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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

#41

Post by auctiontheory »

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.

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

#42

Post by argumentum »

adventured wrote: post #36
argumentum wrote: post #30

In my view, after his humiliation by Apple's board, Carl Icahn feels his power (and by proxy the power of wall street) slowly and surely being stripped away by tech. This is at the root of his obsession with pmarca, who famously claimed that "software is eating the world." The world that's being eaten is the world of Icahn and wall street financiers like him. The tech industry has its own source of finance (namely an…

At a minimum Icahn is playing far outside of his scale. Trying to force Apple's hand - he might as well be trying to dictate terms to Exxon or Walmart, it's comical. Icahn can bring a modest fraction of his $22 billion to bear on any given situation. That might work against financially weak companies, or companies he dwarfs (like if he picked a fight with Groupon's leadership). Financial power players like Icahn will…

It's not merely the size of the company. A proxy war against Exxon is very possible, because its stock is spread thinly.

Tech companies tend to be strongly controlled by the founders/early employees/ and early investors. These are all people who bought in to the vision of the company .. they are by and large true believers. In younger tech companies, like Google or Facebook, this control is truly absolute. There is nothing public shareholders can do.

But even in older companies like Apple or Microsoft, the founders have an almost religious appeal over the stakeholders, particularly employees and the board, but also the shareholders at large.

For example, Tesla and Spacex, though within Icahn's "striking range", might as well be subsidiaries of Musk enterprises. There's no way someone like Icahn would have a chance of besting Musk in a showdown.

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

#43

Post by nathanvanfleet »

hnnewguy wrote: post #9
arbuge wrote: post #2

Financiers like Icahn are motivated by short term profits above all else. Building a company takes people with a long term vision. The two are often not compatible. Having a leech trying to bleed out every cent as soon as it's made is not generally a good thing unless your company throws off wads of unneeded cash like nobody's business.

> Financiers like Icahn are motivated by short term profits above all else. That's one way to look at it. Another is to note that Icahn built a thriving financial company that has survived for over 4 decades, and employs over 60,000 people globally. I'd say that requires long term thinking and demonstrates a bit of business acumen.

Yes definitely, let's hope he's continues to be successful and handicaps more American businesses and we'll see how you feel about it in 10 years. He'll wreck more than 60,000 jobs but he'll have a lot of money for himself.

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

#44

Post by refurb »

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.

From what I've read, Icahn argues that the companieshe's going up against aren't do a good job of running the company. If that's true, Icahn is doing shareholders a service.

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

#45

Post by mahyarm »

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 think he was the inspiration for Gekko in the film.

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

#46

Post by adventured »

argumentum wrote: post #42
adventured wrote: post #36

Earlier quoted context omitted.

At a minimum Icahn is playing far outside of his scale. Trying to force Apple's hand - he might as well be trying to dictate terms to Exxon or Walmart, it's comical. Icahn can bring a modest fraction of his $22 billion to bear on any given situation. That might work against financially weak companies, or companies he dwarfs (like if he picked a fight with Groupon's leadership). Financial power players like Icahn will…

It's not merely the size of the company. A proxy war against Exxon is very possible, because its stock is spread thinly. Tech companies tend to be strongly controlled by the founders/early employees/ and early investors. These are all people who bought in to the vision of the company .. they are by and large true believers. In younger tech companies, like Google or Facebook, this control is truly absolute. There is n…

Part of my point was that going after Exxon and Walmart, would be extremely difficult because of their very strong financial health (not to mention connections and influence).

Gnats don't concern Exxon, they get swatted. At that scale, Icahn is a gnat. Exxon would have to be extremely mismanaged to inspire so many investors to line-up for a serious proxy battle. Simply doesn't happen unless a company is on its back, or knee deep in a huge scandal relating to the leadership.

If you buy a billion dollars worth of Exxon and try to stir up trouble, you'll be completely ignored unless the company is being very poorly managed such that much larger fish than you are willing to join your cause.

With eBay, since Icahn is a relatively small fish (in terms of what he can personally leverage into the battle) trying to force the hand of a $75 billion enterprise, he's going to need much larger fish than himself to join his cause. He simply can't do it himself. That's the other point I was trying to make about their scale. The larger the company you take on, the larger the total resources you're going to have to get lined up on the same agenda.

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

#47

Post by gdubs »

mahyarm wrote: post #45
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 think he was the inspiration for Gekko in the film.

It's also sometimes said that Asher Elderman was the inspiration, from his takeover of Datapoint:

http://en.wikipedia.org/wiki/Datapoint#Edelman_takeover

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

#48

Post by argumentum »

adventured wrote: post #46
argumentum wrote: post #42

Earlier quoted context omitted.

It's not merely the size of the company. A proxy war against Exxon is very possible, because its stock is spread thinly. Tech companies tend to be strongly controlled by the founders/early employees/ and early investors. These are all people who bought in to the vision of the company .. they are by and large true believers. In younger tech companies, like Google or Facebook, this control is truly absolute. There is n…

Part of my point was that going after Exxon and Walmart, would be extremely difficult because of their very strong financial health (not to mention connections and influence). Gnats don't concern Exxon, they get swatted. At that scale, Icahn is a gnat. Exxon would have to be extremely mismanaged to inspire so many investors to line-up for a serious proxy battle. Simply doesn't happen unless a company is on its back,…

I agree with mostly everything you said. The point I was making re:exxon is that you would merely have to convince rational actors of your side (which I agree is not easy if the company isn't floundering). If you get one major player on board, then it will be easier to get the next etc.

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

#49

Post by Napapijri »

johnny635 wrote: post #28
jcampbell1 wrote: post #10

For those that don't know what is going on, here is the backstory: Carl Icahn has recently bought a bunch of ebay stock. He has claimed the company is mismanaged. He has also personally attacked Marc Andreesen. Here is the accusation from Ichan: 1) Marc Andreesen was/is on ebay's board. 2) While on ebay's board, Marc bought most of Skype from eBay. 3) He flipped Skype to Microsoft in less than 2 years, earning himsel…

Marc Andreesen should be in jail over that Skype flip.

Why?

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

#50

Post by jcampbell1 »

x0x0 wrote: post #25
boomzilla wrote: post #18

Earlier quoted context omitted.

I think Marc Andreessen position is weak in this fight. I have absolutely no empathy for Carl Icahn, but on this issue, he's got a good point. It seems Marc Andreessen had a conflict of interest and instead of showing that wasn't the case, Andreessen decided to attack Icahn for stuff that aren't related to this issue, even if they were definitely questionable.

from marc's blog: * Throughout the eBay board’s process of divesting Skype, I fully disclosed my potential interest and recused myself from all deliberations on the transaction, including all discussions, negotiations, and decisions. I was uninvolved in eBay’s decision to spin off Skype and in eBay’s decision to choose to partner with the Silver Lake syndicate. * eBay’s retained ownership in the Skype spinoff was 30%…

Also from his blog:

    (3) Restrictions on use of company confidential information by 
    any director for any purpose other than that company’s benefit.
I don't have any idea what the discussions happened between A16Z and Silver Lake, but it seems like tons of emails could be construed as a conflict.

Even a wikipedia quote is problematic:

"Through our research, we found that Skype had a core group of engineers who were completely dedicated to the mission. They stayed through the eBay acquisition and were hugely determined to make Skype the communications company of the future."

Did he learn that as a board member, or from research done at a16z?

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