Comment by jorgeortiz85 | Hacker News Reader

Comment by jorgeortiz85 | Hacker News Reader

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Google's model was inspired by Berkshire Hathaway. I'm not entirely certain, but I don't think it's very common to have such a two-tiered insider/outsider voting system. It really dilutes the value of the "outsider" shares. (Especially if, as in Google's case, you promise to never, ever pay dividends. If you never get dividends, and you don't get to vote, then what are you paying for when you buy a share? A pyramid scheme? You hold some claim to Google's assets, but it's essentially unenforceable unless Google decides to buy back its shares or dissolve the company. Both are decisions that are taken based on voting power that you don't have.)

As for buying a company's stock: Who are you going to buy your 11 shares from? If I don't want to sell them, and no one else owns any, then where do they come from? The Company could issue more shares for you to buy, but it doesn't have to. And if I control the Company, I can tell it whether or not to issue more shares. When you buy shares on the stock market, you aren't buying them from the Company itself. You're buying them from someone else who owns shares and wants to sell them. If no one wants to sell, there are no shares to buy.

Berkshire Hathaway has two classes of stock, but for a different reason. BRK.A trades for 137000.00 and BRK.B trades for 4562.00. The smaller one was issued to make ownership accessible to individual invstors, so that an outside company would not provide that service.

The GOOG model is much closer to the NYT model, where the purpose of having two classes of stock is exclusively control. I'm glad that, for now, the New York Times and Google are in a position to not be evil.

I see. Let's pretend you control the Company and you convince the Company's board to issue 11 more shares, which I will subsequently buy. I'd have 11 shares; you'd have 10.

Is that enough for me to take over the Company? Once the stock exchange transaction is done, I can just dissolve the board in place and do as I want to?

Possibly, but it depends. Some companies have special restrictions or internal regulations regarding shares and control. For instance, some smaller companies (with only 21 shares issued) may have a policy that each shareholder gets only 1 vote, regardless of the number of shares owned. Others may have a system in place where those serving at the company have more voting power. If I set it up, I could issue you 20 of the 21 total available shares, but because I'm the CEO and chairman of the board, and because the articles of incorporation state that internal shares receive extra voting power, my shares provide me with 90% control of the company. Other companies might have internal controls to prevent a radical dissolving of the board or other establishments in the company. It all depends on the articles of incorporation.

As far as external regulations such as the SEC, I don't think there is too much in the way of what you can and can't do with purchasing stock. There is of course the concern for monopoly-like control of an industry, and then someone may step in, but I don't know enough about that to let you know exactly how that will work. In fact, I don't think anyone knows for sure, otherwise Microsoft wouldn't have to worry about their Yahoo! acquisition being shot down.

Nope, sorry. Multi-tierred share classes in this country goes back to Standard Oil. Overall you can find variations of this going all the way back the the East India Tea Company. Every modern business genius is just rehashing some crap somebody thought up long ago. Stop reading Fast Company.

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