4 ms·

> golden hand cuffs Those aren't really worth much anymore -- once you hit a bump in the road, employee options are the first things to be wiped out. If invest

> golden hand cuffs Those aren't really worth much anymore -- once you hit a bump in the road, employee options are the first things to be wiped out. If investors received a larger share as has been reported, it's in preferred shares, which probably wipes out the employee options.

jhpankow 10y ago
That's why I called mine bronze handcuffs.
- mi100hael 10y ago
  Sounds like plastic zip ties might be more appropriate at this point.
  - bredren 10y ago
    These work in a riot.
temp246810 10y ago
As much as I want to shit on Zenefits I think they actually doubled up employee options as well. Sacks was pretty good about handling that situation. Still agree with your overall point though - it's going to be a long, long time before those shares are worth anything.
- JonFish85 10y ago
  If everyone gets 2x shares/options, there's no change in ownership -- someone lost out, otherwise they wouldn't do it. And preferred shares are tickets for the front of the line, and quite possibly with onerous terms that aren't public (whether it's a multiplier, or something else). Between a lowered valuation and more shares given to investors and the burden of a high valuation..... things don't look bright for the future of Zenefits, and especially not their employees.
  - boling11 10y ago
    From the news, it sounded like the repricing benefited Series C investors, and current employees got equity increases. So founders, former employees, and earlier investors probably lost out...
Xyik 10y ago
can you explain a bit about how preferred shares wipe out employee options? thats only in the scenario the company exits for far fewer than its current valuation?
- jzl 10y ago
  Google "preferred participating". Not all preferred offerings are participating but some are. Also, define "current". What matters the most is its valuation at exit relative to its valuation in the final few funding rounds.
- svachalek 10y ago
  1. Usually debts are paid off first, then preferred shareholders get their money back, before regular shareholders get a chance to sell. I got a 1099 for $0.00 one year thanks to this! 2. When new shares are issued, usually preferred shareholders get shares for free to maintain their percentage in the company. Other existing shareholders do not, of course.

jhpankow 10y ago

That's why I called mine bronze handcuffs.

mi100hael 10y ago
Sounds like plastic zip ties might be more appropriate at this point.
- bredren 10y ago
  These work in a riot.

temp246810 10y ago

As much as I want to shit on Zenefits I think they actually doubled up employee options as well. Sacks was pretty good about handling that situation. Still agree with your overall point though - it's going to be a long, long time before those shares are worth anything.

JonFish85 10y ago
If everyone gets 2x shares/options, there's no change in ownership -- someone lost out, otherwise they wouldn't do it. And preferred shares are tickets for the front of the line, and quite possibly with onerous terms that aren't public (whether it's a multiplier, or something else). Between a lowered valuation and more shares given to investors and the burden of a high valuation..... things don't look bright for the future of Zenefits, and especially not their employees.
- boling11 10y ago
  From the news, it sounded like the repricing benefited Series C investors, and current employees got equity increases. So founders, former employees, and earlier investors probably lost out...

Xyik 10y ago

can you explain a bit about how preferred shares wipe out employee options? thats only in the scenario the company exits for far fewer than its current valuation?

jzl 10y ago
Google "preferred participating". Not all preferred offerings are participating but some are. Also, define "current". What matters the most is its valuation at exit relative to its valuation in the final few funding rounds.
svachalek 10y ago
1. Usually debts are paid off first, then preferred shareholders get their money back, before regular shareholders get a chance to sell. I got a 1099 for $0.00 one year thanks to this! 2. When new shares are issued, usually preferred shareholders get shares for free to maintain their percentage in the company. Other existing shareholders do not, of course.