Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Sell for half a billion and get nothing (2021)

fundablestartups.com

Post reply on HN
Print view View original

21–30 of 334 posts

Re: Sell for half a billion and get nothing (2021)

#21

Post by Analemma_ »

jmward01 wrote: post #14

I 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…

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 their absence here, but I do think that startups don't have access to the same talent pool as they used to, and sooner or later this will catch up with the ecosystem.

Re: Sell for half a billion and get nothing (2021)

#22

Post by frfl »

AndrewKemendo wrote: post #12

I wrote this in 2015 in response to Mark Suster suggesting that founders "Run" from liquidation preference and preference overhang in early deals: "Run where? When I talk to my fellow early stage east coast founders, the majority aren’t beating away founder friendly term sheets. Even seed stage companies with revenue and traction raising relatively small amounts are giving away board seats and agreeing to multiple pr…

You wrote that back in 2015. What, in your experience, has changed since then? 2021 would've probably, I'm guessing, been a lot more favorable for founders, but 2022/23/24 is likely a lot less favorable.

Re: Sell for half a billion and get nothing (2021)

#24

Post by hn_throwaway_99 »

lupire wrote: post #5
EchoChamberMan wrote: post #2

"FanDuel founders to receive no cash from sale to Paddy Power Betfair" https://news.ycombinator.com/item?id=17485246 (July 8, 2018) Shamrock Capital Advisers and Kohlberg Kravis Roberts are the two mentioned investors, I believe.

Gambling company should know the house always wins. If I read crunchbase correctly FanDuel got $350M in funding by 2015, and sold for $465M 9 years later, for 33% ROI, or about 3%/yr. Founders don't deserve anything just for managing to hold on to investor capital and not lose it. Investing money at below market rates is not an achievement. Founders and employees weren't robbed. Also, OP is just a bad ad.

Your timing is wrong here, which breaks your calculations. I read some other articles that said FanDuel got $75 million in 2014 and $275 million in 2015, and then they sold in 2018, so not sure where you're getting your "9 years" from.

Re: Sell for half a billion and get nothing (2021)

#26

Post by eschneider »

This sort thing is uncommon only in that there was eventually a high dollar liquidity event. When negotiating offers, I always try to get some idea of the financing and the liquidation preferences, if only so I can get some idea of what we'd have to pull in for shares to be "in the money" and quite often the number would be something insane like this. You just value the shares at zero. :/

Re: Sell for half a billion and get nothing (2021)

#27

Post by yieldcrv »

gumby wrote: post #6

Liq prefs vanished during the ZIRP and I haven’t seen them return…yet. But the founders do have some leverage. If there is no incentive to do the deal they can just… not cause the deal to happen (different from blocking it, just not working on it). This is the same reasons you see big pay packets for the execs when a company is doing poorly or is bankrupt: otherwise they could just go do something else (get a differe…

maybe in Silicon Valley, but in New England and other less mature markets nothing has ever changed

feel free to change my view, for anyone passing by

Re: Sell for half a billion and get nothing (2021)

#28

Post by hamburglar »

jmward01 wrote: post #14

I 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 feel like the key is 1) don’t count on your options being worth anything at all, and 2) work for savvy founders that know how to get the employees taken care of. This means never taking more money than they need, not giving away multipliers, giving non-negligible percentages to employees, and focusing on making the business actually have intrinsic value instead of letting “how much can we raise” drive their sense of value.

I feel like a lot of people (founders included) buy into the idea that the VCs should be able to walk in and screw everyone out of their equity because they hold all the cards. If you work for founders that believe this, you will definitely get screwed, partially because the founders will believe screwing you is just part of the game.

Re: Sell for half a billion and get nothing (2021)

#29

Post by yieldcrv »

Analemma_ wrote: post #21
jmward01 wrote: post #14

I 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…

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…

it looks like bi-modal distribution of compensation in tech, where there are tech startups paying one amount and options, and FAANG paying another amount plus liquid shares

but crypto organizations have added another wrench for more than half a decade, leaving the other startups aside, they are startups paying one amount, and skipping the options and paying their employees RSUs of their liquid crypto tokens, competing directly with FAANGs on compensation as employees can sell those tokens just as - or even more easily - than they can sell shares in a brokerage account

I'm saying it as if its news because the crowd here relies on people they respect saying the same thing to believe it in the absence of public and common knowledge, and that likely hasn't happened in the topic of anything crypto/web3 industry here

Re: Sell for half a billion and get nothing (2021)

#30

Post by AndrewKemendo »

frfl wrote: post #22
AndrewKemendo wrote: post #12

I wrote this in 2015 in response to Mark Suster suggesting that founders "Run" from liquidation preference and preference overhang in early deals: "Run where? When I talk to my fellow early stage east coast founders, the majority aren’t beating away founder friendly term sheets. Even seed stage companies with revenue and traction raising relatively small amounts are giving away board seats and agreeing to multiple pr…

You wrote that back in 2015. What, in your experience, has changed since then? 2021 would've probably, I'm guessing, been a lot more favorable for founders, but 2022/23/24 is likely a lot less favorable.

I stepped out of investing about two years ago because i couldn’t stomach the persistent narcissistic greed dressed up as virtue once I saw it for what it was.

The last I saw it was just as bad and frankly getting worse for founders, as investors pulled back when the Fed moved on interest rates.

Basically everyone just stopped taking risk except for the giant institutional funds and even then, as of last year were most just doubling down on existing.

I heard similar actually last month at an event I was at - funds are sitting on dry powder and not doing cap calls.

Post reply on HN