00:37:57 · John Coogan
[00:37:57] S0: We'll find out because we're gonna make Tyler do it. Anyway, let's move on to CrowdStrike. Your business is AI. Their business is securing it. CrowdStrike secures AI and stops breaches. Meta is introducing new Class C stock. The plan is to distribute one Class C share for every existing A or B share at the start of the next year. So it's basically a two for one stock split. It's not a fundraising opportunity, doesn't make Zuckerberg richer, and it doesn't dilute anyone's ownership percentage, but it does have a bunch of interesting knock on effects. And basically, there's two wildly different narratives. I sent you both of these posts, I was like, it's the same story, but the New York Times and semaphore have completely different rationales for what's going on. So I wanted to get to the bottom of it. We'll do this quickly before Kevin Weil joins at 11:45. So this is not the first time Dave proposed this class c stock. It happened in 2016. Meta, which was then called Facebook, of course, proposed creating nonvoting class c shares. The the reasoning back then was that Mark Zuckerberg said, hey. I'm doing the Chan Zuckerberg initiative. I'm giving away a lot of my money. I'm doing a lot of philanthropy. I wanna do both. I wanna be able to run Meta as the sole decision maker with the supervoting stock and be able to not be fireable and be able to have control over the company that I founded, and I want the supervoting. But I also wanna be able to sell down my economic position or donate it to Chan Zuckerberg. They can sell it to fund philanthropic initiatives, build hospitals, do a bunch of great stuff. And so he tried to do this, actually got challenged by shareholders. There was a Delaware trial that was scheduled, but Facebook withdrew the proposal in September 2017 before that trial. And after the trial, Zuck was like, I don't even need to sell because my stock's ripping. He actually said this. He said, the the share price appreciation in Meta has allowed me to fund everything with the Chan Zuckerberg initiative, which is probably true because at a certain point, you're just like, oh, what? I have to deploy $50,000,000,000 in nonprofits? Like, there's only so many projects you can do before stuff gets unwieldy. And so he was probably in a pretty good place, but it was still an interesting motivation and and didn't go through. Then...
00:40:07 · John Coogan, Jordi Hays
So the the the goal, the overarching goal hasn't really changed in the last decade. The goal is to allow Zuckerberg to sell or donate or pay taxes with the economic portion of his Meta stake without losing control over the company that he founded two decades ago. So in the intervening years, things have come up, tax bills, philanthropic opportunities, AI build outs, and Zuck needs to manage his control against these issues as they arise. And so the NYT tells the story as basically entirely tax related, which is interesting because there's obviously a lot of different things going on. So the New York Times said, mister Zuckerberg has been negotiated with met... With Meta's board since July over dinner with board members on September 9. He effectively gave them an ultimatum. If a deal wasn't struck, he would sell his home in Palo Alto and the listing would be public. And so I assume what he was doing here was like all the other meta board members have huge homes in Palo Alto and if he sells his, it's gonna tank their real estate prices. So he's saying, I'm I'm gonna I'm gonna I'll do it. I'll do it. I'll do it. I assume that that that that was the that was the veiled threat. [00:41:14] S1: Do you think he's trying to have his cake and eat it too? [00:41:16] S0: I think he is, actually. I think that's exactly what's happening. [00:41:20] S1: I I think this might serve multiple purposes.
00:41:20 · Jordi Hays, John Coogan
[00:41:20] S1: I I think this might serve multiple purposes. [00:41:22] S0: Yes. But the market will probably say, yeah. Go ahead. Have some cake. Eat it too. I I I don't think they'll I don't think they'll care because for a long time, you bought meta class a shares. So he has class b, which have 10 voting... 10 votes per share. You bought class a shares, which have one vote per share. Now you're gonna get class c that has zero votes per share. Never mattered because you were never going to get more than 50%. The the the votes never really Yeah. Like, they never really, sold meaningful voting stock. And so when Meta goes to the market, investors just say, what is the economic opportunity? What is the economic return? And so in theory, you you can go to the market with something that's preferred plus a board seat. We do this all the time in Silicon Valley. We say, yeah. We're selling 20% of the company. You get a board seat. You get information rights. You get pro rata. You get a million things. It's it's so much value, and we're only gonna charge you a $100,000,000 for that or whatever a startup's selling for. Meta will do the same thing. Sure. The shares might be slightly less valuable because they have zero votes instead of one vote. Realistically, the buyers of this are only interested in the financials. They don't care about the vote. So it doesn't really matter. [00:42:34] S1: So what's your takeaway? You think he wants to scratch two itches at once?
00:42:34 · Jordi Hays, John Coogan
[00:42:34] S1: So what's your takeaway? You think he wants to scratch two itches at once? [00:42:39] S0: Yeah. I mean, he... I I I do think he cares about the billionaire tax, and I do think that it's completely rational to get out of California before it hits. And I'm surprised that this is even a discussion. I thought that the reason he bought that Florida home was that he was going to claim residency outside of California as of 2026. It seems like this was mostly going over throughout the year. But if the tax passed, it would be retroactive. He would still be on the hook for it, but at least he could challenge it in court. But it's funny because Yeah. Would bad when it... [00:43:07] S1: It would be litigated and then during that time, he would leave and so that you would have this, like, worst case scenario, that one time 5% versus... [00:43:16] S0: But the interesting thing is that, like, the Google co founders have done the exact same thing. They've done a stock split and they've maintained control, voting control while relocating to Florida, avoiding the billionaire tax potentially. But the the... No one really cares because Sundar is the face of the company. The interesting thing is, like, the board... The the way the New York Times frames it is, like, the board wanted Zuck not to sell his Palo Alto home because it would be a negative signal to the employees. No. No. Not the fake reason I was joking about. [00:43:47] S1: No. No. No. [00:43:48] S0: What are you laughing at? [00:43:49] S1: I'm just laughing at Trey. He wants both birds in the bush to be in his hands.
00:43:49 · Jordi Hays, John Coogan
[00:43:49] S1: I'm just laughing at Trey. He wants both birds in the bush to be in his hands. [00:43:54] S0: Yes. But but as... Let's say you're a board member. Do you care if Mark Zuckerberg can't spend more than a hundred and eighty days a year in the headquarters where all the researchers are, where where they're building MSL, where they're, you know, building Muse? Does he need to be on-site? [00:44:14] S1: I think I think he has to just wanna be. Like, he is he's the only... Not the only. One of a very, very small group of people running a company at that scale that is truly in founder mode. Yeah. No founder. In the arena. No elite founder that I've ever met says, yeah, I love working remotely. I love being away from my team for half the year. [00:44:36] S0: And he probably travels a ton. [00:44:37] S1: So it's much more like the board is probably like, yeah, kind of do whatever you want. Yeah. Like, live wherever you want. But you can imagine he's the one being like, I wanna be in the office as many days as possible with the team. [00:44:50] S0: That was not the NYT report. The NYT report was that he wants to avoid getting diluted past 50%, losing control of the company because he has to spend a hundred and eighty six days a year in Florida and can't be on-site in Menlo that often and would have to be more remote. And he's like, look, if it's between being in the arena in the in the Menlo office a ton and losing control because of this tax, I'm choosing I'm choosing Florida. [00:45:19] S1: 30 five. Yeah. Mister Worldwide.
00:45:19 · Jordi Hays, John Coogan
[00:45:19] S1: 30 five. Yeah. Mister Worldwide. [00:45:21] S0: He's being Mister Worldwide potentially. That was at least the that was at least the debate, the way it was put to the board, and now it's a nonissue because they are gonna issue the class c stock. So if he does get hit with a 5% tax, he'll sell the economic stake, not the controlling stake, and he'll be able to stay in TBD Labs in the building. I don't know why you're watching, but it's interesting because both of these both these rationales are completely justifiable from, like, the PT lens of framing, which is, like, of course, leave California if they're gonna taxi you and you can just go to Florida. And then also, like, of course, issue a bunch of equity if you have a really... If there's a new technology that you can actually Make invest [00:46:02] S1: an omelet without breaking a few eggs.