5 ms·

50% of a $7.5 billion sale is going to 3 people? insane. what about the employees?

by aroman 8y ago

sparky_ 8y ago
I might choose a stronger word - gross, for instance. I'm all for founder success, but that sounds a lot to me like the employee equity pool suffered.
- deleted 8y ago
  [deleted]
- darawk 8y ago
  Why? 50% of 7.5 billion is still a lot of money. Github doesn't have that many employees. In fact, they have 745 employees. That averages out to 4.6 million per employee. Now, there's probably a good bit of VC money in there diluting that, but i'd bet not by more than 50%. I think the employee equity pool did just fine here.
  - aetherson 8y ago
    You think that the employee equity pool was 25% of the company? That's pretty high. Not maybe completely unprecedented, but I'd expect considerably lower.
    - kjksf 8y ago
      Founders apparently got 50%. GitHub had 2 funding events. https://www.crunchbase.com/funding_round/github-series-b--49182d09 https://www.crunchbase.com/funding_round/github-series-b--49... $250M at pre-money valuation of $1.8B i.e. 13%. https://www.crunchbase.com/funding_round/github-series-a--832c3557 https://www.crunchbase.com/funding_round/github-series-a--83... $100M at valuation of $650 i.e. 15% So ~28% to VC, 50% to founders, which leaves 22% How much of that was actually allocated, I don't know.
- adventured 8y ago
  GitHub has, what, 600-700 employees? Most of those have probably been hired in the last five years. Ownership distribution was likely relatively slow, given the way GitHub proceeded as a business (slow ramp, only took on a series A four years after the founding). Gates had 45% of Microsoft after its IPO after a similar length of time (a decade) that GitHub has existed. His position rapidly diluted after that with increased share-based compensation and Microsoft's size ballooning. Allen + Gates + Ballmer probably had 65% of Microsoft after the IPO. Larry Ellison still holds 27% of Oracle after 40 years. I don't think the GitHub distribution outcome is particularly historically unusual. One could argue obviously that from a strictly subjective moral basis that it's still not enough distribution. The only thing historically unusual, is that the venture capitalists got such a small share of the outcome, courtesy of GitHub not drowning themselves in funding across a decade. In most cases these days, the VCs would be taking up a far larger portion of the founder's 50% position. I'd guess the employees are getting 20%-25% of the $7.5 billion. That's maybe $2.25m to $2.75m average per employee, assuming a 600-700 employee range.
- ramen-san 8y ago
  I understand your visceral reaction here, and agree that equity pools need to be increased in general. But isn’t that really a reflection on all the folks who choose to join a startup for the prevailing equity packages offered today? The reality is unless you have founder or very early employee equity, it will take a Facebook size outcome to Be truly life changing. Having been part of a billion dollar acquisition myself, I can attest that for the vast majority of people (myself included), it was equivalent to a nice bonus. Perhaps more people need to realize that and internalize that before they forego the higher compensation, and easier workload of an established company? The only thing that will realistically get founders to share more equity is for the market to demand it. Personally I would not sign up for another startup journey unless I felt there was substantially more upside on the table. Otherwise, you’re better off joining BigCo or go further and start your own thing and get founder equity. FWIW, I wouldn’t begrudge the Github founders... they’ve done an amazing job over a very long time. They rolled the dice and made it happen. Hats off to them!
  - tomp 8y ago
    Just keep in mind that it's not just about the money. For example, in an early-stage, rapidly-growing startup, you're also bound to gain much more experience (managing, sales, operations, etc) much more quickly than in many established companies. So even if you just get a nice salary and a nice bonus, your career could still be leaps ahead of a corporate worker-bee.
bordercases 8y ago
Almost like it was too good to pass up. What does Microsoft see in a Github acquisition?
tjr225 8y ago
They won the lottery on the backs of their employees. Unfortunate, but also unfortunately acceptable in today's climate.
- darawk 8y ago
  You mean the employees who chose to work there understanding the terms of their deal? The employees who probably just made a ton of money themselves from this deal? What exactly is unfortunate about this? Are you upset that some people made a lot of money?
  - sdiupIGPWEfh 8y ago
    > You mean the employees who chose to work there understanding the terms of their deal? As if anyone can just choose to be working for a company with the right terms, in a position to make a multi-billion dollar sale, and also somehow not get screwed out of what they thought their terms guaranteed.
    - darawk 8y ago
      So, you are positing that the employees were screwed here? Do you have some evidence for that claim?
      - sdiupIGPWEfh 8y ago
        Only if you're suggesting that the employees chose to work there because they thought they had the right terms and were expecting a multi-billion dollar sale from which to benefit. If you have evidence for that, I expect you've freely chosen to work for such a company yourself and that you're entirely confident in your situation. (Or else the money just doesn't matter that much to you. That's ok too!)
    - Trundle 8y ago
      you're right, people can't. If you want shot at a significant chunk of a multi billion dollar sale you start your own company. As the github founders did. If you want up be paid $x a fortnight right from the get go then you get a job. I don't see how the success of people who chose to do A means people that did B got screwed, just because they both worked on the same project. The decisions they made and context of their choosing to work on it were still different things each with their own pros and cons Unless there was some more to it. Like share /options shenanigans that might not be legally fraud but fraud in spirit. No one seems to be saying that happened here though.
hkdobrev 8y ago
They've bootstrapped for some time.
- aroman 8y ago
  raising $350 million is bootstrapping?
  - Trundle 8y ago
    When you raise that money after four years of success, sure why not?
dpatru 8y ago
> what about the employees?! Presumably the employees were paid salaries.
- paulie_a 8y ago
  I wouldn't want stock options. Just pay me more. I am too old to want to deal in lottery tickets.
parvenu74 8y ago
What do you mean "what about the employees?" Were they not paid? Or do you assume anyone who profits from the sale of a company is automatically immoral? Lots of founders lose everything when they attempt a startup; the employees of those companies got paid up through the end and much more than the founders in many cases. Let's celebrate the success of those who hit a home run rather than sniping at them for not sharing their wealth with the people who risked less in the venture than they did.
- perfmode 8y ago
  let’s not sit here and pretend it’s that simple. there is certainly a gulf in the present day equity split between even the least helpful founder and the most instrumental employee.
  - parvenu74 8y ago
    It certainly is that simple. I know a lot of serial contractors who would rather take the guaranteed $150/hour instead of $95/hour+equity because the latter is a crap shoot. Sure, there will be cases where they could say "If I had taken the equity deal on GitHub/Instagram/Fabulous Startup I could retire now".... they can dry their tears with the realization they are still in the top 2% of all income earners even without the equity millions.
    - perfmode 8y ago
      let’s face it: the distribution of equity is about leverage and convention. as a community, we anchor each other by saying things like what you’re saying. if more people felt the way i do, as a community, we would not accept the status quo. it sounds as though your stance is founded upon a just-world hypothesis.
- partycoder 8y ago
  Many employees do much more than what they're asked to do. Stay longer hours, postpone their families and many times take salary hits, refuse job offers, give away intellectual property... many even put their health and marriage on the line. And without that sacrifice on the part of employees, many companies would never have made it out of a vast pool of mediocre nondescript companies. This is not the case for every employee or every company, but I think you need to balance your world view a little bit.
jonas21 8y ago
The fact that the founders still own 50% of the company means there was less dilution from investors. Less dilution is better for employees too (especially the early ones).
bitmapbrother 8y ago
>50% of a $7.5 billion sale is going to 3 people? insane. They'll need to be frugal to remain members of the 3 comma club.

50% of a $7.5 billion sale is going to 3 people? insane. what about the employees?

by aroman 8y ago

50% of a $7.5 billion sale is going to 3 people? insane. what about the employees?

I might choose a stronger word - gross, for instance. I'm all for founder success, but that sounds a lot to me like the employee equity pool suffered.

deleted 8y ago
[deleted]
darawk 8y ago
Why? 50% of 7.5 billion is still a lot of money. Github doesn't have that many employees. In fact, they have 745 employees. That averages out to 4.6 million per employee. Now, there's probably a good bit of VC money in there diluting that, but i'd bet not by more than 50%. I think the employee equity pool did just fine here.
- aetherson 8y ago
  You think that the employee equity pool was 25% of the company? That's pretty high. Not maybe completely unprecedented, but I'd expect considerably lower.
  - kjksf 8y ago
    Founders apparently got 50%. GitHub had 2 funding events. https://www.crunchbase.com/funding_round/github-series-b--49182d09 https://www.crunchbase.com/funding_round/github-series-b--49... $250M at pre-money valuation of $1.8B i.e. 13%. https://www.crunchbase.com/funding_round/github-series-a--832c3557 https://www.crunchbase.com/funding_round/github-series-a--83... $100M at valuation of $650 i.e. 15% So ~28% to VC, 50% to founders, which leaves 22% How much of that was actually allocated, I don't know.
adventured 8y ago
GitHub has, what, 600-700 employees? Most of those have probably been hired in the last five years. Ownership distribution was likely relatively slow, given the way GitHub proceeded as a business (slow ramp, only took on a series A four years after the founding). Gates had 45% of Microsoft after its IPO after a similar length of time (a decade) that GitHub has existed. His position rapidly diluted after that with increased share-based compensation and Microsoft's size ballooning. Allen + Gates + Ballmer probably had 65% of Microsoft after the IPO. Larry Ellison still holds 27% of Oracle after 40 years. I don't think the GitHub distribution outcome is particularly historically unusual. One could argue obviously that from a strictly subjective moral basis that it's still not enough distribution. The only thing historically unusual, is that the venture capitalists got such a small share of the outcome, courtesy of GitHub not drowning themselves in funding across a decade. In most cases these days, the VCs would be taking up a far larger portion of the founder's 50% position. I'd guess the employees are getting 20%-25% of the $7.5 billion. That's maybe $2.25m to $2.75m average per employee, assuming a 600-700 employee range.
ramen-san 8y ago
I understand your visceral reaction here, and agree that equity pools need to be increased in general. But isn’t that really a reflection on all the folks who choose to join a startup for the prevailing equity packages offered today? The reality is unless you have founder or very early employee equity, it will take a Facebook size outcome to Be truly life changing. Having been part of a billion dollar acquisition myself, I can attest that for the vast majority of people (myself included), it was equivalent to a nice bonus. Perhaps more people need to realize that and internalize that before they forego the higher compensation, and easier workload of an established company? The only thing that will realistically get founders to share more equity is for the market to demand it. Personally I would not sign up for another startup journey unless I felt there was substantially more upside on the table. Otherwise, you’re better off joining BigCo or go further and start your own thing and get founder equity. FWIW, I wouldn’t begrudge the Github founders... they’ve done an amazing job over a very long time. They rolled the dice and made it happen. Hats off to them!
- tomp 8y ago
  Just keep in mind that it's not just about the money. For example, in an early-stage, rapidly-growing startup, you're also bound to gain much more experience (managing, sales, operations, etc) much more quickly than in many established companies. So even if you just get a nice salary and a nice bonus, your career could still be leaps ahead of a corporate worker-bee.

bordercases 8y ago

Almost like it was too good to pass up. What does Microsoft see in a Github acquisition?

tjr225 8y ago

They won the lottery on the backs of their employees. Unfortunate, but also unfortunately acceptable in today's climate.

darawk 8y ago
You mean the employees who chose to work there understanding the terms of their deal? The employees who probably just made a ton of money themselves from this deal? What exactly is unfortunate about this? Are you upset that some people made a lot of money?
- sdiupIGPWEfh 8y ago
  > You mean the employees who chose to work there understanding the terms of their deal? As if anyone can just choose to be working for a company with the right terms, in a position to make a multi-billion dollar sale, and also somehow not get screwed out of what they thought their terms guaranteed.
  - darawk 8y ago
    So, you are positing that the employees were screwed here? Do you have some evidence for that claim?
    - sdiupIGPWEfh 8y ago
      Only if you're suggesting that the employees chose to work there because they thought they had the right terms and were expecting a multi-billion dollar sale from which to benefit. If you have evidence for that, I expect you've freely chosen to work for such a company yourself and that you're entirely confident in your situation. (Or else the money just doesn't matter that much to you. That's ok too!)
  - Trundle 8y ago
    you're right, people can't. If you want shot at a significant chunk of a multi billion dollar sale you start your own company. As the github founders did. If you want up be paid $x a fortnight right from the get go then you get a job. I don't see how the success of people who chose to do A means people that did B got screwed, just because they both worked on the same project. The decisions they made and context of their choosing to work on it were still different things each with their own pros and cons Unless there was some more to it. Like share /options shenanigans that might not be legally fraud but fraud in spirit. No one seems to be saying that happened here though.

hkdobrev 8y ago

They've bootstrapped for some time.

aroman 8y ago
raising $350 million is bootstrapping?
- Trundle 8y ago
  When you raise that money after four years of success, sure why not?

dpatru 8y ago

> what about the employees?! Presumably the employees were paid salaries.

paulie_a 8y ago
I wouldn't want stock options. Just pay me more. I am too old to want to deal in lottery tickets.

parvenu74 8y ago

What do you mean "what about the employees?" Were they not paid? Or do you assume anyone who profits from the sale of a company is automatically immoral? Lots of founders lose everything when they attempt a startup; the employees of those companies got paid up through the end and much more than the founders in many cases. Let's celebrate the success of those who hit a home run rather than sniping at them for not sharing their wealth with the people who risked less in the venture than they did.

perfmode 8y ago
let’s not sit here and pretend it’s that simple. there is certainly a gulf in the present day equity split between even the least helpful founder and the most instrumental employee.
- parvenu74 8y ago
  It certainly is that simple. I know a lot of serial contractors who would rather take the guaranteed $150/hour instead of $95/hour+equity because the latter is a crap shoot. Sure, there will be cases where they could say "If I had taken the equity deal on GitHub/Instagram/Fabulous Startup I could retire now".... they can dry their tears with the realization they are still in the top 2% of all income earners even without the equity millions.
  - perfmode 8y ago
    let’s face it: the distribution of equity is about leverage and convention. as a community, we anchor each other by saying things like what you’re saying. if more people felt the way i do, as a community, we would not accept the status quo. it sounds as though your stance is founded upon a just-world hypothesis.
partycoder 8y ago
Many employees do much more than what they're asked to do. Stay longer hours, postpone their families and many times take salary hits, refuse job offers, give away intellectual property... many even put their health and marriage on the line. And without that sacrifice on the part of employees, many companies would never have made it out of a vast pool of mediocre nondescript companies. This is not the case for every employee or every company, but I think you need to balance your world view a little bit.

jonas21 8y ago

The fact that the founders still own 50% of the company means there was less dilution from investors. Less dilution is better for employees too (especially the early ones).

bitmapbrother 8y ago

>50% of a $7.5 billion sale is going to 3 people? insane. They'll need to be frugal to remain members of the 3 comma club.