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A bit off topic, but one thing I've always wondered about Homejoy is how it went bankrupt, yet somehow the leadership team seem to have gotten out richer than w

A bit off topic, but one thing I've always wondered about Homejoy is how it went bankrupt, yet somehow the leadership team seem to have gotten out richer than when they started. At least, I assume you have to have some money on the bank to be able to become a YC Partner, and Adora Cheung is a YC Partner now. Maybe this is an incorrect assumpion on my part. Anyway, I'm not trying to single them out, they seem great people and had enough shit to handle. But I am wondering how this happens because IIRC Homejoy isn't the only case like this. If a company tanks, how is it possible for the founders to cash out? Did they sell some shares to investors in earlier rounds? Is that common? Wouldn't it be a huge red flag for investors for a founder/exec to cash out early?

hkmurakami 9y ago
That was the case for the Secret (the app) founders. Sold founder shares in their A round (which is very rare to see that early)
- skrebbel 9y ago
  Amazing. If I were an investor in that I'd really wonder what the founders know and aren't telling me.
  - pbiggar 9y ago
    What the founders know - and are telling investors - is they have an offer to sell the company and they don't want to take it, but it's so much money they'd be stupid not to. The investors want the company to keep going -- and growing -- so they cash out the founders a bit to make sure everyone is aligned on the same goal: to make a huge company.
    - skrebbel 9y ago
      Ah! Ok that makes a lot of sense :-)
birken 9y ago
It's possible the founders took out a "small" chunk during their large funding round, but it is equally possible they didn't. Taking out a huge amount (>10% of your equity) would be bad signaling and investors wouldn't go for it, but a founder turning a few percent of their equity into cash to cover life expenses isn't a big deal. Sometimes founders will have gone years with little or no salary so recouping some of that is very understandable to the investors. Still though a lot of founders are what I'd consider irrational and don't want to sell any stock because of their belief in the company. I know multiple instances of founders turning down massive paydays during a secondary round because of course the stock is going to be worth so much more later (and as of yet none of them are wrong -- though I imagine in the future some will be). The founders and employees didn't get anything from their stock after Homejoy's sale. I highly doubt the founders ended up being "rich" from Homejoy. Maybe they are "rich" now that they are a YC partner. I don't know. But I don't know how those things would be related. Startups have a lot of luck. Just because a startup fails doesn't mean the founders weren't really good at it. It doesn't mean they aren't exceptional investors or startup advisors. It just means their startup didn't succeed. The reason websites like the OP are extremely stupid is because they distill down a startups failure to a bunch of points that if flipped around could be reasons for success for another startup. I worked for a company that was a direct competitor to many of these companies and their "Fatal Flaws" worked just fine for us. Yes, there are obviously better and worse decisions a startup can make, but everything is so context specific these general rules are worthless.
- skrebbel 9y ago
  Fantastic response, thanks a lot!
seibelj 9y ago
Any HN commentary about Homejoy is not complete without this cringe-inducing job post on Christmas Eve by the founder: https://news.ycombinator.com/item?id=8794956 https://news.ycombinator.com/item?id=8794956
- flyinglizard 9y ago
  For everyone that has ever been a part of something exciting, that's not cringe inducing at all. I feel sorry for anyone who never got to experience a driven team putting all they have on the line. These are the times I felt most alive.

hkmurakami 9y ago

That was the case for the Secret (the app) founders. Sold founder shares in their A round (which is very rare to see that early)

skrebbel 9y ago
Amazing. If I were an investor in that I'd really wonder what the founders know and aren't telling me.
- pbiggar 9y ago
  What the founders know - and are telling investors - is they have an offer to sell the company and they don't want to take it, but it's so much money they'd be stupid not to. The investors want the company to keep going -- and growing -- so they cash out the founders a bit to make sure everyone is aligned on the same goal: to make a huge company.
  - skrebbel 9y ago
    Ah! Ok that makes a lot of sense :-)

birken 9y ago

It's possible the founders took out a "small" chunk during their large funding round, but it is equally possible they didn't. Taking out a huge amount (>10% of your equity) would be bad signaling and investors wouldn't go for it, but a founder turning a few percent of their equity into cash to cover life expenses isn't a big deal. Sometimes founders will have gone years with little or no salary so recouping some of that is very understandable to the investors. Still though a lot of founders are what I'd consider irrational and don't want to sell any stock because of their belief in the company. I know multiple instances of founders turning down massive paydays during a secondary round because of course the stock is going to be worth so much more later (and as of yet none of them are wrong -- though I imagine in the future some will be). The founders and employees didn't get anything from their stock after Homejoy's sale. I highly doubt the founders ended up being "rich" from Homejoy. Maybe they are "rich" now that they are a YC partner. I don't know. But I don't know how those things would be related. Startups have a lot of luck. Just because a startup fails doesn't mean the founders weren't really good at it. It doesn't mean they aren't exceptional investors or startup advisors. It just means their startup didn't succeed. The reason websites like the OP are extremely stupid is because they distill down a startups failure to a bunch of points that if flipped around could be reasons for success for another startup. I worked for a company that was a direct competitor to many of these companies and their "Fatal Flaws" worked just fine for us. Yes, there are obviously better and worse decisions a startup can make, but everything is so context specific these general rules are worthless.

skrebbel 9y ago
Fantastic response, thanks a lot!

seibelj 9y ago

Any HN commentary about Homejoy is not complete without this cringe-inducing job post on Christmas Eve by the founder: https://news.ycombinator.com/item?id=8794956 https://news.ycombinator.com/item?id=8794956

flyinglizard 9y ago
For everyone that has ever been a part of something exciting, that's not cringe inducing at all. I feel sorry for anyone who never got to experience a driven team putting all they have on the line. These are the times I felt most alive.