Marc Andreessen In praise of dual-class stock structures

In a recent blog post, Marc Andressen argues for dual-class stock structures for public companies:

A dual-class stock structure means that a company has two different classes of common stock. Each class of stock has the same economic ownership of the company, yet different voting rights.

In a typical scenario, Class A shares have a single vote per share, whereas Class B shares have 10 votes per share, for any shareholder vote.

Using this mechanism, for example, the Class B shareholders might only own 20% of the company in economic terms but have a clear majority voting position relative to the Class A shareholders.

Although he used to be a believer in single-class stock, Andreessen lists a number of reasons why dual-class stock is in fact a good thing. Most of them have to do with the factors that cause companies to do the wrong thing for long-term success because of the pressures imposed on management by the stock market itself. His summary comment:

The huge advantage of a dual-class stock structure is that it lets the company's core management simply ignore most of this stuff and stay focused on the long-term goal.