Steve Jobs famously owned very few shares of Apple, partly because he divested his stake when he was drummed out of the company in the mid-1980s. Asked later what he thought of dual-class stock ownership structures that younger founders used to keep control of their companies, he said he wished the technique had been popular when he co-founded Apple. He would have taken advantage of it.
That technique has been under fire for years. Larry Page and Sergey Brin used it to control Google, and when it went public they told investors not to buy the shares if they didn’t like the arrangement. More recently founder control has become an item on the checklist of bad behavior by entrepreneurs. Along with their arrogance and insouciance, founders are considered insufficiently mindful of the concerns of the people from whom they are raising capital.
This is undoubtedly true. It’s also very likely beside the point. Erin Griffith, the estimable author of Fortune’s Term Sheet newsletter, has a new column out that argues that the era of “founder-friendly” ownership structures will soon give way to better corporate governance in Silicon Valley. Her data points include Snap and Blue Apron, two founder-controlled companies whose share prices have cratered, and Uber, another outfit where the CEO, co-founder Travis Kalanick, let things run amok.
Here’s my problem with this analysis. First, it suggests a causal relationship where one might not exist. I’m not convinced Snap and Blue Apron have performed poorly because their founders didn’t fear being fired. It’s possible. But it’s also possible they made long-term bets—as controlling shareholders will—that haven’t paid off so far or never will. Second, a good idea is a good idea no matter the governance. Google and Facebook investors seem pretty pleased Page and Brin and Mark Zuckberberg are in control. Facebook even endured a horrible IPO and a near-death strategic miss early on.
There’s no one right way to structure a startup. Investor control can be critical for getting rid of bad operators. And founder control can ensure long-term thinking that avoids stupid short-term moves. Or the reverse might happen regardless. As the saying goes, this time literally, you pays your money you takes your choice.
| Adam Lashinsky | |
| @adamlashinsky | |
| adam_lashinsky@fortune.com |
NEWSWORTHY
Tech companies silence hate. After a fatal white nationalist rally in Virginia, tech companies are going beyond merely censuring extremist ideologies. They are actively barring hate groups from using their services. Some of the company's that have taken action: GoDaddy, Google, Apple, CloudFlare, even Spotify.
Looking for love in all the wrong places. Another tech company moved to stomp out hate on its platform: dating site OkCupid. The matchmaker has banned "for life" Chris Cantwell, a white supremacist who gained infamy for his appearance on a Vice News segment following the weekend's deadly attack in Charlottesville.
Ex-Uber CEO bites back. Travis Kalanick, former chief of embattled ride-hailing firm Uber, filed a response to Benchmark Capital, an early investor that is suing him for alleged misdeeds. Kalanick called the venture capital firm's lawsuit "shameful" as well as a "public and personal attack."
Infosys CEO resigns. Vishal Sikka, former chief of the Indian IT outsourcing firm, surprised investors by submitting his letter of resignation. Sikka had butted heads with the company's founders, who still control a decent chunk of the company (12.75%). Sikka cited a "continuous drumbeat of distractions and negativity" behind his decision.
Andy Rubin takes on Apple and Samsung. The creator of Android, the world's most popular mobile operating system, has made his new Essential phone available for preorder. You can place orders for the phone through Essential's website, Sprint, or Best Buy.
Bitcoin hits new high. The cryptocurrency oft-compared to digital gold peaked above $4,500, an all-time high, before crashing back down to the $4,300 range. The digital coin's price has leaped nearly $1,000 in little over a week.
Two Bitcoin businesses add Ethereum. Two of the oldest cryptocurrency companies around, wallet provider Blockchain and exchange Bitstamp, added support for Ethereum, a cryptocurrency network that rivals Bitcoin. Ethereum, which allows people to create "smart contracts" and mint digital tokens, continues its frothy ascent.
IN CASE YOU MISSED IT
If You Bought Google at Its IPO Price Here's How Much Richer Richer You'd Be, by Lucinda Shen
Microsoft and Google Give Startups Options to Amazon's Cloud, Barb Darrow
The Next Apple Watch Might Have a Surprising Disappointment, by Don Reisinger
Facebook Declares War on Video Clickbait, by Tom Huddleston, Jr.
We Print 50 Trillion Pages a Year, and Xerox Is Betting that Continues, by Susie Gharib
Box's Deal With Google Involves a Lot of Machine Learning, by Jonathan Vanian
Motorola Is Developing Self-Healing Phone Screens, by David Meyer
FOOD FOR THOUGHT
"Human interaction is often perceived, from an engineer’s mind-set, as complicated, inefficient, noisy, and slow. Part of making something 'frictionless' is getting the human part out of the way."
—David Byrne, Talking Heads' frontman, theorizes that technology is designed to eliminate human interaction in this think-piece for MIT Technology Review. According to him, less person-to-person interaction is a bad thing, because it "means one can live in a tribal bubble—and we all know where that leads."
ONE MORE THING
We've all heard about the benefits of taking a stroll. Good for your health, your mind. Steve Jobs was a fan of the walk-and-talk. But is this so quotidian activity actually a sign of privilege? A meandering, meditative essay on The Outline ponders this question. The piece posits that ambulation exposes a class divide: there are those who did it for leisure, and those who did it because they must.
