
Bose founder makes big stock donation to MIT - privacyguru
http://web.mit.edu/newsoffice/2011/bose-gift.html
======
Anechoic
Folks like to rag on Bose products (and from a pure sound quality standpoint
they are overpriced IMO) but Amar Bose was the best professor I had and his
enthusiasm for engineering and acoustics showed in all of his lectures.

He's been good to MIT over the years (MIT students, faculty and affiliates get
substantial discount) and this is another example of him giving back. I hope
this encourages MIT to resurrect some of their acoustics programs (aside from
a couple of projects coming out of the Media Lab and a telephony class or two,
acoustics has been dead at MIT since the late 1990's) but I suspect they'll
just use it as a cash cow.

~~~
horacio
Amar Bose was a good professor, and in making this donation to his alma mater,
he continues to carry on the tradition of MIT graduates doing good things long
after they've made a name for themselves.

His work today in no way lessens the impact of an audiophile's criticism of
his company's products. Not only are they overpriced in consideration of value
delivered, they are in many respects poor implements for faithfully
reproducing sound.

But those criticisms are criticisms of product and market, not criticisms of
people and principles.

~~~
klbarry
Which companies are better than Bose?

~~~
ctide
Sennheiser makes fantastic products, even if they occasionally like to cripple
them ([http://mikebeauchamp.com/misc/sennheiser-hd-555-to-
hd-595-mo...](http://mikebeauchamp.com/misc/sennheiser-hd-555-to-hd-595-mod/))
and the sound quality is significantly higher than anything by Bose at a
similar price point.

~~~
wdewind
I recently compared my Shure $150 SRHDJ head phones to my roomates $500 or so
sennheiser hd 650s plugged into a $275 preamp and can honestly say the
difference was hardly noticeable. I'm not an audio pro but I'm a musician with
a good ear who has had a lot of kinds of headphones. For the money I can't
justify sennheisers. Anything by Shure has been top quality, I've had a bunch
of their stuff.

------
rit
This is an incorrect title; the wrong conclusion may have been drawn.

Although he has given them majority shares they are nonvoting only. The terms
of.the gift forbid them from selling the shares or participating in any
management or governance of the company.

Bose is remaining a private / independent company still run by said founder.
This is essentially a gift that should pay nice stock dividends for MIT.

~~~
jhamburger
Can't the remaining shareholders vote to suspend dividend payments
indefinitely?

~~~
chernevik
Yes, but they themselves wouldn't then receive dividends. They could route
cash to themselves by issuing other capital instruments, but the corporate by-
laws and / or charter should protect minority equity against this. This sort
of thing is why you want good lawyers up front.

The likelier problem is management controlling the board and creeping up exec
comp.

There will always be a trade-off between dividend payments and re-investment,
but presumably here the voting equity's interests are basically aligned with
the non-voting minority.

------
tt
I was fortunate to be a student of Dr. Bose many years ago. No other professor
gave unlimited time on exams, plus free Toscanini's ice cream to boot!

Beyond those small perks, his stories working with Norbert Wiener and his
inspirations have completely transformed and shaped my personality and how I
solve problems. Above all, the highest integrity one would have with his/her
work, has been my #1 beacon thanks to Dr. Bose. I will always cherish that
end-of-term field trip at his corporate headquarters where I witnessed amazing
demos (including the active automobile suspensions), and heard even more
stories that made me believe that anything is possible when you put your mind
and heart into it.

~~~
masterzora
> I was fortunate to be a student of Dr. Bose many years ago. No other
> professor gave unlimited time on exams, plus free Toscanini's ice cream to
> boot!

Unlimited time and free food is a good thing? I went to Harvey Mudd and the
only thing more terrifying than an unlimited time exam was an unlimited time
exam with free food. It was a surefire indicator that you were about to lose a
significant chunk of your time working on a nigh-impossible exam. I guess it's
just weird to find out that this isn't universal.

~~~
tt
Those were great perks since no other classes I knew had them. Bose didn't
offer these things so he could have impossible exams. He offered them because
he was cool like that. :)

If you knew your materials, it would have taken about 1 to 1.5 hrs to finish
the exam. The vast majority finished within 2 hrs (typical duration of MIT
night exams). But indeed there were a few who stuck around for 4-5 hrs. At
least one TA had to stick around too.

~~~
masterzora
Ah, that's a much different case. There's a (true) horror story about an upper
division physics course at Harvey Mudd. It was an unlimited time proctored
exam. The prof apparently expected the students to spend 4-5 hours, but when
nobody had left by then he had to order some pizzas to feed them. If I
remember the story correctly, most of the students exceeded 20 hours and, I
might be making this up, but I believe a couple got into the 40-some range.

This isn't really the usual case (most of the unlimited time exams are take
home exams rather than proctored), but it's still terrifying.

------
tt
Dr. Bose strongly believes that the company would have gone down a terrible
path had they taken on any VC money. He had always wanted Bose Corp to focus
on research, and thus all profits are poured into funding more R&D. No doubt
this decision makes it possible for him to donate the majority of shares to
MIT today. I still remember his words: "Those MBAs would have had me fired in
no time."

So how did he fund the company initially? According to Dr. Bose, Lee handed
over his entire life savings because he firmly believed that Bose would
succeed!

~~~
robg
So in the popular parlance of today he would have been classified as a slow
growth, lifestyle business, right?

------
guelo
What a wasteful donation. MIT has an over $8 billion endowment, and it teaches
the most privileged technical students in the world. If MIT was at least
trying to expand to teach more students, but of course it can't since it needs
to maintain it's high selectivity in order to preserve its reputation. I can
think of a thousand better donations than wasting it on rich ivy schools.

~~~
ernestipark
MIT just added a new dorm and is expanding its undergrad population by about
200-300 students. And even if it wasn't, it helps the general fund of research
and other programs. I can think of a lot of things at MIT that aren't a waste
of research money...

~~~
bethling
MIT also tends to be generous with its financial aid money. When I went there,
I ended up paying less than any other school that accepted me - including my
state university.

------
robg
According to the definitions often used here, isn't Bose a lifestyle company?

~~~
_pius
No.

~~~
robg
Who were his large investors?

~~~
SwellJoe
It was initially funded, at least partially, through research grants, I
believe.

But, shouldn't you have instead said, "Wasn't Bose a bootstrapped company?" if
you were talking about how the company was funded?

~~~
robg
Sure, but I was playing off the contrast as it's typically being made today.
Sounds like he never had an interest in VC.

Seems like Bose is at least one counterpoint to this view:
<http://news.ycombinator.com/item?id=2338140>

~~~
SwellJoe
That's a good point, and I wasn't aware of this discussion, which gives your
comment more useful context. I think there are a lot more examples than pg
hints at, they just happen to be less common in tech...which someone else
theorized could be because money is so easy to come by in technology and less
so in other fields. People don't have to bootstrap as often in tech, so fewer
big success stories started out by bootstrapping.

I think maybe it's a hard thing to figure out because there are so few
Googles, Amazons, and Apples in the world. If you only have a few extreme
outliers to look at as your data, your conclusions might be completely wrong,
even though they fit the data perfectly.

------
joshfinnie
A bit of a sensational title. With all the discussion on Hacker News lately
about ownership of the company, this is interesting. Gave a majority of non-
voting stock to MIT to get company dividends. That is all.

Interesting way of donating your fortune to a school.

~~~
yalogin
Well, he is still running the company and want to have control over the
decision making process. MIT still owns the majority shares right?

------
smackfu
He should have donated 30% to MIT and 70% to a good marketing school.

~~~
smackfu
(Also, it's pretty ironic that I know that MIT is a good tech school but have
no idea what a good marketing school is.)

~~~
Tichy
Maybe this implies that MIT is a good marketing school.

~~~
pnathan
Epic success becomes the best marketing tool.

------
uberc
I attended one special lecture by Prof. Bose while at MIT. I can't remember
the subject matter specifically -- something about acoustics. But I remember
the feeling of the man: humble, wise, noble. This news reminds me of that
feeling.

------
thematt
If MIT will have no voting authority under this new arrangement then I wonder
what the value of actually giving the shares is. Couldn't Bose just donate all
their earnings to MIT every fiscal year instead, earn a tax deduction and
avoid the dividend tax that will be assessed to MIT?

------
kevinherron
Can anyone explain the "'51" after his name? Is that class of 51?

~~~
horacio
He completed his Electrical Engineering undergraduate degree in 1951.

------
rajatmehta1
this is what is called as a life well lived, you do something great that
creates an impact and then the earnings are donated back to enhance your
creation or somebody else's as long as innovation happens for the +ve.Too
good. I am surprised at some comments that still people have the nag to find a
fault in this thing as well :)

------
joejohnson
What power does this actually give MIT? I don't understand.

~~~
ahi
The power to cash dividend checks. No decision making authority.

------
orijing
It says Bose donated a majority of the shares. How much is Bose (private
company) worth? And how much in dividends can MIT expect from Bose on an
annual basis?

~~~
Anechoic
They say that have sales of $2 billion
[http://articles.boston.com/2010-12-26/business/29285848_1_no...](http://articles.boston.com/2010-12-26/business/29285848_1_noise-
canceling-headphones-bose-corp-noise-reduction)

Assuming a decent P/E ratio, total stock value is probably in the 10s of
$billions minimum (I know, as a private company things are different, I'm just
thinking off the top of my head).

~~~
crazycanuck
But the E in P/E is earnings not sales, so this estimate is way too high.
Better guess: start with 1x sales and adjust up or down based on how fast it's
growing and how profitable you think they are. As far as public/private, if
you haircut public company multiples by 10-15% you wouldn't be too far off.

~~~
Anechoic
Oops, yup you're correct. Every outside analysis seems to indicate that
they're incredibly profitable (there retail products have pretty dramatic
markups) so the earnings gotta be in the $100s of millions at minimum.

------
kennethologist
This is an admirable and inspiring gesture. I only hope one day I can do this
for my alma mater (moreso my high school than university). Thank you Dr. Bose.

------
executive
He should have invested in making better speakers.

------
zandorg
All your Bose are belong to MIT.

------
rubergly
I don't understand anything about the stock market, but giving someone a large
portion of stock with the agreement that it can _never_ be sold seems like the
wrong thing to do when people need to spend more to bring us out of a
recession.

~~~
VladRussian
> people need to spend more to bring us out of a recession.

every time i hear that i'm surprised what a fairy tale! Of course politicians
forced to say comfortable "we need more spending" than the suicidal "we need
more working", yet it is obvious for any sane normal person what only
increased productivity and efficiency can get us out of this small hole-in-
the-road current recession and the really big crises looming tomorrow -
healthcare, energy, education - and the day after tomorrow - social security.
Look at who's leading the recovery - the companies reporting large profits
without much increased sales, if any. I.e. increased productivity and
efficiency, less waste. The waste in the business is still extremely large,
yet much smaller than compare to heydays of 2005-7. Instead of being wasted,
at least some part of these profits would get invested and thus would spread
around in the economy and help overall recovery.

~~~
ars
"increased productivity and efficiency" means less jobs. (But also a higher
standard of living since things become cheaper.)

What you want is more demand. (Which depletes natural resources.)

If you want, you can have "well off poor". That's someone who is poorer than
his neighbors, but due to efficiency still has everything necessary for a
comfortable life. Due to human nature people don't really like this.

~~~
VladRussian
>"increased productivity and efficiency" means less jobs.

it means less of mundane and low productive, time wasting jobs. More value
produced by less people. That increased amount of value allows for more
investment (and spending as well) which creates more jobs.

Following your logic, the 20000 years ago was the golden era of employment -
everybody was employed full-time gathering edible roots and hunting.

>If you want, you can have "well off poor". That's someone who is poorer than
his neighbors,

Due to some unfortunate law of the Universe there is always a half which, by
whatever criteria you choose, is worse off than the other half.

~~~
ars
> It means less of mundane and low productive, time wasting jobs.

Unfortunately not everyone can do less mundane jobs, especially when the
skills needed change within a generation - there isn't even time to go to
school to learn them.

> More value produced by less people. That increased amount of value allows
> for more investment (and spending as well) which creates more jobs.

Maybe. But only if the investment creates more demand. It doesn't always.

> Following your logic, the 20000 years ago was the golden era of employment

Certainly. But who said employment was the only goal? It's _a_ goal, but not
the only one.

> is worse off than the other half.

Yup, which is why people don't like it. But your plan (of higher productivity)
won't fix that.

