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 himself a multi-billion dollar profit.
Carl Icahn is running Marc Andreesen name through the mud. The basic accusation is that if Marc knew Skype was so valuable as the smart phone wars were heating up, he had an obligation as a board member to give ebay better advice on the divesture.
Now Marc is fighting back.
This is a comic schoolboy fight among billionaires.
Edit: After a bit of fact checking, it looks like A16Z only invested $50M in the skype deal. Their fund at the time was around $300M. His gain was on the order of $150 million, not billions. A16Z only had around 2% of skype, and ebay retained 35%.
It blows my mind how people can be fooled by money.
Icahn is professional liar and has profited greatly from his ability to fool and deceive.
I don't know the whole story behind this, but Icahn calling out Andreesen for enriching himself at the expense of a company is laughable. The pot calling the kettle black.
Regardless, it's too super rich guys throwing feces at each other.
I have a slight inclination to believe Andreesen, but who knows, really.
Even his Twitter profile bio agrees:
"Me, I make money studying natural stupidity."
* 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% vs. Andreessen
Horowitz’s approximately 3%. That much larger ownership gave eBay a far
bigger role in decision making on Skype after the spinoff than Andreessen
Horowitz, as well as a far bigger economic payoff on the sale to Microsoft.
http://blog.pmarca.com/2014/03/03/my-statement-on-ebay-director-role-and-governance/
Anyway, it does seem a little sketchy, but on the other hand, marc seems to have acted well within established business practices.
As for Andreessen's motive, I suppose he probably thinks Icahn is making a power play and is more interested in fending off Icahn than in defending himself in this particular instance. Icahn clearly wants Andreessen on the defensive, so it kind of makes sense, though it all feels a bit embarrassing.
Nowadays, it's a place to get ripped off. I have to say that I haven't even thought about eBay for many months.
Note: since this $300MM fund, a16z has gone on to raise enormous funds many multiples of the size.
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 angels, vcs, y-combinator etc .. people like pmarca). Icahn's recent attention seeking is a symptom of the despair he feels at no longer being needed.
Good riddance, in my opinion.
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.
Second, while I believe pmarca acted entirely in good faith and is legally in the clear, there is enough "there" to begin fighting a proxy war. For example, the (tech) market was more forgiving when Dan Loeb fought Yahoo because it got the outcome we wanted (Marissa joining, Yahoo focusing).
Let's not conflate what is arguably an ill-advised but legally legitimate proxy war with a misdirected turf war between finance and tech. As a point of reference, I'm a tech co-founder (who poorly codes) and a former investment banker.
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 is to the 20XXs. That's the crux of "software is eating the world".
AUM doesn't seem a useful metric for power, in fact it's debt and so it all depends on what you do with it. What % of those assets are depreciating? How fast are the % of assets that are appreciating doing so?
I know little about capital markets, but these seem like the obvious begged questions, don't they?
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 of it can be redirected towards funding new companies.
The link below informs much more of my world-view however. http://lesswrong.com/lw/jna/finance_as_a_career_option/ajkc
Not saying I like it, just saying it's reality.
Also, Carl Icahn introduces the idea corporate democracy which is a good thing considering how much influence corporations have over our lives. The idea that at least one person can affect the outcomes of a large company like ebay perhaps shows other large firms they have the same potential.
I imagine a future where there are kickstarter-like shell entities which acquire large shares of important corporations and where backers can all vote where Exxon chooses to drill next or which companies Google should be acquiring(obviously GOOG is a bad example because they've been doing so well but hopefully you get the idea).
I know this is the basic idea behind holding shares, but perhaps the voting power can be more evenly distributing in these shell entities. In the current structure one share doesn't get you much voting power in a corporation.
Are you suggesting that Facebook/Google had no value prior to their IPOs? Their public market cap is merely a reflection of the value they already provide to society.
Constitutional democracy is the least worst way to preserve individual liberty. It's not a good way to run a private corporation.
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 never go away so long as there is wealth and capital. Mostly I think he's guilty, in the Apple and eBay situations, of thinking he is much more powerful than he is (and that's saying something given his history), as he has lately been starting fights with very healthy companies far larger than he is.
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.
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.
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.
Or did you mean he has ownership stakes in industrial firms that employ 60,000 people? Because he most certainly has never created 60,000 jobs by starting a company.
Heads I win, tails you lose.
Profit is a measurable of how "right" Carl Icahn is.
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.
I deeply respect pmarca but I can imagine that he, like any high visibility person, has many detractors. What power does Carl Icahn have that warrants such a strong response?
http://online.wsj.com/news/articles/SB1000142405270230407100...
http://blog.pmarca.com/2014/03/03/my-statement-on-ebay-direc...
Bought 20% of company.
made it private.
Sold London route.
So, how can someone with 20% make a company private? And how can someone having his shares bought back after company went private still command it to sell anything?
Was he ceo all along?
Icahn secures a loan from a bank (or group of banks/financiers - possibly even one of his other companies, I don't know what the law is like in this regard in America) to purchase enough shares to take the company private.
Here's the 'trick' though. That loan is not secured by Icahn, it is secured by the company he has just "bought out" - the repayments of the loan being secured against the companies current capital assets and future profits. In effect Icahn gets the company to take out a loan which he uses to take control of the company.
Obviously there needs to be enough shareholders willing to sell for this to work but if the leveraged buyout offers a great enough premium then they'll normally find enough willing sellers.
He uses wildly over-dramatic statements ('ebay is the worst run company ever') to try to force boards to do things that are specifically in his short term interests. He has absolutely no concern for the long-term well being of a company. After he gets his stock pop, he liquidates and is gone. Icahn's entire strategy operates strictly on the basis of greenmailing the leadership of a company into discharging cash into his lap. He will say anything he has to in order to generate that outcome.
Can any mods delete my submission and update this URL to that URL? It seems illadvised to have this item pointed at pmarca's blog homepage vs. the item we're discussing.
Instead, it's in danger of turning into a mud-slinging contest.
Who gives a rats ass what Carl Icahn thinks? Stop paying so much damn attention to him.
You're leaving me the impression that what he is saying is actually applicable. If it is, get to the point. Otherwise, move on....this story is getting old.