Founder Doctrine

The record

1. 2019

   WeWork

   Reversed

   Whether to grant Neumann supermajority control via a multi-class share structure in the IPO filing

   • Grant founder supervoting control — Give Neumann 20-vote shares and majority control at IPOchose this
   • Standard governance structure — List without concentrated founder override power

   Stated reasonThe structure was a bet that the founder's judgment would stay better than every check it disabled

   What happened

   • 2021-02-26 founder removal settlement: Delaware settlement unwinds Neumann's position on terms far below the $1.7B legend
   • 2023-11-06 bankruptcy: WeWork files for bankruptcy, listing liabilities of roughly $10B to $50B
   • 2024 equity canceled, new control: all prior equity canceled and Yardi taking 60% control in a $450 million rescue
   Read the full analysis →
2. 1990

   Oracle

   Reversed

   Whether to keep the growth story intact by booking revenue at contract signing rather than at delivery

   • Book revenue at signing — Recognize revenue when a contract is signed to inflate growthchose this
   • Book revenue at delivery — Recognize revenue only when the product is actually delivered

   Stated reasonTo keep the growth story intact

   What happened

   • 1991 annual profit: Oracle posted its first-ever annual loss — $12.4 million in fiscal 1991
   • 1991 stock value: The stock lost roughly 80% of its value
   • 1991-01 credit line: bankers slashed its credit line from $170 million to $80 million in January 1991
   Read the full analysis →
3. 2011

   Hermes

   Held

   How should the Hermès family defend against LVMH's secret stakebuilding?

   • Build H51 holding lock — Pool family shares into one holding with a decades-long lock-up.chose this
   • Rely on family loyalty — Trust informal family unity to resist selling to a raider.

   Stated reasonConvert a soft majority of individuals into a hard majority of one entity so no individual could sell to a raider.

   What happened

   • 2014-09-03 LVMH stake resolution: LVMH agreed to distribute its roughly 23% stake to its own shareholders as a dividend in kind
   • 2014-12-17 LVMH stake unwind completion: The retreat was complete
   • 2025 H51 stake persistence: H51 alone holds ~50.2% with a 20-year lock-up expiring 2031
   Read the full analysis →
4. 2012

   Canadian Pacific Railway

   Reversed

   Whether to accept or reject Pershing Square's demand to replace CEO with Hunter Harrison

   • Reject Harrison in filing — Formally oppose replacing the CEO with Harrisonchose this
   • Accept Pershing Square's demand — Replace the CEO with Hunter Harrison as demanded

   Stated reasonHarrison was not the right leader and Pershing Square's nominees lacked Class I railroad operating experience

   What happened

   • 2016 activist investor profit: Pershing Square ended its association with CP netting an estimated $2.6 billion profit
   • 2012-06-28 CEO leadership: Fred Green resigned and Harrison was appointed President and CEO on June 28, 2012
   • 2012-05-17 board composition: shareholders elected a 16-person board combining all seven Pershing Square nominees with nine continuing directors
   Read the full analysis →
5. 2013

   Dell

   Held

   Whether to finance transformation by diluting equity or by taking on debt to preserve founder control

   • Issue equity — Fund moves with new shares, diluting the founder's ownership
   • Take on debt — Fund moves with borrowing, preserving ownership concentrationchose this

   Stated reasonDebt does not vote or dilute the founder, so paying in dollars rather than shares protects ownership concentration

   What happened

   • 2016 Founder voting power after EMC close: gave Dell alone roughly 73% of the company's voting power
   • 2022-11 Settlement over Class V transaction: Dell agreed to pay $1 billion to settle a Delaware lawsuit brought by former Class V stockholders
   • 2026-02 Founder beneficial ownership: Michael Dell beneficially owns 45.7% of Class C common stock on an as-converted basis, with sole voting and dispositive power
   Read the full analysis →
6. 2015

   DuPont

   Held in part

   Whether to fight Trian's proxy slate or concede board representation

   • Fight the proxy slate — Reelect all twelve incumbent nominees and defeat Trian's bidchose this
   • Concede board seats — Give Trian minority representation on the board

   Stated reasonThe board sought to keep its slate intact and vindicate management's strategy against the activist

   What happened

   • 2015-10-05 CEO tenure: DuPont announced Kullman would retire as chair and CEO effective October 16
   • 2015-10-05 earnings guidance: The same release cut the company's full-year 2015 operating earnings guidance
   • 2015-10-05 interim leadership: Board member Edward Breen, who oversaw the Tyco breakup, became interim chief
   Read the full analysis →
7. 2018

   Nordstrom

   Held

   Should the family raise its $50 bid or let the take-private talks lapse?

   • Raise the bid now — Meet the committee's demand for a higher, financed offer in 2018
   • Let the talks lapse — Decline to raise and wait for a better windowchose this

   Stated reasonThe family judged the price wasn't worth chasing yet and preferred to keep its powder dry rather than overpay with borrowed money.

   What happened

   • 2024 market interest in acquiring Nordstrom: 19 strategic and financial parties contacted, only one indicated interest and then withdrew
   • 2024 acquisition price and board verdict: board unanimously approved a deal at $24.25 per share, less than half the 2018 marker
   • 2025-05-20 deal close: transaction closed, Nordstrom came off the NYSE, family holds 50.1%
   Read the full analysis →
8. 2020

   Twitter

   Held in part

   Settle with Elliott by keeping Dorsey under public growth conditions or fight the proxy contest

   • Settle and keep Dorsey — Retain the founder with public time-bound growth conditions and board seats for Elliott and Silver Lake.chose this
   • Fight the proxy contest — Let Elliott nominate directors and push the founder out in a vote.

   Stated reasonThe settlement stopped the fight and bought Dorsey time to prove he could run two public companies at once

   What happened

   • 2020-11-03 mDAU vs consensus: Q3 mDAU of 187 million missed the 195.2 million analysts expected, even as the board reaffirmed confidence in Dorsey
   • 2021-11-29 CEO tenure: Dorsey resigned as CEO, succeeded by Parag Agrawal
   • 2022-04-25 company sold: The board unanimously approved the $44 billion sale to Elon Musk and Dorsey exited the board
   Read the full analysis →
9. 2022

   LVMH

   Held

   How to structure LVMH succession: settle ownership while leaving leadership open, or name a successor?

   • Lock ownership, leave leadership open — Bloodline share lock plus unnamed rotating family chair.chose this
   • Name a successor on a timeline — Anoint one heir with a process and date.

   Stated reasonRefusing to name a successor keeps every heir in audition mode and concentrates power in the founder who controls the clock.

   What happened

   • 2024-04 Board composition: four of five children on the board approved at the April 2024 AGM
   • 2026-02 Family equity stake: family's equity stake past 50% to 50.01%
   • 2026 Investor reaction to age-limit extension: large holders demanded clarity on the succession plan outright
   Read the full analysis →
10. 2023

    Reddit

    Held

    Whether to charge for API access despite moderator dependence, or preserve volunteer goodwill

    • Enforce API pricing — Charge for API access and replace protesting moderatorschose this
    • Concede to moderators — Preserve volunteer goodwill by backing off the pricing change

    Stated reasonReddit held the API pricing and removed or threatened to replace moderators who broke the rules

    What happened

    • 2024 IPO: The IPO went ahead the following spring and the stock listed
    • 2024 moderator dependency: Dependency on volunteer moderators persisted post-IPO per the FY2024 10-K
    • 2023 API pricing outcome: The API pricing stood and the protest was suppressed
    Read the full analysis →
11. 1996

    Berkshire Hathaway

    Held

    Whether Berkshire should buy the rest of GEICO to own the float engine outright

    • Buy the remaining stake — Acquire the roughly 49% not already owned and own GEICO outrightchose this
    • Keep partial position — Hold the existing roughly half stake without full acquisition

    Stated reasonGEICO's low-cost, direct-to-driver model produces disciplined underwriting profit that makes float nearly free capital

    Committed$2.33 billion (Cash merger consideration for the roughly 49% Berkshire didn't already own, at $70 a share)

    What happened

    • 2024 GEICO underwriting profit: $7.8 billion of pre-tax underwriting profit, more than double 2023 and a swing from a nearly $2 billion loss in 2022
    • 2024 Berkshire total insurance float: stood at approximately $171 billion at end of 2024, with GEICO the largest single contributor
    Read the full analysis →
12. 2005

    Marvel

    Held

    How should the operators finance Marvel's films — license the characters out, or borrow against them while protecting the parent company?

    • License characters out — Take quick fees by licensing remaining characters to other studios
    • Non-recourse self-financing — Finance own films via a bankruptcy-remote subsidiary that pledges only second-tier film rightschose this

    Stated reasonThey ring-fenced the debt so that if the films flopped, lenders could take only the pledged movie rights and nothing else — guarding the parent company after watching a pledge devour Marvel before.

    What happened

    • 2009-08-31 acquisition / transaction value: Disney announced it would acquire Marvel at a transaction value of approximately $4 billion
    • 2009-12-31 shareholder approval: Marvel stockholders voted to approve the Disney merger
    Read the full analysis →