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There’s no such thing as “a startup within a big company”

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Re: There’s no such thing as “a startup within a big company”

#271

Post by Galanwe »

Animats wrote: post #225
ZephyrBlu wrote: post #218

Earlier quoted context omitted.

The stock market is zero sum as well... When one person wins, another loses. Are people buying Google, Facebook and Amazon stock suckers as well?

Stocks have dividends. The value of a stock is the present value of all future dividends. Otherwise you're hoping to find a greater fool.

> The value of a stock is the present value of all future dividend

That is an idea from the 70s. Not many people would agree that there is an actual fair value for a stock anymore, much less that it is driven solely by accrued future dividends.

Re: There’s no such thing as “a startup within a big company”

#272

Post by 1vuio0pswjnm7 »

nojvek wrote: post #77

When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microso…

Jeff Bezos: "It's Day One."

Ah, not quite. At that early stage, the risk and opportunities are different. He wants his employees to to work as hard as if it were Day One, but he cannot offer 10s of thousands of workers the same possibilities as if they arrived on Day One.

Re: There’s no such thing as “a startup within a big company”

#273

Post by Cd00d »

laurent92 wrote: post #248
dhosek wrote: post #170

Earlier quoted context omitted.

I have never had a stock option that was worth as much as a penny in the course of my career. In one case, a “can't lose” employee stock purchase program (where you put aside money for purchase and at the end of the year you would get stock bought at the lower of the price at the beginning and end of the purchase period with a 10% discount on top of that) ended up being a loss because the stock dropped 50% between th…

A company sold for 3 million is... I mean, in average, I see that the worth is about 1m$ per employee. If you sold for less, your stock performed poorly compared to others. Maybe the product or the engineering was great, but on the wrong market or never met its window. Business is difficult. The question is, would you have had excellent returns if the company had been worth $1m per employee?

I think OP was saying the company 3M bought the startup. Not that the startup was sold for $3mm.

Re: There’s no such thing as “a startup within a big company”

#274

Post by throwaway3699 »

andresp wrote: post #269
tcoff91 wrote: post #263

Earlier quoted context omitted.

Crypto provides global access to a decentralized, permissionless, censorship resistant financial system. Bitcoin provides a savings vehicle that has a completely predictable and transparent supply. That's very valuable.

Why do you care so much about predictable supply if the price is anything but predictable? How is such high volatility commodity a good storage of value? It might be a good speculation vehicle, but people looking to store value typically look for something more stable. It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down. Bitcoin and Blockchain is an interesting project…

It doesn't matter if there's some instability, as long as it's not a downward trend.

> Bitcoin and Blockchain is an interesting project but 1 BTC > 50k USD... Yeah, sure...

Bitcoin could conceivably become the next global reserve currency, 50k USD is horribly undervalued from that PoV.

Re: There’s no such thing as “a startup within a big company”

#275

Post by arduinomancer »

s17n wrote: post #179

OP and Noam Bardin both dance around the core issue which is that you can't give more than a handful of people enough equity to actually care about your company.

100% agree

Reading both articles, the whole time it’s like “No shit guys, you were the owners”

Re: There’s no such thing as “a startup within a big company”

#276

Post by repartix »

andresp wrote: post #269
tcoff91 wrote: post #263

Earlier quoted context omitted.

Crypto provides global access to a decentralized, permissionless, censorship resistant financial system. Bitcoin provides a savings vehicle that has a completely predictable and transparent supply. That's very valuable.

Why do you care so much about predictable supply if the price is anything but predictable? How is such high volatility commodity a good storage of value? It might be a good speculation vehicle, but people looking to store value typically look for something more stable. It remains to be seen how resistant Bitcoin is if powerful governments really decide to take it down. Bitcoin and Blockchain is an interesting project…

I applaud you for asking good questions.

> Why do you care so much about predictable supply if the price is anything but predictable?

Because the price will go higher. When the price goes over $x MM per BTC it will be very predictable.

> How is such high volatility commodity a good storage of value?

It stores more value than any other commodity. When the stock market started in 1920s it was no less volatile than Bitcoin. Volatility is a sign of disruption as much as it is a sign of value.

> 1 BTC > 50k USD... Yeah, sure...

If only you could see the data I'm seeing.

Re: There’s no such thing as “a startup within a big company”

#277

Post by enra »

thegginthesky wrote: post #213
munificent wrote: post #183

Earlier quoted context omitted.

> when the startup becomes worthless (can happen for any number of reasons, and often do), then one wishes one had taken a salary (and reinvested in stocks or as seed investment - ways to gain equity exposure). Well, sure. And when the startup becomes worth billions, one wishes they had taken the options instead of a higher salary. This is just an observation that having information lets you make better decisions. Un…

The point is that the odds of any startup to be worth billions, or for an employee stock option be worth a lot more than accumulated high base salary, is very very low. So if one optimizes by using the expected value over time the conclusion is that high base salary tends to trump employee equity. One can make this sort of inference at any point in time, without hindsight at all.

Joining a startup is not some game roulette where you gave zero information about potential outcomes and just choose randomly one number.

You as an employee have a lot of agency to find the startup to join that you think has potential. If the startups or founders are unwilling to share their thinking then it’s probably a bad sign.

Think about Stripe when they started. The whole story was that most tech and other companies need payments but it’s a hard problem and back in the day we had do merchant accounts. Makes sense, and there is a clear business and maybe as you talk to the team, you are impressed. They raised from Sequoia and other too VCS. Great, sounds like good company. Obviously there are risks. What if they get shutdown? what if PayPal/visa/Google builds this? Maybe the product will suck?

Compare Stripe to something like pet walking startup Wag which also has raised tons of money. Do you think it’s easier to make money by charging % on business revenue or charging % people walking other peoples pets?

There are always risks and unknowns but it’s not a random throw dice which company you join. Probably there has never been a time it would have seemed a terrible idea to join Stripe, at most it would have seemed uncertain and risky. They could have failed too but now they are a $100B+ company, and your employee equity would be worth $1M-100M depending when you joined.

If you join a random startup, you take a random chance. If you do your research and thinking you can increase your odds like you can increase your odds on the public markets. You can also optimize for the team or domain you want to work in, and even if the startup fails, you might have learned something.

Re: There’s no such thing as “a startup within a big company”

#278

Post by amitport »

DoofusOfDeath wrote: post #31
corty wrote: post #9

I'm not sure why everyone seems so focused on the cafeteria thing. I'm not sure people and their attitudes towards amenities are really the problem here. From my understanding, the differerence is the companywide attitude to risk. A startup has a "grow at any cost, or maybe perish" attitude. If things go south, bankruptcy will take care of the leftover excess risk (barring criminal charges). A bigco cannot easily go…

> So the only means to have a situation where you don't risk bigco for a single department is not making it a department. Make it a Ltd. in a holding or something. I was thinking that as well. Can anyone explain why this isn't common practice?

It is rare I think because of the parent company's CEO and founders don't like to really lose control to someone else.

A child company is not easily managed (and they shouldn't, but that's scary and risky by itself. The parent company need to have the know-how of an a serial startup builder investor)

Re: There’s no such thing as “a startup within a big company”

#279

Post by umeshunni »

paulryanrogers wrote: post #66
pembrook wrote: post #57

Earlier quoted context omitted.

The problem is, if this employee is the perfect person to create this business, why are they working at Google and not on their own starting this venture already? Why waste time letting one of your clearly risk averse in-house employees (hence why they work at Google in the first place), fumble around for 5-10 years trying to build something? While your competitors might be doing the same thing and will actually succ…

Big companies buying startups looks like the most likely 'successful' outcome today. Yet with effective antitrust maybe it shouldn't be.

And with sufficient public market deregulation to allow startups to IPO early.

Re: There’s no such thing as “a startup within a big company”

#280

Post by nojvek »

DebtDeflation wrote: post #103
nojvek wrote: post #77

When I was at PowerBI in Microsoft, all the execs hailed it as Startup within Microsoft. Come work here instead of Uber. I worked like a dog, sometimes till 2am in morning. My manager would routinely ask us to come on weekends. I was naive, I thought we are growing customer base, this is what a startup looks like. The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microso…

>The ultimate realization was in a startup you have equity, a decent amount in a good startup. At Microsoft it was a base salary and set amount of stock. I joined a startup in 1999. There were 3 founders and I was employee #2 after that. I received a ton of options (this was before RSUs became popular). We had a great product and a great team, but 18 months later ran out of money and unfortunately it was right after…

I'm not saying base salary is not important. It very much is. You need at-least somewhat a comfortable amount where money stops being a major issue. You can pay mortgage, go for a couple of vacations and have a decent amount in savings.

At Microsoft, it would be hard to cross $10m over 5 years, unless you're a really big shot. At a startup that rises to be a deca-unicorn, if you joined 5-7 years ago, that would be possible. Dropbox, AirBnb, Doordash e.t.c probably minted quite a few deca-millionares on their IPOs. Entry level folks would have made that much. That's what I mean by equity and skin in the game. Sure, there is a lot more risk but your upside is also huge. You can see how your work moves top line ARR and incentivizes you to focus on customers and build what they want and will pay for.

Sure at GOOG, MSFT, FB e.t.c once you go above senior to staff level, your equity/RSU component starts to be more valuable than the base salary. That's what I mean by skin in the game and proportional rewards. However those rewards can be unproportional once you have a large chain of managers. It incentivizes doing things that lead to climbing ladder rather than doing things that are good for your customers and long term ARR. Sometimes it's related, sometimes not. At a true startup, if it's unrelated the startup dies.

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