Subprime ‘unicorns’ that do not look a billion dollars • Hacker News Board

Re: Subprime ‘unicorns’ that do not look a billion dollars

#21

Post by freditup » Sat, Oct 17, 2015, 4:30 AM UTC

AndrewKemendo wrote: post #19

kzhahou wrote: post #16

Earlier quoted context omitted.

Just a couple of days we all dissected Square's upcoming IPO. Valued at $6 billion, the average employee ( ) stock value is at $294K, or $73.5K per year of vesting. Not super awesome. ( ) Not a founder or executive/director, who'll get up to 5000x that.

How is that not super awesome? All of those employees had market wages well before the IPO.

Agreed, if the employees negotiated fair cash compensation, a bonus equivalent to a $70K bonus/year for four years in a row is solid. If employees were told that the stock options were a significant portion of their compensation and thus salaries would be lower, it's less great, but probably still not unreasonable.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#22

Post by throwaway13337 » Sat, Oct 17, 2015, 4:30 AM UTC

scrollaway wrote: post #8

muzz wrote: post #7

Earlier quoted context omitted.

True, although he was not a founder

I think it can be extended to "[the suicide rate amongst] people who give a huge part of their life onto a particular entity or product".

Or could it be more accurately "the suicide rate among people who wrap their self worth in their financial success".

Re: Subprime ‘unicorns’ that do not look a billion dollars

#23

Post by danso » Sat, Oct 17, 2015, 4:37 AM UTC

afarrell wrote: post #5

> whose co-inventor committed suicide two years ago after telling his wife that it was not effective I feel... strange about reading this in an article when it is framed as evidence of anything. People's reasons for committing suicide are often complex and to mention that here seems... improper for reasons that I can't quite put my finger on.

On the other hand, the author is using the widow's claim (as she was the one who told the WSJ about it) as evidence of doubts about Theranos's technology...there's really no way to introduce that kind of second-hand information without also saying that its source is now dead.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#24

Post by pen2l » Sat, Oct 17, 2015, 4:48 AM UTC

pbreit wrote: post #9

I don't know what to think of Theranos. On one hand, it is tackling a huge, important market and appears or appeared to have something legitimate. On the other, so many of its tactics seem designed more to increase valuation than successfully bring its technology to market. It's obscenely celebrity board completely devoid of any relevant experience. A ridiculous $9b valuation on a paltry (relatively) $400m raised. 10…

It is putting a lot of effort on PR. I went to https://www.theranos.com/ for curiosity's sake, and was surprised to see that... well, the big center image has absolutely nothing to do with Theranos' technology, it's about "empowering women" (which is of course a laudable effort).

My best guess is this is just 'fake it till you make it'. If they've got a 9 bil valuation, at least they can hire some smart folks who would otherwise be unhappy in proper academia. Maybe they're on to some technology and we will see that pivot soon.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#25

Post by hkmurakami » Sat, Oct 17, 2015, 5:02 AM UTC

throwaway13337 wrote: post #22

scrollaway wrote: post #8

Earlier quoted context omitted.

I think it can be extended to "[the suicide rate amongst] people who give a huge part of their life onto a particular entity or product".

Or could it be more accurately "the suicide rate among people who wrap their self worth in their financial success".

I think SV is even more perverse because there are plenty of cases where people are chasing some nebulous definition of "success" that is not tied to financial success.

If it's just financial success and you're a very sharp, bright person, be a quant trader at a prop trading firm or something similar.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#26

Post by jimjimjam » Sat, Oct 17, 2015, 5:23 AM UTC

Simple search on LinkedIn for Theranos: 139 current employees. 239 past employees. This company may technically be 10 years old, but lots of these churned employees listed Theranos as their last or second to last employer. That is a terrible ratio for a company of that size and age.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#27

Post by throwaway13337 » Sat, Oct 17, 2015, 5:26 AM UTC

hkmurakami wrote: post #25

throwaway13337 wrote: post #22

Earlier quoted context omitted.

Or could it be more accurately "the suicide rate among people who wrap their self worth in their financial success".

I think SV is even more perverse because there are plenty of cases where people are chasing some nebulous definition of "success" that is not tied to financial success. If it's just financial success and you're a very sharp, bright person, be a quant trader at a prop trading firm or something similar.

People say this - that being a founder isn't a the best path to being rich - and it's definitely true.

The popular culture, however, points to the tech area as the source of the new rich. If you want to be the new rich today, you found a tech company.

You're right, though, that there is also an element of success is more than about financial success today. Not just in the valley but in the privileged world that it is peppered with. We don't want to just be rich - we want respect.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#28

Post by akiselev » Sat, Oct 17, 2015, 6:02 AM UTC

pbreit wrote: post #9

I don't know what to think of Theranos. On one hand, it is tackling a huge, important market and appears or appeared to have something legitimate. On the other, so many of its tactics seem designed more to increase valuation than successfully bring its technology to market. It's obscenely celebrity board completely devoid of any relevant experience. A ridiculous $9b valuation on a paltry (relatively) $400m raised. 10…

I am on board with your skepticism, but I don't believe your concerns are valid in the context of what Theranos is promising and what they have done ($400 million is nothing to scoff at in an industry where you have $0 revenue until a real breakthrough passes the FDA).

The global pharmavertical industry is about $900 billion a year and has a very wide variance in types of products so the normal idea of what what value a "celebrity" is worth is very different. If you're a biotech company whose most likely exit is an aquisition by Pfizer or Roche, you want industry insiders. If you're like Theranos, and your business depends on consumer spending at places like Walgreens, you're so far out of the normal pharmaceutical and diagnostic industry that all bets are off.

Several hundred million for an IPO biotech company on ZERO revenue post dotcom crash is common enough that $9 billion valuation (25 times revenue) is damn good. There are literally thousands, if not tens of thousands, of labs that can run an off site (for the consumer) screening for every one of Theranos' target markers. The idea that anyone would invest hundreds of millions into a diagnostic company without compelLing secret sauce is troubeling. I don't doubt that VC firms make mistakes as silly as the rest of us, but I prefer to give the benefit of the doubt assuming semi-competent due dilligence.

That said, no VC firm in their right mind would ever invest in a company like Theranos if it had only a few SKUs. It is practically impossible (with current technology) to come up with a generalized test that identifies anything more precise than "gram negative bacteria." Either Theranos is a pump and dump scam of epic proportions or they really do have some technological superiority that allows them to convert expensive lab tests into a consumer technology.

As far as the other red flags, you'll usually find the same intrigue surrounding most successful biotech companies. When your operating at the cutting edge of the most difficult scientific field in the most stringent regulatory environment on the planet, you have to take more shortcuts than usual.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#29

Post by phamilton » Sat, Oct 17, 2015, 6:02 AM UTC

AndrewKemendo wrote: post #19

kzhahou wrote: post #16

Earlier quoted context omitted.

Just a couple of days we all dissected Square's upcoming IPO. Valued at $6 billion, the average employee ( ) stock value is at $294K, or $73.5K per year of vesting. Not super awesome. ( ) Not a founder or executive/director, who'll get up to 5000x that.

How is that not super awesome? All of those employees had market wages well before the IPO.

"market wages" is a pretty loaded term.

$130K plus 15% bonus plus $70K/yr in stock for a senior engineer isn't that out of the ordinary at big public companies. Total comp ends up around $220k. I don't see too many startups paying over $150k, so the average employee at an exceptional startup like Square makes around the same if not less than at a big company, even with a decent payout.

Re: Subprime ‘unicorns’ that do not look a billion dollars

#30

Post by Animats » Sat, Oct 17, 2015, 6:08 AM UTC

Note that the author is the head of Sequoia Capital. "Sequoia, notably, also counts the highest number of private, billion-dollar ‘unicorns’ of any investor today and consistently finds itself in the largest tech startup exits."[1] If the head of the VC firm financing the largest number of "unicorns" says publicly that many of the "unicorns" are subprime, it's time to pay attention.

[1] https://www.cbinsights.com/blog/sequoia-capital-teardown/