Things Roberto Says on Podcasts

…of shares they have. So this is like kind of normal for tech companies. The founders will be in control even if they. Won't no, they will no longer own a majority of the company. But the new thing is the T shares, which is the class of shares in the hands of the long, whatever it's called. The

long-term benefit trust, yes.

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So we've got this long-term benefit trust. They control the majority of the board. The other three members will be made up of some mix of the founders, and they'll have an opportunity to weigh in on those decisions as well. But again, not a majority. The LB long-term benefit trust will have that.…

So this is very interesting because If you start digging deeper in the structure, you start seeing details that might become very important in case of a disagreement between profit and the social mission. So it is true that the trust, as we said, appoints four directors out of seven, so a majority.…

…were about shareholders complaining that the boards care too little about them and about profit making. So, weren't really cases about enforcing the social, the social purpose, which is not surprising. That's what shareholders are there for. They're trying to make some money with this investment.

But that's just such a great thing to point out, though, about this design of PBCs to begin with. The only people who can enforce it are most interested in one prong of the balancing.

So we know that there are certainly going to be shortcomings with a sort of corporate governance alone as the mechanism to avoid some of those worst case outcomes. And as you noted previously, boards traditionally have been thought of as having a hyper-focus on the financial interests. We mitigate…

So this is the most interesting and creative part of Anthropic's governance structure. But let me immediately say something that will, it's kind of surprising. And the long benefit trust is not 100% focused on safety. Even the trust has a triple mission, as it were. So it has to balance profit…

And just to pause there for one second for the folks who don't read S1s for a living, right? This is the dual class structure, or I guess in this case, multi-class structure, whereas normally we would have one class of shares, every share would get one vote, and this is sort of the traditional. And…

…is: will they have other kinds of pressures, internal, philosophical, moral, scientific, political? And I don't mean external pressure. I just mean beliefs and values and character and temperament, all kinds of factors that make the difference in terms of what kind of choices a person makes.

…around the long-term benefit trusts in the event that it did go in a poor direction. What is that mechanism in brief? Because I know folks won't need to go fully into the S1, but at a high level, how do you get around the long-term benefit trust if it becomes a problem, for lack of a better phrase?

Right. Or some combination of either the employees or of the other shareholders. But the fact of the matter remains that. The founders alone aren't going to be able to flip that kill switch.

Exactly. So, you need some broad consensus across the various constituencies, or at least some combinations of those constituencies to get rid of the trust of the trustees, which means that, I mean, in a sense, you need some mechanism like that. I don't see it as a loophole of the social mission…

Well, just as we say that we've got a democracy or a republic if we can keep it, it sounds like we've got a safety-forward form of corporate governance if we can keep it. So, this will be a very interesting experiment. Roberto, thank you so much for covering a new alignment issue: rogue trustees…