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Owning shares is not a negative. It's a positive. It means that he's more aligned with shareholders than with management. Boards full of non-shareholders tend

Owning shares is not a negative. It's a positive. It means that he's more aligned with shareholders than with management. Boards full of non-shareholders tend to prioritize the paycheck they get as board members, so they tend to not want to rock the boat or get into conflicts with mangement. Those that are shareholders first tend to have a bigger incentive to confront or fire management if they start doing things that are bad for shareholders.

zepearl 8y ago
Does this mean that a company should use somebody who owns a lot of shares during bad times (when some drastic measure is needed to bring the company back into profitability), and normal paycheck-people during normal times (to ensure that no big risk is taken without reason)? (genuinely asking)
- startupdiscuss 8y ago
  confused as to why someone who owns a lot of shares would want to take a "big risk" "without reason" during "normal times." Wouldn't a person with a lot of stock not want to take a big risk without reason at any time?
  - zepearl 8y ago
    > confused as to why someone who owns a lot of shares would want to take a "big risk" "without reason" during "normal times." I wrote "normal paycheck-people during normal times (to ensure that no big risk is taken without reason)" > Wouldn't a person with a lot of stock not want to take a big risk without reason at any time? (honestly, I'm not sure if I understand the double negation correctly) If you got the stock (or options) for the price of "1" while becoming CEO or similar, you'll probably desperately try to raise that stock price above 1 while your "empire" lasts.
Sniffnoy 8y ago
Yeah, but this is Larry Ellison we're talking about. Do you want to trust his idea of "good for shareholders"?
- MikeCapone 8y ago
  I was making more of a general statement about the dynamics involved. Of course, then you have to look at it case-by-case.
- darkpuma 8y ago
  Maybe, I'm not sure. But I know I don't trust his idea of "good for the human beings inside Tesla cars, and the human beings on the road with Tesla cars."
  - Sniffnoy 8y ago
    I mean, these are related. If Tesla cars aren't safe for the people inside, people won't buy them. If they're not safe for others, lawsuits will follow. Bad for these are bad for shareholders too. But certain people will ignore this to their own detriment, and I expect Ellison to be one of them.
    - darkpuma 8y ago
      That's assuming car buyers are rational actors, and assuming the courts are fair. I think both are poor assumptions. What if the car itself isn't faulty if operated according to the fine print, but the marketing material for the car suggests to drivers the car has capabilities that exceed reality? Could Tesla theoretically be sued into compliance? Sure, maybe. But would it actually happen? Would Tesla defend their reputation by correcting their marketing material, or would Tesla defend their reputation for blaming the drivers? And of course as you mention there is the possibility that Ellison is irrational.
      - Sniffnoy 8y ago
        I'm not sure how much the fine print matters if it fails basic fit-for-purpose standards. Regarding irrationality -- see e.g. this[0] Shamus Young post about the video game industry. IMO, this general sort of irrationality is everywhere. Businesses in general tend to be irrational because they're run by suits, whose primary motivation is not actually accumulating money for the business but rather prestige for themselves, which you get by doing business-y things, regardless of whether those actually make money. For all his reputed greed, that's how I actually expect Larry Ellison to act. [0] https://www.shamusyoung.com/twentysidedtale/?p=41924 https://www.shamusyoung.com/twentysidedtale/?p=41924
Jarbooski 8y ago
Wow, SV has warped your mind into down is up.

zepearl 8y ago

Does this mean that a company should use somebody who owns a lot of shares during bad times (when some drastic measure is needed to bring the company back into profitability), and normal paycheck-people during normal times (to ensure that no big risk is taken without reason)? (genuinely asking)

startupdiscuss 8y ago
confused as to why someone who owns a lot of shares would want to take a "big risk" "without reason" during "normal times." Wouldn't a person with a lot of stock not want to take a big risk without reason at any time?
- zepearl 8y ago
  > confused as to why someone who owns a lot of shares would want to take a "big risk" "without reason" during "normal times." I wrote "normal paycheck-people during normal times (to ensure that no big risk is taken without reason)" > Wouldn't a person with a lot of stock not want to take a big risk without reason at any time? (honestly, I'm not sure if I understand the double negation correctly) If you got the stock (or options) for the price of "1" while becoming CEO or similar, you'll probably desperately try to raise that stock price above 1 while your "empire" lasts.

Sniffnoy 8y ago

Yeah, but this is Larry Ellison we're talking about. Do you want to trust his idea of "good for shareholders"?

MikeCapone 8y ago
I was making more of a general statement about the dynamics involved. Of course, then you have to look at it case-by-case.
darkpuma 8y ago
Maybe, I'm not sure. But I know I don't trust his idea of "good for the human beings inside Tesla cars, and the human beings on the road with Tesla cars."
- Sniffnoy 8y ago
  I mean, these are related. If Tesla cars aren't safe for the people inside, people won't buy them. If they're not safe for others, lawsuits will follow. Bad for these are bad for shareholders too. But certain people will ignore this to their own detriment, and I expect Ellison to be one of them.
  - darkpuma 8y ago
    That's assuming car buyers are rational actors, and assuming the courts are fair. I think both are poor assumptions. What if the car itself isn't faulty if operated according to the fine print, but the marketing material for the car suggests to drivers the car has capabilities that exceed reality? Could Tesla theoretically be sued into compliance? Sure, maybe. But would it actually happen? Would Tesla defend their reputation by correcting their marketing material, or would Tesla defend their reputation for blaming the drivers? And of course as you mention there is the possibility that Ellison is irrational.
    - Sniffnoy 8y ago
      I'm not sure how much the fine print matters if it fails basic fit-for-purpose standards. Regarding irrationality -- see e.g. this[0] Shamus Young post about the video game industry. IMO, this general sort of irrationality is everywhere. Businesses in general tend to be irrational because they're run by suits, whose primary motivation is not actually accumulating money for the business but rather prestige for themselves, which you get by doing business-y things, regardless of whether those actually make money. For all his reputed greed, that's how I actually expect Larry Ellison to act. [0] https://www.shamusyoung.com/twentysidedtale/?p=41924 https://www.shamusyoung.com/twentysidedtale/?p=41924

Jarbooski 8y ago

Wow, SV has warped your mind into down is up.