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Facebook establishing a venture arm to invest in startups

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Re: Facebook establishing a venture arm to invest in startups

#111

Post by aspenmayer »

colonelanguz wrote: post #77
tych0 wrote: post #50

Earlier quoted context omitted.

> Public companies have a fiduciary duty to maximize profits and investor returns. No, they don't. There are many articles on the subject, here is one: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

Delaware companies do. See, e.g., Frederick Hsu Living Tr. v. ODN Hldg. Corp., 2017 WL 1437308, at *18 (Del. Ch. Apr. 14, 2017) (“[T]he fiduciary relationship requires that the directors act prudently, loyally, and in good faith to maximize the value of the corporation over the long-term for the benefit of the providers of presumptively permanent equity capital . . .”). Facebook is a Delaware company.

Has this law ever been enforced against a company; that is, is there a ore-existing verdict against a Delaware company for violating this statute? Or is this more of a hypothetical threat? What would the damages or penalty be for violation? It’s not like you can demand money a company should have made without cause or more importantly, verifiable harm to the counter-party.

Re: Facebook establishing a venture arm to invest in startups

#112

Post by csallen »

riantogo wrote: post #69
gimmeThaBeet wrote: post #39

Earlier quoted context omitted.

That's not really insider trading. Matt Levine pops up here all the time, and one of the really distilled mantras he has: inside trading isn't about fairness , it's about theft . Like the people who track flights to speculate on M&A, or use satellite and aerial imagery to look at parking lots. Gathering information isn't a crime, in fact gathering and acting on that information is explicitly what you want at an aggre…

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

The game isn't rigged because it isn't zero sum. Billionaires getting richer doesn't normally impact your ability to get richer. And as long as you're free to maneuver how you'd like, it shouldn't really matter to you that someone else is succeeding faster or slower.

Also, it's generally the case that there are more opportunities to turn $1 into $2 than to turn $1B into $2B.

Re: Facebook establishing a venture arm to invest in startups

#113

Post by benrbray »

cortesoft wrote: post #54
a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

As many others have pointed out, this isn't insider trading. To drive home the point of how much insider trading laws aren't about fairness, consider this: It isn't insider trading for Facebook to use all the information it has about web trends to buy companies. However, if a Facebook employee used the non-public information Facebook has to go and buy stock in those same companies, that would be insider trading and b…

I think you've pinpointed the exact problem.

Most employees don't own a significant enough stake in their company to benefit from trades made by the company acting on company data. But executives do, and they personally gain from trading on behalf of the company. Trades that would be illegal for any other employee to make.

I think what people mean is this isn't covered under the legal definitino of insider trading, but should be.

Re: Facebook establishing a venture arm to invest in startups

#114

Post by missedthecue »

colonelanguz wrote: post #77
tych0 wrote: post #50

Earlier quoted context omitted.

> Public companies have a fiduciary duty to maximize profits and investor returns. No, they don't. There are many articles on the subject, here is one: https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...

Delaware companies do. See, e.g., Frederick Hsu Living Tr. v. ODN Hldg. Corp., 2017 WL 1437308, at *18 (Del. Ch. Apr. 14, 2017) (“[T]he fiduciary relationship requires that the directors act prudently, loyally, and in good faith to maximize the value of the corporation over the long-term for the benefit of the providers of presumptively permanent equity capital . . .”). Facebook is a Delaware company.

"maximize the value over the long term" isn't the same as "upend the company to pick up a couple dimes"

Re: Facebook establishing a venture arm to invest in startups

#115

Post by IgorPartola »

objclxt wrote: post #38
a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

> Since startups aren't publicly traded, I don't think insider trading laws apply to trading their securities. FAANG is legally allowed to use their access to information to make better investing decisions than other companies are able to Insider trading laws apply to all companies, be them public or private. It is illegal to trade based on undisclosed material information the other party doesn't have - the law doesn…

So by your logic nobody can trade stock with me before buying me a WSJ subscription?

Re: Facebook establishing a venture arm to invest in startups

#116

Post by missedthecue »

scollet wrote: post #105
raverbashing wrote: post #68

Earlier quoted context omitted.

And? You'd probably walk away with at least 6 digits in your bank account. 7 or maybe 8 if you're lucky. This is the kind of money I wouldn't say no except for a very good reason.

Money > ethics in your worldview? This is compounding the issue and creating a toxic incentive.

Money is objective while ethics are not

Re: Facebook establishing a venture arm to invest in startups

#117

Post by pwdisswordfish2 »

a13n wrote: post #27

It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…

Perhaps of interest/relevance: https://en.wikipedia.org/wiki/Onavo

Re: Facebook establishing a venture arm to invest in startups

#118

Post by riantogo »

csallen wrote: post #112
riantogo wrote: post #69

Earlier quoted context omitted.

And that exactly is the problem. The game is rigged in favor of folks who already have access to information (or can afford to buy it), not available to regular folks. That is how billionaires double their billions faster than me essentially playing lottery/roulette with my $1000 on Robinhood.

The game isn't rigged because it isn't zero sum. Billionaires getting richer doesn't normally impact your ability to get richer. And as long as you're free to maneuver how you'd like, it shouldn't really matter to you that someone else is succeeding faster or slower. Also, it's generally the case that there are more opportunities to turn $1 into $2 than to turn $1B into $2B.

Great. I would like to discuss couple multilevel marketing schemes that might be of interest to you. Mostly the top of the pyramid makes money but you can earn dozens of dollars too. You are free to maneuver how you’d like. In fact that is their recruiting line, “be your own boss”.

Re: Facebook establishing a venture arm to invest in startups

#119

Post by crubier »

kortilla wrote: post #110
blocked_again wrote: post #82

Earlier quoted context omitted.

> There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Well, the people working for Billionaires should be able to figure that out right?

No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.

If it’s not worth it tot hem it’s not worth it to us either then. The rules of ROI are the same for billionaire or for me.

Re: Facebook establishing a venture arm to invest in startups

#120

Post by riantogo »

kortilla wrote: post #110
blocked_again wrote: post #82

Earlier quoted context omitted.

> There is probably a useful fact that you know that billionaires don't. It is probably local or related to your technical expertise. Well, the people working for Billionaires should be able to figure that out right?

No, it’s not worth it for them to spend $50k in someone’s salary getting them up to speed on the local culture of a place to discover a trade that might be worth 150k.

But totally worth it to create a “local” team that will find 10,000 such trades by using advanced aggregation and analysis techniques.
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