231–240 of 553 posts
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The fun part comes when you put in 20 years doing this, and your dream is to buy a nice house, and you finally get your seven-figure payout, and.... it's not enough to buy a house. Because now a house is 3 million dollars.
What kind of house had you been dreaming of? I live in SF, and even here $3M goes an awfully freaking long way.
I feel like there needs to be the analogue of open source licenses for equity offers. Something standardized, so that both employees and management could negotiate in good faith with high confidence that the terms are as advertised. Because right now, there has been too much innovation in ways to screw over employees and the only reasonable assumption is that equity will vanish.
Earlier quoted context omitted.
The fun part comes when you put in 20 years doing this, and your dream is to buy a nice house, and you finally get your seven-figure payout, and.... it's not enough to buy a house. Because now a house is 3 million dollars.
What kind of house had you been dreaming of? I live in SF, and even here $3M goes an awfully freaking long way.
Earlier quoted context omitted.
I worked for an ed-tech startup as employee number 4, joined when it was obscure; not even in the Alexa top 4 million rankings and almost no revenue. The founder was really good though and gave everyone shares instead of options. I got a bit under 0.2% equity in the company. The company grew (slowly and steadily) to $6.5 million USD revenue with about 10% net profit margins but its last valuation (over 10 years later…
Sorry to break it to you but 10% profit on 6.5M rev is very low and will absolutely not fetch a high multiple, especially considering this is a mature 10 year old business. This is not a high growth business and you may have grown overly rose colored glasses by thinking it could be priced as one.
Some time ago I found a good formula to plugin numbers and get a valuation multiple. The questions above were the ones that really moved the multiplier. A major lot of “startups” are in the 1-2x range. The hot ones will peak at 7-12x.
I was aquihired by a FAANG. The headline "startup bought for x million" is almost always a lie, either direct or by omission. First, when a startup is bought, its generally not bought at the headline rate. So if you see a "bought for $45m" that doesn't mean People who own shares all got a % of 45m. That number is normally bullshit, but also a "total package" which include share offers for joining the new company. Thi…
Generally, when a startup is acquired, people get paid in a number of tranches:
- First, debts get cleared in order according to debt types. This could be cloud providers, lawyers, employees who deferred salary, etc, etc. If there's still cash left..
- Then preferred (generally earliest) investors get paid back. Some investors will have liquidation preferences where they get 2-5X their initial investment. If there's still cash left..
- Then execs get their preferred shares cashed out. Depending on how many rounds they'd raised, they may own less than you think. If there's still cash left..
- Finally, general stockholders get paid. This is where most employees may actually get cash.
To further complicate things, some people could be in multiple places here. A founding exec may have lent the company money to get started, have preferred shares, and have common shares so they could get paid out in early levels but not at the end.
*There are WAY MORE nuances in this but the point is: You don't just say "total price divided by shares times number of shares = the cash you get"
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At some point, aren't the C Suite and directors failing their fiduciary responsibility? I know they have broad freedoms, but when you're reducing an a minority shareholder's equity by 95%, it's well past "fiduciary responsibility" and looking like fraud.
I am convinced every executive and wanna-be executive is on the 'inside joke' of funneling money out of the company into their pockets. I am also convinced that investors believe it's the C Suite's responsibility to tear away any equity from employees to leave the largest pot for investors.
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If I retired at 40 I don’t think I’d want to remove more than 2% a year from the principal amount, which is.. $12,000-$16,000 a year. How is that possible? Even with a fully paid off house, you still have property taxes, utilities, maintenance. Even 4% a year which is recommended for a 30 year retirement, you’re only taking out $24,000-$36,000 a year.
You are supposed to invest and keep the money working for you. Adjusted for inflation, S&P 500 returns 6.5% a year. That alone gets you above the poverty line. Recall, this is inflation adjusted so your $600,000 is growing with inflation and the poverty line income also grows over time. This does not account for any swings.
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What kind of house had you been dreaming of? I live in SF, and even here $3M goes an awfully freaking long way.
anything within 45 minutes of your office in palo alto (where you are mandated to show up 5 days a week). this will get you a 1300sqft piece of shit built in 1964 with asbestos and lead paint and lead pipes and a cracked foundation (also some dipshit realtor had them paint all the original wood beams and paneling inside gloss white and replace the original wood and slate floors with grey vinyl) from some baby boomer…
https://x.com/ahmaurya/status/1948491614160122308 Garry Tan posted "sounds like a tweet that cost $20M" which he later deleted. Smells like a strong bias against employees in favor of management and founders.
Earlier quoted context omitted.
I worked for an ed-tech startup as employee number 4, joined when it was obscure; not even in the Alexa top 4 million rankings and almost no revenue. The founder was really good though and gave everyone shares instead of options. I got a bit under 0.2% equity in the company. The company grew (slowly and steadily) to $6.5 million USD revenue with about 10% net profit margins but its last valuation (over 10 years later…
Why are the margins so low?