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A shame that they didn't raise this money through an IPO. I'm afraid of how long unicorns are staying private: it's a big bummer for their employees and early i

A shame that they didn't raise this money through an IPO. I'm afraid of how long unicorns are staying private: it's a big bummer for their employees and early investors. It'll be a tough sell for early employees of the next batch of unicorns if Uber, Airbnb, Palantir, Dropbox, etc. stay private for 10-15 years or more!

alehul 10y ago
If investors are enthusiastically in disagreement about the potential of a company (both the buy + sell sides), it's probably better for the company's valuation to stay private. It blocks out any negative opinions' effect that you'd have if public via investors shorting / betting against the company. This probably leads to an overly high valuation it wouldn't hold up to on the stock market, though, (i.e. Uber) so then the company feels pressured to stay private until they can justify that overly high valuation. In Uber's case, though, they'll keep raising money at absurd valuations and keep the cycle going. Palantir is an exception: If they were public and had to disclose much information, their value would plummet, so it'll likely stay private in the foreseeable future.
- frgtpsswrdlame 10y ago
  Isn't that bad for employees with stock options though? The market could tell them how much those options are really worth.
  - alehul 10y ago
    Completely, and a small part of why employees are cautioned on here to take salary over equity. The market telling them would be a loss of billions for the investors/founders, both on the value of their own equity and the increased equity they'd have to offer employees (many exceptions apply, but this seems to be the case particularly with startups who lack an easy path to profitability but can show substantial growth).
  - hkmurakami 10y ago
    Palantir will regularly buy its employees' equity fwiw.
    - jonknee 10y ago
      But without the market you could easily be getting ripped off selling your shares back... They're not doing it out of the goodness of their heart.
jlgosse 10y ago
I'm not saying this is the case with this round in particular, but it's not unheard of for early employees to take money off the table in a round like this
- brandur 10y ago
  The company isn't compelled in any way to allow this though, and is actually disincentivized from doing so because it increases the probability of key departures as those people are able to extract some value. If you're in such a position, you better hope that your founders _really_ like you.
  - amenghra 10y ago
    Many companies have periods of time where you get an opportunity to cash out a percentage of your equity. It gives confidence to early employees that the company has their back and they aren't really disincentivized to leave because they still have a majority of their equity "locked".
  - bogomipz 10y ago
    I believe most do though, but with a right of first refusal. In which case they will buy them of direct you to their preferred buyer. Source: I have done this and my conversation with the broker for the secondary market who handles a lot of this said it is quite common and that in fact other at the same company I was at had done so. It might be frowned upon internally but you have to look out for yourself. Staying at a startup for 8+ plus years isn't very realistic for me personally.
- maineldc 10y ago
  There was a very "insider baseball" moment in 2011 with regards to AirBNB and a well known investor "discussing" taking money off the table. Note, the investor was basically saying that if the founders get some liquidity, you should offer the same to employees. I will never forget how much that raise my esteem him. [0] So yes, if they were willing to do it in 2011, I am sure that they are doing it in this round too. [0] - https://techcrunch.com/2011/10/01/chamath-palihapitiya-airbnb-liquidity-everyone/ https://techcrunch.com/2011/10/01/chamath-palihapitiya-airbn...
muninn_ 10y ago
Becoming a public company has it's own set of issues, though.
- elastic_church 10y ago
  Yeah weird how people hold up IPO as a holy grail. Its the worst thing to do if you are actually passionate about the company, if it is your labor of love. Its the best thing to do if you want to make a lot of money from your money machine and are largely apathetic about the outcome of the business itself. Easy enough to find the next MBA graduate to feign passion for you while they are just trying to sell the company.
  - imranq 10y ago
    why is this downvoted? every company I've worked at that has IPO'd companies has been, in my experience, soul-sucking.
  - muninn_ 10y ago
    Yeah I lean toward this view as well. The point of an IPO is to raise capital. But when you do this, unless you own 51% of the company or there is a small group of like-minded individuals that own 51% of the company, you can wind up losing control and instead of doing things Wall Street doesn't like, you're going to have to focus on profitability and pleasing shareholders. It's one route to take, but not the only one.
    - hagbarth 10y ago
      Yeah, but AirBnB took that route when they got private investors. They expect to get their money back with a good ROI. That would be through an IPO or acquisition, either way you loose control of your company.
      - zenlikethat 10y ago
        True, you lose some control, but a small board of a private company is much easier to convince and compel on long-term vision and plans than the general public.
rpearl 10y ago
Dropbox and AirBnB have already been private for almost 10 years! (Palantir - 13!, Uber - 8) I was at Dropbox for a while and left in no small part because of the frustrating lack of potential liquidity on my equity.
- rickcnagy 10y ago
  I don't know, something feels off about Palantir being around for 6227020800 (13!) years...
- trustfundbaby 10y ago
  wow ... did you give up all your vested options? or at least buy a bit of them?
- chii 10y ago
  i expect companies that remain private while dangling equities for it's employees to create an opportunity for them to sell privately - e.g., a liquidation event, where the buyer is an investment/VC firm that wants in. It's good for both parties - employees get a liquidation event, the VC gets foot in the door, and founders aren't diluted. I guess, though, in this case, the employee is the party without power, as they are offered a price (which is probably lowballed, since they don't have a choice) in a take it or leave it fashion...

alehul 10y ago

If investors are enthusiastically in disagreement about the potential of a company (both the buy + sell sides), it's probably better for the company's valuation to stay private. It blocks out any negative opinions' effect that you'd have if public via investors shorting / betting against the company. This probably leads to an overly high valuation it wouldn't hold up to on the stock market, though, (i.e. Uber) so then the company feels pressured to stay private until they can justify that overly high valuation. In Uber's case, though, they'll keep raising money at absurd valuations and keep the cycle going. Palantir is an exception: If they were public and had to disclose much information, their value would plummet, so it'll likely stay private in the foreseeable future.

frgtpsswrdlame 10y ago
Isn't that bad for employees with stock options though? The market could tell them how much those options are really worth.
- alehul 10y ago
  Completely, and a small part of why employees are cautioned on here to take salary over equity. The market telling them would be a loss of billions for the investors/founders, both on the value of their own equity and the increased equity they'd have to offer employees (many exceptions apply, but this seems to be the case particularly with startups who lack an easy path to profitability but can show substantial growth).
- hkmurakami 10y ago
  Palantir will regularly buy its employees' equity fwiw.
  - jonknee 10y ago
    But without the market you could easily be getting ripped off selling your shares back... They're not doing it out of the goodness of their heart.

jlgosse 10y ago

I'm not saying this is the case with this round in particular, but it's not unheard of for early employees to take money off the table in a round like this

brandur 10y ago
The company isn't compelled in any way to allow this though, and is actually disincentivized from doing so because it increases the probability of key departures as those people are able to extract some value. If you're in such a position, you better hope that your founders _really_ like you.
- amenghra 10y ago
  Many companies have periods of time where you get an opportunity to cash out a percentage of your equity. It gives confidence to early employees that the company has their back and they aren't really disincentivized to leave because they still have a majority of their equity "locked".
- bogomipz 10y ago
  I believe most do though, but with a right of first refusal. In which case they will buy them of direct you to their preferred buyer. Source: I have done this and my conversation with the broker for the secondary market who handles a lot of this said it is quite common and that in fact other at the same company I was at had done so. It might be frowned upon internally but you have to look out for yourself. Staying at a startup for 8+ plus years isn't very realistic for me personally.
maineldc 10y ago
There was a very "insider baseball" moment in 2011 with regards to AirBNB and a well known investor "discussing" taking money off the table. Note, the investor was basically saying that if the founders get some liquidity, you should offer the same to employees. I will never forget how much that raise my esteem him. [0] So yes, if they were willing to do it in 2011, I am sure that they are doing it in this round too. [0] - https://techcrunch.com/2011/10/01/chamath-palihapitiya-airbnb-liquidity-everyone/ https://techcrunch.com/2011/10/01/chamath-palihapitiya-airbn...

muninn_ 10y ago

Becoming a public company has it's own set of issues, though.

elastic_church 10y ago
Yeah weird how people hold up IPO as a holy grail. Its the worst thing to do if you are actually passionate about the company, if it is your labor of love. Its the best thing to do if you want to make a lot of money from your money machine and are largely apathetic about the outcome of the business itself. Easy enough to find the next MBA graduate to feign passion for you while they are just trying to sell the company.
- imranq 10y ago
  why is this downvoted? every company I've worked at that has IPO'd companies has been, in my experience, soul-sucking.
- muninn_ 10y ago
  Yeah I lean toward this view as well. The point of an IPO is to raise capital. But when you do this, unless you own 51% of the company or there is a small group of like-minded individuals that own 51% of the company, you can wind up losing control and instead of doing things Wall Street doesn't like, you're going to have to focus on profitability and pleasing shareholders. It's one route to take, but not the only one.
  - hagbarth 10y ago
    Yeah, but AirBnB took that route when they got private investors. They expect to get their money back with a good ROI. That would be through an IPO or acquisition, either way you loose control of your company.
    - zenlikethat 10y ago
      True, you lose some control, but a small board of a private company is much easier to convince and compel on long-term vision and plans than the general public.

rpearl 10y ago

Dropbox and AirBnB have already been private for almost 10 years! (Palantir - 13!, Uber - 8) I was at Dropbox for a while and left in no small part because of the frustrating lack of potential liquidity on my equity.

rickcnagy 10y ago
I don't know, something feels off about Palantir being around for 6227020800 (13!) years...
trustfundbaby 10y ago
wow ... did you give up all your vested options? or at least buy a bit of them?
chii 10y ago
i expect companies that remain private while dangling equities for it's employees to create an opportunity for them to sell privately - e.g., a liquidation event, where the buyer is an investment/VC firm that wants in. It's good for both parties - employees get a liquidation event, the VC gets foot in the door, and founders aren't diluted. I guess, though, in this case, the employee is the party without power, as they are offered a price (which is probably lowballed, since they don't have a choice) in a take it or leave it fashion...