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Employees usually have no visibility into preference, even when explicitly asking about it.
by danielweber 10y ago
Employees usually have no visibility into preference, even when explicitly asking about it.
- aetherson 10y agoSure. And I'm not saying that's not a problem, but here's the basic thing you need to know about preference: If your real valuation turns out to be lower than what you raised money at, preference will eat a bunch or all of your valuation. And this shouldn't really surprise anyone. It's like some people at HN heard the old joke "How do you make a million in publishing? Start with ten million," and thought: a. Yes, that seems valid. b. Where's my share of the resulting million?
- danielweber 10y ago"You only lose to preference in case of a lowered valuation" is true only for 1x preferences. For 2x preferences, employees can lose out even if the valuation goes up, just by not as much as needed.