6 ms·

Airbnb asks SEC to let it give hosts equity

100 points by sethbannon 8y ago

gammateam 8y ago
HEY FULL TIME ANGEL INVESTORS AND VCs: Any federal district judge in the country can say these aspects of the Exchange Act (and the Securities Act) chills speech. The only reason this hasn't been challenged is because it doesn't affect accredited investors like you, and the people it does affect don't even know it affects them BECAUSE THE SPEECH IS CHILLED! Please help. These laws are nearing 100 years old, but it has only been the last 20 or so where its been a problem because companies are going public so late as well as few and far between, all while the market efficiencies have improved enough where it makes sense to easily give out equity and things that may be construed as securities. But these laws have always chilled speech and recent case law can be used to extend "free speech" into corporate and financial matters. So please, go for it! Hire the same law firm that did Citizens United, they always go for 1st amendment no matter what the context!
- xevb3k 8y ago
  Could someone spell this out for me, I don’t really understand how speech is chilled here.
  - arkades 8y ago
    Because spending money is now “speech:”
  - evbots 8y ago
    I think the line of reasoning here is that money == speech
- Kinnard 8y ago
  Flagger, why did you flag this comment? I think it's an excellent comment.
  - usaphp 8y ago
    Not a flagged but maybe because of caps?
- toast0 8y ago
  The real question is if this is meaningful stock ownership or not. If it's meaningful ownership, then the company needs to do the public disclosure. Otherwise it's very hard for the stockholders to have the right information to value the stock. I think you could do the disclosures, not have a public offering, include restrictive covenants on sales, and be able to give shares away.
- bogomipz 8y ago
  >"Any federal district judge in the country can say these aspects of the Exchange Act (and the Securities Act) chills speech." Could you elaborate on how and why this provision(701) chills free speech? Thanks.
- stale2002 8y ago
  This misrepresents what Citizens United was about. The idea of Citizens United was not that corporations are people, and therefore have free speech rights. It is instead that corporation is just another word for "groups of people", and that groups of people retain their rights, even when they join together to do something.
  - gammateam 8y ago
    The comment wasn't about Citizens United, it was about hiring the same law firm for representation because they're good OHHH I think you thought that was the case law I referring to! There will be plenty
leroy_masochist 8y ago
So many questions about how this would be implemented.... Does the equity vest immediately? Options or pure equity? To the extent that AirBnB remains private, how do they determine share/strike price? I.e., last round valuation or some kind of mark to market? Is there a clawback option if you later make AirBnB look bad by being a bad host? If anything, this strikes me as a political gambit that is largely devoid of meaningful thought. Chesky's playing the long game; he knows this isn't ever going to go anywhere, but if Congress ever gets pissed off at his company the way they currently are pissed off at GOOG/FB, he has a card to play. "As a matter of fact, Senator, we forcefully advocated for giving our hosts equity in AirBnb, but the SEC decided not to implement the simple legal changes that would have been necessary for us to do so."
- maehwasu 8y ago
  Bingo: seems political, and not a pressing business concern.
- bogomipz 8y ago
  >"If anything, this strikes me as a political gambit that is largely devoid of meaningful thought. Chesky's playing the long game; he knows this isn't ever going to go anywhere, but if Congress ever gets pissed off at his company the way they currently are pissed off at GOOG/FB, he has a card to play." Yeah this was my first thought as well that is likely about "potential good will." Floating this idea costs nothing, has immediately publicity benefits and they don't have to worry about any of the questions you mentioned.
CamTin 8y ago
I know this is probably impossible because the "actual" investors wouldn't be able to cash out, but it would seem to make sense to me for companies like AirBnB and Uber to be organized as host/driver co-ops, with the "corporate" services like ops/marketing/engineering being subordinate to the interests of the workers (hosts/drivers), who also happen to be the owners of the majority of the actual capital stock (apartments and cars). Nothing would even need to change from the customer perspective, very little would need to change in terms of the technology. AirBnB employees would just be working for hosts instead of the other way around. Many agricultural co-ops work like this. You probably are more familiar with the brand names these co-ops employ than their actual organization: Oceanspray cranberries and Florida's Natural orange juice are two you probably know about. These are co-ops where the farmers who produce the oranges and cranberries have pooled to do all the things necessary to actually sell their product on a national market, like advertising and running processing plants (i.e. squeezing the oranges, packing the cranberries) but farmers still own and harvest their own crops. It's not really that radical an idea, and seems to make even more sense in the case of AirBnB where the actual capital needs of the centralized entity (an app) are much less expensive than the physical plant needed to handle gigatons of produce.
- Aloha 8y ago
  You said pretty much what I was going to say. The gig economy starts to look a whole lot more equitable with employee ownership, or a co-op structure. I'll point out, there are several very large companies that are partially, mostly, or wholly employee owned - most notably Graybar.
  - tomp 8y ago
    Isn’t one of the (rare) benefits of the gig economy it’s “on again, of again” nature? How would coownership work if/when hosts/drivers decide to stop working for AirBnB/Uber, or even start working for a competitor? What if they resume after some time? How is this solved with existing coops?
    - hendzen 8y ago
mceoin 8y ago
Venture Coop.

100 points by sethbannon 8y ago

HEY FULL TIME ANGEL INVESTORS AND VCs: Any federal district judge in the country can say these aspects of the Exchange Act (and the Securities Act) chills speech. The only reason this hasn't been challenged is because it doesn't affect accredited investors like you, and the people it does affect don't even know it affects them BECAUSE THE SPEECH IS CHILLED! Please help. These laws are nearing 100 years old, but it has only been the last 20 or so where its been a problem because companies are going public so late as well as few and far between, all while the market efficiencies have improved enough where it makes sense to easily give out equity and things that may be construed as securities. But these laws have always chilled speech and recent case law can be used to extend "free speech" into corporate and financial matters. So please, go for it! Hire the same law firm that did Citizens United, they always go for 1st amendment no matter what the context!

xevb3k 8y ago
Could someone spell this out for me, I don’t really understand how speech is chilled here.
- arkades 8y ago
  Because spending money is now “speech:”
- evbots 8y ago
  I think the line of reasoning here is that money == speech
Kinnard 8y ago
Flagger, why did you flag this comment? I think it's an excellent comment.
- usaphp 8y ago
  Not a flagged but maybe because of caps?
toast0 8y ago
The real question is if this is meaningful stock ownership or not. If it's meaningful ownership, then the company needs to do the public disclosure. Otherwise it's very hard for the stockholders to have the right information to value the stock. I think you could do the disclosures, not have a public offering, include restrictive covenants on sales, and be able to give shares away.
bogomipz 8y ago
>"Any federal district judge in the country can say these aspects of the Exchange Act (and the Securities Act) chills speech." Could you elaborate on how and why this provision(701) chills free speech? Thanks.
stale2002 8y ago
This misrepresents what Citizens United was about. The idea of Citizens United was not that corporations are people, and therefore have free speech rights. It is instead that corporation is just another word for "groups of people", and that groups of people retain their rights, even when they join together to do something.
- gammateam 8y ago
  The comment wasn't about Citizens United, it was about hiring the same law firm for representation because they're good OHHH I think you thought that was the case law I referring to! There will be plenty

leroy_masochist 8y ago

So many questions about how this would be implemented.... Does the equity vest immediately? Options or pure equity? To the extent that AirBnB remains private, how do they determine share/strike price? I.e., last round valuation or some kind of mark to market? Is there a clawback option if you later make AirBnB look bad by being a bad host? If anything, this strikes me as a political gambit that is largely devoid of meaningful thought. Chesky's playing the long game; he knows this isn't ever going to go anywhere, but if Congress ever gets pissed off at his company the way they currently are pissed off at GOOG/FB, he has a card to play. "As a matter of fact, Senator, we forcefully advocated for giving our hosts equity in AirBnb, but the SEC decided not to implement the simple legal changes that would have been necessary for us to do so."

maehwasu 8y ago
Bingo: seems political, and not a pressing business concern.
bogomipz 8y ago
>"If anything, this strikes me as a political gambit that is largely devoid of meaningful thought. Chesky's playing the long game; he knows this isn't ever going to go anywhere, but if Congress ever gets pissed off at his company the way they currently are pissed off at GOOG/FB, he has a card to play." Yeah this was my first thought as well that is likely about "potential good will." Floating this idea costs nothing, has immediately publicity benefits and they don't have to worry about any of the questions you mentioned.

CamTin 8y ago

I know this is probably impossible because the "actual" investors wouldn't be able to cash out, but it would seem to make sense to me for companies like AirBnB and Uber to be organized as host/driver co-ops, with the "corporate" services like ops/marketing/engineering being subordinate to the interests of the workers (hosts/drivers), who also happen to be the owners of the majority of the actual capital stock (apartments and cars). Nothing would even need to change from the customer perspective, very little would need to change in terms of the technology. AirBnB employees would just be working for hosts instead of the other way around. Many agricultural co-ops work like this. You probably are more familiar with the brand names these co-ops employ than their actual organization: Oceanspray cranberries and Florida's Natural orange juice are two you probably know about. These are co-ops where the farmers who produce the oranges and cranberries have pooled to do all the things necessary to actually sell their product on a national market, like advertising and running processing plants (i.e. squeezing the oranges, packing the cranberries) but farmers still own and harvest their own crops. It's not really that radical an idea, and seems to make even more sense in the case of AirBnB where the actual capital needs of the centralized entity (an app) are much less expensive than the physical plant needed to handle gigatons of produce.

Aloha 8y ago
You said pretty much what I was going to say. The gig economy starts to look a whole lot more equitable with employee ownership, or a co-op structure. I'll point out, there are several very large companies that are partially, mostly, or wholly employee owned - most notably Graybar.
- tomp 8y ago
  Isn’t one of the (rare) benefits of the gig economy it’s “on again, of again” nature? How would coownership work if/when hosts/drivers decide to stop working for AirBnB/Uber, or even start working for a competitor? What if they resume after some time? How is this solved with existing coops?
  - hendzen 8y ago

mceoin 8y ago

Venture Coop.