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Amazon bought Eero for $97M and employees still got screwed

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Re: Amazon bought Eero for $97M and employees still got screwed

#51

Post by tracker1 »

wutbrodo wrote: post #49
bb88 wrote: post #32

Earlier quoted context omitted.

There's this idea that everyone is in the same boat together, for better or worse. Especially in a startup. And to see some get huge bonuses while others see large losses -- especially in the same company -- doesn't seem entirely fair. > and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company True, but that's the CEO and board that can do that. The employees can't just l…

Investors lost money on the deal overall, right? While employees got paid a salary for however many years they were there? By your framing, employees get "preferential treatment" with respect to salary. This isn't just theoretical: my current job is at a place who's known to be cash-heavy (ie equity-light) with their offers, relative to competitors. This suits me just fine, since I'm not sure enough about the company…

The salary is often in leiu of equity which is effectively worthless, while those responsible for that failure (management) make out like bandits.

Frankly, I will never take a position at a startup with a base pay lower than market. It doesn't make any sense IMHO.

Re: Amazon bought Eero for $97M and employees still got screwed

#52

Post by rhizome »

aetherson wrote: post #15

I don't understand what people expect in this kind of situation. The company was bought for around the amount of money that they took in investment, or less. Why would the employees get anything? If preference didn't exist, and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company, return $1M, and keep $9M, obviously that would just mean that nobody would invest in startup…

>Why would the employees get anything?

This may be the most tone-deaf thing I've read in a long-ass time.

BECAUSE THEY DID THE (...) WORK!

Re: Amazon bought Eero for $97M and employees still got screwed

#53

Post by librish »

munk-a wrote: post #18
librish wrote: post #13

Earlier quoted context omitted.

I don't think that's the right way to think about it. Everyone got "screwed" on equity, including the founders. Separately Amazon decided to set up packages for employees they thought were to valuable to lose. If an early employee was valuable enough they were probably included in the 10 who received it.

I am so confused, were the owners just idiots about judging the value of the sale? There is no reason that all the stockholders should have voted to approve this sale unless they were going to walk away with something to pad their pockets so... did some majority shareholder sell out to amazon and get some separate remuneration? I feel like that should definitely be illegal. Edit: Oh, so the founders assumed they'd be…

No, the company was failing and the board decided that this was the best way for the investors to recuperate some of their lost capital. If they waiting longer they would've had to sell for less or go bankrupt which would have lost everyone even more money. (Obviously employees were already at $0 so they couldn't lose more).

Re: Amazon bought Eero for $97M and employees still got screwed

#54

Post by toomuchtodo »

arcturus17 wrote: post #37
toomuchtodo wrote: post #17

Earlier quoted context omitted.

I have been involved in M&A activity, and when we (owners) bought a failed competitor for clients and assets, we wiped out the owners (who had misstated some financial factors of importance) and made the employees whole (who had all been stiffed on pay). We didn’t have to, but it was the right thing to do . Everyone has different morals and ethics I suppose.

But if you're the guy doing M&A at Amazon how do you sell that to your boss, who has to sell it to Bezos, who at the end of the day has to sell it to stakeholders.

Good PR is cheap and people talk.

Re: Amazon bought Eero for $97M and employees still got screwed

#55

Post by yjftsjthsd-h »

rhizome wrote: post #52
aetherson wrote: post #15

I don't understand what people expect in this kind of situation. The company was bought for around the amount of money that they took in investment, or less. Why would the employees get anything? If preference didn't exist, and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company, return $1M, and keep $9M, obviously that would just mean that nobody would invest in startup…

> Why would the employees get anything? This may be the most tone-deaf thing I've read in a long-ass time. BECAUSE THEY DID THE (...) WORK!

Yes, of course they did work. For which they got a salary.

Of course, if they worked for equity rather than cash, that was their call and one would expect them to bear the outcome.

Re: Amazon bought Eero for $97M and employees still got screwed

#56

Post by bb88 »

wutbrodo wrote: post #49
bb88 wrote: post #32

Earlier quoted context omitted.

There's this idea that everyone is in the same boat together, for better or worse. Especially in a startup. And to see some get huge bonuses while others see large losses -- especially in the same company -- doesn't seem entirely fair. > and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company True, but that's the CEO and board that can do that. The employees can't just l…

Investors lost money on the deal overall, right? While employees got paid a salary for however many years they were there? By your framing, employees get "preferential treatment" with respect to salary. This isn't just theoretical: my current job is at a place who's known to be cash-heavy (ie equity-light) with their offers, relative to competitors. This suits me just fine, since I'm not sure enough about the company…

> By your framing, employees get "preferential treatment" with respect to salary.

Right because most people can't live on a 4 or 5 year option wait alone. And the likelihood of a company getting only rich employees to work for them seems small.

If that were true, then you'd be right.

Re: Amazon bought Eero for $97M and employees still got screwed

#57

Post by [deleted] »

bb88 wrote: post #32
aetherson wrote: post #15

I don't understand what people expect in this kind of situation. The company was bought for around the amount of money that they took in investment, or less. Why would the employees get anything? If preference didn't exist, and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company, return $1M, and keep $9M, obviously that would just mean that nobody would invest in startup…

There's this idea that everyone is in the same boat together, for better or worse. Especially in a startup. And to see some get huge bonuses while others see large losses -- especially in the same company -- doesn't seem entirely fair. > and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company True, but that's the CEO and board that can do that. The employees can't just l…

[deleted]

Re: Amazon bought Eero for $97M and employees still got screwed

#58

Post by librish »

olliej wrote: post #36

Again, if your offer includes a stock grant/option/whatever stake that doesn't have the same priority as those owned by the executive team then you need to treat it as having zero value. If a company believe its stock is sufficiently valuable to be worth being used as compensation then it shouldn't feel the need to give pre-IPO employees low-priority "equity". I recognize people argue that you're taking a lower salar…

I don't understand why you think such black-and-white thinking is needed. The correct thing should be to appropriately discount the options to account for these things instead of saying it's zero.

Sure, walking in with the naive approach will lead most people to vastly overvalue options, but I feel like the counter movement you're championing here acts as if no early employee has ever earned money on options no matter the outcome.

Re: Amazon bought Eero for $97M and employees still got screwed

#59

Post by excitom »

nytesky wrote: post #47
aetherson wrote: post #15

I don't understand what people expect in this kind of situation. The company was bought for around the amount of money that they took in investment, or less. Why would the employees get anything? If preference didn't exist, and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company, return $1M, and keep $9M, obviously that would just mean that nobody would invest in startup…

Honestly confused: why do you want to pay bonuses to retain execs of a failed company? Weren’t they responsible for that failure?

It takes a huge amount of money to build a successful hardware company and they failed because they ran short of cash. However Amazon seems to believe that their product idea and the people who conceived it have value, and that's what they paid for.

Re: Amazon bought Eero for $97M and employees still got screwed

#60

Post by pageandrew »

nytesky wrote: post #47
aetherson wrote: post #15

I don't understand what people expect in this kind of situation. The company was bought for around the amount of money that they took in investment, or less. Why would the employees get anything? If preference didn't exist, and I could take $10M in investment at $100M in valuation, and then the next day liquidate the company, return $1M, and keep $9M, obviously that would just mean that nobody would invest in startup…

Honestly confused: why do you want to pay bonuses to retain execs of a failed company? Weren’t they responsible for that failure?

Not necessarily. Companies fail for any number of reasons, not just executive incompetence. Eero is a hardware company, and hardware companies are require significant capital to operate. Its a very difficult space to operate in, especially pre-launch.

> Hardware startups require a lot of cash, and technological progress can render a product obsolete before it has a chance to take off. Nearly all (97 percent) of the 400 hardware startups tracked in a 2017 report from CB Insights either died or became "zombies," companies that survive for awhile with VC money, but eventually fizzle out.

Amazon purchased this company for its technology and people. Having the entire executive team leave immediately would make the transition exceedingly difficult. They want to incentivize these people to stay to assist in the transition, hence the payout.

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