My company sold for $100M and I got zilch – how can that be?
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Re: My company sold for $100M and I got zilch – how can that be?
#2Is there any good book for explaining all of these startup evaluation, fundraising, etc. terms, how they work, what to ask about, etc.?
Re: My company sold for $100M and I got zilch – how can that be?
#3As a normal individual contributor not at the C-level or even management level, I just assume the value of any options/shares I receive is zero unless an accountant or the IRS tells me I should believe otherwise. Too many goofy fine-print shenanigans like this to keep track of.
Re: My company sold for $100M and I got zilch – how can that be?
#4[deleted]
Re: My company sold for $100M and I got zilch – how can that be?
#5Is there any good book for explaining all of these startup evaluation, fundraising, etc. terms, how they work, what to ask about, etc.?
In no particular order:
https://www.holloway.com/g/equity-compensation (The Holloway Guide to Equity Compensation)
https://gist.github.com/jdmaturen/5830b83c1425c4767f7e1bd4c9... (Who pays when startup employees keep their equity?)
https://gist.github.com/yossorion/4965df74fd6da6cdc280ec57e8... (What I Wish I'd Known About Equity Before Joining A Unicorn)
https://gigaom.com/2011/06/05/5-mistakes-you-cant-afford-to-... (5 Mistakes You Can’t Afford to Make with Stock Options)
https://news.ycombinator.com/item?id=2623777 (Bookmarked comment by /u/grellas about above article/thread)
https://web.mit.edu/tytso/www/OPTIONS-HOWTO/OPTIONS-HOWTO.ht... (Startup Stock Options Tax How To)
https://smile.amazon.com/Venture-Deals-Smarter-Lawyer-Capita... (Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist)
Re: My company sold for $100M and I got zilch – how can that be?
#6I understood none of those words.
Re: My company sold for $100M and I got zilch – how can that be?
#7As a normal individual contributor not at the C-level or even management level, I just assume the value of any options/shares I receive is zero unless an accountant or the IRS tells me I should believe otherwise. Too many goofy fine-print shenanigans like this to keep track of.
> the IRS tells me I should believe otherwise
If you have NSOs (or pay AMT) the IRS will happily lie to you about the true value of your options.
Re: My company sold for $100M and I got zilch – how can that be?
#8Is there any good book for explaining all of these startup evaluation, fundraising, etc. terms, how they work, what to ask about, etc.?
Dan Luu has a pretty good writeup on the various ways you can get screwed :)
Re: My company sold for $100M and I got zilch – how can that be?
#9As a normal individual contributor not at the C-level or even management level, I just assume the value of any options/shares I receive is zero unless an accountant or the IRS tells me I should believe otherwise. Too many goofy fine-print shenanigans like this to keep track of.
This doesn't sound like shenanigans. Reading between the lines:
> While it hasn’t ended up becoming the unicorn I was hoping for
it sounds like the company wasn't a success. It could be the preference overhang, or it could be a difficult acquisition.
Fundamentally, if the company isn't a success relative to the funding, employees aren't going to get paid. Employees can get paid quite well on a $100m exit if eg the funding structure was correct for the exit size.
Re: My company sold for $100M and I got zilch – how can that be?
#10Is there any good book for explaining all of these startup evaluation, fundraising, etc. terms, how they work, what to ask about, etc.?
Very briefly: for employees to have a good outcome, the company must be a success relative to the funding. I'd love to say that founders are in the same boat as employees, but it's not true. Unethical founders can engineer situations where they alone get millions of dollars and no other employees do. That can be somewhat justifiable (eg taking $1m or something off the table in a round B for a company that eventually fails), or it can be poisonous (Adam from wework getting north of a billion in cash for a company that will probably go bankrupt).
With respect to the article:
$100m exit on $10m funding? Employees should do well. $100m exit on $110m funding? You can't expect a good outcome for the employees in that case. They may get some sort of retention bonus in an acquisition, but that's about it.
Another thing all employees should know is that, as a rule of thumb, you need to triple your valuation between funding rounds. That is not as true late, ie when you have enormous $100m + rounds that are raised in lieu of going public with more of a debt structure than an investment structure.
You should be skeptical of companies that have raised too much money. Eg if a company raises a $100m round B, they are basically saying their metrics have to justify a multibillion dollar valuation.
Anyway, there's a bunch of good links, but (and I'm a company founder), I'd tell you to keep a couple crucial things in mind:
First, don't work for dodgy founders. I understand that's not easy for you to evaluate, but there are ways you can figure out. eg have the founders hired lots of people they're previously worked with? That's a good sign.
Second, if you want a good outcome, the company must be growing. At a startup, you are comped on growth. You should be unafraid to fire founders and execs (by quitting) that are unable to grow the company. That's not to say quit at the first rough patch, but every year when you are deciding if you re-up for another year or not, you should evaluate the metrics over the last year.
Third, understand the runway and the metrics that get you the next round or an exit. Be unafraid to demand to know all the above, and expect positive performance on all those things.