In Battle For Silicon Valley’s Destiny, Shareholders Strike Back

By Thomas Lee
San Francisco Chronicle

WWR Article Summary (tl;dr) Given the prospect of big gains in share price and the star power of tech entrepreneurs, shareholders in both private and public companies have increasingly deferred to company management, but the balance of power has been starting to shift as investors have come to realize that they need to assert some kind of authority over companies.

San Francisco Chronicle

In the typically one-sided scrum between investors and superstar tech executives, shareholders have been showing more backbone of late.

First, there was the investor-led ouster of Uber co-founder Travis Kalanick, whose tenure as CEO was marked by a workplace culture of pervasive misconduct, sexual and otherwise.

Following Snap’s initial public offering, in which the company behind Snapchat sold stock to the public with no voting rights, S&P said it would no longer include companies with such stock structures in its benchmark indexes.

And now Facebook has scrapped a plan that would have allowed CEO Mark Zuckerberg to sell stock to fund his philanthropy without losing voting rights.

Given the prospect of big gains in share price and the star power of tech entrepreneurs, shareholders in both private and public companies have increasingly deferred to company management, a trend most point to as starting with Zuckerberg, who arranged to preserve his control over Facebook in its earliest days.

But the balance of power has been starting to shift as investors have come to realize that they need to assert some kind of authority over the companies.

“Over the last 13 months, investors have been pushing back on gaining control over (a company’s) destiny,” said Rohit Kulkarni, director of research for SharesPost, a San Francisco firm that arranges trades in private company stock.

Make no mistake, we’re talking real money here. Worth about $70 billion on paper, Uber is the most valuable private tech firm in the world, and has investments from major mutual fund companies like Vanguard Group and Fidelity Investments. Snap, which makes the popular photo app, was one of the most hotly anticipated IPOs in recent memory.

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