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CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

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Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#21

Post by cromwellian »

I view this as being smart. Box is under heavy competition not just from Dropbox, but from Google and Microsoft. 4% of $250 million is better than 50% of $0. The landscape is littered with founders who drank the koolaid and thought they were going to billions and ran their companies into the ground. Maybe Levie won't own 50% of Box, but maybe he will own 4% of a viable company with a real business going forward. And if all else fails, he'll walk away with $10 million.

That's a "problem" I'm sure many of us would like to have.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#22

Post by ChuckMcM »

pyrrhotech wrote: post #12

And the average engineer who thought they'd be rich, probably owns 0.0002%. Have fun with your 200k! Startups are such a scam for the employees.

To add to this, so what if it is "$200K" ? Basically that is enough to completely cover one kids education at a state school, put down 20% on a million dollar house, or seed fund your next "big thing" for easily 6 to 18 months. On top of that you've been working for a salary that probably paid all your existing living expenses so you were not accumulating debt. That is a pretty cool thing.

Further, if you continue to work there and it continues to appreciate (as it would if Box proves out their model) then you're looking at $200K * x where 'x' is the appreciation multiplier.

Even if your company does a reverse 5:1 split as a friend of mines did just before it IPOs that ISO option is now a 'something' rather than a 'nothing' which was what it was when it was illiquid.

Bottom line, its a Good Thing for everyone.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#23

Post by [deleted] »

mikeryan wrote: post #13
not_that_noob wrote: post #5

Earlier quoted context omitted.

This. Founders are better served maximizing traction at the lowest outside investment possible. If it doesn't become big, then you still hold a large chunk of a small company. And if does, then you hold a fairly large chunk of a large company.

I don't know it seems to me that Silicon Valley is littered with folks who've made a shit ton of money by founding companies and taking chunks off the table during funding rounds. Kevin Rose/Digg come to mind. This way if you become huge you still get a payday but even if it doesn't you're still a millionaire (and maybe an angel investor in companies that do become huge, Kevin Rose/Digg comes to mind).

[deleted]

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#24

Post by klochner »

pyrrhotech wrote: post #16
klochner wrote: post #14

Earlier quoted context omitted.

The average engineer likely wasn't taking a (cash) pay cut to work there. Working at a company that has raised $400M is closer to a post-IPO experience than a startup.

I've worked at a couple startups as well as a couple big companies. My salary + bonus has always been much, much higher at large companies than the startups. I also worked much less, so my effective per hour pay was double or more. Perhaps I got the short end of the stick, but I've never seen a dime from my stock options at these companies. One of which was aquired for a decent amount more than the valuation of the c…

Certainly a lot of start-ups take advantage of engineers, I was more making the case that Box isn't really a start-up so I wouldn't expect them to have a big upside on IPO.

There are some specific reasons to join a start-up, and hitting the unicorn lottery shouldn't be one of them. Also, you should be taking a market salary and working sane hours, which seems to be more the case in the last 2-3 years, though YMMV.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#25

Post by rrhyne »

not_that_noob wrote: post #5
nostrademons wrote: post #2

IIRC PayPal was very similar - it was sold for $1.5B, but Max Levchin's share was only about $30M, and Elon Musk's was only about $100M. By comparison, many early Web 2.0 darlings (Del.icio.us, Blogger, Flickr) sold for only $20-40M, but their founders had only taken small seed rounds, and so the vast majority of the purchase price went to the founders. 75% of a $40M acquisition = 3% of a $1B acquisition. Something f…

This. Founders are better served maximizing traction at the lowest outside investment possible. If it doesn't become big, then you still hold a large chunk of a small company. And if does, then you hold a fairly large chunk of a large company.

Founders need to balance the amount of time it takes to acquire traction on the cheap, vs. via through the acceleration having a larger marketing and dev budget provides. Stagnation can kill and smaller founder equity is better than dead.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#26

Post by not_that_noob »

klochner wrote: post #10
not_that_noob wrote: post #5

Earlier quoted context omitted.

This. Founders are better served maximizing traction at the lowest outside investment possible. If it doesn't become big, then you still hold a large chunk of a small company. And if does, then you hold a fairly large chunk of a large company.

And if it fails? It's obvious that founders prefer to keep more of the company, however tortured of a phrase you use to express it.

The game is to minimize investment, not starve the company of it. If it's clear it isn't on a hockey stick, then best to not stuff the pig, get diluted to almost nothing, and then sell for a low number. It's a judgement call.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#27

Post by refurb »

Random question: When a company finally IPOs, how much equity are the top guys expected to hold onto?

I know it's common for founders to be allowed to cash out some of their equity during financing rounds, usually enough to make them comfortable (a few million).

The reason I ask is if you're Aaron Levie and Box IPOs, are you expected to not sell much of your remaining stake unless you leave the company? It just reminds me a little of the investment banks where partners understood that it was frowned upon if they sold their equity. Many of them lost everything when the banks collapsed (some would say rightfully so).

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#29

Post by mbesto »

nostrademons wrote: post #2

IIRC PayPal was very similar - it was sold for $1.5B, but Max Levchin's share was only about $30M, and Elon Musk's was only about $100M. By comparison, many early Web 2.0 darlings (Del.icio.us, Blogger, Flickr) sold for only $20-40M, but their founders had only taken small seed rounds, and so the vast majority of the purchase price went to the founders. 75% of a $40M acquisition = 3% of a $1B acquisition. Something f…

Strictly in financial terms, yes you're right. There are, however, other benefits to bringing your company to IPO that don't involve your own company's investment...in other words - you get minted. IMHO, that opens up way more doors than just personal wealth.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#30

Post by not_that_noob »

rrhyne wrote: post #25
not_that_noob wrote: post #5

Earlier quoted context omitted.

This. Founders are better served maximizing traction at the lowest outside investment possible. If it doesn't become big, then you still hold a large chunk of a small company. And if does, then you hold a fairly large chunk of a large company.

Founders need to balance the amount of time it takes to acquire traction on the cheap, vs. via through the acceleration having a larger marketing and dev budget provides. Stagnation can kill and smaller founder equity is better than dead.

That's a false dichotomy encouraged by VCs. More money does not necessarily accelerate. It's making sure you're getting the max value for every dollar spent, something that's quickly forgotten when you raise millions of dollars.
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