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Not surprising, and I expect more of this in the decade to come. It feels like we’re finally seeing companies begin to draw lines in the sand on where their int

Not surprising, and I expect more of this in the decade to come. It feels like we’re finally seeing companies begin to draw lines in the sand on where their interests actually lay: power (which Texas grants in spades), profit (which Delaware has historically protected), or values (in which case they would incorporate/move to a place that aligns with said values - of which vanishingly few companies do). If anything, it’s kinda…helpful? As a consumer, I mean. If I see a company moving from CA to TX, well, that’s probably for reasons I have issue with, and therefore make it easier for me to not do business with them going forward. If companies want to advertise their actual values so openly by reincorporating in another state, well, more power to them I guess.

lolinder 2y ago
> profit (which Delaware has historically protected), or values (in which case they would incorporate/move to a place that aligns with said values - of which vanishingly few companies do). Which values exactly are being expressed by being incorporated in, say, California? I can totally see how companies that chafe at the requirements imposed on them by some of these high-government states would choose to leave so they can avoid filling said requirements, but what would a board meeting look like for a company that prides itself on values where they decide on CA? "We really want to pay more taxes" doesn't seem likely—why not just allocate funds to a charity of your choice? "We need the government to tell us to treat our employees well" also seems unlikely—why not just do the right thing in any state? What is the rational values-based reason for incorporating in CA? ("Sticking it to DE" isn't rational.)
- RickS 2y ago
  > Which values exactly are being expressed by being incorporated in, say, California? Depends on when. The whole point is that the incentives, and signal generated by responding to them, are changing a bunch. Just my opinion, but between ~2008 and ~2016, incorporating in CA could at least potentially be read as "We're really serious about hiring the best talent and doing an unusually good job, to the point that we're willing to pay a premium." Implied in the above is the idea that paying said premium would result in success that strongly outweighed the costs, and that you could more or less keep that success, without putting a huge target on ones back for additional taxation, regulation, social stigma, etc. California was highly regulated and expensive, but not quite punitively regulated and expensive. Over time, that signal has weakened. The relationship between SV and CA feels more actively hostile. people do what everyone's doing, or really want to be near VCs and other network effects. These things have always been true, they've just lost the cover provided by that other more grand and inspiring explanation. despite the drawbacks I do think it's still the best place to start a very small tech startup. The pool of both talent and peer companies is completely unmatched, even in other large tech cities. One thing that's hard to decouple: to what degree is this shift because of the regulatory and social environments becoming authentically hostile to tech (on many fronts: taxation, gentrification, looseness-for-speed, etc), and to what degree does it just seem that way to people that get some combination of cash and dopamine from shifting to see the world through that lens? IMO both things have certainly occurred, but I'm less sure of the proportions. Edit — another thing that's very interesting to me: massive ideological decoupling in the C-suite vs IC classes. My experience during that time period felt much more "flat", both hierarchically and ideologically. I started out as a random intern and not only was it very easy to get in the room with some staggeringly rich and brilliant people, I genuinely felt a very strong and natural vibe-compatibility with them. They mostly seemed regular. Thiel was an exception, but only mildly. Intense vibes, but decent ones. I'd have guessed that as I aged out of my 20s and became more successful that I would, if anything, be better able to relate to some of those big dogs. Not the case at all. I think back then both classes were less aware that one was or was becoming an inhumane robber barron. Both sides know that now.
  - lolinder 2y ago
    > between ~2008 and ~2016, incorporating in CA could at least potentially be read as "We're really serious about hiring the best talent and doing an unusually good job, to the point that we're willing to pay a premium." This makes sense for putting a headquarters in California but doesn't explain incorporating there. For example, from TFA: Meta is thinking of moving their corporation from DE to somewhere else, but their headquarters was and will likely remain in CA. I'm trying to figure out what values would be signaled by incorporating anywhere other than DE.
    - RickS 2y ago
      > This makes sense for putting a headquarters in California but doesn't explain incorporating there. Good point. Agree that DE C corp has been the norm and expectation since forever. Doesn't look like CA is a mentioned contender, and my guess is that it is very much not in consideration, for all the above reasons. In "TX and other states" I read "TX and other states that will lean towards relative deregulation in coming years". It's less about sticking it to DE, more about bribing TX or whoever into even more favorable terms than you're getting in DE, in a way that wins some 10+ year metagame. Bezos did a classic version of this with HQ2 and DC
    - ok_dad 2y ago
      > I'm trying to figure out what values would be signaled by incorporating anywhere other than DE. "I don't like that corporations can shop around for the best deal in governments, while an individual is stuck with using their physical location and must follow those laws and pay those taxes no matter where they work. Therefore, my company will be incorporated in the locality that it's main office is in, and we'll pay local taxes and follow local laws for our locations elsewhere, so as to support the people who make our products/services great."
- mcshicks 2y ago
  Maybe if you are a non profit based in CA. There's probably some other corner cases I'm not aware of, like it might be simpler in some cases like an LLC for holding family property, etc.
HillRat 2y ago
There's definitely an "investor beware" signal here, especially with companies like Meta that have dual-class share structures (or Tesla, which Musk has unwarranted direct control over and which he has expressed his desire to convert it to a dual-class structure). Texas isn't exactly the extreme "YOLO your fiduciary duties" wild west that, say, Nevada is, but when a company signals that they don't want the stability, predictability, and extensive experience in business law that Delaware provides, you have to assume that it's not looking out for its shareholders' best interests.
- HillRat 2y ago
  Also, speaking of Musk, note that for all his fits of pique over losing in chancery court over his attempt to wriggle out of a terrible contract that he wrote (Twitter) and a pay package that was rubber-stamped by a conflicted-controller BoD, he also notched some notable wins on some non-slam-dunk cases there, such as upholding Tesla's acquisition of his cousins' failing company SolarCity.
  - kjksf 2y ago
    > pay package that was rubber-stamped by a conflicted-controller BoD Pay package was voted on by 75% shareholders, twice, so that's a gross misrepresentation of reality
    - jedberg 2y ago
      No, it was voted on by 75% of shares. Musk alone is 12% of that.
      - diogocp 2y ago
        > 72% of all votes cast (...), excluding votes of shares owned, directly or indirectly, by Messrs. Elon and Kimbal Musk. https://www.sec.gov/Archives/edgar/data/1318605/000110465924071439/tm2413800d31_8k.htm https://www.sec.gov/Archives/edgar/data/1318605/000110465924...
Anon1096 2y ago
This is a move from Delaware (not California) to Texas. It is probably more about shareholder rights and corporate governance, nothing to do with your standard political values.
- kasey_junk 2y ago
  The comment acknowledges this. As they say a move from Delaware to Texas signals something, it signals that the company goes not particularly care about shareholder protections or governance. It implies that the leadership of the company is more interested in not being constrained than in serving their shareholders.
  - dgfitz 2y ago
    Only if you assume that not being constrained is somehow a bad thing for shareholders, which apparently is a logical fallacy some believe true.
    - kasey_junk 2y ago
      It’s less a value judgement than a fact of law. Delaware has strict rules, precedents and courts that enforce shareholder protections. By leaving Delaware the company has signaled that giving that up is less if a downside than whatever upside they are getting in the new jurisdiction. In the case of Tesla it was an explicit repudiation of those rules that caused the company to leave, so it’s reasonable to see it as a signal.
      - dgfitz 2y ago
        Same point. Leaving a constrained environment for a less-constrained environment. If shareholders don’t like this move, they are free to move on from their position. They are owed what they own, because of their belief in future profits. If shareholders think this move is detrimental to that, move on. Like mentioned, Zuck owns the control. This isn’t a secret revealed to shareholders after they buy in to the gambit.
deleted 2y ago
[deleted]
dkjaudyeqooe 2y ago
I'm sure people like Musk and Zuckerberg think they are gaining some sort of advantage, but the reality is they're mostly gaining a lot of uncertainty as to legal rulings and government intervention. Delaware is widely preferred for a reason. What happened to Disney should be chilling, but maybe they've decided to go all in on the right and figure that will be favored.

lolinder 2y ago

> profit (which Delaware has historically protected), or values (in which case they would incorporate/move to a place that aligns with said values - of which vanishingly few companies do). Which values exactly are being expressed by being incorporated in, say, California? I can totally see how companies that chafe at the requirements imposed on them by some of these high-government states would choose to leave so they can avoid filling said requirements, but what would a board meeting look like for a company that prides itself on values where they decide on CA? "We really want to pay more taxes" doesn't seem likely—why not just allocate funds to a charity of your choice? "We need the government to tell us to treat our employees well" also seems unlikely—why not just do the right thing in any state? What is the rational values-based reason for incorporating in CA? ("Sticking it to DE" isn't rational.)

RickS 2y ago
> Which values exactly are being expressed by being incorporated in, say, California? Depends on when. The whole point is that the incentives, and signal generated by responding to them, are changing a bunch. Just my opinion, but between ~2008 and ~2016, incorporating in CA could at least potentially be read as "We're really serious about hiring the best talent and doing an unusually good job, to the point that we're willing to pay a premium." Implied in the above is the idea that paying said premium would result in success that strongly outweighed the costs, and that you could more or less keep that success, without putting a huge target on ones back for additional taxation, regulation, social stigma, etc. California was highly regulated and expensive, but not quite punitively regulated and expensive. Over time, that signal has weakened. The relationship between SV and CA feels more actively hostile. people do what everyone's doing, or really want to be near VCs and other network effects. These things have always been true, they've just lost the cover provided by that other more grand and inspiring explanation. despite the drawbacks I do think it's still the best place to start a very small tech startup. The pool of both talent and peer companies is completely unmatched, even in other large tech cities. One thing that's hard to decouple: to what degree is this shift because of the regulatory and social environments becoming authentically hostile to tech (on many fronts: taxation, gentrification, looseness-for-speed, etc), and to what degree does it just seem that way to people that get some combination of cash and dopamine from shifting to see the world through that lens? IMO both things have certainly occurred, but I'm less sure of the proportions. Edit — another thing that's very interesting to me: massive ideological decoupling in the C-suite vs IC classes. My experience during that time period felt much more "flat", both hierarchically and ideologically. I started out as a random intern and not only was it very easy to get in the room with some staggeringly rich and brilliant people, I genuinely felt a very strong and natural vibe-compatibility with them. They mostly seemed regular. Thiel was an exception, but only mildly. Intense vibes, but decent ones. I'd have guessed that as I aged out of my 20s and became more successful that I would, if anything, be better able to relate to some of those big dogs. Not the case at all. I think back then both classes were less aware that one was or was becoming an inhumane robber barron. Both sides know that now.
- lolinder 2y ago
  > between ~2008 and ~2016, incorporating in CA could at least potentially be read as "We're really serious about hiring the best talent and doing an unusually good job, to the point that we're willing to pay a premium." This makes sense for putting a headquarters in California but doesn't explain incorporating there. For example, from TFA: Meta is thinking of moving their corporation from DE to somewhere else, but their headquarters was and will likely remain in CA. I'm trying to figure out what values would be signaled by incorporating anywhere other than DE.
  - RickS 2y ago
    > This makes sense for putting a headquarters in California but doesn't explain incorporating there. Good point. Agree that DE C corp has been the norm and expectation since forever. Doesn't look like CA is a mentioned contender, and my guess is that it is very much not in consideration, for all the above reasons. In "TX and other states" I read "TX and other states that will lean towards relative deregulation in coming years". It's less about sticking it to DE, more about bribing TX or whoever into even more favorable terms than you're getting in DE, in a way that wins some 10+ year metagame. Bezos did a classic version of this with HQ2 and DC
  - ok_dad 2y ago
    > I'm trying to figure out what values would be signaled by incorporating anywhere other than DE. "I don't like that corporations can shop around for the best deal in governments, while an individual is stuck with using their physical location and must follow those laws and pay those taxes no matter where they work. Therefore, my company will be incorporated in the locality that it's main office is in, and we'll pay local taxes and follow local laws for our locations elsewhere, so as to support the people who make our products/services great."
mcshicks 2y ago
Maybe if you are a non profit based in CA. There's probably some other corner cases I'm not aware of, like it might be simpler in some cases like an LLC for holding family property, etc.

HillRat 2y ago

There's definitely an "investor beware" signal here, especially with companies like Meta that have dual-class share structures (or Tesla, which Musk has unwarranted direct control over and which he has expressed his desire to convert it to a dual-class structure). Texas isn't exactly the extreme "YOLO your fiduciary duties" wild west that, say, Nevada is, but when a company signals that they don't want the stability, predictability, and extensive experience in business law that Delaware provides, you have to assume that it's not looking out for its shareholders' best interests.

HillRat 2y ago
Also, speaking of Musk, note that for all his fits of pique over losing in chancery court over his attempt to wriggle out of a terrible contract that he wrote (Twitter) and a pay package that was rubber-stamped by a conflicted-controller BoD, he also notched some notable wins on some non-slam-dunk cases there, such as upholding Tesla's acquisition of his cousins' failing company SolarCity.
- kjksf 2y ago
  > pay package that was rubber-stamped by a conflicted-controller BoD Pay package was voted on by 75% shareholders, twice, so that's a gross misrepresentation of reality
  - jedberg 2y ago
    No, it was voted on by 75% of shares. Musk alone is 12% of that.
    - diogocp 2y ago
      > 72% of all votes cast (...), excluding votes of shares owned, directly or indirectly, by Messrs. Elon and Kimbal Musk. https://www.sec.gov/Archives/edgar/data/1318605/000110465924071439/tm2413800d31_8k.htm https://www.sec.gov/Archives/edgar/data/1318605/000110465924...

Anon1096 2y ago

This is a move from Delaware (not California) to Texas. It is probably more about shareholder rights and corporate governance, nothing to do with your standard political values.

kasey_junk 2y ago
The comment acknowledges this. As they say a move from Delaware to Texas signals something, it signals that the company goes not particularly care about shareholder protections or governance. It implies that the leadership of the company is more interested in not being constrained than in serving their shareholders.
- dgfitz 2y ago
  Only if you assume that not being constrained is somehow a bad thing for shareholders, which apparently is a logical fallacy some believe true.
  - kasey_junk 2y ago
    It’s less a value judgement than a fact of law. Delaware has strict rules, precedents and courts that enforce shareholder protections. By leaving Delaware the company has signaled that giving that up is less if a downside than whatever upside they are getting in the new jurisdiction. In the case of Tesla it was an explicit repudiation of those rules that caused the company to leave, so it’s reasonable to see it as a signal.
    - dgfitz 2y ago
      Same point. Leaving a constrained environment for a less-constrained environment. If shareholders don’t like this move, they are free to move on from their position. They are owed what they own, because of their belief in future profits. If shareholders think this move is detrimental to that, move on. Like mentioned, Zuck owns the control. This isn’t a secret revealed to shareholders after they buy in to the gambit.

deleted 2y ago

[deleted]

dkjaudyeqooe 2y ago

I'm sure people like Musk and Zuckerberg think they are gaining some sort of advantage, but the reality is they're mostly gaining a lot of uncertainty as to legal rulings and government intervention. Delaware is widely preferred for a reason. What happened to Disney should be chilling, but maybe they've decided to go all in on the right and figure that will be favored.