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WePay's (YC S09) next chapter

blog.wepay.com

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Re: WePay's (YC S09) next chapter

#71

Post by SeoxyS »

austenallred wrote: post #30
craigkerstiens wrote: post #27

Earlier quoted context omitted.

That is a solid outcome, but with nearly 80m (publicly) raised, likely not a giant return based on those numbers and length of company existing. Some may have done quite well, but plenty of unclear details. There are many notable home-runs for all players involved, FB, Whatsapp, etc, but those are often the exception. This isn't to say it's a bad acquisition or should be dismissed as a failure. It just re-iterates th…

A $220m+ acquisition is absolutely a home run, and likely a win for all involved, even with $80m raised. FB and WhatsApp are once-in-a-decade type returns. In baseball parlance perhaps a World Series winning grand slam or a perfect game. You needn’t exit for $19B for it to be a great outcome.

If you think a $220M acquisition is a home run for anyone involved, you don't understand the Venture model. Liquidation preferences means that investors are probably getting around 1x their money back, which will be considered a failure in their portfolio. They need a 10-100x win to pay for all of the losses. Common stock holders will be seeing less than their pro-rata allocation of the acquisition price (e.g. if you own 1% of common stock, you are getting less than 2.2M).

The top line acquisition price is probably the full package including costs and retention bonuses, not all of which will be paid out. The only people who will get something for their time are the founders, but they're probably looking at low to mid 8 figures at best.

Re: WePay's (YC S09) next chapter

#72

Post by bogomipz »

JonFish85 wrote: post #62
craigkerstiens wrote: post #27

Earlier quoted context omitted.

That is a solid outcome, but with nearly 80m (publicly) raised, likely not a giant return based on those numbers and length of company existing. Some may have done quite well, but plenty of unclear details. There are many notable home-runs for all players involved, FB, Whatsapp, etc, but those are often the exception. This isn't to say it's a bad acquisition or should be dismissed as a failure. It just re-iterates th…

If "the number" is, say $220m, it could be a number of things. If it's cash today, others have done the math on how things could get divvied up. The "top line" number can mean a lot of things though; it almost certainly includes the assumption of hitting several targets, some of which are reasonable and some are probably stretches. It's also a very real possibility that the "real" cost that Chase paid was just the ri…

>"It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock."

Would you mind elaborating on this? What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional?

>"Employees then are given a sheet to sign saying that their stock in WePay is now worth $0, but here's an offer for Chase stock vesting over 4 years."

For an the average rank and file employee who has been grinding it out at Wepay through the ups and downs I am imagining this might not be a "feel good" moment.

Re: WePay's (YC S09) next chapter

#73

Post by joering2 »

ianhawes wrote: post #51
joering2 wrote: post #25

Earlier quoted context omitted.

No its not. What you describing is called "collusion fraud" and if caught it can land you/your company on MATCH list.

No, you're wrong. Collusion fraud is (generally) when a merchant uses stolen credit cards to process payments then absconds with the money before the customer disputes the charge. What the parent is describing is PayFac (payment facilitator) which is where the card network and acquirer are aware of the merchant/sub-merchant relationship. You can determine if a payment is through PayFac by the tell-tale asterisk after…

You are spreading misinformation. Collusion fraud occurs when you are approved for selling ebooks and you endup selling e-cigs, for example. Has nothing to do with using stolen credit cards, which obviously is a crime.

Source: 12 years of experience processing cards in CNP/MOTO environment.

Re: WePay's (YC S09) next chapter

#74

Post by joering2 »

cookiecaper wrote: post #57
joering2 wrote: post #18

Earlier quoted context omitted.

Probably like many others, in the first part of 2012 I invested about $10k in some bitcoins that I still continue to keep untouched today. Tell me once again what should I stay away from??

Please cash in at least some of that; it's too sad to think of a conventional amateur investor approach of "always hold out for more" wiping out that potential fortune. Take your 5000x gain and be happy with that phenomenal performance instead of being concerned about the infinite "I could've gotten more if I just sold on Magic Date X". A materialized gain that you can actually use is more valuable than a paper gain…

I appreciate your concern. I am keeping them not for more gains, but to pass it on to my child eventually, although I believe single bitcoin will end up costing north of $25,000 since #1 there is only limited number being eventually in "circulation", #2 you can safely use 0.0001 bitcoin to process transaction worth $5.

Re: WePay's (YC S09) next chapter

#75

Post by austenallred »

SeoxyS wrote: post #71
austenallred wrote: post #30

Earlier quoted context omitted.

A $220m+ acquisition is absolutely a home run, and likely a win for all involved, even with $80m raised. FB and WhatsApp are once-in-a-decade type returns. In baseball parlance perhaps a World Series winning grand slam or a perfect game. You needn’t exit for $19B for it to be a great outcome.

If you think a $220M acquisition is a home run for anyone involved, you don't understand the Venture model. Liquidation preferences means that investors are probably getting around 1x their money back, which will be considered a failure in their portfolio. They need a 10-100x win to pay for all of the losses. Common stock holders will be seeing less than their pro-rata allocation of the acquisition price (e.g. if you…

If we say 1x preference, there’s still at least 160m left over. Early investors that need a 10x return were investing in 2009, so let’s say 3m valuatiom? They might not get 100x, but they’re going to return way above 10x. The investors putting in in later rounds don’t need to see 100x returns, as their investment is more derisked, and series C+ is a very different game.

Re: WePay's (YC S09) next chapter

#76

Post by austenallred »

bspn wrote: post #61
austenallred wrote: post #30

Earlier quoted context omitted.

A $220m+ acquisition is absolutely a home run, and likely a win for all involved, even with $80m raised. FB and WhatsApp are once-in-a-decade type returns. In baseball parlance perhaps a World Series winning grand slam or a perfect game. You needn’t exit for $19B for it to be a great outcome.

For the founders this represents a very nice exit but for investors, not so much. It obviously depends on when they entered, but later stage investors aren't likely to be making much (if anything) off the exit. Getting money back from a struggling investment is always nice, but I doubt the VCs will be touting this as one of their success stories in the quarterly report.

Later stage is also a different risk profile. They don’t need 100x returns, and their investment is very de-risked compared to early stage. It’s a different game, and returning 2x consistently is solid performance.

Re: WePay's (YC S09) next chapter

#77

Post by JonFish85 »

bogomipz wrote: post #72
JonFish85 wrote: post #62

Earlier quoted context omitted.

If "the number" is, say $220m, it could be a number of things. If it's cash today, others have done the math on how things could get divvied up. The "top line" number can mean a lot of things though; it almost certainly includes the assumption of hitting several targets, some of which are reasonable and some are probably stretches. It's also a very real possibility that the "real" cost that Chase paid was just the ri…

>"It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock." Would you mind elaborating on this? What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional? >"Employees then are given a sheet to sign saying that their stock in WePa…

> "What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional?"

This would mean something like paying exactly what the valuation at the last round was, such that it'd cause the cap table to unwind leaving precisely $0 to split amongst common stock. It's not a huge win for investors, but if it's clearly not going to be a huge win, they get their money back (plus whatever conditions they had for more), and can move on.

> "For an the average rank and file employee who has been grinding it out at Wepay through the ups and downs I am imagining this might not be a "feel good" moment."

Probably not. I've had friends who have been at companies that have sold at these "big numbers", but come to the sad realization that the numbers aren't "real" (e.g. their 1.5% stake of $250m is worth $0). I'm sure it's a weird feeling to see the "congrats!" messages! However, the "retention bonus" of $100k over 4 years on top of their salary is usually enough to keep people from burning the place down (being facetious).

Re: WePay's (YC S09) next chapter

#78

Post by Kiro »

Nemisis7654 wrote: post #66
Kiro wrote: post #44

Earlier quoted context omitted.

What's with the PS? Did he tell you that or are you saying he shouldn't waste his newfound riches on bitcoin? Seems really out of context otherwise.

I believe he's referring to the statements made by Chase CEO Jamie Dimon on bitcoin: https://www.cnbc.com/2017/09/12/jpmorgan-ceo-jamie-dimon-rai... > It's just not a real thing, eventually it will be closed, > Dimon also said he'd "fire in a second" any JPMorgan trader who was trading bitcoin, noting two reasons: "It's against our rules and they are stupid."

Ah, good catch!

Re: WePay's (YC S09) next chapter

#79

Post by bogomipz »

JonFish85 wrote: post #77
bogomipz wrote: post #72

Earlier quoted context omitted.

>"It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock." Would you mind elaborating on this? What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional? >"Employees then are given a sheet to sign saying that their stock in WePa…

> "What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional?" This would mean something like paying exactly what the valuation at the last round was, such that it'd cause the cap table to unwind leaving precisely $0 to split amongst common stock. It's not a huge win for investors, but if it's clearly not going to be a huge win, they get their money back (plus whatever conditio…

Thanks for the clarification. I do feel for the employees that are realizing their equity they took in lieu of cash is worthless.

The retention bonus is nice provided you don't mind working for a Goliath bank I guess.

Re: WePay's (YC S09) next chapter

#80

Post by mbesto »

joering2 wrote: post #73
ianhawes wrote: post #51

Earlier quoted context omitted.

No, you're wrong. Collusion fraud is (generally) when a merchant uses stolen credit cards to process payments then absconds with the money before the customer disputes the charge. What the parent is describing is PayFac (payment facilitator) which is where the card network and acquirer are aware of the merchant/sub-merchant relationship. You can determine if a payment is through PayFac by the tell-tale asterisk after…

You are spreading misinformation. Collusion fraud occurs when you are approved for selling ebooks and you endup selling e-cigs, for example. Has nothing to do with using stolen credit cards, which obviously is a crime. Source: 12 years of experience processing cards in CNP/MOTO environment.

> Collusion fraud occurs when you are approved for selling ebooks and you endup selling e-cigs, for example.

This has literally nothing to do with what I originally posted.

Source: The parent comment.

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