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When Carl Icahn Ran a Company: The Story of TWA

blog.pmarca.com

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Re: When Carl Icahn Ran a Company: The Story of TWA

#81

Post by protomyth »

refurb wrote: post #77
protomyth wrote: post #58

Earlier quoted context omitted.

Given what he did with TWA and reselling tickets, its hard to think that served any other shareholder but himself.

Whenever I hear a story about someone being "underhanded" and "of low character" I always see what the other side of the story is. Usually, the truth isn't so straightforward. It appears that TWA owed him money so he negotiated the cheap ticket as a form of payment...[1] How convenient that Marc left that out of his blog post... In the interim, Icahn negotiated for airline vouchers from the company in lieu of the $19…

So, how did that help the other shareholders?

Re: When Carl Icahn Ran a Company: The Story of TWA

#82

Post by XaspR8d »

pessimizer wrote: post #6

Andreeson's defense seems to be that Icahn has had as many conflicts of interest and selfish motives on boards as he has, if not more. I'm not sure that's a good defense: "He's killed twice as many people as I have, and he's been at it longer, too!" When people so alike bicker like this in movies, they're usually about a minute away from kissing.

Is that quote from something? I really enjoy the dubious logic.

Re: When Carl Icahn Ran a Company: The Story of TWA

#83

Post by argumentum »

dpcheng2003 wrote: post #79
argumentum wrote: post #75

Earlier quoted context omitted.

> First, Wall Street's role in capital markets towers over Silicon Valley. True, but what's the delta ? Where are the sources of new power (and subsequently wealth) being generated? Why, for that matter, are you a former investment banker and now a tech-cofounder and coder? As I'm sure you know, you're not the only one who's made that (smart) move. What moving around money was to the 19XXs, moving around information…

New power/wealth generation is and will be in finance for the foreseeable future. I can go into great detail on this but for TL;DR purposes, I will generalize: finance > tech in making aggregate money because finance only cares about making money and tech cares about a lot of other things, which in turn generates money. I moved into tech because I liked it, not to make money. If I were still in investment banking, I'…

Power and money aren't the same thing. Power is the ability to control your environment .. i'd say that's exactly the "lot of other things" that tech cares about. Power derives from generating wealth, which is making people's lives better.

Of course, people have always moved money (and information) around (and always will). Just as we've always moved goods around. That wasn't my point. When "Brittania rules the waves" became Britain's national anthem, it was because ruling the waves (and moving goods) was the main source of power in those days. Since then, shipping has become a commodity. This is now happening to finance.

Re: When Carl Icahn Ran a Company: The Story of TWA

#85

Post by argumentum »

dpcheng2003 wrote: post #80
Adrock wrote: post #76

Earlier quoted context omitted.

> First, Wall Street's role in capital markets towers over Silicon Valley. Venture Capital Assets Under Management is approximately $200 billion. Blackrock, the world's largest fund, has $4.3 trillion AUM. This isn't really an apples to apples comparison. Most of the money managed by the big players like Blackrock is in funds that are tied to specific benchmarks and have very restrictive mandates. Relatively little o…

Who said anything about funding new companies? We're talking about leverage and wealth generation. Big AUM means bigger fees. Non-VC funds like hedge funds and private equity are incentivized to have huge funds because they get the fees. Since most of their work is financial engineering, more AUM means more leverage and is an advantage. Large VC funds are disadvantaged because they're investing in growth. A 20x retur…

If "AUM" is so crucial to power, why does the market value BlackRock at less than a third of Facebook?

AUM is debt .. so its value depends on what is being done with it. To what extent that these assets can be used for "financial engineering"? They seem rather illiquid to me (and apparently the market, which feels that BlackRock's 11k employees and $4.2 trillion generate less than a third as much wealth as Facebook's 6k employees and $18 billion in total assets "under management").

And how is funding successful new companies not wealth generation? Y-Combinator has invested a total of ~$10m invested for approx a 5% share of ~500 new companies with a valuation greater than $20b and growing. It's annualized RoR is north of 50% for nearly a decade, and likely to increase henceforth.

By contrast, Berkshire Hathaway grew at ~20% for ~50 years. I predict YC will blow those numbers out of the water.

Re: When Carl Icahn Ran a Company: The Story of TWA

#86

Post by refurb »

protomyth wrote: post #81
refurb wrote: post #77

Earlier quoted context omitted.

Whenever I hear a story about someone being "underhanded" and "of low character" I always see what the other side of the story is. Usually, the truth isn't so straightforward. It appears that TWA owed him money so he negotiated the cheap ticket as a form of payment...[1] How convenient that Marc left that out of his blog post... In the interim, Icahn negotiated for airline vouchers from the company in lieu of the $19…

So, how did that help the other shareholders?

I don't know the details, but maybe it kept the company from filling bankruptcy by a few months? They didn't have the cash to pay the loan, so they offered the tickets.

Re: When Carl Icahn Ran a Company: The Story of TWA

#87

Post by revelation »

refurb wrote: post #77
protomyth wrote: post #58

Earlier quoted context omitted.

Given what he did with TWA and reselling tickets, its hard to think that served any other shareholder but himself.

Whenever I hear a story about someone being "underhanded" and "of low character" I always see what the other side of the story is. Usually, the truth isn't so straightforward. It appears that TWA owed him money so he negotiated the cheap ticket as a form of payment...[1] How convenient that Marc left that out of his blog post... In the interim, Icahn negotiated for airline vouchers from the company in lieu of the $19…

But he does mention that?

One of those creditors, to the tune of $190 million, was Icahn. He resigned as chairman in 1993, and by 1995 he was growing impatient to be repaid. TWA executives, desperate to bring the tragic Icahn chapter to a close, gave away the farm, the cows and the farmer’s wife. They came up with a deal called the Karabu ticket agreement, an eight-year arrangement that allowed Icahn to buy any ticket that connected through St. Louis… for 55 cents on the dollar and resell them at a discount.

Then of course, if you believe that the company is undervalued and can grow (and that is why you would buy it, anyway), you wouldn't try to force them to pay your money back, because they could generate a positive return on the money.

Re: When Carl Icahn Ran a Company: The Story of TWA

#88

Post by protomyth »

refurb wrote: post #86
protomyth wrote: post #81

Earlier quoted context omitted.

So, how did that help the other shareholders?

I don't know the details, but maybe it kept the company from filling bankruptcy by a few months? They didn't have the cash to pay the loan, so they offered the tickets.

Selling off the most profitable route, tickets, short ordering replacement aircraft - there is not one thing he did that benefited anyone but himself. Nevermind long term company value.

Re: When Carl Icahn Ran a Company: The Story of TWA

#89

Post by mbreese »

refurb wrote: post #77
protomyth wrote: post #58

Earlier quoted context omitted.

Given what he did with TWA and reselling tickets, its hard to think that served any other shareholder but himself.

Whenever I hear a story about someone being "underhanded" and "of low character" I always see what the other side of the story is. Usually, the truth isn't so straightforward. It appears that TWA owed him money so he negotiated the cheap ticket as a form of payment...[1] How convenient that Marc left that out of his blog post... In the interim, Icahn negotiated for airline vouchers from the company in lieu of the $19…

That tidbit was included in the post.

Re: When Carl Icahn Ran a Company: The Story of TWA

#90

Post by badman_ting »

auctiontheory wrote: post #41
Aqueous wrote: post #32

It's kind of absurd how closely Carl Icahn's mirrors that of the story of Gordon Gekko in Oliver Stone's movie Wall Street . What Icahn did to TWA is pretty much exactly what Gekko did (or planned to do) to Bluestar Airlines in that film. Longer period of time - but in principle, very similar.

I was just about to post exactly this. Anyone interested in what Wall Street actually does needs to watch this movie. I have an MBA. I have nothing against making money. But while it's possible to make money by creating something of value , it's unfortunately possible to make even more money while doing the opposite.

Shitpiles like this always have a "business alibi" that they create liquidity, or improve efficiency/productivity, etc. I suppose it's true that the forest needs fires, but we don't have to like them.
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