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Younger Tech Firms Learn Art of Control

As most investors and corporate executives know, Wall Street is driven by short-term expectations. That means any CEO wanting to make big bets that will play out over the long term better have absolute control of his or her company. Otherwise, activist investors are apt to appear.

That’s a lesson taken to heart by the generation of tech executives who took their companies public over the past decade, as the accompanying chart highlights. Older companies like Microsoft, Oracle, eBay and Amazon.com, each of which went public in either the 1980s or ‘90s, had one-share, one-vote structures. That meant their founders’ control would gradually erode over time as the company issued new shares or they sold stock.

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Dual-class share structures are likely here to stay, including in tech companies yet to go public. And as long as companies perform financially, investors put up with it.

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Joe Lonsdale
Joe Lonsdale
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In adopting so-called “supervoting” shares, Google was taking a page from the media industry, where founders of companies like Comcast, News Corp, Viacom and Liberty Media have long used dual-class shares to retain control.