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So, found company, SPAC it to get some of that sweet sweet public market cash, run it poorly so that it goes bankrupt and you resign, and then buy it at auction
by mrguyorama 1y ago
So, found company, SPAC it to get some of that sweet sweet public market cash, run it poorly so that it goes bankrupt and you resign, and then buy it at auction for less than it's supposed assets?
Surely that does something bad to economics of investing and running businesses if you can just steal public investment dollars like that, right?
Is there an alternative that doesn't reward a rich CEO for killing their own company, even if it wasn't done on purpose?
She put very little of her own money into it. One of the first investors was Google, ie her husband, then it just kept raising money (how much of that money went directly to Anne), billions of dollars of investment, never made profit, and now she gets it for $300 million or so.
- abxyz 1y agoThe principle is that employees matter more than shareholders: wiping out shareholders to save jobs is the greater good even if it enriches a nefarious or incompetent executive. Many retail investors are shocked to learn in their first bankruptcy how low they are in the pecking order when a company goes under.
- nradov 1y agoThe alternative is just to not make stupid investments in the first place. The shareholders knew (or should have known) the risk. If "dumb money" hasn't purchased the stock then the CEO wouldn't have been able to burn their capital.
- sidewndr46 1y agoaren't scenarios like this ultimately enabled by the application of the Greater Fool theory?
- nradov 1y agoNo one is required to be a fool. You can opt out.
- LarsDu88 1y agoVery few companies have CEOs that actually have the voting shares to run their own company to the ground to buy it privately. Wojcicki was actually able to stand against the rest of the board to bring this company down to bankruptcy level because of her 49% voting shares
- refulgentis 1y agoShe wasn't rewarded, she asked to take it private twice because it was going to go bankrupt, board said no both times, now she has to pay 7.5x her last offer to them. I think you're misunderstanding it as if the company endogenously failed due to missteps on her end, which sort of trivially can't be the case, there's a very defined product here where you can charge more for the output than the input. Thing is, investors / board didn't wanna run that sort of business, apparently.
- itsdrewmiller 1y agoIf it clearly had more assets than the cost more people would bid for it at auction