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LivingSocial: Employees' and Founders' Common Stock Now Worthless

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Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#121

Post by MichaelApproved »

schiang wrote: post #112
karoramj23 wrote: post #60

As an independent restaurant owner, I can't say I didn't expect to see this one day. The model simply doesn't work, at least in our industry. The restaurant loses money on every single "daily deal" that is redeemed. With LivingSocial or (insert any other daily deal site here) taking half of the deal, the restaurant is simply left with 25% of the revenue generated. This does not even cover our food costs, let alone la…

I really hate using LivingSocial/Groupon because it seems like the business owners always HATED taking these deals. I always feel like I'm being treated differently because I'm not paying the actual price. One time when I used one of these deals, I even heard the employee say to another employee "... another #$#@$#@ groupon deal....". If they didn't like people using the deals, why bother signing up for it? I can't w…

"I can't wait for these daily deal business to go away because I don't think it benefits anyone."

If you don't like these deals, then don't use them but don't say that they don't benefit anyone. Customers benefit from these deals all the time. 50% off a meal is a great offer!

I think the biggest problem with these deals (for the wait staff at a restaurant) is that people think they should tip based off the discounted meal, instead of the full price.

It's a deal on the meal, not a deal on the tip.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#122

Post by confluence »

emmett wrote: post #114
confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

You seem to be saying to contradictory things: "Equity is worthless, never work for equity, always demand cash up front." "Those darn investors and founders keep all the equity for themselves and get rich off your back!" You can't have it both ways. Either the equity is worthless or it isn't. Are the investors, who get no salary and only equity, even bigger suckers than the employees? What about the founders who usua…

Startup employees get fraction of a percent of ownership whilst taking relatively similar risk profiles - as in pennies on the dollar and last I checked pennies are pretty worthless. Hence the heuristic. Yes - you need a bunch of equity to make it worth it - my point with that heuristic was that employees don't usually get a meaningful enough amount of stock. Furthermore - due to the various stock class structures - the stock may also be diluted away upon exit or subsequent investment rounds.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#123

Post by kanzure »

emmett wrote: post #114
confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

You seem to be saying to contradictory things: "Equity is worthless, never work for equity, always demand cash up front." "Those darn investors and founders keep all the equity for themselves and get rich off your back!" You can't have it both ways. Either the equity is worthless or it isn't. Are the investors, who get no salary and only equity, even bigger suckers than the employees? What about the founders who usua…

> You seem to be saying to contradictory things:

No, they are not contradictory statements. Equity is one way to see upside in a startup, but that upside can be completely destroyed for employees. For example, common stock or when founders don't negotiate with investors on your behalf. An employee's relationship with equity can be very different from a founder's relationship with equity (and not just quantity). Situations aren't always this bleak, but the OP was asking for a dose of cynicism.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#124

Post by chii »

damian2000 wrote: post #93
DigitalSea wrote: post #67

I am honestly surprised they've lasted this long. The whole current premise of daily deals does not work whatsoever. Every business owner I've ever known that has done one of these daily deals has never done them twice, why? Because every deal offerer (restaurant, beauty spa, dentist, tooth whitening formula company, discounted holiday) loses out and it has been proven a daily deal coupon doesn't mean you'll get a re…

If you're going to use a daily deals site, come into it not expecting a profit and look at it for what it is ... a form of cheap marketing. I know a couple of businesses that have used them and found it generated a decent amount of additional sales. Mind you that was about 2 years ago.

it's not cheap if youre making a loss on every deal and the number isn't capped. its a good channel if you manage it properly tho.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#125

Post by chii »

irollboozers wrote: post #46
pshin45 wrote: post #41

Earlier quoted context omitted.

Point taken, and I'd rather not even attempt to define the two because I think that is outside the scope of HN altogether. I'm pretty new around here and the last thing I want to do is be starting political/moral/religious flame wars in a post about LivingSocial.

I disagree, it is will within the scope of HN especially if we're to prevent this sort of thing happening again from a founder/person on the ground level. The other guy is wrong, good and human progress can be paired well with technology and business solutions. It's called social venture, and it's possible. It's just not what the valley focuses on.

you can take the view that Good means profitable. thus if your business generate a profit you have done good.

of course this is only true if the market is free.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#126

Post by louischatriot »

confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

Only someone who hasn't tried to start a company could say that founders and investors don't deserve to have most of the equity. Try to start one and give all employees the same equity you own ...

Some points you make are valid though, it's a shame you are so single-minded.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#128

Post by doktrin »

tnicks wrote: post #119
confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

I find your comment fascinating and, from the perspective of a twice founder, mystifying. Your screen name evokes two vector forces or rivers coming together to form a new, stronger, force in a common direction. Ironically this is the true nature of an employee and employer. I have worked for fortune 10 companies and for 3 man crews. Yet my own assessment of my value has not changed. If an individual understands thei…

>To many the culture fit crap you deride has value.

That argument is circular. Of course it has "value" to those who practice it (presumably why the practice exists in the first place).

>The very few founders who do get rich damn well deserved it and I guarantee the money doesn't cover all of their losses.

By that logic, being a founder is always net loss even in the very best case scenario.

I understand you're making reference to the personal cost of a venture, the debating of which is a dead-end of anecdote and opinion.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#129

Post by planetjones »

Google must be relieved that they didn't end up 6 billion dollars out of pocket and holding the sinking ship that is Groupon.

The marker is saturated, businesses have had enough of getting little in return and consumers are getting annoyed with their inboxes full of annoying offers.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#130

Post by physcab »

karoramj23 wrote: post #60

As an independent restaurant owner, I can't say I didn't expect to see this one day. The model simply doesn't work, at least in our industry. The restaurant loses money on every single "daily deal" that is redeemed. With LivingSocial or (insert any other daily deal site here) taking half of the deal, the restaurant is simply left with 25% of the revenue generated. This does not even cover our food costs, let alone la…

The bigger problem is that you don't have any way to measure the success of a daily deal. Yes, of course you are going to lose money when doing the promotion...that is your "cost". If I want people to see my website and I pay an ad-network for clicks, I will get a bunch of costly low-quality users who did not discover my site organically. But the difference is that I can track people who come to my website and see how much they spent not only on Day 1, but on Day 365. And there exists some customer lifetime value that should in aggregate be more than your acquisition costs. Unfortunately you don't have that data and the best you can do is guess, which doesn't put much faith in the daily deal sites.
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