A weekly thread to discuss financial matters - from personal all the way up to global.
Ground Rules
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Notes -
Did you know that, under Delaware law, Anthropic is a PBC (Public Benefit Corporation).
This is a new type of corporation that has been allowed in Delaware since 2007. It requires.
The corporation to state a specific public benefit in its charter.
The corporation to balance three interests in board decisions: shareholders’ financial interests, the interests of people materially affected by the company’s conduct, and its stated public benefit
It's also completely unenforceable bullshit.
Think for a second about the implications of a PBC. It means that, as a shareholder, management is not working for you. It is working for a coalition of people that includes you, but not necessarily as the primary component. And while I'm sure this will appear as a risk in their S-1 "Item 2437: As a PBC we may decide to simply not give a shit about shareholders", investors don't seem phased. I never hear anyone talk about it. People probably wave it off as stupid bullshit that doesn't matter. And of course they are right about it being bullshit, although not about it mattering.
I actually shorted a different PBC back in 2022. It is called Lemonade. They claim to have some secret sauce insurance algorithm (they don't). But the stock certainly has had a wild ride. They debuted in 2020 and peaked in 2021 around $160/share before collapsing over 90%. It has recovered somewhat and today the stock trades around $40. They lose oodles of money every quarter but avoid bankruptcy by issuing more stock and gradually pissing away their IPO cash.
They love SBC (stock-based compensation). At its peak, it was 35% of revenue! Now its only 8.3% of revenue. Note this is not profit-sharing, it's just giving insiders a giant share of revenue. They don't have profits - they lose money. The executives of Lemonade also love pulling money out of the company with about $600 million in insider stocks sales since IPO vs. a market cap of $3 billion.
So as a shareholder, you're garbage. As an insider, you're golden. And it's unclear how any of the PBC stuff matters at all.
I think if you're going to virtue signal, it is up to society to impose real cost. I want Anthropic to commit, right now, to giving 1% of its shares to the people of the United States each year. I want them to commit to capping executive compensation. You shouldn't get to be a billionaire and run a "Public Benefit" Corporation. Be honest about what you are.
There is an enforcement mechanism:
Though, surprisingly, there's apparently no case law (according to my lawyer on retainer, Claude McClaude Esq.) around a PBC not fulfilling its public benefit. There is for shareholders' financial benefit: Drakes Landing Associates, L.P. v. Tilden Park Capital Management, L.P. It was dismissed, though, as the plaintiffs didn't account for the other purposes.
It does seem like it disempowers shareholders, without adding meaningful checks to enforce the public benefit. If you're not looking out for shareholder financial interests, it's because you're looking out for the public benefit; if you're not looking out for the public benefit, it's because you're looking out for financial interests.
Nice for insiders, and maybe has the benefit of making nuisance suits harder to prove.
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