4 ms·

Care to elaborate on why? The initial condition here is founders having full voting rights. In a free marketplace, they're free to sell shares without (or wit

Care to elaborate on why? The initial condition here is founders having full voting rights. In a free marketplace, they're free to sell shares without (or with little) voting rights as they wish. If investors aren't happy with it (which doesn't seem to be the case), they're free to not invest. You seem to be stating that there's a moral imperative that founders voluntarily give away voting rights to investors.

twblalock 10y ago
I don't know if I would call it a "moral" imperative, but it's a basic tenet of good corporate governance that the board, which represents the shareholders, should be able to prevent the management from harming the company or the shareholder's interests. In the case of Uber, the CEO could run the company into the ground, and nobody would be able to prevent that. A trend toward worse corporate governance could harm the entire economy eventually.
- smallgovt 10y ago
  Got it, I can buy into the argument that pro-rata voting rights would lead to better performing companies than founder-controlled companies (in the long run and on average). But, I don't see any reason why founders should be obligated to give away voting rights. In other words, I would argue that if founder CEO's want that level of control, they SHOULD get it. It's sort of weird to even phrase it as "get it". They already have it by default, and I don't see why we should have any right to force them to give it away.
- shostack 10y ago
  Isn't that the "risk" part of private investment like this? In theory if/when Uber goes public, the market can hammer his share price into submission. His choice then would be to step down and keep his money, or watch his valuation rapidly dwindle as low as the market dictates.
- xbmcuser 10y ago
  The investors came into the company knowing he will keep the control it was a risk they were willing to take. Even if he runs it into the ground they don't have a leg to stand on. They were not strong armed into investing it was a choice they made.

twblalock 10y ago

I don't know if I would call it a "moral" imperative, but it's a basic tenet of good corporate governance that the board, which represents the shareholders, should be able to prevent the management from harming the company or the shareholder's interests. In the case of Uber, the CEO could run the company into the ground, and nobody would be able to prevent that. A trend toward worse corporate governance could harm the entire economy eventually.

smallgovt 10y ago
Got it, I can buy into the argument that pro-rata voting rights would lead to better performing companies than founder-controlled companies (in the long run and on average). But, I don't see any reason why founders should be obligated to give away voting rights. In other words, I would argue that if founder CEO's want that level of control, they SHOULD get it. It's sort of weird to even phrase it as "get it". They already have it by default, and I don't see why we should have any right to force them to give it away.
shostack 10y ago
Isn't that the "risk" part of private investment like this? In theory if/when Uber goes public, the market can hammer his share price into submission. His choice then would be to step down and keep his money, or watch his valuation rapidly dwindle as low as the market dictates.
xbmcuser 10y ago
The investors came into the company knowing he will keep the control it was a risk they were willing to take. Even if he runs it into the ground they don't have a leg to stand on. They were not strong armed into investing it was a choice they made.