AI Companies Almost Get Bought

One question that we talk about from time to time around here is: Who controls a company? What is a company, anyway? In many cases, it is mostly a collection of people working on some common problem. And then there is some corporate legal structure attached to those people, but that’s not always what matters. If you work at an investment banking boutique and you don’t like your boss, and you come into the office one day with doughnuts and say to all your colleagues “hey, our boss is bad, I would be a good boss, I rented an office across the street, come with me and we’ll do a better job,” and they come with you, did you do a hostile takeover? In some formal sense no: The old corporate entity still exists, and you don’t own it; the old firm’s contracts are still in force. But really the company was its employees, and their knowledge and client relationships, and if they all go with you then you got most of the company. The bankers will call their old clients and say “hello we moved across the street and are a different legal entity, but really we’re still the same company with the same great service, call me here instead,” and the clients will mostly do that.

This doesn’t happen too much. Lots of companies have, like, factories and equipment and stores, and you can’t just ask them to move across the street. Other companies are huge, and you couldn’t convince all the employees to move across the street; the corporate structure and its bureaucracy are necessary for controlling that many people. Actual investment banks are mostly large levered financial institutions with big balance sheets, and you can’t move the balance sheet across the street.