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

311–320 of 391 posts

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

#311

Post by H8crilA »

gnicholas wrote: post #279
awinder wrote: post #228

“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 c…

It’s also not the most polite/politic way to ask about it. A neutral way to get the same information is to ask about the cap table and then go from there if needed.

Salary negotiation (which is what this is) is not the time to be super polite and dance around important topics.

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

#313

Post by chrismcb »

techsupporter wrote: post #300
greggman2 wrote: post #288

Earlier quoted context omitted.

I'm surprised how many people don't get this part. Person A, investor puts in $100k Person B, employee gets paid $100k Company fails. Person A lost $100k Person B gained $100k This is why person A gets the lion's share of the rewards if the company succeed. Person B risked nothing. Person A risked $100k. The typical retort from Person B is they could have gone to a different company so their risk was to work for this…

> Person B risked nothing. They risked the single thing that absolutely no one, anywhere on the planet, can ever give them back: time. Yes, they took a lower salary on the risk that it would pay off but they slid in the chips of their days existing on this planet alongside that risk. If no one was willing to take that risk alongside the venture capitalists who only invest easily-replenished money, the VCs would find…

They didn't risk their time. They got paid for it. That is the difference. If they worked for free, then you could argue they risked their time.

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

#314

Post by [deleted] »

mlyle wrote: post #305
ry454 wrote: post #297

Earlier quoted context omitted.

Yup, that's the reason I've turned down all startup offers so far and some of them offered 2-3%. They like to hand wave about how much these 50,000 shares are going to cost or how rich I'm surely going to be even after dilution of these 2-3%, but when I tell them point blank that with my current compensation, over the course of 4 years I'm going to lose at least $1M, and ask them what I would get for a $1M investment…

> They like to hand wave about how much these 50,000 shares are going to cost or how rich I'm surely going to be even after dilution of these 2-3%, but when I tell them point blank that with my current compensation, over the course of 4 years I'm going to lose at least $1M, and ask them what I would get for a $1M investment, There's a thing you're missing here, and it's option value. You don't commit to the lost mone…

[deleted]

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

#315

Post by fogetti »

I find it "funny" that the whole sharing and startup economy is basically built on top of something that resembles a Ponzi-scheme (not in terms of the actual operation of the scheme, but in the way how unfair the scheme is for different people in different roles). And the fact that the software industry happily embraces this modus operandi is simply mind boggling.

As far as I am concerned this scheme with the stock options (some people call them opportunity or investment) never should be substitute to social contracts, like a monthly pay check.

I find it especially nefarious the fact that people who invest time are penalized over people who invest money. This is especially true when the 4-5 year long time investment of a developer today can be easily worth millions. And a dozen developers' time investment can easily reach tens of millions.

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

#316

Post by mike00632 »

awinder wrote: post #228

“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 c…

Re your fear and stigmatization of STD's: If you're genuinely worried about STD's then maybe get to know that person and let it be something you glean after loving conversation and an understanding mindset. Demanding to know like it's your right in a transaction is not only unromantic but really demeaning.

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

#317

Post by qaq »

harryh wrote: post #92
mamon wrote: post #78

Earlier quoted context omitted.

And if the seller in turn uses your $1 to buy a lottery ticket you both would have roughly equal chance of getting rich :)

I think that you are wrong and am demonstrating that with my willingness to put my money where my mouth is.

A person working at startup will take a fairly decent haircut for those options. You valuing it $1 pretty much proves my point :).

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

#318

Post by jonathankoren »

alecbenzer wrote: post #263
jonathankoren wrote: post #241

Earlier quoted context omitted.

When people say that options or pre-ipo shares are “worth nothingl, it doesn’t mean that they literally have zero value on the market. They obviously have value, they have the company had a valuation at issue. It means that you shouldn’t assume you’ll see any value from them. Until a liquidity event, you’re not even a paper thousandaire. Most private equity is worthless in a couple of years. Most companies crash befo…

I just don't think it's a very useful mindset. Or at least, it's not a useful way of phrasing that mindset. You should absolutely understand the very large chance that your equity is worthless. You should absolutely 100% not plan any part of your life around the equity being worth something. You should understand that, even if the equity is ever worth something, it won't be liquid for a very, very long time. ...but a…

It's a mindset about for thinking about your own finances. That's it. It's absolutely the wrong tool for thinking about equity grants.

I've always considered illiquid equity lottery tickets. Yes, playing the lottery is stupid because the expected value is so small. At the same time, I am absolutely buying into the company lottery pool, and want to maximize the number of tickets I get. If it pays off, wonderful. It it doesn't, whatever, because I never counted on the money to begin with.

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

#319

Post by superqd »

greggman2 wrote: post #288
sokoloff wrote: post #261

Earlier quoted context omitted.

That labor is being paid cash along the way. It might additionally be getting common stock, under the same terms of other common shareholders, which is to say, behind the preferred shareholders, who are behind the bond holders.

I'm surprised how many people don't get this part. Person A, investor puts in $100k Person B, employee gets paid $100k Company fails. Person A lost $100k Person B gained $100k This is why person A gets the lion's share of the rewards if the company succeed. Person B risked nothing. Person A risked $100k. The typical retort from Person B is they could have gone to a different company so their risk was to work for this…

There is a deep flaw in this logic. Person A and Person B are both investing the same amount, just in different forms.

Person A converted their 100k into 1 year of time. Person B converted their 1 year of time into 100k of money.

They both put in 100k of something, B put in 100k worth of time, A put in 100k worth of money. If we assume a fair market rate for the conversion, then essentially this is a perfect exchange, and they both traded their different investments for exactly what they were worth. That is, the money invested, got back EXACTLY the amount of time it purchased, and the time invested got back EXACTLY the amount of money it purchased.

Person A and B are trading things of equal value. This means they invested equally, and hence should split the reward equally.

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

#320

Post by [deleted] »

mattmaroon wrote: post #295
nostrademons wrote: post #77

Earlier quoted context omitted.

For brevity I omitted all of the dot-com flameouts and also the Web 2.0 startups that never got off the ground, but IMHO they support my larger point. In the late 90s we had a lot of companies that took a lot of money, and the founders and employees got nothing out of them other than painful experiences. When you look at one of the successful "fat" startups (PayPal), Max Levchin's take ($34M) of the $1.6B acquisition…

But what if your competitor is willing to lose lots of money on large amounts of invested capital until you are out of business? Uber and Lyft have it tough in that regard. At the end of the day they've got product market fit in a profitable industry. I mean the very worst case is they become more efficient cab companies, and cab companies have been making money for a very long time. Their prices are artificially low…

[deleted]
Post reply on HN