Coinbase’s plan to go public in April highlights a troubling trend among tech companies: Its founding team will maintain voting control, making it mostly immune to the wishes of outside investors.
The best-known U.S. cryptocurrency exchange is doing this by creating two classes of shares. One class will be available to the public. The other is reserved for the founders, insiders and early investors, and will wield 20 times the voting power of regular shares. That will ensure that after all is said and done, the insiders will control 53.5% of the votes.
Coinbase will join dozens of other publicly traded tech companies—many with household names such as Google, Facebook, Doordash, Airbnb, and Slack—that have issued two types of shares in an effort to retain control for founders and insiders. The reason this is becoming increasingly popular has a lot to do with Ayn Rand, one of Silicon Valley’s favorite authors, and the “myth of the founder” her writings have helped inspire.