Airbnb's three founders have put two unusual twists on their efforts to retain control after their company goes public
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Investors interested in owning shares in Airbnb when it goes public had better be happy about its founders remaining at the helm for at least 20 years. Tech founders have contrived all kinds of ways to stay in control as they sell off bigger and bigger portions of their companies, but the most common is super voting rights shares. Airbnb uses super voting shares, too: Class B shares, which each carry 20 votes per share. The vast majority of those shares are in the founder's hands: 15.4% of them owned by CEO Brian Chesky and 14.2% each owned by cofounders Nathan Blecharczyk and Joseph Gebbia. None of them is the largest stakeholder of Class B shares, though. That honor goes to Airbnb's biggest investor, Sequoia, which owns 16.6% of them. That means that should Sequoia choose, it could team up with just one of the founders to force another founder out of the company. Then again, the founders collectively have 43.8% of the 20-votes-per-share stock, with other investors like Peter Thiel's Founder's Fund, and Yuri Milner's DST Global, as well as a handful of top executives and board members, owning the rest. So, the founders decided to create two agreements to help keep them from getting ousted. One is called the "Nominating Agreement," the S-1 discloses, which basically says that the company has agreed to always nominate all of the founders as long as they still hold their stock and don't want to resign. On top of that, all three founders have entered into a "Founder Voting Agreement," which says that they're obligated to always vote for each other to retain their board seats. That doesn't mean that all of them will always vote together as a block on all decisions that would require the board to vote. But it does mean that none of them can be kicked off the company's center of power. There is an interesting caveat to all of this. The super voting rights Class B stock are supposed to automatically expire and convert to Class A shares 20 years after the IPO. Class A shares have one vote per share, the S-1 says. A founder also can be kicked out of these agreements if he sells so much Class B stock that he winds up owning less than 10% of his original cache, or if the founder dies. And again, any of them are free to resign. But all in all, Airbnb wants you to know that no matter what happens at the company, the founders will be virtually untouchable for at least 20 years. It's par for the course these days for founders to put protections in place to retain control of their company when they go public, typically through super voting shares. That's why founders like Facebook's Mark Zuckerberg can't be removed. The same for Google founders Larry Page and Sergey Brin, who still control Google's parent company Alphabet. On the other hand, it is not at all common to bake in an expiration date for such shares. For instance, as we previously reported, newly public Palantir created a special class of shares with extra voting rights for founders only that could keep them in power forever.
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