Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

My company sold for $100M and I got zilch – how can that be?

medium.com

Post reply on HN
Print view View original

191–200 of 391 posts

Re: My company sold for $100M and I got zilch – how can that be?

#191

Post by cortesoft »

a13n wrote: post #48
nostrademons wrote: post #27

This matters more now that the current crop of tech companies have taken so much money. In the old days, when software companies sold software rather than traditional services enhanced by software, it was common to get to profitability around the B round and then never take any more investment after that. Google took $25-35M and then nothing until IPO, running the company from 2001-2004 off cashflow. Microsoft took n…

It's also interesting to consider the role SoftBank has played in this shift. Whoever takes SoftBank money will have the deepest pockets and will be able to play hard against competition. This means you're pretty much forced to either take SoftBank's money, or compete against someone else with SoftBank's money. They don't care much who takes their money, because either way they have the most funded pony in the race.

In certain fields, sure... but even SoftBank isn't investing in EVERY market. Not everyone has a SoftBank funded competitor.

Re: My company sold for $100M and I got zilch – how can that be?

#192

Post by Florin_Andrei »

bitL wrote: post #118

For anyone thinking about working for startups: - don't treat verbal agreements seriously - common stock is 99.9% worthless, you want preferred stock - liquidation preference is important, if company doesn't want to tell you, insist on market-rate salary - if a company tries to switch from an LLC to C-Corp and move you from being a minority owner of LLC (0.1-3%) into a common-stock owner of a C-Corp with the same %,…

> common stock is 99.9% worthless, you want preferred stock

TLDR: For the vast majority of folks, stock options are opium of the people.

If you take a 100 steps back from the legalese garbage, all this is just a more nicely dressed version of the good old country fair scam.

Re: My company sold for $100M and I got zilch – how can that be?

#193

Post by bredren »

testfoobar wrote: post #97

As a former founder, I am often surprised by the incredible spend at some startups I've visited. The biggest is headcount - so many fluff jobs. How many designers does an early stage startup really need? 1, 2, 10, 20, 50? How many SREs do you need when your site is just a handful of AWS instances? How many sales people do you need when your product isn't ready for sale yet? Each employee fully loaded in the bay area…

Coinbase avoided design forever—using simply twitter bootstrap and uh not much of a logo.

Not every startup can pull this off, but template designs—particularly for web are great and cheap now. Custom UI controls waste money in development and design.

Re: My company sold for $100M and I got zilch – how can that be?

#194

Post by Florin_Andrei »

vonseel wrote: post #43

There should be a simpler way. All this crap is too complicated. Even if you manage to somehow do the research and understand it well at some point, unless your working with options grants on a regular basis, you'll probably forget it all before you ever leave the company. People don't have time to do all this stuff and not get fucked over.

> All this crap is too complicated.

If it was simpler, regular folks would figure out it's just a scam.

You're naive if you think there's any other reason for all this.

Re: My company sold for $100M and I got zilch – how can that be?

#195

Post by readhn »

2 start ups behind, shares worth 0. both companies took on half a billion (!!!) in funding combined - from VCs, gov etc. Revenue = close to nothing.

I feel that start ups mostly are cash burn machines built to pay cushy salaries to C-level execs and build "impressive" resumes again for the execs. For most other folks, they are a just stepping stone to a "real" world job in a stable corporation.

assume, your shares are worthless, basically a lottery ticket! In both companies i knew that some people put in real money to buy out options, 100s thousands of dollars amounts. Now they are sitting on a bunch of 0s.

Learn from others mistakes! They are free!

Re: My company sold for $100M and I got zilch – how can that be?

#196

Post by ram_rar »

nostrademons wrote: post #27

This matters more now that the current crop of tech companies have taken so much money. In the old days, when software companies sold software rather than traditional services enhanced by software, it was common to get to profitability around the B round and then never take any more investment after that. Google took $25-35M and then nothing until IPO, running the company from 2001-2004 off cashflow. Microsoft took n…

How does liquidation preference work, when companies go IPO?

Re: My company sold for $100M and I got zilch – how can that be?

#197

Post by alteria »

aetherson wrote: post #164
jammygit wrote: post #56

Earlier quoted context omitted.

It may be sensible for the founders and investors, but is it sensible for the employees? Many startup employees are paid to a significant extent in stock and do not understand the situation they end up in. They are also powerless and just have to trust that the founders and investors will treat them well. Rationally, this leads to many of the best people ignoring the startup world

That's equity compensation, in my view. It's not like it's different at the FAANGs. If you go to work at Apple, and you work super hard, and the company declines in stock value from $5jillion to $3jillion, nobody is like, "Whaaaat? Why didn't my equity go up in price? I worked really hard, and also $3jillion is still a ton of money!" Equity compensation is about owning part of the COMPANY. If the company has destroye…

Definitely agree that equity compensation carries risk.

However, I've seen equity pitched as a way to "make up" for the lower cash comp a startup might offer.

This is probably the wrong way to look at equity. The expected value of the equity might make up for lower cash comp, but that's with a large sample size. Employees don't get that benefit at all.

It's definitely up to the employee to understand the risks, but frequently they don't, and employers don't actively educate their employees.

Re: My company sold for $100M and I got zilch – how can that be?

#198

Post by NullPrefix »

nostrademons wrote: post #27

This matters more now that the current crop of tech companies have taken so much money. In the old days, when software companies sold software rather than traditional services enhanced by software, it was common to get to profitability around the B round and then never take any more investment after that. Google took $25-35M and then nothing until IPO, running the company from 2001-2004 off cashflow. Microsoft took n…

> Microsoft took nothing except a small mezzanine round (to align incentives with the I-bankers) right before IPO.

> to align incentives with the I-bankers

What does that even mean?

Re: My company sold for $100M and I got zilch – how can that be?

#199

Post by kevinskii »

harryh wrote: post #131

FWIW, I kind of don't believe that this question is real. Questioner clams that he is a VP but also: > He has no idea how liquidation preferences work > He was "told" that the company was being acquired (instead of being involved in the sale) > No one at the company walked him through how his stock was valued, even after the acquisition. To the point that he thinks he needs to hire a lawyer. It's a fine question to u…

It could be. But small companies often give their employees inflated titles, where a "VP" is actually a small team lead with no executive responsibilities.

Re: My company sold for $100M and I got zilch – how can that be?

#200

Post by jxfreeman »

tyrust wrote: post #76
cj wrote: post #12

Liquidation Preference. In very simple terms: "Liquidation Preference" is an agreement between a company and an investor that when the company is acquired or IPOs, the company will pay the investor some specific amount of money BEFORE any other shareholders get paid. If the company negotiated the funding well, the liquidation preference might be 1x (basically saying the company promises to pay back, in full, the inve…

It always baffles me when the top comment isn't discussing the article, but provides a response to the headline as if the article doesn't even exist.

Yeah, sometimes the comments are more cogent, clear and concise than someone paid by the word.
Post reply on HN