4 ms·

Square Falls on Concerns Over Financing of Loan Program

41 points by iamchmod 10y ago

squaredaway 10y ago
In early 2014, Square arranged for a private market purchase of a limited number of employee shares as part of one of their later rounds (D or E). It is astonishing that the public market price has never risen above the price offered to employees in this liquidation event. Most employees thought the price offered was "too cheap" at roughly $16 per share. This should be a lesson to everybody working at a startup: always take money off the table whenever it is offered.
- YuriNiyazov 10y ago
  Facebook was down for a year after its IPO. It now trades at 3x of its IPO price. "Always take money off the table whenever it is offered." is terrible advice.
  - jonathanjaeger 10y ago
    I feel like when you're working at a company that's about to go public, you can sort of see the writing on the wall (e.g. quick wins with no long-term strategy, high turnover and bad morale, upcoming products, etc.). I run Facebook marketing campaigns and it was so clear that mobile advertising was going to be a cash cow in the early days -- this was before any numbers were out there and people were still VERY skeptical about Facebook's mobile strategy. I think employees who want to live dangerously by not selling their stock should use their gut based on what they see working or not working at their company.
    - pfarnsworth 10y ago
      Employees are generally the worst judges of whether or not a company's stock price will go up. They have far too vested an interest to make an unbiased assessment, and most people anyway don't know what the markets are looking for in terms of making the stock price go higher.
  - pfarnsworth 10y ago
    You are suffering from survivorship bias. 18 months after an IPO, most companies are below the IPO price. Companies like Facebook and Google are the exception, they do not make the rule. https://www.iposcoop.com/last-100-ipos/ https://www.iposcoop.com/last-100-ipos/ shows that of the last 100 IPOs across all sectors, 63% are below their IPO price. Pandora, Twitter, Square, First Data, Lending Club, GoPro, Etsy, etc are all doing shitty. Technically Square is trading above its IPO price only because it got humiliated with having to price their IPO at $9.
- tarr11 10y ago
  A big benefit of working for startups like Square is the opportunity for a non-linear upside. It would probably be more prudent to avoid working for startups, if you are going to take this approach. This approach (taking money off the table as early as possible) will likely have a worse return than if you had worked for a traditional company which pays market rates using cash or cash equivalents.
- mathattack 10y ago
  It's never this black and white. Many (but not all!) companies that eventually exit do so at a value greater than previous rounds. Many also have bumps in the road. What is good advice at Square may be bad advice at Apple, depending on when you've timed it. Taking money off the table is more about risk tolerance than anything else. If you have 2 kids whose college funds aren't filled, and your salary barely pays the rent, and you don't have other assets, taking money off the table makes a lot of sense. If you have a fairly well diversified broad portfolio of assets, and your personal costs are low, it may make more sense to let it ride.

41 points by iamchmod 10y ago

In early 2014, Square arranged for a private market purchase of a limited number of employee shares as part of one of their later rounds (D or E). It is astonishing that the public market price has never risen above the price offered to employees in this liquidation event. Most employees thought the price offered was "too cheap" at roughly $16 per share. This should be a lesson to everybody working at a startup: always take money off the table whenever it is offered.

YuriNiyazov 10y ago
Facebook was down for a year after its IPO. It now trades at 3x of its IPO price. "Always take money off the table whenever it is offered." is terrible advice.
- jonathanjaeger 10y ago
  I feel like when you're working at a company that's about to go public, you can sort of see the writing on the wall (e.g. quick wins with no long-term strategy, high turnover and bad morale, upcoming products, etc.). I run Facebook marketing campaigns and it was so clear that mobile advertising was going to be a cash cow in the early days -- this was before any numbers were out there and people were still VERY skeptical about Facebook's mobile strategy. I think employees who want to live dangerously by not selling their stock should use their gut based on what they see working or not working at their company.
  - pfarnsworth 10y ago
    Employees are generally the worst judges of whether or not a company's stock price will go up. They have far too vested an interest to make an unbiased assessment, and most people anyway don't know what the markets are looking for in terms of making the stock price go higher.
- pfarnsworth 10y ago
  You are suffering from survivorship bias. 18 months after an IPO, most companies are below the IPO price. Companies like Facebook and Google are the exception, they do not make the rule. https://www.iposcoop.com/last-100-ipos/ https://www.iposcoop.com/last-100-ipos/ shows that of the last 100 IPOs across all sectors, 63% are below their IPO price. Pandora, Twitter, Square, First Data, Lending Club, GoPro, Etsy, etc are all doing shitty. Technically Square is trading above its IPO price only because it got humiliated with having to price their IPO at $9.
tarr11 10y ago
A big benefit of working for startups like Square is the opportunity for a non-linear upside. It would probably be more prudent to avoid working for startups, if you are going to take this approach. This approach (taking money off the table as early as possible) will likely have a worse return than if you had worked for a traditional company which pays market rates using cash or cash equivalents.
mathattack 10y ago
It's never this black and white. Many (but not all!) companies that eventually exit do so at a value greater than previous rounds. Many also have bumps in the road. What is good advice at Square may be bad advice at Apple, depending on when you've timed it. Taking money off the table is more about risk tolerance than anything else. If you have 2 kids whose college funds aren't filled, and your salary barely pays the rent, and you don't have other assets, taking money off the table makes a lot of sense. If you have a fairly well diversified broad portfolio of assets, and your personal costs are low, it may make more sense to let it ride.