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Uber plays hardball with early shareholders

fortune.com

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Re: Uber plays hardball with early shareholders

#21

Post by cma »

couradical wrote: post #7
skizm wrote: post #4

Isn't there a law that if there are more than 500 shareholders for a private company that the company must go public? Sounds like a totally reasonable reason for keeping a tight hold on the stock.

There's no requirement to go "public" in the sense of listing on an exchange, and available for public purchase. What changes at that point is SEC regulatory compliance kicks in: earnings/revenue go public, SEC compliance paperwork has to be filed just like a public corp. That's really why people try to stay under that number - you have all the drawbacks of being public, except a floated share price, and it would eff…

IPO filings include financials...

Re: Uber plays hardball with early shareholders

#22

Post by unchocked »

joezydeco wrote: post #3

"This fear of being viewed as a startup enemy also is why none of the early Uber investors we spoke with would allow us to publish their names." What is a "startup enemy" and how does wanting to recoup some of your investment make you one?

A "startup enemy" is someone who puts their own interests above those of the startup.

Re: Uber plays hardball with early shareholders

#23

Post by gecko »

fiatmoney wrote: post #2

If you can't sell it, you don't really own it.

Eh. I own a lot of stock in one of the companies I used to work for. I can't legally sell it. That doesn't mean I don't own it, but I mentally adjust its on-paper value appropriately, basically multiplying its on-paper value by the chance that the company might go public. In effect, what I own is a lottery ticket, but I do own that ticket.

Re: Uber plays hardball with early shareholders

#25

Post by RyJones »

opendais wrote: post #17
gohrt wrote: post #14

Earlier quoted context omitted.

Ultimately, workers need to value the options properly: ~$0. Interestingly, with options/RSUs clauses in employement contracts, workers are making "investments" in privately held securities on the order of ~$100K. In general (outside of employment contracts) such investments are not legal if the worker is not signed off as a "sophisticated investor". I would like the SEC to close this loophole, by mandating some mini…

I'd say the options are worth more like 5% of whatever their value is when you get them. They aren't worthless but it really is a high risk gamble that you are going to get value out of them.

A lottery ticket with 5% odds of payoff would be phenomenal. I think $0 is the proper value - I've never worked for a startup that paid dollar one on options.

Warning, if I work somewhere, you should short that stock / not take options. Sorry.

Re: Uber plays hardball with early shareholders

#27

Post by pjc50 »

jeremymcanally wrote: post #16

It's amazing to me what companies will stick in these contracts, and how deep down the rabbit hole they'll stick it. It's their stock to do it with, of course, but it's just annoying that seemingly employee-centric companies will do such seemingly abusive things. For example, I've seen instances of sale restrictions being four contracts deep (e.g., "shall be governed by (x) agreement", and that agreement says "shall…

never depend on it as part of your compensation in any way

This is very true. I've been in the position of having worthless share options before. It's something everyone who's tempted to work 80 hour weeks because they have share options should remember. You should also remember the Google cook, who had $200m in options that the company tried to do him out of because he wasn't a developer.

Re: Uber plays hardball with early shareholders

#29

Post by robbiemitchell »

What a non-story.

This is a typical way for a private company to manage who owns its stock -- namely investors, employees, and former employees. It's basically a right of first refusal.

You sell your options back to the company at the current market rate -- the rate at which that most recent investors purchased equity. That's your liquidity. The company will do this because it believes the options are undervalued compared to what they'll be worth in the future. If you don't want to do that, you hold and wait for the options to go up (or unfortunately down) in value.

If the company doesn't want to buy them, you _should_ be free to sell to others. Restrictions in _those_ cases would be worth writing about.

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