<ul class="summary-list"><li><keyword id="12250935" type="UNKNOWN" weightage="60" keywordseo="commonstock" source="Orion">Commonstock</keyword> wants to be a social investing app for retail traders - and it's nothing like Reddit.</li><li>The app, which launched in August 2020, allows users to link their brokerages to verify their bets. </li></ul><p><a href="https://markets.businessinsider.com/news/stocks/retail-trader-social-network-commonstock-wallstreetbets-diamond-hands-david-mcdonough-2021-10">A new middleman</a> between brokerage apps like <keyword id="11896285" type="UNKNOWN" weightage="60" keywordseo="robinhood" source="Orion">Robinhood</keyword> and retail traders is emerging.</p><p>The app, called <a href="https://commonstock.com/">Commonstock</a>, aims to attract retail traders looking to share trades and insights into the market - like Reddit, but less chaotic. </p><p>Unlike Reddit investing threads like Wall Street Bets, where millions of traders have gathered in recent years, and particularly in 2021, there's no talk of taking stocks to the moon, <a href="https://markets.businessinsider.com/news/stocks/reddit-wall-street-bets-lingo-guide-glossary-yolo-diamond-hands-2021-5">hodling shares with diamond hands</a>, or taking down the "hedgies" shorting a stock. Memes along with the less-than-mannerly exchanges between retail traders who call themselves "apes" are also few and far between. </p><p>One of the few similarities between the two social platforms is that posts receive "upvotes." </p><p>To stand apart from the massively popular, and sometimes controversial Wall Street Bets forum is exactly what Commonstock founder and Chief Executive Officer David McDonough set out to do. </p><p>The idea behind the app, he said, is to "empower" retail traders with good financial and market insights to be "discovered through all the noise and the meme and troll accounts that are on other platforms."</p><p>"It doesn't mean they don't make jokes or add some light sarcasm, but there's also an undercurrent of actual real knowledge," McDonough told Insider in an interview. With the app, retail traders can link their brokerage accounts to their Commonstock profile to show they "have skin in the game," he added.</p><p>I wanted to see for myself, so I downloaded the app, created a profile, and opted to link my brokerage account. </p><p>There were several options, among them Robinhood, Coinbase, <keyword id="12278832" type="UNKNOWN" weightage="60" keywordseo="webull" source="Orion">Webull</keyword>, Charles Schwab, and Fidelity Investments. Since I'd previously downloaded and opened a Robinhood account <a href="https://markets.businessinsider.com/news/stocks/how-do-trading-apps-robinhood-webull-public-compare-brokerage-review-2021-5">for a different review</a>, I linked that. </p><p>Once linked, my username got a blue Commonstock logo next to it - think Twitter's blue check mark - and my portfolio appeared on my profile, showing the single dollar I'd invested in a Vanguard ETF previously.</p><p>To further back up a user's clout, profiles show the total assets in dollars of all their followers. I don't have followers yet, so the count was nil. Writing a post looks a lot like writing a tweet, except users are given up to 500 characters to work with and can click "link to a trade" to back up what they're saying.</p><p>The app's homepage feed looks like a combination of Twitter and trading app <keyword id="11991847" type="UNKNOWN" weightage="60" keywordseo="public" source="Orion">Public</keyword>.com.</p><div type="image" title="Commonstock app" height="870" width="1741" msid="86893466" hostid="261"></div><p>Investors' posts had few upvotes, revealing the relative newness of the platform, which launched only about a year ago, just before meme stocks became a permanent fixture of the market landscape.</p><p>McDonough didn't share the number of people using the platform so far, but he said the platform is aiming to reach tens to hundreds of millions globally over the long-term. </p><p>He wants it eventually to be the "Bloomberg Terminal for main street."</p><p>"That's really our goal is to be this central community on top of every brokerage and help create more engaged and more informed investors across every asset class," he said. </p><p>As someone who regularly reads Reddit investing threads to find story ideas, I did miss the entertainment the <a href="https://markets.businessinsider.com/news/stocks/how-amc-ceo-adam-aron-embraced-the-company-meme-status-2021-6">meme culture</a> there provides. However, I appreciated being able to weed through the fluff and the chaos of Reddit's most active investing threads and get into what people were investing in and why. </p><p>The platform is still in the early stages of adoption, but once the app has more users, it seems like it could become a valuable tool for users wanting a more serious outlet to talk stocks with other retail investors. </p>

Social-investing app Commonstock wants to be the 'Bloomberg terminal of Main Street' and weed out the meme-stock trolls

<ul class="summary-list"><li><keyword id="11895013" type="UNKNOWN" weightage="60" keywordseo="social-media" source="Orion">Social media</keyword> platform <keyword id="12250935" type="UNKNOWN" weightage="60" keywordseo="commonstock" source="Orion">Commonstock</keyword> allows retail investors to verify their trades. </li><li>The app, backed by hedge funds, just announced a $25 million Series A funding round. </li><li>The app "weeds out a lot of the grifters who might say they had a 1,000% return," the founder told CNBC.</li></ul><p>A social media platform catering to <keyword id="11994572" type="UNKNOWN" weightage="60" keywordseo="retail-traders" source="Orion">retail traders</keyword> and backed by hedge funds wants individual investors who have <a href="https://www.businessinsider.com/reddit-wall-street-bets-lingo-guide-glossary-yolo-diamond-hands-2021-5">gathered on Twitter and Reddit</a> to verify their trades and prove they've got skin in the game when making claims of big returns. </p><p>The app, called Commonstock, was launched last year and <a href="https://commonstock.com/memo/d035bc49-323a-4c8b-a3e4-d0a5d3d7573a">announced</a> a $25 million Series A funding round on Tuesday, from hedge fund-backers including Bill Ackman, Dan Loeb, and Stanley Druckenmiller. </p><p>Commonstock founder David McDonough told CNBC that with the app, retail traders can see one another's performance in real-time.</p><p>On Reddit, where investing forums like Wall Street Bets have millions of members, posts are anonymous. But on Commonstock, users must link their brokerage accounts to the app to prove their investments. </p><p>"The ability for anybody to prove they own Tesla or Peloton by percentage, and show their skin in the game, weeds out a lot of the grifters who might say they had a 1,000% return," <a href="https://www.cnbc.com/2021/10/05/commonstock-aims-to-verify-yolo-trades-receives-new-round-of-funding.html">McDonough told CNBC in an interview</a>.</p><p>The app's home page looks similar to <a href="https://www.businessinsider.com/how-do-trading-apps-robinhood-webull-public-compare-brokerage-review-2021-5">trading app Public</a>, which has a Twitter-like feed. User profiles are marked not by followers but instead by the total dollar amount invested of all the accounts following them, aka "follower assets." According to its website, the app "is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors."</p><p>McDonough left his product strategy role at Google to start Commonstock in 2017, according to his <a href="https://www.linkedin.com/in/davidmcdonoughjr/">LinkedIn profile</a>. The founder told CNBC he'll eventually consider monetizing the app using a subscription service, advanced features and aggregating and anonymizing data. He added that Commonstock would never sell that data to hedge funds or other third parties. </p><p>Retail investors gathering on sites like Reddit and Twitter have made their presence known in the <keyword id="11895235" type="UNKNOWN" weightage="60" keywordseo="stock-market" source="Orion">stock market</keyword> this year, starting with the epic runup in GameStop's stock price in January and spreading to other companies like AMC Theaters, among others. Now, <keyword id="11893875" type="UNKNOWN" weightage="100" keywordseo="markets" source="Orion">markets</keyword> are bracing for <a href="https://www.businessinsider.com/retail-traders-market-downturn-wont-scare-away-reddit-investors-2021-6">the new horde of investors to stay</a> for the long haul. </p><p>"Over the last year, the world experienced a fundamental shift in the way markets operate. The information advantage is moving away from Wall Street and towards Main Street," a Commonstock spokesperson said in an email to Insider. </p><p>"The rise of retail investors will have a profound, positive long-term impact on society," McDonough wrote in <a href="https://blog.commonstock.com/a-brand-new-commonstock-869590d05f2a">a post on Commonstock's blog</a>. </p>

A hedge-fund backed social network wants retail traders to prove they have 'diamond hands' by linking their brokerage account to verify trades

<ul class="summary-list"><li><keyword id="6358963" type="DEFINITION" weightage="60" keywordseo="Warren-Buffett">Warren Buffett</keyword>'s <keyword id="6362665" type="ORGANIZATION" weightage="60" keywordseo="berkshire-hathaway">Berkshire Hathaway</keyword> has racked up a roughly $2 billion gain on <keyword id="294389" type="COMPANY" weightage="60" keywordseo="Davita">DaVita</keyword> in 12 months.</li><li>The investor's company owns $4.8 billion worth of DaVita stock, up from $3 billion a year ago.</li><li>DaVita has come under fire from skeptics including short-seller <keyword id="147333" type="PERSON" weightage="60" keywordseo="Jim-Chanos">Jim Chanos</keyword>.</li></ul><p>Warren Buffett's <a href="https://markets.businessinsider.com/stocks/brk-b-stock">Berkshire Hathaway</a> has scored almost a $2 billion gain on <a href="https://markets.businessinsider.com/stocks/dva-stock">DaVita</a> stock in the past year, likely propelling the kidney-dialysis specialist into the conglomerate's 10 most-valuable portfolio holdings.</p><p>The famed investor's company holds 36.1 million shares of DaVita, giving it a 34.4% stake, a <a href="https://www.sec.gov/Archives/edgar/data/0001067983/000119312521236271/0001193125-21-236271-index.htm">regulatory filing</a> showed this month. DaVita's stock is trading close to a record high at $131, valuing Berkshire's position at $4.7 billion - up nearly 60% from about $3 billion a year ago.</p><p>The upshot is that DaVita probably ranks among Berkshire's 10 largest common-stock investments today, given that seven of its top 15 holdings were worth under $4.1 billion at the <a href="https://www.berkshirehathaway.com/letters/2020ltr.pdf">end of 2020</a>.</p><p>Berkshire first invested in DaVita in late 2011, and grew its stake to 38.6 million shares by 2014. Buffett and his team didn't touch that position until last year, when they trimmed it by about 6% to its current size.</p><p><keyword id="768988" type="PERSON" weightage="60" keywordseo="Ted-Weschler">Ted Weschler</keyword>, one of Buffett's portfolio managers, likely placed the DaVita bet. Weschler <a href="https://markets.businessinsider.com/news/stocks/warren-buffett-deputy-ted-weschler-roth-ira-best-stock-investments-2021-6">owned the stock</a> at Peninsula Capital Advisors - his former hedge fund - between 2003 and 2011, when he landed the Berkshire job.</p><p>Berkshire's ownership of DaVita is notable, given the <keyword id="30603" type="TECHNOLOGY" weightage="60" keywordseo="Dialysis">dialysis</keyword> specialist's controversial relationship with the American Kidney Fund, a nonprofit organization that helps people with kidney disorders to cover their <keyword id="35450" type="COMPANY" weightage="60" keywordseo="insurance">insurance</keyword> premiums.</p><p>DaVita is one of AKF's biggest donors, prompting critics <a href="https://www.businessinsider.com/why-jim-chanos-shorting-davita-warren-buffett-backed-healthcare-firm-2019-9">including short-seller Jim Chanos</a> to accuse the company of effectively paying the fund to move patients from Medicare to commercial insurance, which is more lucrative for DaVita and generates most of its profits. The California Department of Insurance also launched an investigation into DaVita's ties to AKF last year.</p><p>"I just can't understand why Berkshire Hathaway would be promoting a company that's gaming the insurance business as much as DaVita is," Chanos said at the Delivering Alpha conference in 2019, describing it as a "very bad look" for the insurance behemoth. The Kynikos Associates boss added that he was shorting the stock.</p><p>DaVita, Berkshire, and Kynikos didn't immediately respond to requests for comment from Insider. AKF provided the following response:</p><p><em>"We have absolutely no influence over what health coverage our program recipients choose - that's because they apply to AKF for help affording their existing coverage. Further, federal firewalls and our own compliance program ensure dialysis providers have absolutely no say on which patients we assist. </em></p><p><em>"Our 100% needs-based program makes health care possible for individuals with very low household incomes who are fighting kidney failure. We provide premium assistance to about 75,000 patients annually, of which the vast majority are on Medicare and Medigap plans. We helped only 2,700 patients nationwide with individual market (ACA) plans in 2020."</em></p>

Warren Buffett's Berkshire Hathaway has scored an almost $2 billion gain on DaVita stock in the past year

<p></p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/59f8a9a83e9d251d008b70b9-889/man-on-laptop-frustrated.jpg" alt="man on laptop frustrated" data-mce-source="Carsten Koall/Stringer/Getty Images"><p class="source"><span>Carsten Koall/Stringer/Getty Images</span></p><p class="caption">It's not always a grand exit.</p></img></div><p></p></div></div><ul><li><strong>Spencer Rascoff is the CEO of real-estate website <a href="http://www.businessinsider.com/category/zillow">Zillow</a> and the co-founder of travel website Hotwire.</strong></li><li><strong>In 2003, Expedia bought Hotwire for nearly $700 million, all cash.</strong></li><li><strong>But the sale came right after a down round of financing, which&#xa0;wiped out a lot of employees' equity.</strong><strong>&#xa0;</strong></li></ul><hr><p><br>In 2003, Expedia bought travel website Hotwire for nearly $700 million, all cash.</br></p><p>And while at the time this was a huge deal, it was somewhat disappointing for Hotwire's founders.</p><p>On an episode of Business Insider's podcast, "<a href="http://www.businessinsider.com/zillow-ceo-spencer-rascoff-success-how-i-did-it-2017-10">Success! How I Did It</a>," Hotwire co-founder Spencer Rascoff - who is now <a href="http://markets.businessinsider.com/stock/ZG-Quote">Zillow</a>'s CEO - shared the story with Business Insider US editor-in-chief Alyson Shontell.</p><p><em><strong>Listen to the full episode here, or listen later with the buttons below:</strong> </em></p><p>It started with the 9/11 tragedy. For one thing, Hotwire learned it had inadvertently <a href="http://www.businessinsider.com/how-hotwire-learned-they-had-sold-plane-tickets-to-the-911-hijackers-2017-10">sold some plane tickets to the hijackers</a>. For another, no one wanted to travel for several months following the incident.</p><p>Hotwire struggled as a result, and went through what Rascoff called "significant layoffs." Then, they did a <a href="http://www.businessinsider.com/what-down-rounds-do-to-startups-2013-2">down round</a> - a round of financing that values the company at less than the previous round - and Rascoff said it "wiped out a lot of the equity that the employees had in the company."</p><p>So by the time Hotwire sold to Expedia in 2003, when Rascoff was in his late 20s, Rascoff told Shontell it was hardly the grand exit it might sound like. Rascoff said:</p><p style="padding-left: 30px;">"This is a good lesson for founders: A down round basically wipes out most of the employee equity because employees typically have common [stock] and investors typically have preferred [stock]. So a $700 million sale sounds really great but it's mostly the venture capitalists&#xa0;who made the money, not the employees."</p><p>As Business Insider has <a href="http://www.businessinsider.com/stock-option-questions-startup-employees-should-ask-2014-4">previously reported</a>, when a company gets purchased, common-stock holders only get paid from the money left over after the preferred-stock holders have gotten paid. Sometimes, depending on how a fundraising deal is structured, preferred-stock holders get promised so much (particularly if a deal is riskier) that common-stock holders are left with barely anything.</p><p>Rascoff said, "You don't have to feel sorry for anyone at Hotwire, they all did fine and they're doing fine. But it wasn't the type of exit that I think people expected."</p><p>He added, "Read the fine print&#xa0;-or, it usually doesn't get printed as fine print&#xa0;- but usually stories like that have a little layer of complexity to them."</p><div><iframe width="800" height="300" src="https://embed.acast.com/howididit/zillowandhotwirefounder-howiledtwocompaniesbackfromcrises" scrolling="no" frameborder="0" style="border:none;overflow:hidden;"></iframe></div><div><div style="position:relative;width:auto;padding:0 0 16.67%;height:0;top:0;left:0;bottom:0;right:0;margin:0;border:0 none" data-break-on="414" data-lg-id="experience-59e0e7a9f09c1" data-lg-src="//view.ceros.com/business-insider/desktop-podcast-badges" data-lg-padding="16.67%" data-sm-id="experience-59e0f87478c28" data-sm-src="//view.ceros.com/business-insider/desktop-podcast-badges-1" data-sm-padding="16.67%">    <iframe allowfullscreen="" style="position:absolute;width:100%;height:100%;top:0;left:0;bottom:0;right:0;margin:0;padding:0;border:0 none" frameborder="0" class="ceros-experience"></iframe></div><script type="text/javascript" src="//view.ceros.com/scroll-proxy.min.js"></script><script type="text/javascript" src="//creative-services.ceros.com/customer-success/varying-embed-tag-generator/embedded-variant-switcher-v2.min.js"></script></div>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/how-to-strengthen-relationship-2017-10">A relationship psychologist describes 3 ways to strengthen your relationship</a></h3>        <div>            <iframe class="bijwplayerclass" data-player="jwplayer" src="https://content.jwplatform.com/players/qV3255Lh-CEZHWCBG.html" width="100%" height="100%" frameborder="0" scrolling="auto" style="margin:0px;" allowfullscreen=""></iframe><script>function receiveMessage(event){ console.log(event.data.fullscreen); Android.fullscreen(event.data.fullscreen); }window.addEventListener("message", receiveMessage, false);</script>        </div>    </div></hr>

A man who sold his company for $700 million in all cash in his 20s reveals a disappointing truth all startup founders need to hear

<ul class="summary-list"><li><keyword id="1114945" type="PERSON" weightage="60" keywordseo="preferred-stock">Preferred stock</keyword> is a type of equity (ownership) security issued by companies to raise money.</li><li>Preferred stocks pay a higher, fixed dividend than <keyword id="1242816" type="ORGANIZATION" weightage="60" keywordseo="common-stock">common stock</keyword>, but their share prices don't appreciate as much as common shares do. </li><li>Preferreds are best for institutional investors or sophisticated individuals who want them for tax reasons and can weather the risk of the shares being recalled. </li></ul><p>Publicly traded companies have a few ways to raise money. The usual methods include issuing common stock — part-ownership in a company that often rewards buyers with regular payments, called <a href="https://www.businessinsider.com/what-is-a-dividend" target="_blank" rel="noopener">dividends</a> — and selling <a href="https://www.businessinsider.com/what-is-a-corporate-bond" target="_blank" rel="noopener">corporate bonds</a>, loans that come with contractual interest payments, and the full repayment when the bond finally matures. </p><p>And then there's a third option: preferred stock, which somewhat confusingly mashes up features of both common stock and bonds. The name's kind of a misnomer — preferred stock shares aren't "preferred" because they're extra-fancy. Nor are they "better" than common stock, except under limited circumstances and for certain types of investors. </p><p>If you're wondering whether preferred stocks are right for your portfolio, here's what you need to know. </p><h2><strong>What is preferred stock?</strong></h2><p>As with common stock, when you buy a share of preferred stock, you are buying a (small) part of the company. And also like common stock, you usually get a certain percentage of money on a regular basis — that's the dividend. The dividend comes from a portion of the company's profits, assuming there are any. </p><p>Unlike common stock, preferred stock comes with limited or no voting rights — you can't use your share to vote for the board of directors, or for or against other policies. </p><p>Because preferreds don't come with those voting rights, companies sometimes issue them instead of common stock to avoid diluting ownership. Preferred shares can be sold to qualified investors and employees by privately held companies as well as public ones; if the company goes public, any preferreds can then be bought and sold on a stock exchange.</p><p>The price of a preferred share goes up and down based on demand, like common stock. But that share price doesn't wander away too far from its par value — that is, its initial offering price. It generally moves in response to general interest rates, much like bond prices do.</p><p>That's because preferred stocks resemble bonds in a key way: The dividend they pay every quarter is fixed — similar to a bond's interest payment — unlike a common share dividend, which often fluctuates each quarter. </p><p>Although that flow isn't contractually guaranteed the way it is with bonds, companies generally feel obligated to give precedence to paying preferred dividends over common dividends.</p><h2><strong>How preferred stocks work</strong></h2><p>Getting to be ahead of common stockholders in the dividend line is only one of preferred shares' unique features.</p><p>Here are the basics of how preffered stocks work:</p><ul><li><strong>Preferred stock dividends are usually a lot higher than common-stock dividends</strong>, and their jumbo size is essentially the whole reason people buy them. The dividends, which are paid quarterly, are expressed as a percentage of their issued value (called "par"); this percentage is often called their coupon rate. For instance, a preferred stock issued at a par of $50 with a coupon of 6.75% will pay out about $0.84 a quarter, or $3.35 annually.</li><li><strong>Most preferreds are callable</strong>, meaning that a company may decide to force investors to sell their shares back to them at the prevailing market price, plus some sort of premium. </li><li><strong>Many preferreds are also convertible</strong>, meaning that a share can be changed into common stock. For instance, a stock's prospectus may say that one share of preferred can be changed into five shares of common stock once a certain date has passed. (In some cases, a company can even force preferred owners to make that conversion.)</li></ul><h2><strong>What the "preferred" in preferred stock means</strong></h2><p>The price of a preferred share can fluctuate in daily trading, just like its common share counterpart. It can, and does, reflect what's happening to the company. But because most preferreds are callable, the upside is more limited, and their share price stays pretty close to par value, as noted earlier. The par value is usually akin to what a preferred share would buy in common stock.</p><p>So what's the preferred thing worth? It really only comes into play when the company's in trouble: Preferred shareholders always get their dividends before common shareholders if a company has serious financial problems <a href="https://www.businessinsider.com/what-is-liquidity">affecting cash flow</a>, or otherwise decides to suspend dividends. Creditors, employees, bondholders, and a few other groups are still ahead of them in the getting-paid line, though. </p><p>Of course, most companies make a strong effort to pay dividends through hell and high water. Suspending preferred share dividends is a pretty drastic step. One nice thing, though: when companies are able and willing to begin paying dividends again, they are obliged to start paying them on preferred shares before they can start paying them on common stock.</p><h2><strong>Who buys preferred stock?</strong></h2><p>Loading up on common stock <a href="https://www.businessinsider.com/personal-finance/why-invest-in-stocks">makes sense</a> for lots of different kinds of investors, but the market for preferreds is more limited. </p><p>Most preferred stock is bought by institutions and pension funds. They love the higher dividends and are better equipped to assess the risks, including the fact that preferreds are <a href="https://www.businessinsider.com/what-are-liquid-assets">less liquid </a>(easily sold) than common stock. Institutions also get special tax advantages from preferreds in some cases.  </p><p>Because the dividends are taxed as <a href="https://www.businessinsider.com/personal-finance/how-much-is-capital-gains-tax%20asset%20and%20your%20income%20level">capital gains</a> if they are held longer, they may also make sense for <a href="https://www.businessinsider.com/investment-income-assets">income-oriented individual investors </a>who'd otherwise buy bonds. That's because bond payments are interest, which is always taxed as normal income. In contrast, stock dividends qualify for a lower tax rate if you own them as a longer-term investment (longer than a year, usually). </p><p>Still, for most investors, preferreds' downsides outweigh their potential. They may pay out more than bonds do, but those dividends aren't guaranteed. And if they won't ever appreciate much in value the way common stock does, since a company would simply call them before that happens. </p><h2>The financial takeaway</h2><p>Preferreds aren't called that because they're so classy. They're preferred because their dividends have to be paid before those that would go to the common stockholders.  </p><p>Preferred stock pays higher dividends than common stock, but its share price will never appreciate the way common stock might. So, the upside's more limited.  </p><p>Preferreds are best for institutional investors or for more sophisticated individuals, who want them in their portfolio for tax reasons or for some other particular goal. Despite their advantages, they have several aspects to keep track of. Most individual investors don't need the hybrid features that preferreds are known for.</p><h2>Related Coverage in <a href="https://www.businessinsider.com/investing-reference" target="_blank" rel="noopener">Investing</a>:</h2><h3><a href="https://www.businessinsider.com/what-is-an-etn" target="_blank" rel="noopener">ETNs combine a bond's reliability with a stock's profitability. Here's how they work, and how to weigh the risks and rewards</a></h3><h3><a href="https://www.businessinsider.com/what-is-an-index-fund" target="_blank" rel="noopener">What is an index fund? A low-cost, low-risk way to invest in the stock market</a></h3><h3><a href="https://www.businessinsider.com/how-to-buy-treasury-bonds" target="_blank" rel="noopener">How to buy treasury bonds, one of the safest ways to invest for income</a></h3><h3><a href="https://www.businessinsider.com/personal-finance/how-to-invest-in-stocks-beginners-guide" target="_blank" rel="noopener">How to invest in stocks, even if you're starting from scratch</a></h3><h3><a href="https://www.businessinsider.com/what-is-volatility" target="_blank" rel="noopener">Volatility measures how dramatically stock prices change, and it can influence when, where, and how you invest</a></h3>

Preferred stocks supply steady dividends to investors — here's how to evaluate them for your portfolio

<p><div class="image-container float_right" style="width:400px"><div class="image"><img src="http://static1.businessinsider.com/image/512845546bb3f7e062000013-400-300/zappos-alfred-lin.jpg?maxX=400&amp;maxY=300" border="0" alt="Alfred Lin, Sequoia Capital" width="400" height="300" /></div><p class="source"><keyword id="122716" type="CITY" weightage="60" keywordseo="Sequoia-Capital">Sequoia Capital</keyword></p><p class="caption"><keyword id="1765311" type="PERSON" weightage="60" keywordseo="Alfred-Lin">Alfred Lin</keyword>, Sequoia Capital</p></div>Alfred Lin of Sequoia Capital will join the <keyword id="136326" type="ORGANIZATION" weightage="60" keywordseo="Board-of-Directors">board of directors</keyword> of <keyword id="719382" type="COMPANY" weightage="60" keywordseo="Airbnb">Airbnb</keyword>, the lodging marketplace that's one of the most-watched private companies in Silicon Valley today, Business Insider has learned.</p>
<p>Lin and an Airbnb spokesperson confirmed his hire to us on Friday, after Airbnb CEO Brian Chesky announced it internally to the company.</p>
<p>Lin told us he hoped to help Chesky and his team build Airbnb's "unique culture."</p>
<p>Lin is replacing <keyword id="1765312" type="UNKNOWN" weightage="60" keywordseo="Greg-McAdoo">Greg McAdoo</keyword>, who'd previously announced that he was leaving Sequoia. McAdoo led a $600,000 seed round in Airbnb in 2009, making an early and prescient bet on the company.</p>
<p>Airbnb was <a href="http://www.businessinsider.com/airbnb-raises-112-million-2011-7">valued at $1 billion in 2011</a> and is reportedly arranging new financing which could take its value as high as $2.5 billion. Three million guests booked lodging on it last year, and it opened 11 new offices as part of a major international expansion. It could soon be doing $1 billion a year in revenues, according to some estimates, from the cut it takes of bookings and other services.</p>
<p>So why Lin?</p>
<p>Sequoia, Lin, and Airbnb have a long, intertwined history.</p>
<p>Sequoia backed Lin's previous company, Zappos, where he was chairman and COO.</p>
<p>While Zappos CEO Tony Hsieh was the happiness-promoting public face of the e-commerce site, Lin was seen by insiders as a key force behind the company's relentless focus on customer service, which distinguished it from rivals while delivering fast-paced growth. At the time of its sale to Amazon in 2009, it was doing $1 billion in revenues.</p>
<p>Amazon actually approached Lin in 2009 about buying the company, <a href="http://www.inc.com/magazine/20100601/why-i-sold-zappos.html?utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed%3A+inc%2Fheadlines+%28Inc.com+Headlines%29">according to an account Hsieh wrote for Inc. magazine.</a> </p>
<p>After the all-stock deal, which ended up being worth $1.2 billion and netting Sequoia $248 million, Lin joined the firm as a partner in 2010.</p>
<p>But in 2011, Airbnb sought to hire him as COO, <a href="http://techcrunch.com/2011/08/01/alfred-lin-almost-leaves-sequoia-for-airbnb-moritz-convinces-him-to-stay/">according to TechCrunch</a>. (At the time, Lin said companies approached him all the time and he wanted to focus on his career as a venture-capitalist.)</p>
<p>There's one key way in which Airbnb's story differs from Zappos.</p>
<p>At Zappos, Lin and Hsieh had two board seats, while investors had three.</p>
<p>While they couldn't force a sale of the company, investors could fire Hsieh as CEO, he wrote in Inc. That prompted Hsieh and Lin to consider whether Zappos and its culture might be better off in Jeff Bezos's hands than with its venture investors, according to Hsieh's account.</p>
<p>Airbnb's board is structured in a way that that could never happen.</p>
<p>Common-stock shareholders—largely its three founders, Chesky, Joe Gebbia, and Nathan Blecharczyk—have the right to elect three board members. Each founder currently holds a board seat.</p>
<p>Sequoia and its other seed investors have one board seat; Andreessen Horowitz and other investors in Airbnb's 2011 financing elect another board member. Andreessen Horowitz partner Jeff Jordan, the former OpenTable CEO, holds that seat.</p>
<p>The language in Airbnb's articles of incorporation, which Business Insider has reviewed, appears to give unusually strong protections to the board rights of common-stock shareholders. For example, if there's a vacancy among the three common-stock board seats, the board at large cannot fill it; only the common-stock shareholders can.</p>
<p>It is a small irony of today's founder-friendly Silicon Valley.</p>
<p>Lin has ascended to what seems like a powerful role at one of the hottest companies around, a board seat most venture capitalists would kill to have.</p>
<p><span style="font-size: 15px; line-height: 1.5em;">Yet its power is circumscribed—in a way that Lin might have wished were true at his previous company.</span></p>

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