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LivingSocial: Employees' and Founders' Common Stock Now Worthless

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Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#201

Post by whazzmaster »

drusenko wrote: post #192
acheron wrote: post #165

Earlier quoted context omitted.

"1. Take the least amount of stock possible is not a good generally-applicable rule. It might have worked for you in the past, but it sure wouldn't have worked well for any of the employees of Google, Facebook, Dropbox, Weebly, etc." And for the people who won the Powerball, "Don't buy lottery tickets" wouldn't have worked well for them. That doesn't mean "Don't buy lottery tickets" isn't a good generally-applicable…

We're talking maybe 1 in 50 versus 1 in 175,000,000 so yes, the comparison to the lottery is useless.

Cashing out big is a 1 in 50 proposition? Wow! Source?

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#202

Post by wpietri »

confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

If you're that cynical about a particular startup, you probably shouldn't join that startup. If you want a high salary and low risk in a traditional environment, there are plenty of dev jobs like that.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#203

Post by wpietri »

fatbird wrote: post #70
teej wrote: post #43

Over 5 years ago I turned down an offer to work at LivingSocial. Last year, I would've been worth $10 million on paper. All of that fake wealth evaporated today. What a mess.

Had you approached the offer cynically, how much of that money could you have gotten out before this collapse?

Probably none. Generally common shareholders don't see a nickel until a liquidity event. That is, getting bought or doing an IPO.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#204

Post by bitcartel »

tocomment wrote: post #179
leetrout wrote: post #178

Earlier quoted context omitted.

No. They're a rails shop.

You mean "were" a rails shop? (Or am I misunderstanding this news?)

The investors have thrown the company a lifeline to avoid filing for bankruptcy, but in exchange have taken full control and wiped out the founders and employee stock. This is the last roll of the dice.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#205

Post by trifilij »

darkarmani wrote: post #196
drusenko wrote: post #120

Earlier quoted context omitted.

It's unfair to characterize all startups as nirvana, and it's likewise unfair to label them all as run by evil masterminds taking advantage of their employees. Sure, some startups are total shit, others are actually pretty enjoyable places to work. So let's not paint this as either black or white. You make some great points that a lot of "wide eyed" grads could use to hear more of. There are also a few things I take…

> This is not true. The reason earlier employees receive more stock than later employees is that everyone is receiving the same dollar amount, but how much stock you get for that dollar amount changes. To keep it simple, if you are employee #1 and you get $100k of stock at a company valued at $10M, you get 1% of the company. Later, if you get $100k of stock valued at $100M, you get .1%, etc. > This makes a whole lot…

You are given the same value, but the person that got it at 10M will have a lot more money that the other one that joined at an evaluation of 100M

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#206

Post by freshyill »

damian2000 wrote: post #91

Anyone know how they are doing outside the US? Over here in Asutralia for example they seem to be selling plenty of vouchers. I know some businesses that use them often.

I was laid off in November. Last we heard, they were doing quite well in Asian countries, particularly in Korea. This is what they told us, anyway. They also told us last fall that profitability was right around the corner.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#207

Post by funkbot »

confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

My favorite thing at LivingSocial (and other startups) is "unlimited time off". Yeah, good luck with that.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#208

Post by kevinskii »

Duhck wrote: post #185
confluence wrote: post #55

Here are a few tips for others startup employees: 1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock. 2. Unless it's liquid - it's worthless. 3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share…

While I agree with a few things here, I also agree you are very much a cynic (and that can be good). I too am a cynic, but I also believe that the startup culture we have created has many more benefits than you seem to weigh in on. I don't work at a startup to get rich, I work at a startup to figure out what I did wrong with my own business(es) in the past. I joined each of the companies I have worked at in the past…

Rule #37 for becoming a better business person: Don't donate tens of thousands of dollars a year in charity to millionaires and billionaires.

When one works for substantially below-market salary and flimsy equity, that's often essentially what he is doing.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#209

Post by mattetti »

Here is the indirect response of LivingSocial's CEO via a leaked memo reported by CNN: http://finance.fortune.cnn.com/2013/02/21/what-really-happen...

It doesn't mean that most of the advices here aren't just that PrivCo might be making up stuff stories.

Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless

#210

Post by hapless »

drusenko wrote: post #189
doktrin wrote: post #134

Earlier quoted context omitted.

> 1. Take the least amount of stock possible is not a good generally-applicable rule. It might have worked for you in the past, but it sure wouldn't have worked well for any of the employees of Google, Facebook, Dropbox, Weebly, etc. A more accurate statement would be "...is not a good universally -applicable rule...". To add some numbers to the discussion, there are currently 203 startups listed on Angel List as hir…

I would be surprised if even 25% of those startups had a meaningful exit. But even at 25%, we're a very long way from the lottery odds -- that comparison always strikes me as quite misleading.

As repeatedly mentioned, a "meaningful exit" can make the founders extremely rich, and pay employees the equivalent of a routine annual bonus at a normal firm. ($5k-$25k)

Candidates have no way to evaluate the value of the equity pressed upon them, but even in the case of a successful exit, it's usually quite small.

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