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When Carl Icahn Ran a Company: The Story of TWA
- arbuge 13y agoFinanciers like Icahn are motivated by short term profits above all else. Building a company takes people with a long term vision. The two are often not compatible. Having a leech trying to bleed out every cent as soon as it's made is not generally a good thing unless your company throws off wads of unneeded cash like nobody's business.
- hnnewguy 13y ago>Financiers like Icahn are motivated by short term profits above all else. That's one way to look at it. Another is to note that Icahn built a thriving financial company that has survived for over 4 decades, and employs over 60,000 people globally. I'd say that requires long term thinking and demonstrates a bit of business acumen.
- adventured 13y agoCan you explain how his financial company employs 60,000 people? Or did you mean he has ownership stakes in industrial firms that employ 60,000 people? Because he most certainly has never created 60,000 jobs by starting a company.
- hnnewguy 13y ago>Can you explain how his financial company employs 60,000 people? Do you think that large, multi-billion dollar financial conglomerates run themselves? >Or did you mean he has ownership stakes in industrial firms that employ 60,000 people? Both. Through wholly-owned subsidiaries and the financial holding company. What does it matter? My point is, painting him like he's some inexperienced financier is utterly disingenuous. I know it's en vogue to hate on "banksters", but his business experience (and, in my opinion, economic value-added) is of a magnitude greater than Mr. Andreesen's.
- adventured 13y agoWell I wasn't looking to engage in a battle of baseless statements. I asked if you can elaborate on the 60,000 employees you said his financial company employs. Medium-size (Icahn is no Goldman or BlackRock), multi-billion dollar hedge funds and private equity groups (and similar) do not have 60,000 employees. Take a quick look reference at how many people Buffett has employed in his offices over the years. The industrial firms he owns stakes in employ lots of people, he didn't start those companies of course, and he doesn't run them. BlackRock has 11,000 employees with a couple hundred billion in assets. Goldman Sachs has 32,000 employees with $911 billion in assets under management. To name two examples. I'm willing to bet Icahn's financial company is extremely small in fact and employs very few people relative to the value of its holdings. What does it matter? Because I'm fascinated by where those 60,000 people are employed. Who's hating on bankers? Not me. Who said he isn't extremely savvy? Not me. I asked where you got the 60,000 figure, simple.
- hnnewguy 13y ago>Not me. I asked where you got the 60,000 figure, simple. Their 10k lists each subsidiary and the number employed: http://www.ielp.com/sec.cfm?SortOrder=Type%20Ascending&DocType=&DocTypeExclude=&Year=&FormatFilter=&CIK= http://www.ielp.com/sec.cfm?SortOrder=Type%20Ascending&DocTy... 2/3 are employed by Federal Mogul, an automotive parts supplier controlled by IE.
- x0x0 13y agothat's the only way to look at it; Icahn is a thieving sack of shit. Look at TWA: Icahn got fucking paid no matter whether TWA succeeded or failed. I can maybe see how these leeches ought to get 1/2 billion dollar payouts if they come in and rescue a company, but 0.5B when they ruin a company? Heads I win, tails you lose.
- hnnewguy 13y ago>that's the only way to look at it; Icahn is a thieving sack of shit. Curious what your opinion is of Mr. Andreessen, and the conflict-of-interest accusations? is he included in your "leeches" remark, or does he get the SV pass? The story is plausible. If I were an eBay shareholder, I'd be incensed.
- deleted 13y ago[deleted]
- EC1 13y agoWhat puts you in a position to be an objective judge of the dealings of billionaires?
- x0x0 13y agotheir behavior, particularly said behavior's effects on others
- nathanvanfleet 13y agoYes definitely, let's hope he's continues to be successful and handicaps more American businesses and we'll see how you feel about it in 10 years. He'll wreck more than 60,000 jobs but he'll have a lot of money for himself.
- supercanuck 13y agoI don't know about that, I bet there is a certain level of pride and being right that motivates him too. Profit is a measurable of how "right" Carl Icahn is.
- wikiburner 13y agoI don't understand what eBay's problem is. I mean c'mon, Gordon Gekko was only partially based on Icahn.
- untog 13y agoEvery single post in this blog seems to be about Carl Icahn.
- nashashmi 13y agoWhat is it with pmarca? As a subscriber of his blog, he's been lambasting Carl Icahn for awhile now. Don't get me wrong! I hate Carl Icahn, but pmarca's critique is hard to get and overobsessive.
- adventured 13y agoIt's because it has gotten personal between Icahn and Andreessen. Icahn has been specifically dragging Andreessen's character through the mud since it became obvious he wasn't going to get his way on eBay.
- pessimizer 13y agoAndreeson's defense seems to be that Icahn has had as many conflicts of interest and selfish motives on boards as he has, if not more. I'm not sure that's a good defense: "He's killed twice as many people as I have, and he's been at it longer, too!" When people so alike bicker like this in movies, they're usually about a minute away from kissing.
- ktsmith 13y agoMarc has already pointed out that he removed himself from the decision making process regarding the divestiture of Skype and fully disclosed his conflict. ebay held 30% to his 3% during all of this so Icahn's claims seem pretty baseless and should be easily confirmed or denied by another member of the ebay board with knowledge of the proceedings.
- XaspR8d 13y agoIs that quote from something? I really enjoy the dubious logic.
- nostrademons 13y agoAndreessen doesn't care about the moral dimension, he cares about the practical dimension. This series of blog posts is aimed at EBay shareholders - he's trying to convince small-time individual shareholders that if they ally themselves with Icahn they're going to get screwed. (I assume he's running a similar campaign in person with the big-time institutional shareholders.) Smart money probably knows they're going to get screwed by allying themselves with Icahn, but there is an awful lot of dumb money on Wall Street, and they are easily swayed by just a little information.
- jashmenn 13y agoCan someone explain to me the significance of the animosity between Carl Icahn and pmarca? There are half a dozen posts on pmarca's blog discussing how Icahn is making claims against Andreessen. I understand these claims, but I don't understand their significance. I deeply respect pmarca but I can imagine that he, like any high visibility person, has many detractors. What power does Carl Icahn have that warrants such a strong response?
- jkuria 13y agoIcahn called out his conflict of interest in Ebay: http://online.wsj.com/news/articles/SB10001424052702304071004579409813180461206 http://online.wsj.com/news/articles/SB1000142405270230407100...
- ktsmith 13y agoAndreessen responded: http://blog.pmarca.com/2014/03/03/my-statement-on-ebay-director-role-and-governance/ http://blog.pmarca.com/2014/03/03/my-statement-on-ebay-direc...
- gatehouse 13y agoIcahn has bought a stake in eBay. It appears to me like he is trying to force out some of the eBay board by publicly criticizing. If he succeeds in basically kneecapping the current board then he can have much more control of the company. Just skim his wikipedia page to get an idea of what the possible outcomes are: http://en.wikipedia.org/wiki/Carl_Icahn http://en.wikipedia.org/wiki/Carl_Icahn .
- gadders 13y agoNot sure that's the most sophisticated PR strategy. One post looks like a rebuttal, 8 look like an obsession.
- nostrademons 13y agoHe's trying to create FUD here, not look good. As the incumbent, he has the advantage; if all shareholders are paralyzed into inaction because all the major players look like assholes, he wins. He only loses if a majority of EBay shareholder votes believe that Icahn will generate shareholder value, hence he wants to make abundantly clear that Icahn destroys shareholder value to enrich himself.
- jcampbell1 13y agoFor those that don't know what is going on, here is the backstory: Carl Icahn has recently bought a bunch of ebay stock. He has claimed the company is mismanaged. He has also personally attacked Marc Andreesen. Here is the accusation from Ichan: 1) Marc Andreesen was/is on ebay's board. 2) While on ebay's board, Marc bought most of Skype from eBay. 3) He flipped Skype to Microsoft in less than 2 years, earning himself a multi-billion dollar profit. Carl Icahn is running Marc Andreesen name through the mud. The basic accusation is that if Marc knew Skype was so valuable as the smart phone wars were heating up, he had an obligation as a board member to give ebay better advice on the divesture. Now Marc is fighting back. This is a comic schoolboy fight among billionaires. Edit: After a bit of fact checking, it looks like A16Z only invested $50M in the skype deal. Their fund at the time was around $300M. His gain was on the order of $150 million, not billions. A16Z only had around 2% of skype, and ebay retained 35%.
- deleted 13y ago[deleted]
- boomzilla 13y agoI think Marc Andreessen position is weak in this fight. I have absolutely no empathy for Carl Icahn, but on this issue, he's got a good point. It seems Marc Andreessen had a conflict of interest and instead of showing that wasn't the case, Andreessen decided to attack Icahn for stuff that aren't related to this issue, even if they were definitely questionable.
- chc 13y agoWhat, Icahn can fling random accusations but Andreessen can't? It's all just mud-slinging. As for Andreessen's motive, I suppose he probably thinks Icahn is making a power play and is more interested in fending off Icahn than in defending himself in this particular instance. Icahn clearly wants Andreessen on the defensive, so it kind of makes sense, though it all feels a bit embarrassing.
- boomzilla 13y ago
- adventured 13y agoI like to see them swinging back at Icahn. He uses wildly over-dramatic statements ('ebay is the worst run company ever') to try to force boards to do things that are specifically in his short term interests. He has absolutely no concern for the long-term well being of a company. After he gets his stock pop, he liquidates and is gone. Icahn's entire strategy operates strictly on the basis of greenmailing the leadership of a company into discharging cash into his lap. He will say anything he has to in order to generate that outcome.
- mattmaroon 13y agoI love Marc and understand he's upset about the accusations, but it's time to move on. Nobody who knows anything about Marc takes them seriously. I'm obviously not privy to what goes on in eBay's boardroom, but the notion of Marc being some svengali forcing them to cede him 100s of millions is blatantly ludicrous, not to mention insulting to the other board members. If I were Marc (and it's probably much easier to say this since I'm not) I'd just ignore.
- hluska 13y agoWith each volley that Icahn and Andreessen fire back and forth, I'm left more humbled by how incredibly smart these two men are. I feel like I'm watching master communicators slug it out and I'm learning an incredible amount from the action.
- whydo 13y agoI hope the folks at Apple are paying attention.
- thematt 13y agoWhy? I thought Icahn threw in the towel on that crusade.
- argumentum 13y agoIn my view, after his humiliation by Apple's board, Carl Icahn feels his power (and by proxy the power of wall street) slowly and surely being stripped away by tech. This is at the root of his obsession with pmarca, who famously claimed that "software is eating the world." The world that's being eaten is the world of Icahn and wall street financiers like him. The tech industry has its own source of finance (namely angels, vcs, y-combinator etc .. people like pmarca). Icahn's recent attention seeking is a symptom of the despair he feels at no longer being needed. Good riddance, in my opinion.
- adventured 13y agoAt a minimum Icahn is playing far outside of his scale. Trying to force Apple's hand - he might as well be trying to dictate terms to Exxon or Walmart, it's comical. Icahn can bring a modest fraction of his $22 billion to bear on any given situation. That might work against financially weak companies, or companies he dwarfs (like if he picked a fight with Groupon's leadership). Financial power players like Icahn will never go away so long as there is wealth and capital. Mostly I think he's guilty, in the Apple and eBay situations, of thinking he is much more powerful than he is (and that's saying something given his history), as he has lately been starting fights with very healthy companies far larger than he is.
- argumentum 13y agoIt's not merely the size of the company. A proxy war against Exxon is very possible, because its stock is spread thinly. Tech companies tend to be strongly controlled by the founders/early employees/ and early investors. These are all people who bought in to the vision of the company .. they are by and large true believers. In younger tech companies, like Google or Facebook, this control is truly absolute. There is nothing public shareholders can do. But even in older companies like Apple or Microsoft, the founders have an almost religious appeal over the stakeholders, particularly employees and the board, but also the shareholders at large. For example, Tesla and Spacex, though within Icahn's "striking range", might as well be subsidiaries of Musk enterprises. There's no way someone like Icahn would have a chance of besting Musk in a showdown.
- Aqueous 13y agoIt's kind of absurd how closely Carl Icahn's mirrors that of the story of Gordon Gekko in Oliver Stone's movie Wall Street. What Icahn did to TWA is pretty much exactly what Gekko did (or planned to do) to Bluestar Airlines in that film. Longer period of time - but in principle, very similar.
- auctiontheory 13y agoI was just about to post exactly this. Anyone interested in what Wall Street actually does needs to watch this movie. I have an MBA. I have nothing against making money. But while it's possible to make money by creating something of value, it's unfortunately possible to make even more money while doing the opposite.
- refurb 13y agoFrom what I've read, Icahn argues that the companieshe's going up against aren't do a good job of running the company. If that's true, Icahn is doing shareholders a service.
- protomyth 13y agoGiven what he did with TWA and reselling tickets, its hard to think that served any other shareholder but himself.
- refurb 13y agoWhenever I hear a story about someone being "underhanded" and "of low character" I always see what the other side of the story is. Usually, the truth isn't so straightforward. It appears that TWA owed him money so he negotiated the cheap ticket as a form of payment...[1] How convenient that Marc left that out of his blog post... In the interim, Icahn negotiated for airline vouchers from the company in lieu of the $190 million that TWA owed him. As the deal included the provision that he could not sell these tickets through travel agents, Icahn founded LowestFare.com, where he both sold the tickets and created a revolution in the travel industry. [1]http://www.investopedia.com/articles/financial-theory/08/carl-icahn-lift.asp http://www.investopedia.com/articles/financial-theory/08/car...
- taylorbuley 13y agoI submitted this under the permalink URL earlier in the day: https://news.ycombinator.com/item?id=7421591 https://news.ycombinator.com/item?id=7421591 Can any mods delete my submission and update this URL to that URL? It seems illadvised to have this item pointed at pmarca's blog homepage vs. the item we're discussing.
- drawkbox 13y agoIf everyone was like Icahn, we'd already be through a few revolutions. He likes to engineer market events just ask Apple. Like this article said, he does this to the detriment of everyone around and destroys value. Marc creates value and companies and Icahn from what I have seen previous and here, likes to create money for himself out of destroying that value. When the world says don't, he says Icahn.
- metaphorm 13y agoandreesen and icahn deserve each other.
- GFK_of_xmaspast 13y agoIf you want to see the face of capitalism, look to Carl Icahn.
- pedalpete 13y agoThat's not capitalism, that's greed. Sadly, many of the greedy are hiding behind the banner of capitalism, but don't be confused.
- GFK_of_xmaspast 13y agoIt's exactly capitalism. Carl Icahn, capitalist, used capital to establish control over TWA and, having done so, exercised his property rights in a way to maximize profit and return.
- pedalpete 13y agoI don't disagree that Carl Icahn is a capitalist, so are Warren Buffett and Marc Andreesen (now). Look at the definition of capitalism "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state." Nowhere in the definition does it state that a capitalist must be a greedy ahole who destroys companies and the lives of employees in order to fill his own pockets. Sadly, we see too many examples of this, but it isn't capitalism, and we need a better label for it, or we risk throwing the baby out with the bath water.
- bitonomics 13y agoAgreed. Capitalism gives people the ability to be driven by generally selfish factors, but there is a line between selfish motivation and greed. Unfortunately that line is more of a moral one which can make it harder to define.
- jackgavigan 13y agoMarc's paying for too much attention to Icahn. He should have simply issued a short statement refuting Icahn's allegations and laying out the facts, and then ignored him, like one would a crazy homeless guy ranting on the street. Instead, it's in danger of turning into a mud-slinging contest.
- r00fus 13y agoCarl Icahn is the Cryptonomicon's Dentist. A wolf that ravages, feeds and moves on.
- erdle2 13y agoThe sketchiest thing about Andreeson is that he sits on the board of directors for HP... and at no point has he told investors that it's a rudderless shell of it's former self with almost no hope.
- kumarski 13y agoI'd like to see Marc be a bit more vicious about this, starting with Herbalife as the first target.
- nfm 13y agoPermalink: http://blog.pmarca.com/2014/03/18/when-carl-icahn-ran-a-company-the-story-of-twa/ http://blog.pmarca.com/2014/03/18/when-carl-icahn-ran-a-comp...
- tomrod 13y agoI like this guy's writing. The multiple ellipses every 3 sentences bothers me.
- jroseattle 13y agoDear Marc: Who gives a rats ass what Carl Icahn thinks? Stop paying so much damn attention to him. You're leaving me the impression that what he is saying is actually applicable. If it is, get to the point. Otherwise, move on....this story is getting old.
- gcb0 13y agoThe article left me with lots ofdoubt... Take this sequence of events: Bought 20% of company. made it private. Sold London route. So, how can someone with 20% make a company private? And how can someone having his shares bought back after company went private still command it to sell anything? Was he ceo all along?
- Marazan 13y agoI don't know the details but from the description he'll have done through the form of a leveraged buyout. Icahn secures a loan from a bank (or group of banks/financiers - possibly even one of his other companies, I don't know what the law is like in this regard in America) to purchase enough shares to take the company private. Here's the 'trick' though. That loan is not secured by Icahn, it is secured by the company he has just "bought out" - the repayments of the loan being secured against the companies current capital assets and future profits. In effect Icahn gets the company to take out a loan which he uses to take control of the company. Obviously there needs to be enough shareholders willing to sell for this to work but if the leveraged buyout offers a great enough premium then they'll normally find enough willing sellers.
- chris_mahan 13y agoMaybe he should buy Microsoft.
- nnq 13y agoIs there any positive perspective on this guy too? In this interview (http://www.youtube.com/watch?v=CTIp9ebXAh0 http://www.youtube.com/watch?v=CTIp9ebXAh0) he kind of makes sense with `restructure to concentrate on shareholder value` and `restructure for short term or sure profits` line of thinking...
- rdl 13y agoI kind of find fault with pmarca recusing himself from the eBay board during the skype deal in spite of his conflict of interest, as he's clearly 100x more intelligent than anyone else on the eBay board. I'd rather have a smart guy who has particular knowledge advocating for my interests, even if he has some biases which he discloses, rather than some former CEOs of eBay (not exactly winners there) or some big dumb fund people, which is what you're left with otherwise.