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StabilityAI cofounder says CEO tricked him into selling stake for $100

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Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#171

Post by gamblor956 »

hgsgm wrote: post #154
gamblor956 wrote: post #81

Earlier quoted context omitted.

Doesn't make sense without additional facts. Such an agreement would not be valid in court as there wouldn't be an exchange of consideration.

That's not true. Gifts are obviously legal. Consideration is only required to enforce a contract for future performance, since otherwise there is no harm in breaking the contract.

Yes, gifts are legal. But the attorneys weren't asking for a gift, they were asking him to sign a binding legal document. And generally the law does not recognize "gifts" to for-profit entities; such a transaction is characterized as a contribution to the entity...which in the original comment would have defeated the very purpose of the agreement the attorneys were asking him to sign.

Furthermore, consideration isn't required to enforce future performance. It's a fundamental basic requirement to have a contract in the first place. Without consideration, there is no contract.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#172

Post by [deleted] »

hn_throwaway_99 wrote: post #118
pyuser583 wrote: post #105

Earlier quoted context omitted.

Having 51% control guarantees nothing. I know a guy who had 51% in the family company. His retired dad had, in exchange for money, deprived the 51% shares of their voting power. His dad then sold the shares on the local stock exchange. A couple months later, his CEO/son was fighting a hostile takeover of the family-run, but publicly traded company. So his son bought the 51% from the local stock exchange, thinking he…

> I know a guy who had 51% in the family company. His retired dad had, in exchange for money, deprived the 51% shares of their voting power. You are either leaving out some important details or this is just not accurate. When people say you need to have "51% of shares" to control a company it means that you need to control 51% of voting rights of shares (sometimes different share classes have different voting rights)…

[deleted]

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#173

Post by aledalgrande »

marricks wrote: post #115
cj wrote: post #7

I was chatting with a company who sold a large minority stake in their company to a well known private equity group (think 49%) with the explicit purpose of retaining control. Soon after the transaction closed, the PE firm was able to covertly buy another 2% of voting shares from a pre-existing investor in the company, which resulted in the PE firm gaining full majority control over the company, kicked out the CEO, r…

There's also the story Richard Branson wrote about in his memoir where the co-founder of Virgin was pro unionizing and his workers were too. Branson convinced (and lied to) his partner that no one in the company actually liked him and the union attempt would fail. Caused his co-founder to quietly quit and Branson to retain sole control. I agree, I imagine shady shit like this is quite common just not discussed.

Which memoir was that?

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#174

Post by marricks »

aledalgrande wrote: post #173
marricks wrote: post #115

Earlier quoted context omitted.

There's also the story Richard Branson wrote about in his memoir where the co-founder of Virgin was pro unionizing and his workers were too. Branson convinced (and lied to) his partner that no one in the company actually liked him and the union attempt would fail. Caused his co-founder to quietly quit and Branson to retain sole control. I agree, I imagine shady shit like this is quite common just not discussed.

Which memoir was that?

Oh wow, I misremembered it a bit. It was about a magazine Branson was running "Student" in his early days. The details of the story are accurate though.

Source

> Richard Branson’s Losing My Virginity

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#175

Post by kristopolous »

fsckboy wrote: post #168
kristopolous wrote: post #64

Earlier quoted context omitted.

The finance side of the AI boom is just the crypto bros chasing a new hustle. Before that they were the Uber for x/y as a service people. It's a shame we can't get things financed without these PT Barnum clown cars

it would actually be pretty cool if we could run Uber Pool with PT Barnum clown cars!

Knowing Uber, they'd probably force the drivers to listen to the Benny Hill Theme on a loop.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#176

Post by Kamq »

adastra22 wrote: post #135
csallen wrote: post #133

Earlier quoted context omitted.

What's wrong with it? If people want to be allowed to buy/sell second-class shares that don't have voting rights, then I don't see the problem with there being a market for that.

It’s not a free market. Your options are buy the class of stocks that the company wishes to sell, or not participate at all. Therefore it can be aggressively abused to disenfranchise public shareholders who have no say in the creation of share classes in the first place. One important role of government is to set and maintain standards for listing on markets, so that customers are protected. An example of such a rule…

> Therefore it can be aggressively abused to disenfranchise public shareholders who have no say in the creation of share classes in the first place.

Elaborate on this, because I think I'm misreading it.

It seems to me like shareholders, generally already have a vote. Converting those shares, from voting to non-voting, would be quite illegal (at the very least breach of contract) without shareholder sign-off. Which they probably wouldn't do... y'know... because they're the shareholders.

What's being discussed is issuing different shares (with approval of the voting shareholders). And if you don't like that, you can... just not invest in that company. There are several other companies you can invest in if that's what you want.

And if the companies that offer only non-voting shares dominate (probably being driven by the founders)... most investors would probably want that. Most investors are looking for a return first and foremost.

> An example of such a rule would be that all publicly traded companies have equal voting rights across all share classes: one share, one vote.

I agree that it's an example of such a rule. Do you have an argument for why it's a good rule?

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#177

Post by aledalgrande »

sergiotapia wrote: post #132
rexreed wrote: post #55

Earlier quoted context omitted.

Not quite -- Eduardo Saverin has had a pretty good life after he was diluted out. "Eduardo Luiz Saverin is a Brazilian billionaire entrepreneur and angel investor based in Singapore. Saverin is one of the co-founders of Facebook. In 2012, he owned 53 million Facebook shares (approximately 2% of all outstanding shares), valued at approximately $2 billion at the time" https://en.wikipedia.org/wiki/Eduardo_Saverin I'd s…

How do you go from cofounder 50% to owning 2%? Did he just trust his friend like most of us would and the zucc made him sign a document he didn't bother to review?

> after he was diluted out

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#178

Post by [deleted] »

mbesto wrote: post #156
cj wrote: post #7

I was chatting with a company who sold a large minority stake in their company to a well known private equity group (think 49%) with the explicit purpose of retaining control. Soon after the transaction closed, the PE firm was able to covertly buy another 2% of voting shares from a pre-existing investor in the company, which resulted in the PE firm gaining full majority control over the company, kicked out the CEO, r…

> 1) they happen all the time, > So much business is done in bad faith and the people on the losing end rarely have the ability to warn others of their experience without killing their own reputation. The M&A world is much smaller than you think. These reputations get around and the story you're referring is an exception not the norm. Availability bias 101. Source - work in PE, rarely see this happen.

[deleted]

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#179

Post by Mizoguchi »

marricks wrote: post #115
cj wrote: post #7

I was chatting with a company who sold a large minority stake in their company to a well known private equity group (think 49%) with the explicit purpose of retaining control. Soon after the transaction closed, the PE firm was able to covertly buy another 2% of voting shares from a pre-existing investor in the company, which resulted in the PE firm gaining full majority control over the company, kicked out the CEO, r…

There's also the story Richard Branson wrote about in his memoir where the co-founder of Virgin was pro unionizing and his workers were too. Branson convinced (and lied to) his partner that no one in the company actually liked him and the union attempt would fail. Caused his co-founder to quietly quit and Branson to retain sole control. I agree, I imagine shady shit like this is quite common just not discussed.

If your "partner" sides with a union to take over the company that's an all out war.
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