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Gumroad raises $5M from Crowd SAFE in first 24 hours

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Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#61

Post by nrmitchi »

duxup wrote: post #57
nrmitchi wrote: post #55

Earlier quoted context omitted.

I think there's a difference between "open investing for equity", and "open investing for a thing that one day may turn in to equity given a certain set of events". The majority of people will assume that "start up investing" or "equity crowdfunding" (or whatever you want to call it) is like the stock market, but on a smaller scale. You invest money, and you get shares in the company. I don't think the concern is aro…

I wonder how it would be possible to ... make someone know enough to make an informed choice and still allow more opportunities to invest. I like the idea of opening things up more like this but worry that actual scams could be a problem. It's not investing but similar to kickstarter and etc problems.

Probably by keeping the crowdfunding part, but with reglation around the terms that have to be offered, and actions you're allowed to take after equity crowdfunding. But it's a pretty complex problem.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#62

Post by gadders »

duxup wrote: post #36
gadders wrote: post #27

Earlier quoted context omitted.

That Gumroad states it is "for creators" but the original Gumroad creators will not benefit from the new funding round.

IIRC 'creators' as far as Grumroad's tagline is concerned are their customers.

Yes, understood, but I guess Nathan Barry's point would be why treat your company co-creators differently than your customer-creators.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#63

Post by vmception »

joshmanders wrote: post #59
vmception wrote: post #47

Earlier quoted context omitted.

So neither you or Nathan have posted what you would like to happen and why. What is that? Rebrand Gumroad instead? A lower valuation? Different kind of security issued with more rights? Shi should be shut out from the capital markets and corporate sphere forever? PSA to investors who have already 100% subscribed the max raise? I'm just grasping, what do you guys want to happen?

Why do we have to want something like that to happen? Why can't we just be like "Hey, just so you know, this stuff happened. Make sure you're not being duped into investing in Gumroad without knowing who you're investing in." Especially considering the terms on Republic not favorable at all for investors.

okay, I can see that. yeah its quite rhetorical and open ended, and the sale is already closed.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#64

Post by jonfromsf »

PragmaticPulp wrote: post #58
adamhp wrote: post #52

Earlier quoted context omitted.

I've seen similar sentiment being repeated about Sahil, even by other successful founders like Nathan Berry. It is a bit unfair to look at everything in hindsight and assume Sahil acted maliciously. He did what he could to scrap together the resources to save a failing company. It's not like he ran some sort of shell game to rob the original contributors of their equity. People always view the past in this way and it…

Frankly, the investors who set the initial valuation (presumably used to set the strike price of the employee options) and later the $0 valuation (rendering the options worthless) and then giving away the IP that they declared worthless (despite the company not fundamentally changing) deserve a lot of the scrutiny. If the company had simply been left to make their own choices like laying off the employees and buying…

I mean strike prices are usually unrealistically LOW, as low as they can be without being fraud. There's a whole industry of 409a valuations that is used to legally say "we're selling preferred stock to investors as a 50MM valuation, but the common stock which represents 80% of the company is only worth 2MM". Founders want strike prices to be low because options are free compensation to employees.

The issue is the out-going employees thought that a stake in the business was literally worthless, which turned out not to be true. Very similar to the Blogger story actually.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#65

Post by giarc »

thecleaner wrote: post #29
rollover wrote: post #28

This company is a disaster. They are even too stupid to understand the concept of account deletion. "How to delete your Gumroad account: From your Advanced Settings page, scroll to the bottom of the page, then click Delete your Gumroad account? After you've deleted your account, if you try to log back in, Gumroad will make your account "live" once again. Therefore, if you really want to delete your account, click Del…

How is this stupid ? Facebook does the same thing.

Just because Facebook does it, does not make it right.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#66

Post by duxup »

gadders wrote: post #62
duxup wrote: post #36

Earlier quoted context omitted.

IIRC 'creators' as far as Grumroad's tagline is concerned are their customers.

Yes, understood, but I guess Nathan Barry's point would be why treat your company co-creators differently than your customer-creators.

Call me crazy but I think the deal between the two is dramatically different up front, even what everyone does.

End customer's don't have any equity... in the end neither did the employees. That's the same, unfortunately. But they're the same that way.

I think those are two dramatically different deals you're making with people, pretending they should be the same seems oblivious to the actual relationships.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#67

Post by itronitron »

duxup wrote: post #34
PragmaticPulp wrote: post #26

Earlier quoted context omitted.

> The alternative was to close down the company completely No, the alternative was to give the IP and equity ownership proportionally to the employees, not 100% to the founder. Instead, they gave it all to the founder and none to the employees who built the IP (as far as I can tell from public documents). Employees were told they received nothing because their work was useless. Apparently it wasn’t so useless.

I'm a little confused about how this works in a sort of mechanical function. At the time it was deemed worthless or whatever term we want to call it, the owners were the initial investors. They sold it (well some of them) back to the initial founder. It's their ownership to sell.... I go back to my point that we need to be honest about what the equity and rights of individual contributors really IS more than some eph…

Dropping the price to exercise the options to zero dollars seems like it would be an equitable solution. If the company is really worth nothing then why should an option to buy a share of the company cost more than that?

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#68

Post by duxup »

itronitron wrote: post #67
duxup wrote: post #34

Earlier quoted context omitted.

I'm a little confused about how this works in a sort of mechanical function. At the time it was deemed worthless or whatever term we want to call it, the owners were the initial investors. They sold it (well some of them) back to the initial founder. It's their ownership to sell.... I go back to my point that we need to be honest about what the equity and rights of individual contributors really IS more than some eph…

Dropping the price to exercise the options to zero dollars seems like it would be an equitable solution. If the company is really worth nothing then why should an option to buy a share of the company cost more than that?

>If the company is really worth nothing

I'm not sure I understand why that would be or why that would even come up if you were investing in 'worth nothing'.

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#69

Post by haltingproblem »

PragmaticPulp wrote: post #16

Gumroad is an interesting cautionary tale for employee equity compensation. The company was declared to have failed several years ago. Employees were laid off and the investors released the IP (built by the early employees) to the founder as a token of goodwill. Presumably, they thought he might use it to start a new company. Story here: https://www.businessinsider.com/startup-failure-gumroad-why-... However, he cont…

Disclosure - I don't know Sahil and have never had any interaction with him or Gumroad except as an ocassional Gumroad customer.

I find this take to be disingenuous at best and outright misinformed at worst. Sahil has been very public with what happened [1]. Gumroad turned out to be a lifestyle business and not a VC funded boom or bust rocket.

He could have easily shut down Gumroad and gone on to bigger and better things. He persevered and today Gumroad has risen from the ashes and creators are better off for it. Kudos to him and his motley crew. He has extensively blogged about it and been public about Gumroad's finances. Maybe one day Gumroad will be worth $1B but it is a long road ahead and I wish the new investors the best.

Back to Sahil's actions, unless you have actual instances of wrongdoing by him, I feel you are just flinging innuendo.

[1] https://sahillavingia.com/reflecting

Re: Gumroad raises $5M from Crowd SAFE in first 24 hours

#70

Post by [deleted] »

jonfromsf wrote: post #64
PragmaticPulp wrote: post #58

Earlier quoted context omitted.

Frankly, the investors who set the initial valuation (presumably used to set the strike price of the employee options) and later the $0 valuation (rendering the options worthless) and then giving away the IP that they declared worthless (despite the company not fundamentally changing) deserve a lot of the scrutiny. If the company had simply been left to make their own choices like laying off the employees and buying…

I mean strike prices are usually unrealistically LOW, as low as they can be without being fraud. There's a whole industry of 409a valuations that is used to legally say "we're selling preferred stock to investors as a 50MM valuation, but the common stock which represents 80% of the company is only worth 2MM". Founders want strike prices to be low because options are free compensation to employees. The issue is the ou…

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