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In 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

In 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 ago
At 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 ago
  It'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.
  - adventured 13y ago
    Part of my point was that going after Exxon and Walmart, would be extremely difficult because of their very strong financial health (not to mention connections and influence). Gnats don't concern Exxon, they get swatted. At that scale, Icahn is a gnat. Exxon would have to be extremely mismanaged to inspire so many investors to line-up for a serious proxy battle. Simply doesn't happen unless a company is on its back, or knee deep in a huge scandal relating to the leadership. If you buy a billion dollars worth of Exxon and try to stir up trouble, you'll be completely ignored unless the company is being very poorly managed such that much larger fish than you are willing to join your cause. With eBay, since Icahn is a relatively small fish (in terms of what he can personally leverage into the battle) trying to force the hand of a $75 billion enterprise, he's going to need much larger fish than himself to join his cause. He simply can't do it himself. That's the other point I was trying to make about their scale. The larger the company you take on, the larger the total resources you're going to have to get lined up on the same agenda.
    - argumentum 13y ago
      I agree with mostly everything you said. The point I was making re:exxon is that you would merely have to convince rational actors of your side (which I agree is not easy if the company isn't floundering). If you get one major player on board, then it will be easier to get the next etc.
debt 13y ago
The power of the street powers tech. All of the largest tech IPOs in recent memory were organized by investment firms such as Goldman Sachs and Morgan Stanley. Basically, tech in it's current iteration wouldn't exist without the street and well-structured IPOs. Not saying I like it, just saying it's reality. Also, Carl Icahn introduces the idea corporate democracy which is a good thing considering how much influence corporations have over our lives. The idea that at least one person can affect the outcomes of a large company like ebay perhaps shows other large firms they have the same potential. I imagine a future where there are kickstarter-like shell entities which acquire large shares of important corporations and where backers can all vote where Exxon chooses to drill next or which companies Google should be acquiring(obviously GOOG is a bad example because they've been doing so well but hopefully you get the idea). I know this is the basic idea behind holding shares, but perhaps the voting power can be more evenly distributing in these shell entities. In the current structure one share doesn't get you much voting power in a corporation.
- argumentum 13y ago
  > Basically, tech in it's current iteration wouldn't exist without the street and well-structured IPOs. Are you suggesting that Facebook/Google had no value prior to their IPOs? Their public market cap is merely a reflection of the value they already provide to society. Constitutional democracy is the least worst way to preserve individual liberty. It's not a good way to run a private corporation.
dpcheng2003 13y ago
I can't presume to understand Carl Icahn (as you admitted as well) but IMHO, this is untrue and can lead fellow HNers into an echo chamber. First, Wall Street's role in capital markets towers over Silicon Valley. Venture Capital Assets Under Management is approximately $200 billion. Blackrock, the world's largest fund, has $4.3 trillion AUM. Second, while I believe pmarca acted entirely in good faith and is legally in the clear, there is enough "there" to begin fighting a proxy war. For example, the (tech) market was more forgiving when Dan Loeb fought Yahoo because it got the outcome we wanted (Marissa joining, Yahoo focusing). Let's not conflate what is arguably an ill-advised but legally legitimate proxy war with a misdirected turf war between finance and tech. As a point of reference, I'm a tech co-founder (who poorly codes) and a former investment banker.
- eruditely 13y ago
  Also, I do not agree, the wealth created by tech companies is legitimate progress, whereas finance is more rent-seeking/pushing tail-risk off to the government. The link below informs much more of my world-view however. http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc
  - dpcheng2003 13y ago
    While you can be 100% correct, it's a straw man and irrelevant to my point. You can simultaneously believe finance is rent-seeking and still 100% agree with my points in response to the original post: 1) finance is much larger in capital markets; 2) Icahn has legitimacy even if he turns out to be wrong; 3) We should not dovetail into a finance vs. tech argument.
- argumentum 13y ago
  > First, Wall Street's role in capital markets towers over Silicon Valley. True, but what's the delta? Where are the sources of new power (and subsequently wealth) being generated? Why, for that matter, are you a former investment banker and now a tech-cofounder and coder? As I'm sure you know, you're not the only one who's made that (smart) move. What moving around money was to the 19XXs, moving around information is to the 20XXs. That's the crux of "software is eating the world". AUM doesn't seem a useful metric for power, in fact it's debt and so it all depends on what you do with it. What % of those assets are depreciating? How fast are the % of assets that are appreciating doing so? I know little about capital markets, but these seem like the obvious begged questions, don't they?

adventured 13y ago

At 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 ago
It'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.
- adventured 13y ago
  Part of my point was that going after Exxon and Walmart, would be extremely difficult because of their very strong financial health (not to mention connections and influence). Gnats don't concern Exxon, they get swatted. At that scale, Icahn is a gnat. Exxon would have to be extremely mismanaged to inspire so many investors to line-up for a serious proxy battle. Simply doesn't happen unless a company is on its back, or knee deep in a huge scandal relating to the leadership. If you buy a billion dollars worth of Exxon and try to stir up trouble, you'll be completely ignored unless the company is being very poorly managed such that much larger fish than you are willing to join your cause. With eBay, since Icahn is a relatively small fish (in terms of what he can personally leverage into the battle) trying to force the hand of a $75 billion enterprise, he's going to need much larger fish than himself to join his cause. He simply can't do it himself. That's the other point I was trying to make about their scale. The larger the company you take on, the larger the total resources you're going to have to get lined up on the same agenda.
  - argumentum 13y ago
    I agree with mostly everything you said. The point I was making re:exxon is that you would merely have to convince rational actors of your side (which I agree is not easy if the company isn't floundering). If you get one major player on board, then it will be easier to get the next etc.

debt 13y ago

The power of the street powers tech. All of the largest tech IPOs in recent memory were organized by investment firms such as Goldman Sachs and Morgan Stanley. Basically, tech in it's current iteration wouldn't exist without the street and well-structured IPOs. Not saying I like it, just saying it's reality. Also, Carl Icahn introduces the idea corporate democracy which is a good thing considering how much influence corporations have over our lives. The idea that at least one person can affect the outcomes of a large company like ebay perhaps shows other large firms they have the same potential. I imagine a future where there are kickstarter-like shell entities which acquire large shares of important corporations and where backers can all vote where Exxon chooses to drill next or which companies Google should be acquiring(obviously GOOG is a bad example because they've been doing so well but hopefully you get the idea). I know this is the basic idea behind holding shares, but perhaps the voting power can be more evenly distributing in these shell entities. In the current structure one share doesn't get you much voting power in a corporation.

argumentum 13y ago
> Basically, tech in it's current iteration wouldn't exist without the street and well-structured IPOs. Are you suggesting that Facebook/Google had no value prior to their IPOs? Their public market cap is merely a reflection of the value they already provide to society. Constitutional democracy is the least worst way to preserve individual liberty. It's not a good way to run a private corporation.

dpcheng2003 13y ago

I can't presume to understand Carl Icahn (as you admitted as well) but IMHO, this is untrue and can lead fellow HNers into an echo chamber. First, Wall Street's role in capital markets towers over Silicon Valley. Venture Capital Assets Under Management is approximately $200 billion. Blackrock, the world's largest fund, has $4.3 trillion AUM. Second, while I believe pmarca acted entirely in good faith and is legally in the clear, there is enough "there" to begin fighting a proxy war. For example, the (tech) market was more forgiving when Dan Loeb fought Yahoo because it got the outcome we wanted (Marissa joining, Yahoo focusing). Let's not conflate what is arguably an ill-advised but legally legitimate proxy war with a misdirected turf war between finance and tech. As a point of reference, I'm a tech co-founder (who poorly codes) and a former investment banker.

eruditely 13y ago
Also, I do not agree, the wealth created by tech companies is legitimate progress, whereas finance is more rent-seeking/pushing tail-risk off to the government. The link below informs much more of my world-view however. http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc
- dpcheng2003 13y ago
  While you can be 100% correct, it's a straw man and irrelevant to my point. You can simultaneously believe finance is rent-seeking and still 100% agree with my points in response to the original post: 1) finance is much larger in capital markets; 2) Icahn has legitimacy even if he turns out to be wrong; 3) We should not dovetail into a finance vs. tech argument.
argumentum 13y ago
> First, Wall Street's role in capital markets towers over Silicon Valley. True, but what's the delta? Where are the sources of new power (and subsequently wealth) being generated? Why, for that matter, are you a former investment banker and now a tech-cofounder and coder? As I'm sure you know, you're not the only one who's made that (smart) move. What moving around money was to the 19XXs, moving around information is to the 20XXs. That's the crux of "software is eating the world". AUM doesn't seem a useful metric for power, in fact it's debt and so it all depends on what you do with it. What % of those assets are depreciating? How fast are the % of assets that are appreciating doing so? I know little about capital markets, but these seem like the obvious begged questions, don't they?