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Ask HN: Why does Stripe need $4B?

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Re: Ask HN: Why does Stripe need $4B?

#11

Post by olliej »

toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

Essentially we have another story of people being offered equity compensation in a non-public company as though it were real compensation. Now they're even potentially being hit with tax liability for that equity despite having no way to realize the income.

This sounds like stripe does not actually have the cash to cover the withholding even then, and if they can't I think that means the employees are getting $X of "income" being taxed on that, and then having to put some significant % of that value aside, from their own assets, to cover that tax burden. Because stripe insisted on equity compensation with no method for equity compensation to have a non zero real world value despite its non zero tax value? "cool" I really hope stripe's equity compensation is a significant multiple of other companies to make up for this ... if they ever actually go public. Otherwise the "equity" remains fictitious zero value BS.

Re: Ask HN: Why does Stripe need $4B?

#12

Post by carlivar »

adam_arthur wrote: post #6
toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

They should've IPOed when valuations went into massive bubble territory in 2020/2021... have to wonder what kind of logic they were using to wait so long. If you can IPO at a ~100x sales multiple, what more do you really need? Hard to feel sorry for those that chose to stay private for a decade+ while the getting was good

Could it be a regulatory compliance issue? Maybe they couldn't get their accounting affairs in order.

Re: Ask HN: Why does Stripe need $4B?

#13

Post by treffer »

adam_arthur wrote: post #6
toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

They should've IPOed when valuations went into massive bubble territory in 2020/2021... have to wonder what kind of logic they were using to wait so long. If you can IPO at a ~100x sales multiple, what more do you really need? Hard to feel sorry for those that chose to stay private for a decade+ while the getting was good

I am partially gussing here, but...

They weren't old enough by 2020/early 2021. Series A was 2012. It's usually 10 years after that you need to IPO.

So the expected IPO would be 2022. Bad timing/luck.

Similar for those option plans. Planned IPO +2 years should OK. Unless it hits you like the last 2 years.

Re: Ask HN: Why does Stripe need $4B?

#14

Post by looping__lui »

treffer wrote: post #13
adam_arthur wrote: post #6

Earlier quoted context omitted.

They should've IPOed when valuations went into massive bubble territory in 2020/2021... have to wonder what kind of logic they were using to wait so long. If you can IPO at a ~100x sales multiple, what more do you really need? Hard to feel sorry for those that chose to stay private for a decade+ while the getting was good

I am partially gussing here, but... They weren't old enough by 2020/early 2021. Series A was 2012. It's usually 10 years after that you need to IPO. So the expected IPO would be 2022. Bad timing/luck. Similar for those option plans. Planned IPO +2 years should OK. Unless it hits you like the last 2 years.

Can you provide specific data points and examples for this 10 year hypothesis?

Re: Ask HN: Why does Stripe need $4B?

#15

Post by sintaxi »

adam_arthur wrote: post #6
toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

They should've IPOed when valuations went into massive bubble territory in 2020/2021... have to wonder what kind of logic they were using to wait so long. If you can IPO at a ~100x sales multiple, what more do you really need? Hard to feel sorry for those that chose to stay private for a decade+ while the getting was good

I suspect the regulatory compliance is not easy to meet for their business.

Re: Ask HN: Why does Stripe need $4B?

#16

Post by Rastonbury »

adam_arthur wrote: post #6
toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

They should've IPOed when valuations went into massive bubble territory in 2020/2021... have to wonder what kind of logic they were using to wait so long. If you can IPO at a ~100x sales multiple, what more do you really need? Hard to feel sorry for those that chose to stay private for a decade+ while the getting was good

Same could be said of anyone in tech who held onto vested RSU in 2021/early 2022, which I think is a majority. Greed is human

Re: Ask HN: Why does Stripe need $4B?

#17

Post by treffer »

looping__lui wrote: post #14
treffer wrote: post #13

Earlier quoted context omitted.

I am partially gussing here, but... They weren't old enough by 2020/early 2021. Series A was 2012. It's usually 10 years after that you need to IPO. So the expected IPO would be 2022. Bad timing/luck. Similar for those option plans. Planned IPO +2 years should OK. Unless it hits you like the last 2 years.

Can you provide specific data points and examples for this 10 year hypothesis?

This is the normal runtime of venture funds.

I am not sure if the last chapters of "The hard thing about hard things" or "Venture Deals" had more details.

So you can expect Series A with fresh funds and money (10 years runtime left).

Re: Ask HN: Why does Stripe need $4B?

#18

Post by miga »

toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

Hardships like taxing illiquid stock is the main reason for only taxing _realized gains_.

Since Stripe wants employees to cherish their vested interest in the company, the corporation goes ahead of law here and facilitates. This also means that employees are less likely to either forfeit and sell the stock to third parties.

Legislators promoting entrepreneurship may in future encourage this behaviour to strengthen employee ownership of companies, when RSUs become commonplace for most employees, not just executive officers.

Re: Ask HN: Why does Stripe need $4B?

#19

Post by looping__lui »

treffer wrote: post #17
looping__lui wrote: post #14

Earlier quoted context omitted.

Can you provide specific data points and examples for this 10 year hypothesis?

This is the normal runtime of venture funds. I am not sure if the last chapters of "The hard thing about hard things" or "Venture Deals" had more details. So you can expect Series A with fresh funds and money (10 years runtime left).

So 7 years would have “been to early” (e.g., like Meta did it and we all know how that ended…)? Or 5 years in the case of Google? Or 2 years for Amazon?

Re: Ask HN: Why does Stripe need $4B?

#20

Post by AbrahamParangi »

olliej wrote: post #11
toomuchtodo wrote: post #4

https://www.ft.com/content/9b6981cf-7444-4057-9791-b40ef1cdb... https://archive.is/2sJfX > In the case of payments group Stripe, RSUs worth millions of dollars will start expiring from 2024 and risk being forfeited unless the company buys them out, changes the terms of the awards or launches an IPO. > Employees face a personal tax liability when RSUs vest. But staff are unable to sell any of these shares without the…

Essentially we have another story of people being offered equity compensation in a non-public company as though it were real compensation. Now they're even potentially being hit with tax liability for that equity despite having no way to realize the income. This sounds like stripe does not actually have the cash to cover the withholding even then, and if they can't I think that means the employees are getting $X of "…

Frankly, the villain is the tax code.
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