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The rise of super-voting shares has given founders the ultimate job security
- deleted 10y ago[deleted]
- elvinyung 10y agoOpinions on Uber aside, wasn't everyone complaining a while ago that VCs were having too much control?
- kristianov 10y agoYin and Yang, my friend, Yin and Yang.
- swampthinker 10y agoI thought it was Ying and Yang?
- hellofunk 10y agoNope, not Ying. Yin.
- swampthinker 10y agoTIL.
- sika_grr 10y agoDoes nobody on Hacker News watch Silicon Valley? Or are references in comments frowned upon?
- Trundle 10y agoReferences are generally frowned upon, at least when that's all there is to the comment. There is a strong fear here of becoming reddit.
- stagbeetle 10y agoCensor thyself, lest ye cause the plague.
- nebabyte 10y agoUh > comments saying that HN is turning into Reddit [...] a common semi-noob illusion, as old as the hills
- stagbeetle 10y agoIt's a very vague reference and it completely slipped past me the first time reading through. Compare that to something like Szechuan Sauce.
- blowski 10y agoTypically, yes. One of the most frustrating things about Reddit is the neverending cliched references. It's why HN comments are so much higher in quality.
- rimliu 10y ago> It's why HN comments are so much higher in quality. Not always the case. Sometimes just boring. More relaxed attitude on reddit attracts more diverse expressions and sometimes that can be a bad thing, but sometimes it is a good thing.
- Majestic121 10y agoYou're absolutely right, it can be both good and bad. What's great is that since both Reddit and HN exists, there is space for both and no need to compromise on either side : relaxed on Reddit and high quality on HN
- bbctol 10y agoOne might say... yin and yang, my friend, yin and yang.
- jquery 10y agoHacker News prides itself on a higher ratio of signal to noise than other, more popular websites, that will remain nameless.
- dingo_bat 10y agoI feel it is good that founders are increasingly able to keep their companies under their control.
- jquery 10y agoIf Uber fails due to the fact the Uber board cannot fire its CEO, the trend may reverse. Uber is too big to fail without industry-wide repercussions.
- gaius 10y agoUber is too big to fail Not true. If Uber disappeared then everyone would install another app - if they haven't already - and one ride later would forget Uber ever existed.
- wheels 10y agoThey're discussing the VC industry, not the ride-sharing industry.
- jquery 10y agoI wasn't referring to consumers. What I meant was that $60 billion in value disappearing in a puff of smoke, because of one individual who couldn't be fired when the role outgrew him, would be a shattering event for SV investors, and negotiations around equity terms for founders would likely change.
- yCloser 10y agolet me tell you in 1char: '$'
- milesf 10y agoFTA: "That’s due in part to the dual-class share structure that savvy tech founders have come to embrace in recent years... with smart management techniques when setting up a board to guarantee control in perpetuity." Though "savvy" and "smart" today, tomorrow other words might be used to describe this type of behavior.
- stagbeetle 10y ago> "Though "savvy" and "smart" today, tomorrow other words might be used to describe this type of behavior." Iconoclastic and resolute. Half-jokes aside, why do you think people will have a negative view of this sort of thing, in the future? Its main purpose is to circumvent the short-term groupthink of investors that plagues all modern companies (I'm looking at you, Amazon). Even if this means the CEO sets course for shipwreck (ex. Uber), the people being hurt the most are investors. They'll be seen as populists fighting the fat cats who can't keep their fingers out of everyone's cookie jars.
- soufron 10y agoWell, let's just wait how people will react when they will understand that they accepted to invest billions in assholes who got lucky but have as much vision and management skills as a 5 years old kid.
- bryanrasmussen 10y agoI don't know if it's lack of vision and management skills as much as it is lack of a moral compass, and being jerks.
- dastbe 10y agohow would you say that investors are forcing short-term groupthink at Amazon?
- michaelt 10y agowhy do you think people will have a negative view of this sort of thing, in the future? The fear is when there are conflicts between the interests of investors and the interests of the CEO, the CEO will get what he wants and the investors won't. Imagine a company has $x and has to distribute that money between investors' dividends and the CEO's bonus. The more control the CEO has, the larger his slice of the pie. Or perhaps the CEO will decide he really feels like only working 2 days a week. Or he wants to appoint his idiot relative as a senior manager. Or he wants to use employees' time to run a political campaign. Or any of a lot of other things that he likes the sound of, but that investors don't.
- tyre 10y agoI think there is something to increasing voting preference based on tenure of shareholding. Giving more control to longer-term shareholders leads to long term thinking aim governance. Something like vesting for stock voting would be interesting. What if we had the number of votes equal to the number of years the stock was held by that investor (with some max)? On the other hand, I don't agree with CEOs having board control. That prevents any company oversight (which is exactly the point of the board.) No one should be immune from reproach. The article gives examples of great CEOs being fired, but there are at least as many examples of poor CEOs retaining power.
- Chaebixi 10y ago> I think there is something to increasing voting preference based on tenure of shareholding. Giving more control to longer-term shareholders leads to long term thinking aim governance. While I like any idea that would encourage longer-term thinking, wouldn't the founders be the longest-term shareholders with the most voting power, in this case? So, many of the problems of super-voting shares would still apply?
- tyre 10y agoThat's why there should be a max. So, for example, you get one vote per year up to a maximum of five votes. Anyone holding a share for longer than that (6, 10, 100 years) gets the same 5 votes per share.
- soufron 10y agoI see many people comment with "so what". Well, let's just wait how people will react when they will understand that they accepted to invest billions in assholes who got lucky but have as much vision and management skills as a 5 years old kid.
- nothrabannosir 10y agoOk, I'll bite: so what? Should I care about private investors losing money in Uber or something? Haha pass me the tissues, I feel tears coming up already. Poor oil sheiks! Poor rich people. Didn't do due diligence and are now losing money on a bad investment! The world is cruel and unjust. Something must be done!
- tehlike 10y agoi guess it's hard to call uber ceo visionless. All unethical stuff aside (that's not to say it's not important), he's brilliant. disrupting transportation industry - including logistics industry - is not something you can do without that.
- wcarron 10y agoApparently it is also something one can't do without flagrantly disregarding the law.
- JumpCrisscross 10y agoEven if investors could easily fire Travis, I doubt they would. This is the man who has taken the company from zero to $60bn. He has it embroiled in numerous commercial, political and technological battles around the world, most of which--until recently--Uber has been winning. Any replacement would, at the very least, need extensive mentoring from him. Kalanick has described Uber as his baby. He won't properly mentor someone he's forced to accept as his replacement. This means a CEO totally unequipped to know where Uber's chips are, let alone play them properly. Keep in mind: Uber is largely forging new ground. We don't have a playbook for replacing a durable good purchased by consumers with technologically synchronised fleets. Replacing a CEO is usually seen as a textbook cosmetic change. A swap at the top and nothing below. Bringing in a Schmidt to Travis's Page looks like the savviest option. Uber has been drawn through the dirt for good reason. They need to change or die. That said, assuming they can get past the Waymo bullshit, there's nothing the press loves more than a turnaround story.
- onion2k 10y agoThis is the man who has taken the company from zero to $60bn. There's no reason to assume someone capable of taking a company from zero to $60bn is necessarily capable of taking it from $60bn to $120bn, or even just maintaining a $60bn valuation. Quite often the skills needed to start something are different from the skills needed to grow or to maintain something. That isn't to say Travis can't do it. He's clearly incredibly capable of doing some amazing things. I'm just questioning the idea that he's automatically the right person to run Uber using a basis of the fact he started Uber. While he has done some astounding things he's also been CEO while Uber has done some very bad things too.
- ckastner 10y agoThere's no reason to assume someone capable of taking a company from zero to $60bn is necessarily capable of taking it from $60bn to $120bn, or even just maintaining a $60bn valuation. Quite often the skills needed to start something are different from the skills needed to grow or to maintain something. Theranos comes to mind.
- rustoo 10y agoMaybe they can create a holding company (focusing on strategy) that is headed by Travis and under it put Uber (focusing on operations) headed by a new CEO. Something similar to what Google has done using Alphabet.
- _pmf_ 10y agoThis would also be clever to decouple Uber-the-brand (which has immense value) from Uber-the-driver-exploiter (which has a unsavory aftertaste) and Uber-the-autonomous-driving-dilettante (which is a running joke).
- crdb 10y agoIt makes it more painful, but shareholders can sue management and the board if their interests are not represented (see the numerous lawsuits against Yahoo). Or in other words "when there's a will there's a way". The real reason they won't replace him is that he built a unicorn from nothing for them, making them very rich and cool in the process (imagine being able to say "I was an early stage investor in Uber"), and by all accounts he has not changed, with Uber being run as a large, efficient company that delivers globally with McDonald's level reliability. Investors also know that what people say and do are very different things. In aggregate, customers will publicly complain and say they will take Lyft, but privately will vote with their wallet (after all who sees what you book), in the same way that publicly they decry energy wastage whilst they take holidays on other continents and drive SUVs to their giant McMansion. I literally cannot think of a company that "won" by promoting its ethical competitiveness, beyond conquering the few percent of the market who can afford to care and care enough to pay a premium. I wonder how many of the #DeleteUber reinstalled it quietly a few weeks later. The public has a very short memory - as a Frenchman I remember being called cheese-eating surrender monkey by the same Brits who today protest against "American imperialism". Governments won't do anything since Uber has tons of positive externalities such as reduction in drunk driving, creation of many part time unskilled jobs and generally electorate happiness in having a reliable and affordable taxi service. They think in terms of net welfare and a few Californians having some issues at work is the least of their worries.
- johncolanduoni 10y agoGroup rides are a big market for ride sharing, so even if people only drop Uber for those and still use it privately that could be a big hit.
- SNwaiga 10y ago" customers will publicly complain and say they will take Lyft, but privately will vote with their wallet " Exactly, public opinion doesn't really have any weight anymore.
- TeMPOraL 10y agoDid it ever? That it has sounds mostly like a lie told to the public to placate it.
- macspoofing 10y agoPutting his super-voting shares aside, should he be fired? Uber has been spectacularly successful and now is going through a bit of a rough time - is that enough to get rid of him?
- andriesm 10y agoKalanick has done a stellar job of creating value at Uber. He made the rules, and every investor either choses to accept Kalanick's rules, or they can not invest. I will do EXACTLY the same if I raised a lot of outside capital. If you don't trust the founder's judgement, don't invest.
- ojosilva 10y agoOn a humorous note, and I don't know if this was intended or not, but in the the picture of Travis Kalanick that leads the article, if you look closely, he seems to have stepped on some sh*t. Maybe this was unintended, but the metaphor is definitely there.
- known 10y agoAKA https://en.wikipedia.org/wiki/Stockholm_syndrome https://en.wikipedia.org/wiki/Stockholm_syndrome
- bjornsing 10y ago> The argument for allowing a small set of founders complete control over their boards is the same one to be made for enabling benevolent dictatorships. To me it feels like this is often the underlying (mis)understanding in articles like this one: "It's dictatorship; dictatorship is bad!". Well, I guess it's obvious to most here, but let me say it anyway: Companies are not democracies, they're not meant to be, and there's a hell of a difference between Travis clinging to power in Uber and say The Donald doing the same, but in the White House.
- dominotw 10y agoi don't understand, why would uber want to fire its CEO? Was there a theranos like scandal ? Feel a little out of loop here.
- 627467 10y agoPersonally I think that more than market consolidation and siloing, it is this power that dual-class shares confers that is feeding our current neo-feudalistic economy.
- tryitnow 10y agoI'm skeptical of dual class shareholders. Honestly, it's not a terribly inventive idea. So why hasn't it been done before on such a widespread basis? If the ability to vote is valuable then that means investors will be willing to pay more for it. If it's not valuable then why do founders insist on reducing investor power? There's a contradiction in there somewhere. If capital were to suddenly dry up what would happen to the value of most of these companies? I would predict a significant drop in valuations for all companies that aren't monopolies (e.g. Google and Facebook). Steve Jobs is often used as an example of why we need "CEOs for life." But let's not forget that Jobs had fairly little shareholder power in Apple - most of his billions came from Pixar. So ironically, at the time Jobs was brought back to Apple it was basically equivalent to bringing in a non-founder CEO from the perspective shareholder power.