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Comment by mathattack | Hacker News Reader

I interpret it as keeping the ad machine separate from everything else. If product decision impact ad revenue, they stay in (G)oogle. Everything else moves to different arms.

My guess is this serves 3 benefits:

1 - Less turf wars.

2 - Better visibility to investors on where the money is.

3 - Ability to spin off pieces as needed.

Many companies resist this type of visibility because they don't want a Carl Icahn to come in and demand a spinoff. The share structure of Google/Alphabet precludes this from happening.

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Transparency is easier when you have control (Class A versus Class C shares). I'm surprised more largish tech companies haven't followed along to not be at the whim of WallStreet and other short-term outlook players.

Here's the thing... Many companies are actually poorly run. For most of them, Wall Street does the dirty work of forcing them to relinquish their money to more productive efforts. (Think of all the bloated monopolies who used to have fleets of corporate jets and crazy perks) No extreme is right or wrong.

Aren't the Class B shares the major voting shares, with 10x as many votes per share as Class A (10 vs 1)?

Correct:

Class C - 0 Votes (GOOG)

Class A - 1 Vote (GOOGL ~4% higher cost per share)

Class B - 10 Votes (Not publicly traded)

I still can't believe that investors are willing to trust Larry and Sergey in perpetuity(same goes for Zuckerberg and there are many other corporate doing this gambit).

Sure, I like all the weird sideprojects, but what happens when they decide to build a 100B Monolith on a moon? If you happen to own Class C shares, you have no say.

If you own Class C and to some extent A shareholders get a raw deal.

The Class B holders have their cake and eat it too.

It just feels morally wrong that someone owning 20% or 15% of company controls 50+% of the votes.

Here's my take... It's not a moral decision, it's a financing decision. Larry and Sergey (and their initial backers) made a decision to put this structure in place. Everyone is free to decide to invest or not invest in it. Conventional theory suggests that investors don't like these types of arrangements, and these provisions weigh down the price of the stock. Therefore, the original owners had to accept a smaller valuation based on this.

This isn't a morality thing, it means that the Class A common stock holder are more like bondholders (who put in money without votes) with upside, rather than full owners. But all of them were well informed about this when they put the money in.

This is not to say that we should all invest in Class A shares, just that this structure is one way of many to invest in a company, and people who don't like it can put their money elsewhere.

> It just feels morally wrong that someone owning 20% or 15% of company controls 50+% of the votes.

Shareholders don't really "own" a company in the traditional sense. They own a specific package of claims against the company in the event of dissolution, voting rights, etc. In the simple case of a company with one class of shareholders, the analogy between owning X% of the shares and owning X% of the company is fairly close, when you have differentiated share classes that analogy is less close.

And shareholders own because they choose to acquire the stock under specific terms. If they don't like the terms, they can just not accept the deal that would give them the stock. I don't see how its morally wrong that someone that bought a set of claims that don't include voting rights, or include smaller voting rights than some other set of claims, has exactly what they bought.

Can Class B shares be traded privately between individuals? Or do they have conditions attached (right of first refusal back to founders/company, etc)?

Shares of class B can be converted 1:1 to class A and sold.

Ahh! Very interesting if they lose all of the voting rights in the process.

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