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CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

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Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#2

Post by nostrademons »

IIRC PayPal was very similar - it was sold for $1.5B, but Max Levchin's share was only about $30M, and Elon Musk's was only about $100M. By comparison, many early Web 2.0 darlings (Del.icio.us, Blogger, Flickr) sold for only $20-40M, but their founders had only taken small seed rounds, and so the vast majority of the purchase price went to the founders. 75% of a $40M acquisition = 3% of a $1B acquisition.

Something for founders to think about when they're taking funding. If you look at the gigantic tech fortunes - Gates, Page/Brin, Omidyar, Bezos, Zuckerburg, Hewlett/Packard - they usually came from having a company that was already profitable or was already well down the hockey-stick user growth curve and had a clear path to monetization by the time they sought investment. Companies that fight tooth & nail for customers and need lots of outside capital to do it usually have much worse financial outcomes.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#5

Post by not_that_noob »

nostrademons wrote: post #2

IIRC PayPal was very similar - it was sold for $1.5B, but Max Levchin's share was only about $30M, and Elon Musk's was only about $100M. By comparison, many early Web 2.0 darlings (Del.icio.us, Blogger, Flickr) sold for only $20-40M, but their founders had only taken small seed rounds, and so the vast majority of the purchase price went to the founders. 75% of a $40M acquisition = 3% of a $1B acquisition. Something f…

This. Founders are better served maximizing traction at the lowest outside investment possible. If it doesn't become big, then you still hold a large chunk of a small company. And if does, then you hold a fairly large chunk of a large company.

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#9

Post by ycmike »

I agree with the article that since startups are pass/fail, the founders must due whatever they have to do to succeed. Marc Andreesen says to even take that highly diluted fourth round to get to product/market fit and increase your chances of success. http://www.stanford.edu/class/ee204/ProductMarketFit.html

Re: CEO Aaron Levie Will Only Own 4.1% Of Box When It IPOs, Investor DFJ Owns 25.5%

#10

Post by klochner »

not_that_noob wrote: post #5
nostrademons wrote: post #2

IIRC PayPal was very similar - it was sold for $1.5B, but Max Levchin's share was only about $30M, and Elon Musk's was only about $100M. By comparison, many early Web 2.0 darlings (Del.icio.us, Blogger, Flickr) sold for only $20-40M, but their founders had only taken small seed rounds, and so the vast majority of the purchase price went to the founders. 75% of a $40M acquisition = 3% of a $1B acquisition. Something f…

This. Founders are better served maximizing traction at the lowest outside investment possible. If it doesn't become big, then you still hold a large chunk of a small company. And if does, then you hold a fairly large chunk of a large company.

And if it fails?

It's obvious that founders prefer to keep more of the company, however tortured of a phrase you use to express it.

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