3 ms·

The Shelf Life of John Mackey

44 points by troydavis 9y ago

CaliforniaKarl 9y ago
A prescient article. I hope this publication will be able to do a follow up some time later, once things settle. I also wonder: My understanding is that many recent tech IPOs are structured such that most investors have limited ability to activist-invest in a company (like what is happening with Whole Foods). Is that (at least partially) because those CxOs have seen this happen before, and don't want it to happen to them?
losteverything 9y ago
Texas monthly is one of those pubs that stands out. It must be hell for mackey to lose/give everything. The article is worth a read
- chiph 9y ago
  They do terrific long-form reporting. My guess is that he'll become an Amazon employee like Tony Hsieh did and continue to run the business. At least until he finds something else he wants to do more than that. He'll get a windfall from the sale of course. And he'll probably start a charitable foundation, or perhaps join another one (like the Bill & Melinda Gates Foundation) and only keep his current $100mm to live on. Which is "enough" for most purposes. I've stopped by the new 365 store in Cedar Park (a suburb north of Austin) and I find that it's less intimidating than the mothership at Lamar & 6th. I hope the concept does well.
Sujan 9y ago
Very ELI5 question: > When a company hits an extended rough patch and its stock price slides into a trough and stays there for a while, a special class of opportunistic investors—hedge funds and so-called activist investors like Jana Partners—stands ready to pounce. They buy up large chunks of the stock, enough to give them some bully power, and try to force the company to make changes that could increase the stock’s value, preferably quickly. That might mean selling the company, breaking it apart, forcing cost cuts, replacing leaders, or other often drastic measures. If the activists can rally other shareholders to join their cause, the company may have no choice but to acquiesce, at least to some degree. Why does owning shares automatically mean having power over a company? Is there no way to say "You buy shares, and the only right you acquire by it is participating in share price increases and an optional dividend we decide to pay or not"?
- al2o3cr 9y ago
  Companies can issue common stock both with and without voting rights; non-voting stock isn't welcome at some exchanges like the NYSE, for instance. Here's an article with more history: https://www.bloomberg.com/view/articles/2017-03-16/non-voting-shares-don-t-have-a-pretty-history https://www.bloomberg.com/view/articles/2017-03-16/non-votin...
- throwaway9980 9y ago
  Google and Facebook are structured this way. Multiple classes of stock, some with voting rights and most without. The founders own the majority of shares in the voting class and the public owns the majority of shares in the non-voting class. Larry/Sergei and Zuckerberg retain control indefinitely.
- jasode 9y ago
  >Is there no way to say "You buy [non-voting shares]" Yes, you can have multiple classes of shares[1], but the tradeoff is it makes the shares less desirable for investors. This means the pricing of shares will be lower (or possibly unsaleable) and you won't raise as much capital as you intended. If you have a company considering an IPO, your investment banker (e.g. Goldman Sachs, Credit Suisse, etc) will advise if the marketplace is willing to buy your non-voting shares. Facebook is an interesting example of having 3 classes of shares: Class A - 1 vote per share Class B - 10 votes per share (MZ holds these) Class C - 0 votes Facebook did not issue Class C when they went public in 2012. The non-voting shares were created in 2016.[2] Snap Inc on the other hand, issued non-voting shares right at the IPO. When you're a glamorous high-flying tech company, it's easier to entice investors with the less-desirable non-voting shares. Could Whole Foods have issued non-voting shares at IPO in 1992? They would have had to have agreement from their investment bank to underwrite them and market interest from the first wave of investors to buy them. You can't always have your cake (significant capital funding) and eat it too (outside investors get 0 votes). [1] http://www.investopedia.com/articles/fundamental/04/092204.asp http://www.investopedia.com/articles/fundamental/04/092204.a... [2] http://www.nasdaq.com/g00/article/facebook-shareholders-approve-creation-of-class-c-shares-cm638528 http://www.nasdaq.com/g00/article/facebook-shareholders-appr...

44 points by troydavis 9y ago

A prescient article. I hope this publication will be able to do a follow up some time later, once things settle. I also wonder: My understanding is that many recent tech IPOs are structured such that most investors have limited ability to activist-invest in a company (like what is happening with Whole Foods). Is that (at least partially) because those CxOs have seen this happen before, and don't want it to happen to them?

losteverything 9y ago

Texas monthly is one of those pubs that stands out. It must be hell for mackey to lose/give everything. The article is worth a read

chiph 9y ago
They do terrific long-form reporting. My guess is that he'll become an Amazon employee like Tony Hsieh did and continue to run the business. At least until he finds something else he wants to do more than that. He'll get a windfall from the sale of course. And he'll probably start a charitable foundation, or perhaps join another one (like the Bill & Melinda Gates Foundation) and only keep his current $100mm to live on. Which is "enough" for most purposes. I've stopped by the new 365 store in Cedar Park (a suburb north of Austin) and I find that it's less intimidating than the mothership at Lamar & 6th. I hope the concept does well.

Sujan 9y ago

Very ELI5 question: > When a company hits an extended rough patch and its stock price slides into a trough and stays there for a while, a special class of opportunistic investors—hedge funds and so-called activist investors like Jana Partners—stands ready to pounce. They buy up large chunks of the stock, enough to give them some bully power, and try to force the company to make changes that could increase the stock’s value, preferably quickly. That might mean selling the company, breaking it apart, forcing cost cuts, replacing leaders, or other often drastic measures. If the activists can rally other shareholders to join their cause, the company may have no choice but to acquiesce, at least to some degree. Why does owning shares automatically mean having power over a company? Is there no way to say "You buy shares, and the only right you acquire by it is participating in share price increases and an optional dividend we decide to pay or not"?

al2o3cr 9y ago
Companies can issue common stock both with and without voting rights; non-voting stock isn't welcome at some exchanges like the NYSE, for instance. Here's an article with more history: https://www.bloomberg.com/view/articles/2017-03-16/non-voting-shares-don-t-have-a-pretty-history https://www.bloomberg.com/view/articles/2017-03-16/non-votin...
throwaway9980 9y ago
Google and Facebook are structured this way. Multiple classes of stock, some with voting rights and most without. The founders own the majority of shares in the voting class and the public owns the majority of shares in the non-voting class. Larry/Sergei and Zuckerberg retain control indefinitely.
jasode 9y ago
>Is there no way to say "You buy [non-voting shares]" Yes, you can have multiple classes of shares[1], but the tradeoff is it makes the shares less desirable for investors. This means the pricing of shares will be lower (or possibly unsaleable) and you won't raise as much capital as you intended. If you have a company considering an IPO, your investment banker (e.g. Goldman Sachs, Credit Suisse, etc) will advise if the marketplace is willing to buy your non-voting shares. Facebook is an interesting example of having 3 classes of shares: Class A - 1 vote per share Class B - 10 votes per share (MZ holds these) Class C - 0 votes Facebook did not issue Class C when they went public in 2012. The non-voting shares were created in 2016.[2] Snap Inc on the other hand, issued non-voting shares right at the IPO. When you're a glamorous high-flying tech company, it's easier to entice investors with the less-desirable non-voting shares. Could Whole Foods have issued non-voting shares at IPO in 1992? They would have had to have agreement from their investment bank to underwrite them and market interest from the first wave of investors to buy them. You can't always have your cake (significant capital funding) and eat it too (outside investors get 0 votes). [1] http://www.investopedia.com/articles/fundamental/04/092204.asp http://www.investopedia.com/articles/fundamental/04/092204.a... [2] http://www.nasdaq.com/g00/article/facebook-shareholders-approve-creation-of-class-c-shares-cm638528 http://www.nasdaq.com/g00/article/facebook-shareholders-appr...