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

Dropbox Shares Offered at 34% Discount in Secondary Market

buzzfeed.com

Post reply on HN
Print view View original

31–40 of 46 posts

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#31

Post by bogomipz »

putlake wrote: post #15

As others have noted, you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred. A few months ago when I looked into investing in Palantir via EquityZen/Sharespost, the share price being offered valued Palantir at between 25-30% less than their most recent funding round valuation of $20B. If anyone's interested in acquiring pvt company shares in the secondary market, here's…

You've got some misinformation here, this was my experience two years ago but on the seller side as an employee leaving a startup.

>"you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred."

I sold common shares via the secondary market and I got exactly what they were valued at. This was a very well-known startup. So that's incorrect. In fact I managed to get just north of that price given the scarcity of obtaining them.

> "You don't actually own common stock of the company (e.g. Palantir). It actually works like a mutual fund."

This is something specific to just EquityZen and this is a technique that is used in instances where the company's employee option agreements forbids such a sale. This is a loophole of sorts used only in those instances.

One other interesting point is that once I had a buyer lined up the company exercised their right of first refusal which means they then had to buy the shares for the same amount as the buyer agreed to purchase them from me for. The company themselves of course didn't actually buy them but they put me in touch with a well-known Hollywood celebrity's wealth manager who then bought them.

This last point irked me a bit when I thought about all the other engineers toiling away to build a good product who were bound by all these options restrictions yet some Hollywood celebrity with no connection to the company was on a shortlist of preferred buyers should some options come available. Sigh.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#32

Post by jfoutz »

B1FF_PSUVM wrote: post #27
throwaway7798 wrote: post #21

Earlier quoted context omitted.

I strongly disagree. They produce a lot of biased news geared against startups in Silicon Valley. It almost feels like they're anti-startup news feed. And reading them, as an employee of a startup makes me feel pessimistic and depressed.

News in general will make you feel pessimistic and depressed. If not enraged. Don't do news.

Media diet is important. IMHO staying aware of local, regional national and global "stuff" is kind of nice, it makes it much easier to be social. Occasionally I encounter stuff I want to know more about. But it takes a light touch. 15 to 30 minutes a day is more than enough.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#33

Post by argonaut »

bogomipz wrote: post #31
putlake wrote: post #15

As others have noted, you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred. A few months ago when I looked into investing in Palantir via EquityZen/Sharespost, the share price being offered valued Palantir at between 25-30% less than their most recent funding round valuation of $20B. If anyone's interested in acquiring pvt company shares in the secondary market, here's…

You've got some misinformation here, this was my experience two years ago but on the seller side as an employee leaving a startup. >"you could attribute the entire 34% "discount" to the fact that these are common shares, not preferred." I sold common shares via the secondary market and I got exactly what they were valued at. This was a very well-known startup. So that's incorrect. In fact I managed to get just north…

To be fair, the common vs. preferred share distinction depends on the company.

It could be that in your case they were valued the same. You actually mention that you sold at above the company's last fundraising valuation - it could be the case that the preferred stock was valued even higher.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#34

Post by bogomipz »

maaku wrote: post #29
p4wnc6 wrote: post #12

Earlier quoted context omitted.

Most employees would be in a situation where right of first refusal means their employer would have to approve this -- and in a lot of places, the employer's going to take it as a red flag that you want to sell and it could create problems.

Doesn't the right of first refusal mean that company has the right to buy the shares (at the same price)? Still not a wise thing to do if you're employed there.

Why not? I feel like this is a dirty secret and double standard at high profile tech startups - management and those with preferred stock regularly sell to the secondary market while the common workers are supposed to be wait for some distant pay day that may or may not arrive. Why shouldn't you be able to take money off the table? If the company is really that solid and the IPO is such a "sure" thing as you are lead to believe then it shouldn't matter. What I learned when I sold my options was that I was not the first and in fact the secondary market companies told they sold employee options before so it can and is being done. I don't think its a red flag at all. It means your savvy. I think that most employees aren't aware that this is even an option for them.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#35

Post by bogomipz »

state wrote: post #22
p4wnc6 wrote: post #12

Earlier quoted context omitted.

Most employees would be in a situation where right of first refusal means their employer would have to approve this -- and in a lot of places, the employer's going to take it as a red flag that you want to sell and it could create problems.

Could someone (perhaps with a throwaway or a 'wink') corroborate or elaborate on this? I'm very curious to know (anecdotally) how the politics of these sales work.

See my comment above. There are no politics of it, just an irrational fear, call up one of these companies that specialize in it and ask. I found Sharespost to be very knowledgeable and helpful in this regard.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#36

Post by p4wnc6 »

bogomipz wrote: post #34
maaku wrote: post #29

Earlier quoted context omitted.

Doesn't the right of first refusal mean that company has the right to buy the shares (at the same price)? Still not a wise thing to do if you're employed there.

Why not? I feel like this is a dirty secret and double standard at high profile tech startups - management and those with preferred stock regularly sell to the secondary market while the common workers are supposed to be wait for some distant pay day that may or may not arrive. Why shouldn't you be able to take money off the table? If the company is really that solid and the IPO is such a "sure" thing as you are lead…

Most people probably agree with you, but it doesn't mean founders or start-up execs will see it that way. And there's no way to know why they might cause a problem over it. It could be that they've seen a lot of people selling and view it as a bad signal and they just take it out on you ... or it could be that they are just psycho and see their company like a cult and suddenly you're "not a team player" if you want to sell shares.

People are far from rational about this stuff.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#37

Post by bogomipz »

joshjkim wrote: post #25
state wrote: post #22

Earlier quoted context omitted.

Could someone (perhaps with a throwaway or a 'wink') corroborate or elaborate on this? I'm very curious to know (anecdotally) how the politics of these sales work.

This is a copy/paste from a prior HN discussion that I had: [it's definitely true] that employees are discouraged from seeking buyers because there is an unspoken implication that this means the employee is "losing faith" or "believes less" in the company, or is getting ready to leave. If the party line is: "hey, we are going to be a billion dollar company!" and then one employee says "hey, I want to sell at this $10…

And with each round of financing your equity is likely getting diluted. If you are a good employee and sell some shares on the secondary market and continue to do a good job and remain at the company I don't think anyone can equate that with losing faith or imminent departure.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#38

Post by bogomipz »

throwaway7798 wrote: post #21
jfoutz wrote: post #8

Earlier quoted context omitted.

Buzzfeed news is pretty good. You won't believe how they fund serious journalism. #8 will shock you. But seriously, they do seem to have a commitment to producing quality news. [1] for example. [1] http://www.nytimes.com/2013/10/22/business/media/buzzfeed-hi...

I strongly disagree. They produce a lot of biased news geared against startups in Silicon Valley. It almost feels like they're anti-startup news feed. And reading them, as an employee of a startup makes me feel pessimistic and depressed.

Yep and ditto for that shit pile known as Gawkwer Media. Techcrunch is another one to be avoided. As far as I can tell the only tech bubble that exists is the one these media companies keep trying to drag into existence.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#39

Post by bogomipz »

p4wnc6 wrote: post #36
bogomipz wrote: post #34

Earlier quoted context omitted.

Why not? I feel like this is a dirty secret and double standard at high profile tech startups - management and those with preferred stock regularly sell to the secondary market while the common workers are supposed to be wait for some distant pay day that may or may not arrive. Why shouldn't you be able to take money off the table? If the company is really that solid and the IPO is such a "sure" thing as you are lead…

Most people probably agree with you, but it doesn't mean founders or start-up execs will see it that way. And there's no way to know why they might cause a problem over it. It could be that they've seen a lot of people selling and view it as a bad signal and they just take it out on you ... or it could be that they are just psycho and see their company like a cult and suddenly you're "not a team player" if you want t…

I get what you are saying but remember founders and execs need quality people to build and maintain a successful company. Its unlikely that you will be fired for this. I think if you went and told everyone within earshot that you did this it might problematic but if you kept it to yourself and did it discretely I think its unlikely to cause problems. Also like I mentioned ask these companies(and theres on a couple) if they sold options for your company before.

As far as psychos and/or the cult mentality, my view is that I wouldn't want to work there anyway but thats me.

Re: Dropbox Shares Offered at 34% Discount in Secondary Market

#40

Post by jmathai »

msoad wrote: post #19

The bigger story is that Dropbox is trending down in general. Look at Google Trends[1] for Dropbox searches. I used to have files. But now I don't really have any files. I use Spotify for music. A collection of streaming services for movies and shows. Google Photos for my photos. Google Docs for storing my spreadsheets and "word" documents and Google Drive to dump some useful PDF files. I don't pay for any storage se…

Dropbox's recent gamble and failure with Carousel has to be a big blow. Especially considering how successful Google Photos has been so far.

When they launched Carousel I had hopes that they'd really capture the market [1]. But nearly 2 years later I think Google ended up out Carouseling Dropbox [2].

[1] https://medium.com/@jmathai/thoughts-on-dropbox-carousel-e5a...

[2] https://medium.com/@jmathai/my-automated-photo-workflow-usin...

Post reply on HN