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There was a pretty incendiary flame war on Twitter about this: https://twitter.com/nathanbarry/status/1371549184701067265
It's like the worst of twitter right there, just a bunch of tweet / word salad and accusations without anything to explain what any of that is / back up the meat of the accusations ...
There was a pretty incendiary flame war on Twitter about this: https://twitter.com/nathanbarry/status/1371549184701067265
I think Nathan has put a slightly negative spin on what happened to Gumroad- maybe implying that it was intended all along - but he does have a bit of a point.
Whats the point? Really though, I'm having trouble figuring it out.
There was a pretty incendiary flame war on Twitter about this: https://twitter.com/nathanbarry/status/1371549184701067265
Using a SEAL or the Indie.VC V3 terms seems more inline with how they want to run the company because it includes an instrument for investors to get an ROI with a payback clause if you choose never to sell.
I’d imagine there will be almost no pressure to sell because to my knowledge, no past employees or current contractors have equity, nor do they have outside institutional investors that want a return for LPs. I’d be curious to hear what the board structure is for oversight as well around important topics like salary comp, potential acquisitions, etc. There isn’t much stopping the founder or a group of people from pulling out all the profits for themselves or just paying outsized salaries.
Anyways, not dunking on it and just stating how some of the structures work from what I understand. The Gumroad story is an interesting one and I appreciate how they publicly share the experiments about how they’re running too. Will be interesting to follow over the years.
[edit: grammar]
The company was declared to have failed several years ago. Employees were laid off and the investors released the IP (built by the early employees) to the founder as a token of goodwill. Presumably, they thought he might use it to start a new company. Story here: https://www.businessinsider.com/startup-failure-gumroad-why-...
However, he continued running the company with new part-time employees, minus original investors and minus the early employees who built the company. Apparently the company succeeded enough that it’s now worth $100 million. Early employees who built the original site presumably don’t have equity because they were laid off and their options expired worthless as they were told the company had failed.
On one hand, it’s great to see a founder persevere and rise from the ashes. On the other hand, watching the early employees lose out on their equity because they were told the company was a failure is not cool.
I’ve made some money from startup options through my career so I won’t agree that they’re worthless as often claimed. However, this is a good reminder that the game is very stacked against the employees.
There was a pretty incendiary flame war on Twitter about this: https://twitter.com/nathanbarry/status/1371549184701067265
Something I didn't realise until a while after reading this was that the author of the tweets was previously a large Gumroad customer + now runs a competing business (ConvertKit Commerce). I believe the events he's talking about are also very public (I think the Gumroad founder wrote a blog post about it that was on HN not that long ago).
I recognized this guy's name, so skimming over the twitter thread my cynical thought was "I bet ConvertKit is working on a Gumroad competitor", and sure enough, they already have one.
Gumroad is an interesting cautionary tale for employee equity compensation. The company was declared to have failed several years ago. Employees were laid off and the investors released the IP (built by the early employees) to the founder as a token of goodwill. Presumably, they thought he might use it to start a new company. Story here: https://www.businessinsider.com/startup-failure-gumroad-why-... However, he cont…
I'd argue the first issue is not being more direct / everyone understanding what it means to be an employee at a start up as it is equity wise.
I'm not sure some token Grumroad tidbits thrown old employees way really would change much / I'd argue obligations like that would complicate any such resurrections.
a plug: we did a research report on gumroad's financials to give potential investors a deeper look at the company: https://sacra.com/research/gumroad-android-creator-economy/ here are 3 key points: 1. gumroad experienced major covid tailwinds. whereas the company's five-year compound annual growth rate is 37%, it grow 94% from 2019 to 2020. they've been profitable since 2017. 2. gumroad's core customer base is creato…
Gumroad is an interesting cautionary tale for employee equity compensation. The company was declared to have failed several years ago. Employees were laid off and the investors released the IP (built by the early employees) to the founder as a token of goodwill. Presumably, they thought he might use it to start a new company. Story here: https://www.businessinsider.com/startup-failure-gumroad-why-... However, he cont…
I like the idea that a startup that fails to be a unicorn can still be something. The alternative are these companies vanish because they're not worth an enormous amount in a short time.. I'd argue the first issue is not being more direct / everyone understanding what it means to be an employee at a start up as it is equity wise. I'm not sure some token Grumroad tidbits thrown old employees way really would change mu…
The problem isn’t that the company failed to be a unicorn. The problem is that the company was declared to be worthless and was given away to the founder (but not employees who built it), but it obviously wasn’t worthless as it’s currently valued at $100 million. Early employee equity was wiped out in the process.
The point is that you can work for a $100mm company, build the foundation of a $100mm company, yet walk away with nothing because the investors and founders can play games with your equity. Unlikely to happen again given how this played out. However it must hurt to be an early Gumroad employee doing the math on what their equity would have been worth today after being told the company was worthless.