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Stripe cuts internal valuation by 28%

wsj.com

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Re: Stripe cuts internal valuation by 28%

#111

Post by jssssa »

anonymouse008 wrote: post #93
Brystephor wrote: post #86

Earlier quoted context omitted.

I'm not familiar with this. Are you referring to common vs preferred shares?

Preferred shares, covenants, etc - there’s no way you can guarantee an employee static dollars without finessing the cap table. The things that keep the compensation static on paper are usually tested and stressed during an acquisition, and a public offering at a valuation lower than the highest priced round - additional terms begin at those points: clawbacks, earn outs, lockups, tips, first rights of refusal, and ne…

I don't know how stripe does it , but employees want to know what his stock is worth and the company needs to know how much stock to give. Since we are private we just say "our internal best guess for our evaluation is $XXmillion therefore we will give you X number of shares worth $200k at this valuation. There is no finessing of the cap table. We have pre allocated a certain percentage of stock for employees, we issue out of that allocation.

I don't see an answer here for why reducing the unofficial internal valuation is bad except for the fact that they are saying we might not sell for as much anymore which affects all current stock holders if it ends up being true.

Re: Stripe cuts internal valuation by 28%

#112

Post by gonehome »

zlast wrote: post #107
gonehome wrote: post #98

Earlier quoted context omitted.

It's designed to screw employees out of upside and they sell it pretending it's employee favorable. If you reprice equity comp each year then you lose most of the upside. Compare the two following equity plans: Example Year 1: --- PLAN 1 FMV: $1 Strike: $1 Total #: 40k ISOs Vesting: 4yrs --- PLAN 2 FMV: $1 Strike: $1 Total #: 10k ISOs Vesting: 1yr --- In the second plan you get granted new equity per year targeting s…

In the case of a crash, "typical" companies do not re-grant equity. Look at your typical big tech company, did they regrant equity? All of tech is down -- few tech companies have granted additional equity.

Depends on the crash and if employees are underwater or not.

In this case Stripe cut their validation by 28% and may give more stock based on that price. Assuming they do, will employees come out ahead when compared to if they had been able to lock in 5yrs of equity up front at whatever the price was when they started?

You can always negotiate for more if your locked equity becomes worth a lot less, it's a stronger position to be in as an employee. The equity is a bet on capturing value of large upside imo, their structure limits that.

Re: Stripe cuts internal valuation by 28%

#115

Post by [deleted] »

noway421 wrote: post #88
toomuchtodo wrote: post #79

Earlier quoted context omitted.

I work adjacent to payments in fintech. I’ve had conversations with largish merchants who have mentioned their intent to attempt to move payment flow to these new rails when available to reduce CC processing costs. Will they? I cannot say for sure, I speak the lens I see through. A real recent quote from a CFO: “why am I handing over 2% of my revenue just to take a payment if I can avoid it?”

FedNow will allow instant bank transfers. That means that you can build a payment system on top of it similar to Windcave Account2Account (that we have here in Australia and New Zealand) Windcave Account2Account is not a full replacement for debit/credit cards. It does not have PayWave (solvable). It has a clunky UX (solvable). It does not do credit transactions (not solvable). It can be a minor headwind to VISA/Mast…

[deleted]

Re: Stripe cuts internal valuation by 28%

#116

Post by Matthias247 »

toomuchtodo wrote: post #42
majormajor wrote: post #37

Earlier quoted context omitted.

Credit cards, compared to Zelle or even higher-dollar direct-transfer things, have a pretty big moat: * for people who don't have the money up front, it covers "spending money that isn't in their account today" (for better or for worse). BNPL seems like worth paying attention to from this front, though. * for people who do have the money up front, why move to something with more of an immediate hit to my bank account…

I suppose we will need to see what happens when someone like Walmart or Amazon decides to prioritize instant payments over CCs in their checkout flows. The cost savings to them from avoiding merchant fees at their volume makes it inevitable they’ll test it. I can’t say if they’d start to pass along CC merchant fees, but I’m interested to find out. They can even offer BNPL or credit directly to their customers without…

Online shops in Germany do that for a decade. Payment with direct bank transfer is free, and things like credit cards and PayPal may have an extra charge of 2%. If the free options offer the same level of convenience, I assume people prefer those.

Re: Stripe cuts internal valuation by 28%

#117

Post by repsilat »

OgAstorga wrote: post #102
radicaldreamer wrote: post #97

Earlier quoted context omitted.

They should still be angry because this company should’ve gone public and made them liquid a year ago.

Shouldn't going public on an unrealistic market cap would cause more issues than benefits? Sure, a healthy exit is ok but later pressure to recover the market cap in the short term can cause heavy structural damages inside any org.

I think that's a more complicated explanation than necessary. If their private valuation is higher than their public valuation it means they can raise money more cheaply while private.

Re: Stripe cuts internal valuation by 28%

#118

Post by danielmarkbruce »

cco wrote: post #114
beernet wrote: post #96

Scary this is just the beginning... a recession has not even started

Could you clarify? By any measure we're already in a recession today. I'm certainly no economist so maybe there is some other detail we're missing?

Which measure are you using?

Re: Stripe cuts internal valuation by 28%

#120

Post by magneticnorth »

askafriend wrote: post #78
ushakov wrote: post #45

Earlier quoted context omitted.

how is something worth $200k if you can't sell it?

I assure you, you will have no trouble selling Stripe stock at what its worth. There is a big appetite for Stripe shares in the secondary markets even if the company never goes public.

Stripe has "double trigger" RSUs, meaning you don't actually own them until after IPO + lockup period. There are tax advantages to doing it this way, but it means that a senior hire "getting" $200k/year can't sell on the secondary markets, and may be getting shares that they will never be able to sell for their supposed value.
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