Keep it in perspective with regard to dual-class stock structures

Marc Andreessen posted a salient argument in favor of dual-class stock structures. Note the caveat…”for public companies.” I might even add “…that are clear first movers with distinct and defensible competitive advantages.”

I once met a very bright duo – they had a very interesting product, excellent execution (so far), and a whole lotta passion for what they were doing. They also shared the “president” title. Why? “Because Google does it.” I didn’t think that was a particularly good reason (and it even seemed to reflect some level of immaturity). It’s no better reason to take this tack with your fledgling, closely held enterprise, as it relates to capital structure. It may even turn off some private investors – and before you’ve had a chance to prove you are worthy of holding such power over your company’s destiny.

If you are a technology entrepreneur, you should be listening to what Mr. Andreessen has to say – there are plenty of merits to having a voting power-heavy Class B share for founders, and alignment of interests is just one of several Marc points out. However, this doesn’t mean you should run to your lawyer this very moment and have them do a state filing for a change in capital structure.

I’d hate to see promising businesses diminish their chances of success by emulating the last home run without good justification. Few technology companies are going to go public, even in the best of times (which these aren’t). Rather than fret endlessly about voting control, entrepreneurs might be better off keeping this in mind…

10% of something is a better outcome than 100% of nothing.

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