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Confirmed: Walmart buys Jet.com for $3B in cash

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Re: Confirmed: Walmart buys Jet.com for $3B in cash

#11

Post by asmithmd1 »

tommynicholas wrote: post #6
wheaties wrote: post #2

I have to wonder if the employee stock options were worth anything? Most telling is that Walmart decided to throw ~$300M at the founders "and others" to retain them. Does that mean, in this case, that the founding team is the only one who walks away with a payday? And to be clear, this isn't a cynical musing. I'm genuinely curious to see how this worked out for them.

There are always retention bonuses for the founders. What scenario would the options not be worth anything? It's a cash acquisition that is 2x larger than the post of their last round of funding which was fairly recent.

The common stock might be worthless if the last money in had a 2x or greater liquidation preference.

https://en.wikipedia.org/wiki/Liquidation_preference

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#12

Post by WhitneyLand »

Is anyone here using Jet on a regular basis? I tried it once a few months back and dismissed it as nothing innovative enough to be a sustainable Amazon competitor.

I must have been very wrong. I don't see how Jet justifies 3B from Walmart.

I will credit them on one point - They do seem have great employee sat that is a result of investing lots of time and energy to create a healthy environment.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#13

Post by JonFish85 »

tommynicholas wrote: post #6
wheaties wrote: post #2

I have to wonder if the employee stock options were worth anything? Most telling is that Walmart decided to throw ~$300M at the founders "and others" to retain them. Does that mean, in this case, that the founding team is the only one who walks away with a payday? And to be clear, this isn't a cynical musing. I'm genuinely curious to see how this worked out for them.

There are always retention bonuses for the founders. What scenario would the options not be worth anything? It's a cash acquisition that is 2x larger than the post of their last round of funding which was fairly recent.

Some scenarios (in no real particular order):

- A Zynga-like order: give back unvested stock or you're fired

- There were "hidden" bank loans / lines of credit that need to be paid back first. These may not be known to employees, but generally they are the first in line to be paid back.

- If the cash acquisition is assuming they hit some earn-out targets, there's a very, very good chance that they won't get 100% of the money, and in fact could get a lot less.

- If the investors had some sort of very tough terms where they get a 1-2x return before participating in the common stock, that could make this worth very little to employees.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#14

Post by dclowd9901 »

WhitneyLand wrote: post #12

Is anyone here using Jet on a regular basis? I tried it once a few months back and dismissed it as nothing innovative enough to be a sustainable Amazon competitor. I must have been very wrong. I don't see how Jet justifies 3B from Walmart. I will credit them on one point - They do seem have great employee sat that is a result of investing lots of time and energy to create a healthy environment.

I see this as Wal-Mart buying their place into the online market. It's hard for a company like that to be able to spin up an entire division, and do it right.

A cynical person might also believe Jet created itself to be sold off in this very way, too.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#15

Post by publicfig »

WhitneyLand wrote: post #12

Is anyone here using Jet on a regular basis? I tried it once a few months back and dismissed it as nothing innovative enough to be a sustainable Amazon competitor. I must have been very wrong. I don't see how Jet justifies 3B from Walmart. I will credit them on one point - They do seem have great employee sat that is a result of investing lots of time and energy to create a healthy environment.

At this point, it's a generalized online marketplace that has been successful enough that some of the general public has heard of it and used it. 3B is QUITE a bit of money, I agree, but from a name and branding perspective in the age of Amazon, Jet has already made an impressive amount of progress where SO many others have failed.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#16

Post by tommynicholas »

asmithmd1 wrote: post #11
tommynicholas wrote: post #6

Earlier quoted context omitted.

There are always retention bonuses for the founders. What scenario would the options not be worth anything? It's a cash acquisition that is 2x larger than the post of their last round of funding which was fairly recent.

The common stock might be worthless if the last money in had a 2x or greater liquidation preference. https://en.wikipedia.org/wiki/Liquidation_preference

It would have to be much more than 2x - 2x would still have no impact because the acquisition was 2x the price of the last round.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#17

Post by arenaninja »

dclowd9901 wrote: post #14
WhitneyLand wrote: post #12

Is anyone here using Jet on a regular basis? I tried it once a few months back and dismissed it as nothing innovative enough to be a sustainable Amazon competitor. I must have been very wrong. I don't see how Jet justifies 3B from Walmart. I will credit them on one point - They do seem have great employee sat that is a result of investing lots of time and energy to create a healthy environment.

I see this as Wal-Mart buying their place into the online market. It's hard for a company like that to be able to spin up an entire division, and do it right. A cynical person might also believe Jet created itself to be sold off in this very way, too.

To be fair, I installed the Walmart mobile app as well as Jet over the weekend. The Walmart experience is miles ahead. Pricing was also better, and Walmart has better pricing than Amazon on a lot of things lately. I'm not sure that they're 'buying' their place, because it seems to me they're ahead of the game on anything but name

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#18

Post by tommynicholas »

JonFish85 wrote: post #13
tommynicholas wrote: post #6

Earlier quoted context omitted.

There are always retention bonuses for the founders. What scenario would the options not be worth anything? It's a cash acquisition that is 2x larger than the post of their last round of funding which was fairly recent.

Some scenarios (in no real particular order): - A Zynga-like order: give back unvested stock or you're fired - There were "hidden" bank loans / lines of credit that need to be paid back first. These may not be known to employees, but generally they are the first in line to be paid back. - If the cash acquisition is assuming they hit some earn-out targets, there's a very, very good chance that they won't get 100% of t…

#1 is the only one I can imagine (that was such a horrible situation at Zynga, I had family get hit), and given the founder, extremely unlikely. I understand why everyone wants a reason to be skeptical of this acquisition, but all signs point to a home run for everyone involved.

Re: Confirmed: Walmart buys Jet.com for $3B in cash

#19

Post by SmellTheGlove »

Good for them. I talked to a couple of folks there regarding potential roles that they'd had in the HN hiring thread. We never went anywhere on that front, but everyone that I interacted with was a total class act. I hope this works out well for the existing employees.
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