How Wizards of the Coast distributed equity as a startup
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How Wizards of the Coast distributed equity as a startup
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Re: How Wizards of the Coast distributed equity as a startup
#2I love the idea of small scale stock offerings, but isn't this illegal? My understanding was that selling stock like this is a private equity offering and that private equity offerings are limited to a small number of people unless the investor is sufficiently rich (the government likes to use the term "accredited investor").
Re: How Wizards of the Coast distributed equity as a startup
#3>If I had a deep, intellectual conversation with someone, I’d give them 10 shares. At $0.50 per share, that was only $20 of fictional value, certainly a fair trade at the time!
Is his multiplication bad, or am I misunderstanding something terribly?
Re: How Wizards of the Coast distributed equity as a startup
#4>If I had a deep, intellectual conversation with someone, I’d give them 10 shares. At $0.50 per share, that was only $20 of fictional value, certainly a fair trade at the time! Is his multiplication bad, or am I misunderstanding something terribly?
He multiplied by 2 instead of dividing. He meant $5.
Re: How Wizards of the Coast distributed equity as a startup
#5This is a great story, and I'm glad it worked out for them, but it's important to keep in mind that it's only one data point. This is exactly the sort of "I'll pay you in equity, and once my great idea makes it big you'll be rich!" approach that HN usually hates, because 99% of the time said payout never comes.
Re: How Wizards of the Coast distributed equity as a startup
#6>If I had a deep, intellectual conversation with someone, I’d give them 10 shares. At $0.50 per share, that was only $20 of fictional value, certainly a fair trade at the time! Is his multiplication bad, or am I misunderstanding something terribly?
He multiplied by 2 instead of dividing. He meant $5.
Ok, I thought that was the most likely, but didn't want to discount some sort of option-style benefit.
Re: How Wizards of the Coast distributed equity as a startup
#7"But most of the value in this company came from two things: Richard Garfield creating Magic: The Gathering, and the employees. Not investors. It’s only appropriate that the distribution from the sale reflects that."
Hear hear. Investors say that founders and employees are what make startups. I wish the cap tables reflected that.
Re: How Wizards of the Coast distributed equity as a startup
#8>If I had a deep, intellectual conversation with someone, I’d give them 10 shares. At $0.50 per share, that was only $20 of fictional value, certainly a fair trade at the time! Is his multiplication bad, or am I misunderstanding something terribly?
This goes hand in hand with his admitting he didn't know how to price them. :-)
Re: How Wizards of the Coast distributed equity as a startup
#9I love the idea of small scale stock offerings, but isn't this illegal? My understanding was that selling stock like this is a private equity offering and that private equity offerings are limited to a small number of people unless the investor is sufficiently rich (the government likes to use the term "accredited investor").
Giving in lieu of services isn't illegal. I believe that selling them without some kind of legal preparation is. (Strange)
Another challenge is you are limited to the # of owners you can have in a pre-IPO company.
Re: How Wizards of the Coast distributed equity as a startup
#10This is a great story, and I'm glad it worked out for them, but it's important to keep in mind that it's only one data point. This is exactly the sort of "I'll pay you in equity, and once my great idea makes it big you'll be rich!" approach that HN usually hates, because 99% of the time said payout never comes.
True. But it's nice to hear these stories. My brother gave our old man $5K in his startup in appreciation for several months of sleeping on the couch when money got tight. During a downturn my brother lost it all. When the dot com bubble hit, my old man realized he still had the stock, which was now in a parent of a parent, and got out with a 20x return.