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Elon Musk, dual-class shares, and who owns the future

 2 years ago
source link: https://finance.yahoo.com/news/elon-musk-dual-class-shares-170106064.html
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Elon Musk, dual-class shares, and who owns the future

Alex Wilhelm
Sun, April 10, 2022, 2:01 AM·3 min read

Welcome to The TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where it gets its name. Want it in your inbox every Saturday? Sign up here.

Technology news was entertaining this week, if nothing else. The fact that we started the week learning that Elon Musk had bought a material percentage of Twitter's stock, spent the mid-week period learning that he had joined the board, and by the end of Friday were busy reading about how employees were digesting the matter, it's been busy.

But better busy than not, and the saga has given us a lot to think about. I want to touch on the matter one more time today through the lens of voting rights.

Something that we have seen the last few years are multi-class shares at startups. In simple terms, multi-class shares exist when investors and founders create a class of equity that affords them more votes per unit of stock than what is provided by other, lesser types of company stock. This does a few things, including concentrating power in fewer hands. In extreme cases, multi-class share setups can ensure that a founder has complete control of a company, forever.

Facebook is one such company. Twitter is not.

The difference between the two companies isn't idle. Facebook is struggling to reinvent itself under the guidance of the same leader that brought it to early success while, in contrast, Twitter is now run by a non-founder, and just added a controversial power-user to its board. These are very different results for publicly traded social networks.

This brings us to what is making me laugh. By my understanding of today's technology tribalism, the folks most enthralled with Elon Musk and his own brand of capitalism are also those most in favor of using multi-class shares to control companies. Or more simply, the folks who see little issue with Facebook's CEO holding all the cards, are also the ones excited about what Musk can do at Twitter.


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