goes up, it becomes difficult to give granular stock options. Rarely publicized because it doesn't mean anything. Owning 5/1000 shares or 50/10000 is the same.
      - hkmurakami 11y ago
        The split definitely helps nudge a new hire to be happier with the offer, all things, being equal, because many hires are still unknowledgeable about the fact that the number of options is irrelevant (like you say), and there is also the subconscious satisfaction of seeing big numbers next to our names that is hard to fight.
dclowd9901 11y ago
I must be hugely cynical because my first thought was "what has this guy done to commit so much to public benefit." There is an unnatural or questionable amount of money for people to give up isn't there?
- eric-hu 11y ago
  Jack Dorsey's net worth is approximately 2.4 billion [1]. Back when Bill Gates stepped down as CEO of Microsoft, he did so not to retire, but to take on the responsibility of spending his money in the best possible way for society. [2] It's pretty easy to imagine a situation in which increasing your net worth can't really earn you more to experience or nice things. I'd wager Dorsey's already at that point, but maybe still wants to create things. [1] https://en.wikipedia.org/wiki/Jack_Dorsey https://en.wikipedia.org/wiki/Jack_Dorsey [2] http://money.cnn.com/2006/06/15/technology/microsoft_news/ http://money.cnn.com/2006/06/15/technology/microsoft_news/

143 points by richiezc 11y ago

he should use that to save Twitter but good on him for getting his priority straight and putting human lives over some glorified text publishing app that gives the world an insight into our most mundane daily mental noise that we otherwise would've never spewed if it wasn't for such social media platforms.

stpe 11y ago

Updated title on original source: "Jack Dorsey is giving up at least 50% of his stake in Square to help underserved communities" Update: This post has been updated to correct that Dorsey will commit 10 percent of the entire company, not just his equity as previously stated. In addition, our calculations were off and I regret the error. This is commendable. Actually intending to making the world a better place (in the non HBO-Silicon-Valley-Show-way).

rco8786 11y ago
Jack owns ~24% of the company. It is just his equity.
- flintchip 11y ago
  Yes, but 10% of 100% is a lot more than 10% of 24%.
  - rco8786 11y ago
    It was reported that he would be giving up 30-50%(now at least 50% apparently) of his own stake. Which comes out around 10% of the entire company, depending on what number is actually correct.

arbitrage314 11y ago

I no longer dislike Jack Dorsey! :)

arbitrage314 11y ago
Why did this comment get downvoted? Is it because other people like Jack Dorsey, or because other people still don't like him? :)

humility 11y ago

Does anyone else feel like it's the government's responsibility to help all the needy sections of the society, and billionaires intervening only abets and condones all the deliberate/unintentional mistakes of the former, and lets them escape it?

msvan 11y ago
Volunteering and donations are a much bigger thing in the US than in Sweden. Here we just tax everybody more, and that mostly takes the place of benevolent billionare philanthropists.
- humility 11y ago
  General masses in Sweden are way better off than those in the US, I'd call that a better approach!
  - mkaziz 11y ago
    Correlation != Causation!
  - adventured 11y ago
    I wouldn't. The top 50% of Americans are better off than the top 50% of people in Sweden. That's 160 million people doing better than Sweden, I call that an extraordinary success. The bottom 1/3 are better off in Sweden than in America however, not much debate on that. Swedes in America also do better than Swedes in Sweden. There is greater opportunity for success in America than there is in Sweden as well. The US has a far greater diversity of culture overall. The US economy is far richer, 45% of all global wealth is concentrated in just 4.6% of the world's population. US universities are far superior to Sweden's. The Swedish household debt to income ratio is far worse than America's, at twice the rate of the US household levels. They've been taking on debt far beyond their means to fake some of that standard of living. Some masses of people are better off in Sweden, some are not. Sweden's unemployment rate is higher than the US. Their system was also a disaster for decades before they launched numerous reforms of the prior formulation of their welfare state, improving its overall free market friendliness.

LunaSea 11y ago

Are the "underserved communities" ex-Twitter employees ?

butwhy 11y ago
Yes, I'm sure the high tier engineers living in SF are very undeserved.
- SEJeff 11y ago
  The @TwitterOSS got really hammered by the layoffs. They were real people, not just "high tier engineers". I take offense as some of my friends, real people, lost their jobs. You shouldn't make light of other people's misfortune.
  - saryant 11y ago
    I had friends at Twitter OSS too and the ones I knew are pretty well poised to do whatever they want at this point. They definitely are high tier engineers. It sucks, one of them got me my job, but they're going to be in pretty high demand.
  - Psyonic 11y ago
    I say this only partly in jest: severance == paid vacation, ex-twitter == immediate new job.
- LunaSea 11y ago
  I should've added \s but talk about being butthurt ...
  - geofft 11y ago
    Adding a sarcasm indicator doesn't magically make sarcasm on-topic on HN.

ScottBev 11y ago

Part of helping underserved communities would be to move some of the business outside the Valley and major metro areas. Find the mid to small cities and spread the wealth.

smtddr 11y ago
...well, the line between spreading the wealth and gentrification is a bit fuzzy. I'm not convinced what's happening in SF, and starting to happen in Oakland, is actually desirable by the residence that were there before tech people showed up. I think it's much better that Jack donates to help public schools, libraries, arts & crafts, other recreational activities in underserved communities.... without sending the gentrification catalyst into them.
Edmond 11y ago
This is quite true, the way companies hyper-concentrate is not really given much thought it seems. There are obviously benefits to concentration when it comes to fostering innovation but like everything I imagine there is a point of diminishing returns beyond which the benefits turn to negative. A similar phenomenon can be seen in the DC area, all the companies are hyper-concentrated in NoVa creating a miserable commuting situation for hundreds of thousands of area residents, meanwhile a city like Baltimore a mere 40 miles away is completely ignored when it comes to locating offices.

_lex 11y ago

Depending on how he does this and the basis of the equity, this move may be an amazing tax shield, worth WAY more than it seems. {edit} - I actually think this is exactly the strategy being applied by him and his team of tax strategists - He's using this "donation" as a tax shield and keeping the money in a foundation, which he can use to help "the underprivileged" as he pleases, instead of just paying an amazing amount of tax like Zuck did.

murbard2 11y ago
It's not a tax shield if you don't get to keep the money. Of course, if you were going to donate anyway, then sure, it's more tax efficient to give appreciated stocks. But calling it a tax shield makes it sound like you can stand to gain personally by doing this.
- _lex 11y ago
  He may not keep it, but he can control it, and it will make him significantly more powerful.
- nmjohn 11y ago
  > But calling it a tax shield makes it sound like you can stand to gain personally by doing this. One (with that much wealth) absolutely stands to gain a ton from it. A family member of mine works in financial trusts / estate planning for multi-millionaires (many times over) and this is one of the things I've heard from them used to limit tax exposure while maximizing the most typical goal - not personal wealth (these people have more money then they will ever be able to spend, that isn't the concern for them) - but rather maximizing family wealth. And once you're extremely wealthy, it's amazing how large your family becomes. Essentially - many charitable foundations are absolutely charitable in their fundamental mission, and best case are helping thousands of people with most of the money directly helping - however what happens in practice, is this foundation then has family members work for it earning somewhere between a reasonable to a completely insane salary depending on any number of factors.
  - 11y ago

cowsandmilk 11y ago

Since the article ends my mentioning Missouri, it is worth mentioning that his cofounder Jim McKelvey used his Square success to found Cultivation Capital, which is a VC focused on parts of the midwest often ignored by the coastal VCs (e.g. Missouri, Indiana, Southern Illinois, etc.)

codingdave 11y ago

My first reaction was that funding artists, musicians, and business is probably not the greatest charitable good that can be done with his money... but then I reconsidered -- It might not be the greatest good, but it is more good than leaving the money in the bank. So... OK, I'll give it a mild thumbs up.

simonebrunozzi 11y ago
If someone gives a fortune away for something that deems noble, I would give it a double thumbs up even if I don't completely agree with the recipient. Myself, I would have probably directed that money somewhere else, but I still plaud Jack's initiative. In addition to that, I've always had mixed feelings about him: yes, successful entrepreneur and apparently smart person, but I saw him in person at an event and I made my (bad) opinion about his personality. This gesture somehow fights against that opinion. I might start to like him after all.
lips 11y ago
It appeals to me personally. My personal income in NYC is much higher than the average for the area I live in, and it seems to me that many younger people around me have aspirations modeled on those they see in popular media/instagram/youtube. Photography, sound production, graphic design, illustration... these are real, if difficult careers.
rezistik 11y ago
Funding artists, musicians and businesses, especially in underserved communities is absolutely the best way to reduce poverty. The world doesn't have a jobs problem, it has a funding problem. It requires capital to accomplish most tasks of notable quality. Plus it circulates the money better.
oldmanjay 11y ago
Is there an honest belief that wealthy people keep their money sitting idle in bank accounts? That would explain a lot of the hyperbolic language around the politics of envy - it's a pretty easy (although nonsensical in reality) leap to assume the wealthy accumulate money just to keep it out of the hands of "the people."

jsprogrammer 11y ago

I'd prefer these announcements wait until the stake has been distributed. I think it's been over a year since reddit said the community would receive a 10% stake in the company (or maybe it was just a direct payout of 10% of the amount raised in a previous round). I haven't heard anything about it since.

100k 11y ago

Can anyone who's been though an IPO comment on what happened to the early employees with their 0.1% stake (of the original 10 million shares)? Everyone understands that they'll get diluted with new rounds, but when I read that Dorsey's giving away 40,000,000 shares I wonder what happened to the poor sap who started with 10,000. Do companies typically issue more options or RSUs to existing employees? How many?

ChuckMcM 11y ago
Varies from company to company. But every startup I've been in, and a couple of larger companies, gave "refresher" grants to folks annually. That keeps employees from being fully vested and helps skew equity toward the employees who are contributing the most.
transitorykris 11y ago
Dilution isn't the only possibility here. Stock splits also happen.
- 100k 11y ago
  Thanks. I was wondering about that, but had never heard of a split in a private company.
  - tyre 11y ago
    It's more common than you think. I was an early engineer at ZenPayroll (now Gusto) and they split the stock 10-to-1 in their last round. As the company grows and the value of the stock goes up, it becomes difficult to give granular stock options. Rarely publicized because it doesn't mean anything. Owning 5/1000 shares or 50/10000 is the same.
    - hkmurakami 11y ago
      The split definitely helps nudge a new hire to be happier with the offer, all things, being equal, because many hires are still unknowledgeable about the fact that the number of options is irrelevant (like you say), and there is also the subconscious satisfaction of seeing big numbers next to our names that is hard to fight.

dclowd9901 11y ago

I must be hugely cynical because my first thought was "what has this guy done to commit so much to public benefit." There is an unnatural or questionable amount of money for people to give up isn't there?

eric-hu 11y ago
Jack Dorsey's net worth is approximately 2.4 billion [1]. Back when Bill Gates stepped down as CEO of Microsoft, he did so not to retire, but to take on the responsibility of spending his money in the best possible way for society. [2] It's pretty easy to imagine a situation in which increasing your net worth can't really earn you more to experience or nice things. I'd wager Dorsey's already at that point, but maybe still wants to create things. [1] https://en.wikipedia.org/wiki/Jack_Dorsey https://en.wikipedia.org/wiki/Jack_Dorsey [2] http://money.cnn.com/2006/06/15/technology/microsoft_news/ http://money.cnn.com/2006/06/15/technology/microsoft_news/