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VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

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Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#111

Post by philwelch »

abbott wrote: post #49
pheaduch wrote: post #32

Interesting that he brings up Apple as during their IPO, if it wasn't for Wozniak and his "Woz Plan" the majority of Apple employees and the former earlier employees would have been frozen out of the IPO. Jobs was very much against giving up his share of the pie. To me, being greedy is hardly the worst trait to have as entrepreneur.

what traits are worse than greed for (successful) entrepreneurs? you highlight woz's intervention, but then say greed isn't as bad as...?

It's strange that wanting to get rich is even considered a bad trait for an entrepreneur.

Off the top of my head, I'd say stupidity, laziness, cowardice, and soft-headedness are probably worse traits.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#112

Post by veyron »

staunch wrote: post #110
veyron wrote: post #95

Earlier quoted context omitted.

As a person in Wall Street who isn't in it just for the money, I resent your remark.

There are probably a few exceptions. Do you honestly disagree with the sentiment?

I was giving you a hard time. I don't think there's a significant percentage of people in finance for any reason other than money.

I am utterly fascinated with the capital markets and many aspects of finance. The returns reflect a true understanding of the markets. And yes, for the record, tech startups are in many ways less stressful than finance startups :)

As far as "altruism" is concerned, the value-add to society is wholly artificial: if our financial systems weren't structured to force retirement and pension funds to invest in the capital markets, I highly doubt anyone would say they were doing something good for the world.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#113

Post by gabaix »

SoftwareMaven wrote: post #109
gabaix wrote: post #103

Why do the founders want to cash out? It looks to me you can increase your salary to live a good life, while waiting for the big exit. I understood Groupon did this because they thought Groupon was at its peak. Is that the same thing for AirBnB? Am I missing something here?

The founders aren't getting diluted in the deal, since they are being distributed as dividends. This will give them the opportunity to run past third to slide home instead of taking the standing triple, since they won't be left with nothing if the umpire calls them out.

Got it. Also dividends are better than higher wages for tax purposes.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#114

Post by rdouble »

keeptrying wrote: post #65
sunnydaynow wrote: post #40

Earlier quoted context omitted.

>It's about entrepreneurs screwing early-employees, Yes, that surprised me a lot! Especially from founders that are somewhat "famous" and are connected to YC. I expected they don't play these tricks. Greed? Anyone knows how their employees reacted to this news? If I would have worked 50+ hours for year(s) and then read this... :(

But the employees are getting salary and have been for the last 3-4 years. Infact all those employees have been making more than the founders for the last 3-4 years. And if on joining, you were told about 2 classes of stocks - one for the founders and one for the employees then you should have understood that this was a distinct possibility. This VC is just using this small soapbox to warn Airbnb not to eff with him.…

But the employees are getting salary and have been for the last 3-4 years.

They've only had employees for about 2 years. /pedantic

http://blog.airbnb.com/hiring-really-smart-software-engineer

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#115

Post by rdl »

This looks like two issues:

1) Founders de-risking a successful but still growing company at a series b or later financing (or even a late series a). I really don't see a problem with founders diversifying their personal portfolios (otherwise, many have 100% in company stock AND debt from school, etc.). You don't want them to get distracted, but being short on cash doesn't help you make a successful product.

2) De-risking via a special dividend, vs. secondary sale of stock. Yes, it lets founders avoid selling some shares. If you're doing it at a $1b valuation, it doesn't seem like a major factor either way, but if there could be a precedent for people raising $20-50mm rounds, dividend vs. sale might be a better way to put $1-2mm in the pocket of each founder after a few years, so they can shoot for a >$1b exit.

I'm curious if this form was suggested by the AirBnB side (or their law firm) or the VCs.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#116

Post by Hitchhiker »

The Vanity of Wealth and Honor

" If you see in a province the oppression of the poor and the violation of justice and righteousness, do not be amazed at the matter, for the high official is watched by a higher, and there are yet higher ones over them. But this is gain for a land in every way: a king committed to cultivated fields.

He who loves money will not be satisfied with money, nor he who loves wealth with his income; this also is vanity. When goods increase, they increase who eat them, and what advantage has their owner but to see them with his eyes? Sweet is the sleep of a laborer, whether he eats little or much, but the full stomach of the rich will not let him sleep. " - Ecclesiastes 5:8-12

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#117

Post by wnight »

keeptrying wrote: post #65
sunnydaynow wrote: post #40

Earlier quoted context omitted.

>It's about entrepreneurs screwing early-employees, Yes, that surprised me a lot! Especially from founders that are somewhat "famous" and are connected to YC. I expected they don't play these tricks. Greed? Anyone knows how their employees reacted to this news? If I would have worked 50+ hours for year(s) and then read this... :(

But the employees are getting salary and have been for the last 3-4 years. Infact all those employees have been making more than the founders for the last 3-4 years. And if on joining, you were told about 2 classes of stocks - one for the founders and one for the employees then you should have understood that this was a distinct possibility. This VC is just using this small soapbox to warn Airbnb not to eff with him.…

> if on joining, you were told about 2 classes of stocks [...]

If there is ever a second class of stock, and it is yours, it is worthless.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#118

Post by wisty »

garry wrote: post #81
sunnydaynow wrote: post #40

Earlier quoted context omitted.

>It's about entrepreneurs screwing early-employees, Yes, that surprised me a lot! Especially from founders that are somewhat "famous" and are connected to YC. I expected they don't play these tricks. Greed? Anyone knows how their employees reacted to this news? If I would have worked 50+ hours for year(s) and then read this... :(

I was early at Palantir (employee #10). Trust me, the founders assumed way more risk than I did when I joined. I didn't even quite understand that fact until I myself started a company. If you know the Airbnb story, you'll know these guys worked their asses off on an idea nobody else believed in. As legend would have it, Joe had a binder of credit cards the way kids would have binders of baseball cards. Think about t…

So, he was risking other people's money, hoping he would be able to reward himself for taking those risks? Sounds like great CEO material.

Using multiple credit cards to fund a risky investment is irresponsible.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#119

Post by jsavimbi »

patio11 wrote: post #77
jsnell wrote: post #58

Earlier quoted context omitted.

You must be interpreting this article very differently from many others since you're trying to turn this into an example of VC greed, but I don't quite understand how. My reading is that the VCs for this round are not getting screwed in any way, they know exactly what they're getting (X% of the company for $Y, with $Z ending up in the company's accounts). For them it doesn't really matter whether all the shares they…

The delta between this deal and every other deal ever is not "Employees are uniquely getting screwed." Employees always get diluted. Three things you can count on: death, taxes, and employees getting diluted. You've got to come up with a fairly elaborate scenario to make this particular marginal dilution sound morally significant for me, since it is likely to be on the order of "We stopped stocking one particular bra…

> "We stopped stocking one particular brand of free soda"

In most cases, that is the most unethical action a company can take against its employees.

Re: VC Decries Airbnb’s Recent Funding for Founder Control and Cashout

#120

Post by 0x12 »

mikebo wrote: post #70
patio11 wrote: post #28

I must have missed the post where a VC said "Guys, sorry, love your company but I couldn't in good conscience participate in a round where the rich people get paid and the poor people are told to wait for an exit." I must have missed that post quite frequently, because that describes every VC round ever . A $120 million investment round means that about $2.4 million in cash money just moved from the limited partners…

The way I read it, Chamath doesn't think the company will be as successful if this is the way employees are treated. That's a perfectly valid reason to pass -- it doesn't seem like a right vs. wrong stance.

I'll buy that if Chamath is willing to forego his management fee on this and future deals.

A VC arguing the ethics of this deal with respect to early employees is more than a bit disingenuous, at first glance it looks as if they are doing this to protect the little guy but that is only because for once they are treated the same as the little guy.

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