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Bose founder makes big stock donation to MIT
- tt 15y agoI was fortunate to be a student of Dr. Bose many years ago. No other professor gave unlimited time on exams, plus free Toscanini's ice cream to boot! Beyond those small perks, his stories working with Norbert Wiener and his inspirations have completely transformed and shaped my personality and how I solve problems. Above all, the highest integrity one would have with his/her work, has been my #1 beacon thanks to Dr. Bose. I will always cherish that end-of-term field trip at his corporate headquarters where I witnessed amazing demos (including the active automobile suspensions), and heard even more stories that made me believe that anything is possible when you put your mind and heart into it.
- clistctrl 15y agosorry I have only a little value to add... but Toscanini's is some of the best ice cream you can get in Boston.
- jpdoctor 15y ago3 words for you: Ginger Snap Molasses.
- ThomPete 15y agoI am interested. What did him and Wiener work on?
- tt 15y agoBose spent over a decade working with Wiener. It started when Lee recruited Bose (as a grad student) to work under Wiener. Bose often told the story of the initial encounter, in which he spent 6 months fearing for his life because his level of math versus that of Wiener was equivalent to a child who knows basic arithmetic versus someone well versed with Calculus. They worked together on a wide variety of projects, including bio-engineering projects where they measured brain signals of hospital patients who lost, say, their arms but was asked to pretend to move their fingers as if their arms were still attached. According to Bose, Wiener was a total genius who had an amazing memory. He fully memorized AND understood the human anatomy down to every detail, and often corrected experienced Harvard doctors from mistakes, large or small. Wiener told Bose that he resented his upbringing because his parents wanted to see if they could raise a genius. By age 7, Wiener's eyesight was nearly shot from so much reading, but his parents pushed on and made Wiener do everything in his head instead.
- ThomPete 15y agoFascinating. I have Weiners book "Cybernetics: Or the Control and Communication in the Animal and the Machine" (unfortunately not in the hardback version) and although I don't understand the math in the book I still read it to the best of my ability. Another book that I did understand and which made me understand Weiners book a little better conceptually was Valentino Braitenbergs "Vehicles: Experiments in Synthetic Psychology" a fantastick book for math morons like myself. Thank you so much for your little story.
- Florin_Andrei 15y ago> Wiener told Bose that he resented his upbringing because his parents wanted to see if they could raise a genius. Looks like they were pretty successful.
- masterzora 15y ago> I was fortunate to be a student of Dr. Bose many years ago. No other professor gave unlimited time on exams, plus free Toscanini's ice cream to boot! Unlimited time and free food is a good thing? I went to Harvey Mudd and the only thing more terrifying than an unlimited time exam was an unlimited time exam with free food. It was a surefire indicator that you were about to lose a significant chunk of your time working on a nigh-impossible exam. I guess it's just weird to find out that this isn't universal.
- tt 15y agoThose were great perks since no other classes I knew had them. Bose didn't offer these things so he could have impossible exams. He offered them because he was cool like that. :) If you knew your materials, it would have taken about 1 to 1.5 hrs to finish the exam. The vast majority finished within 2 hrs (typical duration of MIT night exams). But indeed there were a few who stuck around for 4-5 hrs. At least one TA had to stick around too.
- masterzora 15y agoAh, that's a much different case. There's a (true) horror story about an upper division physics course at Harvey Mudd. It was an unlimited time proctored exam. The prof apparently expected the students to spend 4-5 hours, but when nobody had left by then he had to order some pizzas to feed them. If I remember the story correctly, most of the students exceeded 20 hours and, I might be making this up, but I believe a couple got into the 40-some range. This isn't really the usual case (most of the unlimited time exams are take home exams rather than proctored), but it's still terrifying.
- Anechoic 15y ago>But indeed there were a few who stuck around for 4-5 hrs. At least one TA had to stick around too. In one of our exams, there was supposedly a student who remained in the hall until 3 or 4am. It was unlimited time and s/he decided to take advantage of it. I took the class pass/fail (I was an Mech E so I didn't have a great background in the advanced EE stuff underpinning some of the concepts) so I always left sooner than I really should have since I didn't sweat the small stuff.
- smackfu 15y agoHe should have donated 30% to MIT and 70% to a good marketing school.
- robg 15y agoSeems like Bose did just fine in marketing without that additional "schooling".
- juiceandjuice 15y agoIt was a joke about Bose products...
- xyzzyb 15y agoI'd bet that a brilliant marketer with additional schooling was behind that.
- smackfu 15y ago(Also, it's pretty ironic that I know that MIT is a good tech school but have no idea what a good marketing school is.)
- rit 15y agoThis is an incorrect title; the wrong conclusion may have been drawn. Although he has given them majority shares they are nonvoting only. The terms of.the gift forbid them from selling the shares or participating in any management or governance of the company. Bose is remaining a private / independent company still run by said founder. This is essentially a gift that should pay nice stock dividends for MIT.
- jackolas 15y agoIt's interesting that they're expected to just take what is given to them and not try and not be allowed to control their financial income.
- space-monkey 15y agoThey don't have to take it.
- biot 15y agoThose were the conditions under which the gift was offered. They are controlling their financial income by choosing to accept the gift, which gives them revenue from dividends. It's very similar to how a trust fund operates.
- jhamburger 15y agoCan't the remaining shareholders vote to suspend dividend payments indefinitely?
- cma 15y agoNo; something akin to minority shareholder rights applies.
- chernevik 15y agoYes, but they themselves wouldn't then receive dividends. They could route cash to themselves by issuing other capital instruments, but the corporate by-laws and / or charter should protect minority equity against this. This sort of thing is why you want good lawyers up front. The likelier problem is management controlling the board and creeping up exec comp. There will always be a trade-off between dividend payments and re-investment, but presumably here the voting equity's interests are basically aligned with the non-voting minority.
- robg 15y agoAccording to the definitions often used here, isn't Bose a lifestyle company?
- _pius 15y agoNo.
- robg 15y agoWho were his large investors?
- SwellJoe 15y agoIt was initially funded, at least partially, through research grants, I believe. But, shouldn't you have instead said, "Wasn't Bose a bootstrapped company?" if you were talking about how the company was funded?
- robg 15y agoSure, but I was playing off the contrast as it's typically being made today. Sounds like he never had an interest in VC. Seems like Bose is at least one counterpoint to this view: http://news.ycombinator.com/item?id=2338140 http://news.ycombinator.com/item?id=2338140
- SwellJoe 15y agoThat's a good point, and I wasn't aware of this discussion, which gives your comment more useful context. I think there are a lot more examples than pg hints at, they just happen to be less common in tech...which someone else theorized could be because money is so easy to come by in technology and less so in other fields. People don't have to bootstrap as often in tech, so fewer big success stories started out by bootstrapping. I think maybe it's a hard thing to figure out because there are so few Googles, Amazons, and Apples in the world. If you only have a few extreme outliers to look at as your data, your conclusions might be completely wrong, even though they fit the data perfectly.
- joejohnson 15y agoWhat power does this actually give MIT? I don't understand.
- ahi 15y agoThe power to cash dividend checks. No decision making authority.
- orijing 15y agoIt says Bose donated a majority of the shares. How much is Bose (private company) worth? And how much in dividends can MIT expect from Bose on an annual basis?
- Anechoic 15y agoThey say that have sales of $2 billion http://articles.boston.com/2010-12-26/business/29285848_1_noise-canceling-headphones-bose-corp-noise-reduction http://articles.boston.com/2010-12-26/business/29285848_1_no... Assuming a decent P/E ratio, total stock value is probably in the 10s of $billions minimum (I know, as a private company things are different, I'm just thinking off the top of my head).
- crazycanuck 15y agoBut the E in P/E is earnings not sales, so this estimate is way too high. Better guess: start with 1x sales and adjust up or down based on how fast it's growing and how profitable you think they are. As far as public/private, if you haircut public company multiples by 10-15% you wouldn't be too far off.
- Anechoic 15y agoOops, yup you're correct. Every outside analysis seems to indicate that they're incredibly profitable (there retail products have pretty dramatic markups) so the earnings gotta be in the $100s of millions at minimum.
- Anechoic 15y agoFolks like to rag on Bose products (and from a pure sound quality standpoint they are overpriced IMO) but Amar Bose was the best professor I had and his enthusiasm for engineering and acoustics showed in all of his lectures. He's been good to MIT over the years (MIT students, faculty and affiliates get substantial discount) and this is another example of him giving back. I hope this encourages MIT to resurrect some of their acoustics programs (aside from a couple of projects coming out of the Media Lab and a telephony class or two, acoustics has been dead at MIT since the late 1990's) but I suspect they'll just use it as a cash cow.
- horacio 15y agoAmar Bose was a good professor, and in making this donation to his alma mater, he continues to carry on the tradition of MIT graduates doing good things long after they've made a name for themselves. His work today in no way lessens the impact of an audiophile's criticism of his company's products. Not only are they overpriced in consideration of value delivered, they are in many respects poor implements for faithfully reproducing sound. But those criticisms are criticisms of product and market, not criticisms of people and principles.
- klbarry 15y agoWhich companies are better than Bose?
- blhack 15y agoFor headphones, I've heard wonderful things about pretty much everything made by "Grad Labs" http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Daps&field-keywords=Grado+Labs&x=0&y=0 http://www.amazon.com/s/ref=nb_sb_noss?url=search-alias%3Dap...
- Florin_Andrei 15y agoGrado is not bad, but I don't think their goal is faithful reproduction of the sound either. I own a pair of Grado phones, and a pair of Sennheiser, high end. There's a pretty big difference between the two. The Sennheiser is, for lack of a better word, "transparent". It's like the sound is coming not from a pair of cans, but from "out there". It's very easy to forget you're wearing phones. It's like they don't have any personality of their own. The Grado, OTOH, is very different. The sound is very much "in your face". Can you hear all sorts of tiny details and nuances? Sure, but that's because they were magnified a lot, to force them to become obvious. A look at the response curve tells you why: Grado likes to crank up the high-frequency response on their cans. They are great, though, if you're mixing audio tracks and are keeping an eye out for tiny mistakes. The Sennheiser is like a wide-screen TV. The Grado is like a microscope. Both are useful, but for different purposes.
- joshfinnie 15y agoA bit of a sensational title. With all the discussion on Hacker News lately about ownership of the company, this is interesting. Gave a majority of non-voting stock to MIT to get company dividends. That is all. Interesting way of donating your fortune to a school.
- yalogin 15y agoWell, he is still running the company and want to have control over the decision making process. MIT still owns the majority shares right?
- kevinherron 15y agoCan anyone explain the "'51" after his name? Is that class of 51?
- horacio 15y agoHe completed his Electrical Engineering undergraduate degree in 1951.
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- tt 15y agoDr. Bose strongly believes that the company would have gone down a terrible path had they taken on any VC money. He had always wanted Bose Corp to focus on research, and thus all profits are poured into funding more R&D. No doubt this decision makes it possible for him to donate the majority of shares to MIT today. I still remember his words: "Those MBAs would have had me fired in no time." So how did he fund the company initially? According to Dr. Bose, Lee handed over his entire life savings because he firmly believed that Bose would succeed!
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- robg 15y agoSo in the popular parlance of today he would have been classified as a slow growth, lifestyle business, right?
- uberc 15y agoIt would be fascinating to know more about how Bose funded his company without venture captital. Has that story been told somewhere? And, who's "Lee"? Thanks!
- rubergly 15y agoI don't understand anything about the stock market, but giving someone a large portion of stock with the agreement that it can never be sold seems like the wrong thing to do when people need to spend more to bring us out of a recession.
- Encosia 15y agoBose stock pays dividends to its shareholders. The stock doesn't need to be sold for MIT to receive (and spend) money derived from the stock.
- rubergly 15y agoYes, it pays dividends, but there's still a big asset that can never be mode liquid.
- 16s 15y agoMIT will receive dividends from the stock. It will never cost them anything to hold it even if it falls in value. Also, if it does fall horribly (unlikely) and is sold off, MIT would receive part of the sale proceeds (I believe). Either way, it's a win win for MIT.
- VladRussian 15y ago> people need to spend more to bring us out of a recession. every time i hear that i'm surprised what a fairy tale! Of course politicians forced to say comfortable "we need more spending" than the suicidal "we need more working", yet it is obvious for any sane normal person what only increased productivity and efficiency can get us out of this small hole-in-the-road current recession and the really big crises looming tomorrow - healthcare, energy, education - and the day after tomorrow - social security. Look at who's leading the recovery - the companies reporting large profits without much increased sales, if any. I.e. increased productivity and efficiency, less waste. The waste in the business is still extremely large, yet much smaller than compare to heydays of 2005-7. Instead of being wasted, at least some part of these profits would get invested and thus would spread around in the economy and help overall recovery.
- thematt 15y agoIf MIT will have no voting authority under this new arrangement then I wonder what the value of actually giving the shares is. Couldn't Bose just donate all their earnings to MIT every fiscal year instead, earn a tax deduction and avoid the dividend tax that will be assessed to MIT?
- zandorg 15y agoAll your Bose are belong to MIT.
- uberc 15y agoI attended one special lecture by Prof. Bose while at MIT. I can't remember the subject matter specifically -- something about acoustics. But I remember the feeling of the man: humble, wise, noble. This news reminds me of that feeling.
- guelo 15y agoWhat a wasteful donation. MIT has an over $8 billion endowment, and it teaches the most privileged technical students in the world. If MIT was at least trying to expand to teach more students, but of course it can't since it needs to maintain it's high selectivity in order to preserve its reputation. I can think of a thousand better donations than wasting it on rich ivy schools.
- Anechoic 15y agoFTR, MIT isn't an Ivy. Dr. Bose has always felt that MIT was good to him and so he gives back. It is what it is. BTW, Bose does have a Corporate Contributions Committee that people can solicit for donations if they feel they have a worth cause: Contributions@bose.com It didn't work for me (EAW generously stepped in) but others may have better luck.
- ernestipark 15y agoMIT just added a new dorm and is expanding its undergrad population by about 200-300 students. And even if it wasn't, it helps the general fund of research and other programs. I can think of a lot of things at MIT that aren't a waste of research money...
- bethling 15y agoMIT also tends to be generous with its financial aid money. When I went there, I ended up paying less than any other school that accepted me - including my state university.
- spenrose 15y agoMore on this theme: http://online.wsj.com/article/SB10001424052702304017404575165730979629178.html http://online.wsj.com/article/SB1000142405270230401740457516... http://yglesias.thinkprogress.org/2010/09/harvardperetz-controversy-illustrates-folly-of-charitable-donations-to-wealthy-u-s-universities/ http://yglesias.thinkprogress.org/2010/09/harvardperetz-cont... http://www.theatlantic.com/magazine/archive/2005/11/the-best-class-money-can-buy/4307/2/ http://www.theatlantic.com/magazine/archive/2005/11/the-best...
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- kennethologist 15y agoThis is an admirable and inspiring gesture. I only hope one day I can do this for my alma mater (moreso my high school than university). Thank you Dr. Bose.
- executive 15y agoHe should have invested in making better speakers.
- rajatmehta1 15y agothis is what is called as a life well lived, you do something great that creates an impact and then the earnings are donated back to enhance your creation or somebody else's as long as innovation happens for the +ve.Too good. I am surprised at some comments that still people have the nag to find a fault in this thing as well :)