Lyft Doesn’t Need Investors to Vote

About two years ago, Snap Inc. went public by issuing non-voting stock to public investors. Those investors complained mightily about the non-voting stock, while also clamoring to buy it and pushing up the opening-day price. This did not work out all that great for them: Snap now trades at around half of its IPO price and, uh, they still can’t vote. The whole thing seems to score as a comprehensive win for startup founders — who raised money at a high price without giving up any control of their company — and a loss for public investors, who overpaid and got no voting rights.

Since then, public investors have held some post-mortems to analyze what went wrong and prevent it from happening again. I mean, I am being a little metaphorical; for antitrust and fiduciary-duty reasons, big public investors can’t all just get together and promise never to buy non-voting stock again. But they did what they could. After lobbying from their customers — big public-market investors — several major index providers announced that they would exclude dual-class stocks from their indexes, so that future startups that go public by issuing non-voting or low-voting stocks will not be able to get into stock indexes and so will presumably have less demand for their shares. The Council for Institutional Investors — an important group of big public-market investors — put out an open letter saying that dual-class stocks are bad and calling on stock exchanges to limit them. The Securities and Exchange Commission — whose mission seems in large part to be championing the interests of public-market investors — has gotten involved; SEC Commissioner Rob Jackson has argued against perpetual dual-class stock.