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This is a pretty authentic and fairly clear note from an acquisition. It's pretty clear it wasn't the home run that so many set out for when founding a company

This is a pretty authentic and fairly clear note from an acquisition. It's pretty clear it wasn't the home run that so many set out for when founding a company. I do expect this is a good landing out of this for many, yet now there are new challenges to navigate. Nine years is no short time to labor through, especially when you're taking a giant risk and giving up things that software engineers could easily get in terms of work/life balance at an AWS/Google/Microsoft. Yet, you set out to change something in a noticeable fashion. I truly hope Chase gives you the chance to do that, yes it's a big company. But, in the spectrum of big co's in the financial space they seem more open to innovation than so many others so... best of luck with what's next at Chase.

tommynicholas 9y ago
Sources say it's north of a $220m acquisition - I mean I know that's not a home run but I'm also pretty certain it's not a nothing outcome at all.
- craigkerstiens 9y ago
  That is a solid outcome, but with nearly 80m (publicly) raised, likely not a giant return based on those numbers and length of company existing. Some may have done quite well, but plenty of unclear details. There are many notable home-runs for all players involved, FB, Whatsapp, etc, but those are often the exception. This isn't to say it's a bad acquisition or should be dismissed as a failure. It just re-iterates that it's not all easy, glory, and success. I do hope for the team involved it worked out just as they'd hoped, but from their post it feels like many hard years and more of a next chapter than the end. Best of luck to them all in the future.
  - deleted 9y ago
    [deleted]
  - austenallred 9y ago
    A $220m+ acquisition is absolutely a home run, and likely a win for all involved, even with $80m raised. FB and WhatsApp are once-in-a-decade type returns. In baseball parlance perhaps a World Series winning grand slam or a perfect game. You needn’t exit for $19B for it to be a great outcome.
    - elvinyung 9y ago
      I mean, don't common stockholders (i.e. all employees) still basically get shafted in a down acquisition?
      - austenallred 9y ago
        It’s not a down acquisition...
      - amorphid 9y ago
        Say investors own 60% of the company. In an acquisition worth $220 million, 60% of the company would be worth $132 million. It's common for investors to have a 2x liquidation preference, meaning they get up to twice their money back before anyone other shareholders get $1. $80 million invested means investors get $160 million, more than the $132 million. $60 million would be left over for the founders and employees. There's enough money there to be a life altering amount for many people.
        spullara 9y ago
        If you see a 2x liquidation preference on a term sheet in this market I would be really surprised. Virtually every term sheet that isn't the one before an IPO or a recap will be non-participating preferred.
        amorphid 9y ago
        I confess I'm not an M&A/finance/VC-funding wizard. Would you mind giving an example describing the scenario you describe?
  - 0xbear 9y ago
    That’s what people don’t get. It’s only really a decent outcome for the investors and the founders, and then only until you consider how long it took to get there. Front line grunt gets bupkis, and now has to find another job, because fuck working for a bank.
    - hkmurakami 9y ago
      I mean, there are many reasons to work for a startup but pay is not one of them. If you want the payout, work for one of the majors.
      - 0xbear 9y ago
        That’s not what the founders will tell you. Even for employee #1 in 999 cases out of a 1000 it’s not really worth it, if the goal is to get ahead financially.
  - JonFish85 9y ago
    If "the number" is, say $220m, it could be a number of things. If it's cash today, others have done the math on how things could get divvied up. The "top line" number can mean a lot of things though; it almost certainly includes the assumption of hitting several targets, some of which are reasonable and some are probably stretches. It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock. Employees then are given a sheet to sign saying that their stock in WePay is now worth $0, but here's an offer for Chase stock vesting over 4 years. Anecdata, for sure, but most of the deals I've seen have been something like this. The top-line number is all well & good, but the real dollars people extract from it are invariably less (again, just in the limited set of things I've seen). I'm sure there are exceptions (I bet the Instagram folks did just fine). But if I had to make a guess, it'd be that the founders will come out with a good chunk of cash, and employees will get a job at Chase out of it (with the valued employees getting a nice bonus at the "new car money" level)
    - bogomipz 9y ago
      >"It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock." Would you mind elaborating on this? What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional? >"Employees then are given a sheet to sign saying that their stock in WePay is now worth $0, but here's an offer for Chase stock vesting over 4 years." For an the average rank and file employee who has been grinding it out at Wepay through the ups and downs I am imagining this might not be a "feel good" moment.
      - JonFish85 9y ago
        > "What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional?" This would mean something like paying exactly what the valuation at the last round was, such that it'd cause the cap table to unwind leaving precisely $0 to split amongst common stock. It's not a huge win for investors, but if it's clearly not going to be a huge win, they get their money back (plus whatever conditions they had for more), and can move on. > "For an the average rank and file employee who has been grinding it out at Wepay through the ups and downs I am imagining this might not be a "feel good" moment." Probably not. I've had friends who have been at companies that have sold at these "big numbers", but come to the sad realization that the numbers aren't "real" (e.g. their 1.5% stake of $250m is worth $0). I'm sure it's a weird feeling to see the "congrats!" messages! However, the "retention bonus" of $100k over 4 years on top of their salary is usually enough to keep people from burning the place down (being facetious).

tommynicholas 9y ago

Sources say it's north of a $220m acquisition - I mean I know that's not a home run but I'm also pretty certain it's not a nothing outcome at all.

craigkerstiens 9y ago
That is a solid outcome, but with nearly 80m (publicly) raised, likely not a giant return based on those numbers and length of company existing. Some may have done quite well, but plenty of unclear details. There are many notable home-runs for all players involved, FB, Whatsapp, etc, but those are often the exception. This isn't to say it's a bad acquisition or should be dismissed as a failure. It just re-iterates that it's not all easy, glory, and success. I do hope for the team involved it worked out just as they'd hoped, but from their post it feels like many hard years and more of a next chapter than the end. Best of luck to them all in the future.
- deleted 9y ago
  [deleted]
- austenallred 9y ago
  A $220m+ acquisition is absolutely a home run, and likely a win for all involved, even with $80m raised. FB and WhatsApp are once-in-a-decade type returns. In baseball parlance perhaps a World Series winning grand slam or a perfect game. You needn’t exit for $19B for it to be a great outcome.
  - elvinyung 9y ago
    I mean, don't common stockholders (i.e. all employees) still basically get shafted in a down acquisition?
    - austenallred 9y ago
      It’s not a down acquisition...
    - amorphid 9y ago
      Say investors own 60% of the company. In an acquisition worth $220 million, 60% of the company would be worth $132 million. It's common for investors to have a 2x liquidation preference, meaning they get up to twice their money back before anyone other shareholders get $1. $80 million invested means investors get $160 million, more than the $132 million. $60 million would be left over for the founders and employees. There's enough money there to be a life altering amount for many people.
      - spullara 9y ago
        If you see a 2x liquidation preference on a term sheet in this market I would be really surprised. Virtually every term sheet that isn't the one before an IPO or a recap will be non-participating preferred.
        amorphid 9y ago
        I confess I'm not an M&A/finance/VC-funding wizard. Would you mind giving an example describing the scenario you describe?
- 0xbear 9y ago
  That’s what people don’t get. It’s only really a decent outcome for the investors and the founders, and then only until you consider how long it took to get there. Front line grunt gets bupkis, and now has to find another job, because fuck working for a bank.
  - hkmurakami 9y ago
    I mean, there are many reasons to work for a startup but pay is not one of them. If you want the payout, work for one of the majors.
    - 0xbear 9y ago
      That’s not what the founders will tell you. Even for employee #1 in 999 cases out of a 1000 it’s not really worth it, if the goal is to get ahead financially.
- JonFish85 9y ago
  If "the number" is, say $220m, it could be a number of things. If it's cash today, others have done the math on how things could get divvied up. The "top line" number can mean a lot of things though; it almost certainly includes the assumption of hitting several targets, some of which are reasonable and some are probably stretches. It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock. Employees then are given a sheet to sign saying that their stock in WePay is now worth $0, but here's an offer for Chase stock vesting over 4 years. Anecdata, for sure, but most of the deals I've seen have been something like this. The top-line number is all well & good, but the real dollars people extract from it are invariably less (again, just in the limited set of things I've seen). I'm sure there are exceptions (I bet the Instagram folks did just fine). But if I had to make a guess, it'd be that the founders will come out with a good chunk of cash, and employees will get a job at Chase out of it (with the valued employees getting a nice bonus at the "new car money" level)
  - bogomipz 9y ago
    >"It's also a very real possibility that the "real" cost that Chase paid was just the right amount to make the common stock evaporate; investors get their money back such that $0 is split amongst common stock." Would you mind elaborating on this? What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional? >"Employees then are given a sheet to sign saying that their stock in WePay is now worth $0, but here's an offer for Chase stock vesting over 4 years." For an the average rank and file employee who has been grinding it out at Wepay through the ups and downs I am imagining this might not be a "feel good" moment.
    - JonFish85 9y ago
      > "What causes the common stock to "evaporate" exactly? Is this a side effect or is this intentional?" This would mean something like paying exactly what the valuation at the last round was, such that it'd cause the cap table to unwind leaving precisely $0 to split amongst common stock. It's not a huge win for investors, but if it's clearly not going to be a huge win, they get their money back (plus whatever conditions they had for more), and can move on. > "For an the average rank and file employee who has been grinding it out at Wepay through the ups and downs I am imagining this might not be a "feel good" moment." Probably not. I've had friends who have been at companies that have sold at these "big numbers", but come to the sad realization that the numbers aren't "real" (e.g. their 1.5% stake of $250m is worth $0). I'm sure it's a weird feeling to see the "congrats!" messages! However, the "retention bonus" of $100k over 4 years on top of their salary is usually enough to keep people from burning the place down (being facetious).