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I was employee #1. It sold to google. All employee options were wiped out.
by saryant 8y ago
I was employee #1. It sold to google. All employee options were wiped out.
- tehwebguy 8y agoPlease tell this story
- sgk284 8y agoPretty standard acquisition story. Shareholders with preferred shares (VCs) got paid first. By the time they were paid there was nothing left. It just means the company was sold for too little for the employees to benefit.
- jwn 8y agoThis happened to a company I co-founded. My common stock was bought at about 1/3 of the lowest price given to early employees for options. (I had RSUs, not options). I got $130k, and their options were worthless. Luckily the acquirer offered retention bonuses that helped dull the pain, but of course those are taxed at regular income and not long term capital gains. Oh, and like a previous comment mentioned: the VCs have preferred stock so they get their investment back 100% before any common stock sees a penny. If employees had the same stock as VCs, I estimate I would have walked away with about $400k.
- mooman219 8y agoIt sounds like the Founders had to have made some poor/greedy decisions if even employee #1 didn't see anything.
- misabon 8y agoLooks like one of Google’s notorious acquihires.
- hn_throwaway_99 8y agoAs someone who has been on the purchasing side of one of these transactions, that's not really the case. What usually happens is, say the company has received $x million in funding. Everyone is plugging away working hard, but runway starts to run short and the product isn't getting the traction originally anticipated. At that point it looks obvious the company will go bankrupt relatively soon, so the investors push for a sale to try to recoup some of the their money. Often times there is value in the team and perhaps industry knowledge to the acquiring company, but the tech itself is often worthless, so the sales price is below the $x million capital raised and only holders of preferred shares get anything. Note that founders rarely own preferred shares. They have common stock just like employees, so they are usually wiped out, too, in cases like this.
- tinkerteller 8y agoThanks for the insight. I had guessed that most of the aquihires price are set at (investments + $500K/employee). If this wasn't the case, I would think that employees would have no incentive to get onboard and that would basically not allow the sale to go through. Is this not the case in your experience?
- vostok 8y agoWhat was your Google offer?
- saryant 8y agoI’d already left the company but they didn’t keep any of the employees.
- viggity 8y agobecause the vc's liquidity preference took precedence?