Comment by throwawayffffas
Comment by throwawayffffas 10 months ago
The resignation implication is that the CEO is running the company to the ground.
The comment further implies this is on purpose in order to buy the company cheaply.
Comment by throwawayffffas 10 months ago
The resignation implication is that the CEO is running the company to the ground.
The comment further implies this is on purpose in order to buy the company cheaply.
I don't think you're properly modeling a truly ambitious person whose basic needs are already fully-met for life.
Anne Wojicki is already sufficiently wealthy – net worth $150m+? – that maybe what really interests her is playing hardball for (say) $10B+ instead of just a few hundred million more? Or for the control & glory of shepherding forward some breakthrough cancer treatments that the other investors might simply treat as financial options to sell early?
And, perhaps she's got the votes & de facto IP control & legal budget to think she's got a good chance of winning, and even a loss can't cut her out?
Isn't this just bare-knuckle "founder mode"?
The viability and profitability of the strategy depend critically on the ownership and control position of the CEO. Many CEOs do not have all that much stock, in percentage terms. If they have access to resources and sufficient board control they could privatize, reset the cap table, and reorganize.
If they were to reorganize first and produce a company worth as much as its competitors, they only get eg 5% of eg 30B, which after taxes makes them maybe a billionaire. Reorg and do the same thing and they could be looking at control and $10-20B.
Where tens of billions of dollars are involved, “really complicated” and “high risk” plays are basically table stakes.
Was that not a strategy successfully employed by Ford to edge out other investors?
Honestly, it would be more surprising to me if this sort of thing never happened. In politics it happens fairly regularly (entryism, agent provocateurs etc.) so why wouldn't it happen in business? It would take even less coordination, all it would take is a bit of personal loyalty between top leaders which - shock and horror! - didn't disappear when one of them changed company.
I don't know the first thing wrt how 23andMe has its governance and voting setup, but the letter seems to imply the CEO has majority power or, at least, a large enough plurality that it is a one-person-show:
> Because of that difference and because of your concentrated voting power, we believe that it is in the best interests of the Company’s shareholders that we resign
EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
> EDIT: But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
1. Less legal oversight and paperwork.
2. I don’t know the terms of the buyout, but if this means the CEO, family, friends, etc (“insiders”) become the new shareholders, then any future upside will be distributed to insiders not the open market.
You can have company control without having even a majority.
This is similar to what zuckerberg is doing with Meta. Supervoting Class A shares vs common shares, etc.
The arrangement is completely up to the governing docs of the entity.
The CEO does currently control the company without a majority.
Having less legal oversight generally refers to paperwork that needs to be done for the SEC.
> If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
I don't know their governance structure, but the CEO may have a majority of votes, but not own a majority of the actual shares. Being able to take the company private would give her (and her other investors) full economic control as well as voting control.
This is risky ground, of course. Even with voting control, legally the CEO cannot screw over the minority shareholders.
>But that brings up a different question: If you have majority voting power, why try to take the company private (as it has been suggested by others here)?
voting power dictates control. Ownership dictates rights to profits. you can have full control with 51% ownership, but you still only get 51% of profits.
The CEO owns 49% of the voting power so the board is pretty much toothless. Facing a direct conflict with her, loudly resigning is probably about the best they could do.
Since CEOs typically own a lot of stock and are compensated for performance, doesn’t that seem like a strange theory? Intentionally destroying a company you run and own shares in so you can buy more shares seems like a really complicated and high risk strategy compared to just running it well, making a fortune, and getting an even bigger CEO gig.