Business Public Markets

Lyft’s Founders Reportedly Pursue Outsized Control Over Company Votes

As a company moves closer to public markets, the governance shuffle picks up the pace.

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Sources tell the Wall Street Journal that Lyft co-founders John Zimmer and Logan Green are working with the ridesharing company’s IPO underwriters to create a new class of shares with disproportionate voting rights. The pair collectively own less than ten percent of the company, which could be valued at around $15 billion if and when its shares hit public markets.

This being said, Zimmer and Green are vying for more influence over the future of the company they founded sources told the WSJ. It’s a strategy that many tech company founders pursue, sometimes to the chagrin of other shareholders.

On the one hand, some founders may argue that it allows them to continue to pursue and realize the “vision” their venture was originally founded on. But on the other, outsized control over corporate votes is also a source of job security, even when circumstances would otherwise merit a change in leadership. In other words, even when it makes sense to fire a CEO, it’s difficult to do so if they control a large portion of the votes required to oust them.

This can create moral hazard. A person with minority rights to a company’s revenue and liquidation value can exert, through supervoting shares, decisions that affect the majority. And then they insulate themselves from consequences if their decisions fail to benefit other shareholders, or steer the company in a direction other shareholders may object to.

Since more specific details of the Lyft founders’ proposed voting structure are still under wraps, it’s too early to say just how much this tips the balance of power in the company. If all goes well at the company, super-sized voting rights are a cudgel that could go unswung.

Illustration: Li-Anne Dias


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