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Loopt acquired by payment card provider for $43.3m in cash

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Re: Loopt acquired by payment card provider for $43.3m in cash

#131

Post by startupgrrl »

webwright wrote: post #52
majani wrote: post #45

Earlier quoted context omitted.

Buddy exits like this one and the Hunch exit are very demoralising. They make startups look like some sort of game. As you indicated, Loopt was clearly dying ( http://www.google.com/insights/search/#q=loopt.com&cmpt=... ) and yet people still got rich off of it. Product + Hype -> Big Exit is starting to seem like a perfectly legitimate business plan nowadays.

I think calling this a "buddy exit" isn't really fair. Same with Hunch. That's like calling Next selling to Apple a "buddy exit". If Square went south, what kind of exit could they command based on Jack and his team? If Facebook was dying, what would Zuck and his team be worth? Sam and Chris are both brilliant guys and great BRANDS. Not Steve Jobs great-- but great nonetheless. Guys like this attract A-players and at…

The difference is that Next had a technology; Apple bought something tangible with actual value and a real engineering investment. All loopt has is a "brand".

Re: Loopt acquired by payment card provider for $43.3m in cash

#132

Post by rhizome »

freshhawk wrote: post #116
rhizome wrote: post #75

Earlier quoted context omitted.

Which is why buddy exits are such a problem: there's so much money in the greater pool that they can hand out life-changing cash on a whim to people who might not deserve it as much as others. Sure, life isn't fair, but I'd rather people didn't pretend otherwise.

Fairness is less of a problem than VC's treating their investor money as a slush fund to dole out to their friends. Doesn't everyone know that it's "more about who you know that what you do"? Even on HN most people don't pretend otherwise unless it's the all too prevalent press releases and astroturfing posts/comments.

No, everybody doesn't know. Why do you think the conventional wisdom doesn't reflect that it's a buddy game rather than a meritocracy? Why is the word "meritocracy" ever even mentioned? Is it just a red herring thrown out by successful people to keep the masses suffering?

Re: Loopt acquired by payment card provider for $43.3m in cash

#133

Post by freshhawk »

rhizome wrote: post #132
freshhawk wrote: post #116

Earlier quoted context omitted.

Fairness is less of a problem than VC's treating their investor money as a slush fund to dole out to their friends. Doesn't everyone know that it's "more about who you know that what you do"? Even on HN most people don't pretend otherwise unless it's the all too prevalent press releases and astroturfing posts/comments.

No, everybody doesn't know. Why do you think the conventional wisdom doesn't reflect that it's a buddy game rather than a meritocracy? Why is the word "meritocracy" ever even mentioned? Is it just a red herring thrown out by successful people to keep the masses suffering?

I think we disagree on what the conventional wisdom is.

I have never heard anyone successful talking about the state of things refer to a meritocracy actually existing. Lot's of comments about how some method is more of a meritocracy or closer to this hypothetical ideal. Talk to anyone about nearly any business and the advice is to make good connections. The "it's not what you know, it's who you know" is such an old saying that it's a cliche. It's "a saying". It's conventional wisdom.

The aphorism "build a better mousetrap, and the world will beat a path to your door" has only been used, during my lifetime (30 years), as an example of naivete. You also need good design and marketing and the right connections. To me, this is the conventional wisdom.

Nothing about money in the western world is a meritocracy, I honestly can't find anyone serious trying to say it is. Especially with all the number crunching lately concerned with the growing class divide in the US.

Am I ignorant? Outside of some kind of Glenn Beck style "woooo America! Fuck Yeah!" pundit that have I completely missed a meme or school of thought that is claiming a meritocracy exists (even though that's objectively wrong)?

Re: Loopt acquired by payment card provider for $43.3m in cash

#134

Post by rksf »

ajju wrote: post #98
rksf wrote: post #96

Earlier quoted context omitted.

Typically, venture rounds are participating preferred securities (at least). So, the more likely scenario here is: 43.4 MM Sale Less: 9.8 Cash Retention Pool = 33.6 MM Available for Shareholders Less: 17MM Preferred to VCs (Face Value of VC Investment) = 16.6 MM (split among VCs, founders, employees) VC Participating Share: ~35% * 16.6 = ~5MM Available for Founders / Employees = 11MM Total to VCs = 17+5=22MM

>typically, venture rounds are participating preferred securities (at least) That is increasingly false for A rounds, at least. This 2 year old discussion talks about that, but from what I hear these days, any startup that doesn't "desperately" need money will not agree to participating preferred in the valley. http://www.quora.com/How-common-are-participating-preferred-...

Yes, that is a good point. Some research suggests that today only ~35% of Valley Series A are part preferred(according to recent legal reports), but Crunchbase suggests that Loopt took series A in 2005, Series B in 2008 and Series C in 2010. Total capital raised (according to that post) was $32MM across 3 rounds. Not sure how much was primary or if any of it was taken out by later rounds, of course. Anyhow, I don't know for sure, but I suspect there were some protections around the securities, given the timing of the early rounds and the total amount invested. http://www.crunchbase.com/company/loopt
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