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For all those wondering about Priceline (CEO Ownership 47%, VC Ownership 74%), where the total ownership exceeds 100%: Walker Digital Corp, one of the VCs, was

For all those wondering about Priceline (CEO Ownership 47%, VC Ownership 74%), where the total ownership exceeds 100%: Walker Digital Corp, one of the VCs, was founded by Jay Walker, the CEO of Priceline. Also, Zuckerberg exceptionalism strikes again: he was the highest ownership-retaining CEO on the list, at 57% (closely followed by others at 55 and 53).

anilgulecha 10y ago
It's not actually 57% of facebook's value (since that would make him by far the richest person).. It's voting rights. Facebook stock is split into 2 classes.. I think monetary value wise, he holds a much smaller chunk of FB. Same for Larry Page/Sergey Brin for Google. Rather than percentages, the median/mode of absolute monetary value would be more useful, since that gives you a directly number you can compare to non-VC startup (lifestyle startup). If you own 2% of a 100M VC startup, maybe it's the same to fully own a 2M fully owned lifestyle startup.
- kijin 10y ago
  Both monetary value and voting rights would be useful metrics, since different founders care about different things. Zuckerberg is absolutely obsessed with retaining control of his company, even at a significant cost to his net worth. On a side note, I was like "wait a second, 2M is now considered a lifestyle business?" but then I remembered that crazy P/E is the norm around here, so a valuation of 2M probably means that the founder subsists on ramen... :(
  - bzbarsky 10y ago
    It's not "around here". It's more "around now". Crazy P/E is the market outcome in any low interest rate environment. If an investor wants to get 2% over the safe (read: government bonds) rate of return and the safe rate is 4%, then the investor wants a 6% return and that gives you price/profit ratio (not quite the same as P/E, I know, but for purposes of lifestyle business income this is the relevant number anyway of about 16). If the safe rate is 0%, then the investor is willing to settle for a 2% return and you get a price/profit ratio of 50. Given identical profits that means 3x the valuation. In real life this is a bit more complicated, because investors may not necessarily seek a simple additive percentage on top of the safe rate of return, but the same dynamic plays out in general. Or to put another way, say you have a lifestyle business with $100k/year of profit. That's nothing too special. What valuation should that correspond to? Depends on risk, of course, but $1-2M doesn't seem unreasonable; that corresponds to 5-10% annual return, which is pretty good right now.
rmason 10y ago
Zuckerberg was given a gift. Sean Parker was kicked out of his startup Plaxo by the VC's. He didn't get mad, he educated himself and by helping Zuckerberg structure Facebook stock into two classes before VC investment he not only got even, but made quite a bit for himself.
- madamelic 10y ago
  So basically what they did was make 2 classes, one had voting rights and the other didn't then 'gave' the non-voting stock to investors? That doesn't seem like it would fly. (Sorry, I could probably Google this myself...)
  - rmason 10y ago
    He also made certain that Zuckerberg got to appoint a majority of the board. Once they had the initial deal with Peter Thiel on future rounds Facebook was such a hot investment they didn't face serious pressure to change things.
  - josu 10y ago
    >That doesn't seem like it would fly. If you are the hottest startup in SV you probably have some leverage in the negotiations.

anilgulecha 10y ago

It's not actually 57% of facebook's value (since that would make him by far the richest person).. It's voting rights. Facebook stock is split into 2 classes.. I think monetary value wise, he holds a much smaller chunk of FB. Same for Larry Page/Sergey Brin for Google. Rather than percentages, the median/mode of absolute monetary value would be more useful, since that gives you a directly number you can compare to non-VC startup (lifestyle startup). If you own 2% of a 100M VC startup, maybe it's the same to fully own a 2M fully owned lifestyle startup.

kijin 10y ago
Both monetary value and voting rights would be useful metrics, since different founders care about different things. Zuckerberg is absolutely obsessed with retaining control of his company, even at a significant cost to his net worth. On a side note, I was like "wait a second, 2M is now considered a lifestyle business?" but then I remembered that crazy P/E is the norm around here, so a valuation of 2M probably means that the founder subsists on ramen... :(
- bzbarsky 10y ago
  It's not "around here". It's more "around now". Crazy P/E is the market outcome in any low interest rate environment. If an investor wants to get 2% over the safe (read: government bonds) rate of return and the safe rate is 4%, then the investor wants a 6% return and that gives you price/profit ratio (not quite the same as P/E, I know, but for purposes of lifestyle business income this is the relevant number anyway of about 16). If the safe rate is 0%, then the investor is willing to settle for a 2% return and you get a price/profit ratio of 50. Given identical profits that means 3x the valuation. In real life this is a bit more complicated, because investors may not necessarily seek a simple additive percentage on top of the safe rate of return, but the same dynamic plays out in general. Or to put another way, say you have a lifestyle business with $100k/year of profit. That's nothing too special. What valuation should that correspond to? Depends on risk, of course, but $1-2M doesn't seem unreasonable; that corresponds to 5-10% annual return, which is pretty good right now.

rmason 10y ago

Zuckerberg was given a gift. Sean Parker was kicked out of his startup Plaxo by the VC's. He didn't get mad, he educated himself and by helping Zuckerberg structure Facebook stock into two classes before VC investment he not only got even, but made quite a bit for himself.

madamelic 10y ago
So basically what they did was make 2 classes, one had voting rights and the other didn't then 'gave' the non-voting stock to investors? That doesn't seem like it would fly. (Sorry, I could probably Google this myself...)
- rmason 10y ago
  He also made certain that Zuckerberg got to appoint a majority of the board. Once they had the initial deal with Peter Thiel on future rounds Facebook was such a hot investment they didn't face serious pressure to change things.
- josu 10y ago
  >That doesn't seem like it would fly. If you are the hottest startup in SV you probably have some leverage in the negotiations.