Founders Apparently No Longer Looking to Cash Out

The rise of dual-class stock structure means Zuck and his cohort aren't disappearing any time soon.


When Facebook hits the NASDAQ sometime later this month, the structure of the stock offerings will ensure that Mark Zuckerberg still hasa substantial amount of control. If that sounds unusual or problematic, well, Bloomberg has crunched the numbers and the trend probably isn’t disappearing any time soon–so we’d all better get used to founders who make it to the IPO sticking around for the long haul.

Traditionally, going public means ceding some authority, as CEOs become answerable not just to a board of directors, but new shareholders, as well. For a particularly flamboyant example of how this can play out, witness Yahoo’s resume-gate, which was set into motion by a particularly activist investor.

Rather than risk mission drift, a growing number of tech companies are electing a dual-class stock structure, which grants founders more valuable stock and therefore more long-term control. Google helped pave the way by fighting for the option in 2004, and then there’s glowing example of the once-defoundered Steve Jobs, who returned from his time in the wilderness to save an ailing Apple. In 2011, Groupon, LinkedIn, Zillow, and Zynga all IPOed with the structure. Based on their limited numbers of outside board members, Bloomberg suggests hot new startups like Dropbox, Quora, Pinterest, Nest Labs, and Flipboard all might follow in their footsteps.

But not everyone is thrilled with the trend. Anne Sheehan is the director of corporate governance at the California State Teachers’ Retirement System (which manages many, many billions of dollars in assets), and she is skeptical:

“They’re good for Mark Zuckerberg or the founders of Google, but are they good in the long run?” Sheehan said. “If they want to get public money and play in the big leagues, why is tech any different?”

Doesn’t anyone just want to take his IPO money and chillax on a yacht anymore?

Founders Apparently No Longer Looking to Cash Out