Office of Contention Reddit: Can a company manager spend money on a smart headquarters?

In mid-November, the Western Internet discussed unexpected changes in the Reddit manual. CEO Yishan Wong , who led its activities since 2012, left his post. As one of the shareholders of Reddit, Sam Altman, later said in his blog , the disagreement of shareholders with Wong’s plans to move the company to a new, much more expensive office was the reason for the withdrawal.

It's all about the disagreement of the board of directors with the plans for the new office (its location and the amount of money that was planned to pay for the rent). Honestly, the shareholders did not offer him to quit, Yishan himself decided so when his plan for the new office was rejected.
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We wish him all the best and are grateful for the work he did at Reddit - and he managed to increase the company by more than 5 times.

We decided to ask domestic entrepreneurs and investors if a successful manager has the right to spend the company’s money on things like a more beautiful office?

Dmitry Kalaev, Head of Acceleration Programs at the IIDF

In general, this situation is quite strange. I would say that it was rather some kind of drop that filled the cup of previously accumulated problems. Here we must understand that Wong is a hired employee, and this is not a conflict of the company's founders with shareholders, but a conflict of a hired top manager with investors and founders. In order to make a conclusion about who is to blame, there is not enough information from publicly available sources.

In general, I would say once again that the situation looks crazy, because no one benefits from it. At the same time, the risks for the company are insignificant, because one of the founders, who led the company until 2012, will return to management at the moment.

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Konstantin Kalinov, CEO Aviasales

I do not think that this was the only reason, rather the “last straw”. In general, the question of whether shareholders can get involved in the management of a company, and who has the final word in case of disputes, is determined in the shareholders agreement.

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Mikhail Smolyanov, founder and ex-CEO of Megaplan

A strange case, perhaps there are many other reasons for which we simply do not know. In the general case, shareholders, of course, should not engage in micromanagement. If the CEO fulfills the plans, fits budgets, etc., then there is no point in telling him which office to rent. Now, if it doesn’t perform, and on a regular basis, then indeed the shareholders will go down to a lower level and even ask questions about the cost of the office.

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Denis Kutergin, CEO of YouDo

Shareholders have the opportunity to influence the management of the company within the framework of their rights enshrined in the shareholder agreement. In some cases, a shareholder may, by decision, remove from his position any manager, including the founder. In some cases, a shareholder can only observe what is happening without the right to vote.

These conditions are agreed immediately.

The fact that a business has grown five times is not yet an indicator of the success or indispensability of the CEO. I am very cautious about statements about growth when it comes to some abstract indicators without specific figures and detailed information about which indicator has grown and in what volume.

For example, you can increase the staff and turnover of the company five times, but in such a way that losses will increase tenfold, as a result of which the company will begin to rapidly roll into the financial abyss. Such a CEO needs to be changed. Especially if he wants to move to a more expensive office instead of optimizing the company's expenses. Most likely, the conflict in this situation did not arise because of the office and hides in itself more global causes.

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Max Voloshin, Redmadrobot Development Director

This kind of activity - expanding and moving to a new office - is worth considering as an investment project: now we are investing money in it, and in the long run it brings us more profit. And if this is an investment project, then it should be formalized accordingly: numbers, deadlines, and not just “I want or leave so.” Another issue is that shareholders may have other plans - for example, in connection with a difficult economic situation, they want to take a profit, rather than reinvest it in an office expansion.

The dude has achieved a five-fold growth of the business, of course, we must listen to his opinion - if he believes that for development it is necessary to move to a new office, then he must move. Just most likely, this situation was not worked out properly on the economic justification.

In general, the occurrence of such a situation suggests that communication between the shareholder and the general director is broken. And you need to work out not the consequence - the conflict, but the reason - communication.

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Philip Ilyin-Adaev, founder of Banki.ru

Shareholders have the right to ask what the company is spending money on. After all, an unnecessarily luxurious office for a large company is millions of dollars in dividends that are not received by shareholders in the end. There is such a thing as a “company for management” when a hired CEO and his team begin to spend money on their own, without thinking about the appropriateness of these expenses, because this is not their money. This is a standard problem in many companies. When this process takes a pronounced form, shareholders have to connect.

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Stanislav Sazhin, founder of the Doctor at Work service

I think that if a manager fulfills in full what he promised, he can rent any office. But if the company, for example, is all bad, and the manager decides to increase costs, and this looks like a clearly non-market solution, then I would, instead of shareholders, begin to think about whether it is possible to replace the manager. But, of course, I don’t know at all how things go with Reddit.