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!
The real question is if this is meaningful stock ownership or not. If it's meaningful ownership, then the company needs to do the public disclosure. Otherwise it's very hard for the stockholders to have the right information to value the stock.
I think you could do the disclosures, not have a public offering, include restrictive covenants on sales, and be able to give shares away.
This misrepresents what Citizens United was about.
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.
So many questions about how this would be implemented....
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."
>"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."
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.
I know this is probably impossible because the "actual" investors wouldn't be able to cash out, but it would seem to make sense to me for companies like AirBnB and Uber to be organized as host/driver co-ops, with the "corporate" services like ops/marketing/engineering being subordinate to the interests of the workers (hosts/drivers), who also happen to be the owners of the majority of the actual capital stock (apartments and cars). Nothing would even need to change from the customer perspective, very little would need to change in terms of the technology. AirBnB employees would just be working for hosts instead of the other way around.
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.
Isn’t one of the (rare) benefits of the gig economy it’s “on again, of again” nature? How would coownership work if/when hosts/drivers decide to stop working for AirBnB/Uber, or even start working for a competitor? What if they resume after some time? How is this solved with existing coops?
Do you mean "Should a driver still have a vote/share in the co-op if they quit driving for 6 months?" If so, then there are various ways to handle it. I'm not an expert but in agricultural co-ops like Oceanspray, the problem simply doesn't arise: there's no scenario where it is in the farmer's best interest not to harvest his cranberries at all, and they contract for delivery before the harvest season (they can go it on their own or sell to a different processor next harvest if they want, in which case they leave the co-op). For worker co-ops like grocery stores, there are various solutions: some give credit (including voting power and dividend) per hour worked, others just pay regular wages but have tiers of ownership that you move up with tenure. There are infinite possible models.
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.
It could be a split system, much like the US Congress is - I do think that the person who works full time on a platform ought to get a bigger voice than the guy who takes rides on weekends, for example.
While that makes sense in theory it usually leads to policies that exclusively benefit the people that work the most, because they're the ones with the most votes. Unions often have this problem, where new hires are often taken advantage of by the union in favor of people who have been working longer.
Either scheme ("one worker, one vote" or "some workers are are more equal than others") has downsides, but they're both probably preferable (to labor) than the status quo arrangement where labor gets no say at all in managing an enterprise.
I'm a Graybar customer, the employees I've talked to love it, outside sales guys in particular. I work for a top 20 national electrical contractor that has an ESOP as well, it's great.
That's what the platform.coop movement is all about. C.f. Arcade City for an example of a company doing this in rideshare.
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:
The bill doesn't have anything to do with tax treatment. It lets employees take out a loan from the government to buy the stock of their business from the current owners, and then pay back the loan using the profits from the business. It's how the Twitter employees are currently trying to buy Twitter.
I think this is just a way to make it easier to set up ESOPs. Blasi created an alternative structure called an EWOK, but afaik that wasn’t included in this bill.
Cabot Creamery in Vermont is another fairly well known example of this; it actually happens to have joined with a larger but less publicly visible coop known as Agri-Mark.
Why do you have "actual" in scare quotes when Uber investors have put in something like 20 billion dollars worth of investment and AirBnB have put in about 4.5 billion?
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.
I meant to imply that Uber and AirBnB have other investors which aren't really treated as such by the legal system: the drivers and hosts who have invested their time and capital driving, hosting guests, buying cars, and renting or buying property. I never meant to imply that the "actual" investors weren't real investors, only that the other sort is just as "actual" despite the legal reality where they are considered the only investors.
This has very little to do with the legal system[1] and much more to do with voluntary exchange. Investors voluntarily gave money to Uber in return for equity. Drivers voluntarily signed up and started driving in return for cash. Either of those exchanges could have been negotiated differently by either side but they chose not to.
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.
You're still making an ideological argument, though you might not realize 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?
CamTin said "Uber and AirBnB have other investors which aren't really treated as such by the legal system" and I pointed out that this wasn't really true.
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.
CamTin was saying that workers should be considered investors in a moral sense: they put time and effort into the company and deserve a share of the profits. Obviously, workers are not investors in the literal sense.
I was actually trying to say something more than that workers should be considered investors, because Uber drivers and AirBnB hosts are more than just workers: they literally supply the main working capital of their respective concerns. They are owner-operators in the same sense that a taxi driver who owns his cab is, or in the same sense as an orange grower who is part of the "Florida's Natural" co-op.
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.
If the owners of the houses & cars want to sign over their property to AirBnB & Uber then you might have a point, but if they want to keep their property for themselves then they aren't really supplying "the main working capital of their respective concerns."
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[ 2.9 ms ] story [ 123 ms ] threadAny 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
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.
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.