Who were the investors?
Sell for half a billion and get nothing (2021)
131–140 of 334 posts
Re: Sell for half a billion and get nothing (2021)
#132> Lessons Learned: Build a Very Fundable Startup > Every founder should learn from this disastrous scenario the importance of building a very healthy, fundable startup. A healthy, vibrant startup draws more investors during fundraising. The competition gives founders the leverage to negotiate for more founder-friendly terms. Healthy startups get better valuations, better terms, and raise funds with much less effort.…
That's not super useful advice for founders who (really) need some investment from the get go. The lesson would rather be: don't raise so much at the seed stage. Google got started with a $100K grant. FanDuel raised $400M in four years [1] And it looks like one of the the FanDuel founders did it again [2] This is reckless and should be a massive red flag for new joiners. [1] https://en.wikipedia.org/wiki/FanDuel [2]…
So they raised $416M and sold for $465M. That's 12% ROI. The investors could just buy normal stocks and get similar returns in a year. I don't think there is anything remarkable about this case. It's not like they got a $100K grant and received nothing from a $500M sale.
Re: Sell for half a billion and get nothing (2021)
#133Earlier quoted context omitted.
It's not just your friend: a lot of people have given up on options. Obviously they're underrepresented here on HN because this is a startup-focused forum, but I know many, many people who have concluded "options have an EV of zero, startups pay options in lieu of market-rate salary, therefore startups are a raw deal; I will only go to FAANGs". They're sort of a dark matter universe since they are only visible in the…
Is ‘EV’ enterprise value or something else? Thanks.
I was assuming EV was expected value.
“For a pocketful of mumbles such are promises” Paul Simon.
Seen too many promises forgotten/diluted to really trust anything other than cash.
Re: Sell for half a billion and get nothing (2021)
#134Earlier quoted context omitted.
Yeah I have a small business and I sway strongly towards being contempt with letting the business grow at its own rate. No, it won’t have a 1 bil payout, but you make your own rules and you’ll get a healthy cash out from the dividends after only 1 year or so. It also forces you to keep pivoting and finding a cash cow rather than assuming your initial plan was any good. We’re on like plan #10 now and in hindsight if w…
> No, it won’t have a 1 bil payout Does anything have a $1B payout for the founder? I guess there are a few companies that achieve this, but it takes only a modicum of humility to realize you're not likely to be one of the most successful founders this decade.
> modicum of humility
= turnoff for investors. They only care for chances at homeruns — singles and doubles are not welcome. You’d better swing for the fences, because that’s the purpose of VC.
(This is my understanding, not my endorsement. Please correct as needed)
Re: Sell for half a billion and get nothing (2021)
#135I have a friend that has given up on options. Even if he were to be #10 somewhere he would take any extra pay over any options. Stories like this show the wisdom of that. Are there really that many success stories for people other than for VCs and (maybe) founders out there anymore? Even if your options (eventually) get you 200k, how much did they cost you in years of lower pay. Even with a payout, considering intere…
> Are there really that many success stories for people other than for VCs and (maybe) founders out there anymore? I was the employee around #300 at Atlassian, the founders didn’t dilute the employees, and my options netted $3m (minus the taxes) after working there for 3 years and waiting 6 years. Scott Farquhar and Mike Cannon-Brookes were hell-bent on being honest, fair and giving back. There are good people out th…
As we are now down-under I will mention: Wisetech Global. I was too late to make anything meaningful over 3 years there, but it was transparent and very generous, and they made it as tax efficient as legally possible in Australia. If you joined in say 2009, grabbed some shares for 3 years you would probably be in the high 100ks at IPO, and millions if you held until now (but you could have also made those millions as a retail investor using your super or something too!). I sold too early :-(
Also $currrent_company which I wont reveal. Run as well as Wisetech in terms of growth focus. Got some options. Learnt lesson. HODLing these fuckers to zero or "very interesting" levels lol!
Re: Sell for half a billion and get nothing (2021)
#136I am currently working with a start-up where the company is incapable of meeting its capex obligations. The founder raised a good amount of capital from investors a few years ago, and that provided a decent runway, but there's no traction, no KPIs, and whilst we've built some impressive technology, impressive technology does not bring in revenue. One of the problems (amongst many) is that the primary stakeholder has…
> "Can I see the cap table?" - "Can I see the terms of the investors?" These questions should become so normalized that founders don’t bat an eye at it. If I am an early employee, we are partners. Wanting to know my percentage and the company’s liabilities before I sign is not unreasonable. I also want to hear you talk convincingly about your plans for future investment.
If you dont pay to get the equity at market value you're most definitely a worker.
Re: Sell for half a billion and get nothing (2021)
#137I have a friend that has given up on options. Even if he were to be #10 somewhere he would take any extra pay over any options. Stories like this show the wisdom of that. Are there really that many success stories for people other than for VCs and (maybe) founders out there anymore? Even if your options (eventually) get you 200k, how much did they cost you in years of lower pay. Even with a payout, considering intere…
I don't think startup compensation has yet to account for the wage gains in big tech since Facebook started bidding up comp. They are still operating as if it's 2009.
We'd also need a new technology as big as the PC and the Internet to open up lanes for new entrants. As it is the incumbents have locked up most of the market so that's where the money is.
Re: Sell for half a billion and get nothing (2021)
#138The concept that you can sell for X, and X is large and you get nothing shouldn't be a surprise in itself. Investors wouldn't make money if they made every founder rich regardless of the risk they take. That said, in this case sounds like the founders were f'd over. Why did they accept those terms, why didn't a lawyer or advocate advise against it?
Re: Sell for half a billion and get nothing (2021)
#139Earlier quoted context omitted.
> No, it won’t have a 1 bil payout Does anything have a $1B payout for the founder? I guess there are a few companies that achieve this, but it takes only a modicum of humility to realize you're not likely to be one of the most successful founders this decade.
Even if anyone gets a cool $1b, the IRS is going to come for a good chunk of that...
Well, I for one could live with that... :)
Re: Sell for half a billion and get nothing (2021)
#140Earlier quoted context omitted.
It's not just your friend: a lot of people have given up on options. Obviously they're underrepresented here on HN because this is a startup-focused forum, but I know many, many people who have concluded "options have an EV of zero, startups pay options in lieu of market-rate salary, therefore startups are a raw deal; I will only go to FAANGs". They're sort of a dark matter universe since they are only visible in the…
This is me. I work at a FAANG, about half of my very good compensation is in RSUs. All the startup companies I've talked to (I don't turn down recruiters out of hand) seem to like my skill set, but cannot really meet my comp requirements without valuing options as if they were 100% guaranteed to convert at the current high valuation. It's a bummer - startups do a lot of really cool stuff, but I'm at a point in my car…
I wouldn’t discount startups altogether. I was previously at a FANG company when a startup doing some exciting work in a really interesting space offered to match my total comp in cash, plus the equivalent in options based on their recent valuation. All fully remote.
At the time, the company I was at seemed to be going downhill quickly, and they began mass layoffs for the first time shortly after I left.
What happened since then? Well, the startup options have very likely gone to zero. And my previous company’s stock price, which had been dropping quickly over the course of my last year there, made a hard U-turn right after I left and has been skyrocketing ever since (my family likes to joke that I caused the change of course at both companies).
Was it really a bad decision though? It’s sort of hard to tell. At my previous company, my manager had put together a promotion packet, but this likely would have been cancelled with the layoffs, and there’s a chance I could have been laid off as well (as far as I can tell it was random). And then there’s the fact that for whatever weird reason, compensation for internal promos at this company heavily lagged that of external hires at the same level for many years.
So at least up until now, I think I am even with or maybe slightly ahead of the counterfactual situation where I didn’t join a startup. Plus I have had new experiences, greater scope, and different types of challenges than I had previously, and I think it’s valuable to have a variety of novel experiences over a lifetime.
Obviously, from this point forward my future (financial) outlook would be better off if I had stayed, but it’s hard to write off my decision to try something new. Other former coworkers also left to join startups, a few of which are likely to go public soon, so it’s not as if going from FANG to a startup always works out unfavorably, and if you join a startup that seems to be doing well at a later stage, the downside risk doesn’t seem that high actually.