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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?

#221

Post by dudul »

sabujp wrote: post #218

It's stupid that startups don't tell people going in what the overhang is, or that you won't get called back or get weird looks. Everyone is looking out for their bottom line, wtf would a startup expect any less from an employee that's about to spend 60+ hours a week toiling on the product? In any case, this is good info and I'll pass it onto my kids if they ever decide to join or build a startup. Hopefully they deci…

Based on my XP, getting details about options is real difficult. HR and hiring managers are used to people who barely understand the vesting schedule, so when you start asking about percentage, strike price, etc etc it's kind of unusual. And yeah, companies tend to not be transparent simply because they play on people's ignorance to make attract them with options while in 99% of cases you will never see a penny from these.

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

#222

Post by tptacek »

fiter wrote: post #189
tptacek wrote: post #148

Earlier quoted context omitted.

How often is often? Can you name 3 such cases?

Often enough that it is mentioned in the article.

Carve-outs in general are mentioned in the article. A common type of carve-out: the employee retention pool. The article does not say that founder carve-outs are common. I'm sure they've happened, but you said they happen "often", as a way to get founders to greenlight deals. Do you know how often that happens?

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

#223

Post by [deleted] »

nighthawk648 wrote: post #165
dgzl wrote: post #96

Earlier quoted context omitted.

What's baffling about it? If someone were to only read the title and not the article and came to the comments section, a summary about the title would be desired. What you're probably baffled about is why do people only read the title and not the article.

I’m not sure... HN is supposed to be real time discussions of articles. summarizing the article not only is not discussion (read it is regurgitation / bastardization) but any argument / discussion had based on the summary will be inaccurate as they are going off of the words of another, who more than likely integrated logical fallacies that did not exist before the comment.

[deleted]

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

#225

Post by dplgk »

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.

Some people rather quickly see the reason than read about the leaves blowing on one crispy fall evening as a dog howled in the distance and the city lights twinkled beneath the moon.

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

#226

Post by KON_Air »

NullPrefix wrote: post #198
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?

funding where higher risk takers get paid more but "controlling rights" remains with smaller invester(s), so I guess MS didn't want to give up any control by selling shares, other then select few.

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

#227

Post by caconym_ »

tptacek wrote: post #216
arohner wrote: post #188

Earlier quoted context omitted.

To expand on your example: I invest $100 for 20% of your venture, implicitly valuing the company at $500 . You sell for $200. - Standard preference: I get $100 or 20% of the company ($40) - 2x preference: I get $200 or 20% ($40) - Participating preferred: I get $100 and 20% of the company ($140) IMO, 1x preference, non-preferred is entirely fair. In the event the company sells for lower than the valuation, the invest…

Why moralize? It may be that there's nothing intrinsically unconscionable about it; it could just be a way of expressing the market power the investor and the company had when the funding deal was struck. You could similarly say a harsh down-round is unconscionable (a low valuation can just as easily wipe out returns for employees), but we tend not to think companies taking down-rounds are "unconscionable" so much as…

It seems perfectly valid to "moralize" (that word sure has some baggage, doesn't it?) about those who have power exercising it at the expense of those who don't. In fact, I'd expressly encourage it.

Not saying I'm particularly worried in this case, but overall I don't think that "argument" is a very convincing one if we're actually concerned with "doing the right thing".

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

#228

Post by awinder »

“In fact, one of my kids was recently interviewing at a startup and I told her to ask about the preferred overhang — she said the interviewer looked at her like she was asking about his sex life! She didn’t get a call-back.”

I’ll do you one better. This is like asking someone you’re about to have sex with if they have an STD and then having them act indignant and not answer. And you should do the same thing in both cases and run away.

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

#229

Post by blihp »

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…

The title is not a meaningful gauge of a person's knowledge or experience. It wouldn't be unheard of for a VP at a company with 50 employees to have similar responsibilities as a manager at a company with 1000 employees. They could also be VP of Engineering/Customer Service/etc. which would typically not be expected to have much, if any, legal or finance knowledge.

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

#230

Post by IggleSniggle »

kevinskii wrote: post #199
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.

Exactly. The entirety of the company roster could easily be 5 people and still have someone with a title like that.
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