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>> If I start a company on my own and I provide all the equity then I own all the "shares". What would it mean for those shares to "be on the open market"? If I

>> If I start a company on my own and I provide all the equity then I own all the "shares". What would it mean for those shares to "be on the open market"? If I'm not selling them then no one can buy them. If you own all the shares initially, it means you get to set the price to whatever you want (and hope that someone is willing to pay that price), or you can just hold them and keep them all to yourself. BUT, if you decide to sell them, you can't just sell them to a specific person over the counter. You'd have to sell on a market so that anyone can potentially buy them and potentially outbid your intended investor. >> And if it was a trivial low-regulation thing to create shares and sell them to the public, it would undermine the entire body of regulations they put in place to prevent scams and ensure transparancy. These regulations are completely useless at preventing scams and it's not the government's job to protect people from scams ahead of time. It's extremely disingenuous to suggest that the government can even know what is a scam ahead of time... Scams like FTX were allowed to grow to billions of dollars and the regulators didn't bat an eyelash until the whole scheme was blown wide open. The only correct, honest way to handle it is that if people get scammed, they can sue the scammer to try to recover as much money as possible. The person who lost the money is partly responsible because they failed to judge the founder's character. >> If I think that my labour makes a huge difference to the success of a company Nobody's Labour ever makes a difference. The success of any project is all about capital, political leverage and media exposure. Let's be honest here. >> And by the way, if you got your wish and limited liability was abolished, then all shareholders would be on the hook for any and all debts the company cannot pay (jointly and severally). That would include employees paid in shares. It contradicts your desire for broad share ownership. I would be fine with that. My strategy would be to only invest in small or medium-sized companies whose founders I can trust and who can manage their risk. The bigger the company, the higher the risk. All of society would be better off if everyone did this. This is not a new concept. It used to be how humans did business for thousands of years. They did just fine, in spite of having very little technology at their disposal. Then finally honesty would be worth something again... It's terrifying how everyone blindly trusts criminals just because the government gave them its stamp of approval.

smeej 3y ago
This is like reading the early chapters of a fiction story about an alternate universe. What, to you, is the difference between these two situations? 1. One person decides to form a company and has all the shares. After six months, he realizes he should really have worked with a cofounder, so he closes that business and opens a brand new one with this cofounder, the two of them now equally owning half the shares. 2. One person decides to form a company and has all the shares. After six months, he realizes he should really have worked with a cofounder, so he hires a very high level early employee and gives him half the shares. How does this change based on the number of co-founders/early hires? Why does it make a difference if their need for a new person surprises them, so they start all over with the distribution of the equity of a new "business," or they plan for it in advance and set equity aside for such hires?
- dahart 3y ago
  First sentence I agree with, but I don’t understand your hypothetical. #2 is what usually happens, and non-co-founder very high level early employees don’t usually get 50% or anywhere close. If the original founder made any progress and has anything of value in the first six months, a 2nd co-founder may not get 50% in either case.
  - smeej 3y ago
    It's a direct question for the parent commenter who's going on about how it shouldn't be OK to give individual people shares to convince them to come work for you. If you get six months into "working" on a project and realize you're missing some core skill, "hire" someone. Call them "cofounder." Give them an appropriate amount of the shares. It's exactly the same in the end as closing one business and starting a new one that's divvied up the same way. I'm arguing that being able to give important employees a stake in the company is just good sense, and having to "sell them on the open market" instead is about as inane an idea as I've heard this year.
fauigerzigerk 3y ago
>BUT, if you decide to sell them, you can't just sell them to a specific person over the counter. You'd have to sell on a market so that anyone can potentially buy them and potentially outbid your intended investor. So if I was looking for someone who would build a company with me, someone who would take on an entrepreneurial role, provide expertise, labour or personal connections, I wouldn't be allowed to do that. I wouldn't be allowed to give shares to employees in exchange for labour either. Nor would there be any family businesses. >Nobody's Labour ever makes a difference. The success of any project is all about capital, political leverage and media exposure. Let's be honest here. Capital is a factor that leverages and buys labour. Without labour the result of this equation is always zero. Without a product or service you have no customers, regardless of how much free media coverage you may be getting (for whatever reason). >My strategy would be to only invest in small or medium-sized companies whose founders I can trust and who can manage their risk. Good luck with that. Personal trust is not a replacement for limited liability though, especially not if shares are publicly traded. How would a creditor decide how much to lend to a company if the personal assets of all shareholders are used as collateral? If I owned shares in Microsoft, would I have to provide a payslip and a bank statement to Microsoft's bank? Would they do a credit check? And if I sold my shares, would Microsoft have to pay back part of a bank loan if the buyer's net worth was less than mine? I don't think you have thought this through.

smeej 3y ago

This is like reading the early chapters of a fiction story about an alternate universe. What, to you, is the difference between these two situations? 1. One person decides to form a company and has all the shares. After six months, he realizes he should really have worked with a cofounder, so he closes that business and opens a brand new one with this cofounder, the two of them now equally owning half the shares. 2. One person decides to form a company and has all the shares. After six months, he realizes he should really have worked with a cofounder, so he hires a very high level early employee and gives him half the shares. How does this change based on the number of co-founders/early hires? Why does it make a difference if their need for a new person surprises them, so they start all over with the distribution of the equity of a new "business," or they plan for it in advance and set equity aside for such hires?

dahart 3y ago
First sentence I agree with, but I don’t understand your hypothetical. #2 is what usually happens, and non-co-founder very high level early employees don’t usually get 50% or anywhere close. If the original founder made any progress and has anything of value in the first six months, a 2nd co-founder may not get 50% in either case.
- smeej 3y ago
  It's a direct question for the parent commenter who's going on about how it shouldn't be OK to give individual people shares to convince them to come work for you. If you get six months into "working" on a project and realize you're missing some core skill, "hire" someone. Call them "cofounder." Give them an appropriate amount of the shares. It's exactly the same in the end as closing one business and starting a new one that's divvied up the same way. I'm arguing that being able to give important employees a stake in the company is just good sense, and having to "sell them on the open market" instead is about as inane an idea as I've heard this year.

fauigerzigerk 3y ago

>BUT, if you decide to sell them, you can't just sell them to a specific person over the counter. You'd have to sell on a market so that anyone can potentially buy them and potentially outbid your intended investor. So if I was looking for someone who would build a company with me, someone who would take on an entrepreneurial role, provide expertise, labour or personal connections, I wouldn't be allowed to do that. I wouldn't be allowed to give shares to employees in exchange for labour either. Nor would there be any family businesses. >Nobody's Labour ever makes a difference. The success of any project is all about capital, political leverage and media exposure. Let's be honest here. Capital is a factor that leverages and buys labour. Without labour the result of this equation is always zero. Without a product or service you have no customers, regardless of how much free media coverage you may be getting (for whatever reason). >My strategy would be to only invest in small or medium-sized companies whose founders I can trust and who can manage their risk. Good luck with that. Personal trust is not a replacement for limited liability though, especially not if shares are publicly traded. How would a creditor decide how much to lend to a company if the personal assets of all shareholders are used as collateral? If I owned shares in Microsoft, would I have to provide a payslip and a bank statement to Microsoft's bank? Would they do a credit check? And if I sold my shares, would Microsoft have to pay back part of a bank loan if the buyer's net worth was less than mine? I don't think you have thought this through.