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Comment by shostack | Hacker News Reader

While I'm not sure I disagree with you, devil's advocate here...do you think you'd feel the same way as a founder who could prevent yourself from ever being fired from your own company? I can think of several situations where retaining that kind of control would be hugely beneficial and important (in the right hands of course, which is the whole issue here).

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And that's why Google and Facebook (I think) both took steps for the founders to retain control in that manner. So that they would be able to focus on what's important to the company vs. bs next quarter results. And it's worked out well for both of them. But of course, they don't seem to have the "ethics" issues that Uber does.

If google had a ethics issues, i certainly never found something on that on the web :D

I suspect that most CEOs would like that level of control, but they shouldn't get it.

Care to elaborate on why? The initial condition here is founders having full voting rights. In a free marketplace, they're free to sell shares without (or with little) voting rights as they wish. If investors aren't happy with it (which doesn't seem to be the case), they're free to not invest.

You seem to be stating that there's a moral imperative that founders voluntarily give away voting rights to investors.

I don't know if I would call it a "moral" imperative, but it's a basic tenet of good corporate governance that the board, which represents the shareholders, should be able to prevent the management from harming the company or the shareholder's interests.

In the case of Uber, the CEO could run the company into the ground, and nobody would be able to prevent that.

A trend toward worse corporate governance could harm the entire economy eventually.

Got it, I can buy into the argument that pro-rata voting rights would lead to better performing companies than founder-controlled companies (in the long run and on average).

But, I don't see any reason why founders should be obligated to give away voting rights.

In other words, I would argue that if founder CEO's want that level of control, they SHOULD get it.

It's sort of weird to even phrase it as "get it". They already have it by default, and I don't see why we should have any right to force them to give it away.

Isn't that the "risk" part of private investment like this?

In theory if/when Uber goes public, the market can hammer his share price into submission. His choice then would be to step down and keep his money, or watch his valuation rapidly dwindle as low as the market dictates.

The investors came into the company knowing he will keep the control it was a risk they were willing to take. Even if he runs it into the ground they don't have a leg to stand on. They were not strong armed into investing it was a choice they made.

Problem is, every founder thinks theirs is the right hands.

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