Airbnb asks SEC to let it give hosts equity
axios.com
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Many agricultural co-ops work like this. You probably are more familiar with the brand names these co-ops employ than their actual organization: Oceanspray cranberries and Florida's Natural orange juice are two you probably know about. These are co-ops where the farmers who produce the oranges and cranberries have pooled to do all the things necessary to actually sell their product on a national market, like advertising and running processing plants (i.e. squeezing the oranges, packing the cranberries) but farmers still own and harvest their own crops. It's not really that radical an idea, and seems to make even more sense in the case of AirBnB where the actual capital needs of the centralized entity (an app) are much less expensive than the physical plant needed to handle gigatons of produce.
The gig economy starts to look a whole lot more equitable with employee ownership, or a co-op structure.
I'll point out, there are several very large companies that are partially, mostly, or wholly employee owned - most notably Graybar.
For Uber specifically, I can see miles=votes for each election period. IOW, if you've driven 10,000 miles since the last election, then you get to cast 10,000 votes. The fact that all the work is tracked mechanically makes it easier in Uber's case than in others.
The new legislation that Joseph Blasi and Gillibrand just got passed as part of the tax bill makes it even easier for startups to be organized as co-ops. Of course you won't see TechCrunch writing about this even though it's one of the biggest startup-related bills to pass in decades, but regardless:
https://money.cnn.com/2018/08/26/news/economy/employee-stock...
You also mention that hosts & drivers own apartments and cars. This is, of course, true. But those assets are owned by the individuals and not by the company. So I don't see how this sort of personal ownership would be any sort of reasonable claim for ownership of the company.
Such is the world we live in.
1. Obviously not zero, as this AirBnB request makes clear, but for the most part these sorts of restrictions can be dealt with if both sides really want it.
The question is whether workers should have some degree of ownership and control of their company. You point out that the workers voluntarily gave that up.
The broader question is whether free market outcomes must be fair/best. What you ignore is that in an unjust society with imbalances of power, markets will reflect and amplify those inequities.
For example, what do you make of the fact that most board members are white men? Will you argue that this is the fair outcome? Or is it possible that there other explanations and better outcomes?
Now perhaps this is bad. Perhaps we would live in a more fair world if our legal system treated Uber drivers and AirBnB hosts differently and forced certain kinds of compensation structures on those transactions. Perhaps that would serve to create a more fair world, but that is not relevant to the point I was making.
Certainly workers deserve a seat at the table, and that's a fine debate to have, but surely even the most dyed-in-the-wool capitalists can agree that the owners of the capital deserve a seat at the table, and that an enterprise which by fiat excludes major capital contributors from ownership is not really a capitalist enterprise, but rather some other more exploitative form.
You can't have your cake and eat it too.
Does the equity vest immediately?
Options or pure equity?
To the extent that AirBnB remains private, how do they determine share/strike price? I.e., last round valuation or some kind of mark to market?
Is there a clawback option if you later make AirBnB look bad by being a bad host?
If anything, this strikes me as a political gambit that is largely devoid of meaningful thought. Chesky's playing the long game; he knows this isn't ever going to go anywhere, but if Congress ever gets pissed off at his company the way they currently are pissed off at GOOG/FB, he has a card to play. "As a matter of fact, Senator, we forcefully advocated for giving our hosts equity in AirBnb, but the SEC decided not to implement the simple legal changes that would have been necessary for us to do so."
Yeah this was my first thought as well that is likely about "potential good will." Floating this idea costs nothing, has immediately publicity benefits and they don't have to worry about any of the questions you mentioned.
Any federal district judge in the country can say these aspects of the Exchange Act (and the Securities Act) chills speech. The only reason this hasn't been challenged is because it doesn't affect accredited investors like you, and the people it does affect don't even know it affects them BECAUSE THE SPEECH IS CHILLED!
Please help. These laws are nearing 100 years old, but it has only been the last 20 or so where its been a problem because companies are going public so late as well as few and far between, all while the market efficiencies have improved enough where it makes sense to easily give out equity and things that may be construed as securities. But these laws have always chilled speech and recent case law can be used to extend "free speech" into corporate and financial matters. So please, go for it! Hire the same law firm that did Citizens United, they always go for 1st amendment no matter what the context!
I think you could do the disclosures, not have a public offering, include restrictive covenants on sales, and be able to give shares away.
Could you elaborate on how and why this provision(701) chills free speech? Thanks.
The idea of Citizens United was not that corporations are people, and therefore have free speech rights.
It is instead that corporation is just another word for "groups of people", and that groups of people retain their rights, even when they join together to do something.
OHHH I think you thought that was the case law I referring to! There will be plenty