5 ms·
For what it’s worth, this is what a fire sale / acqui-hire looks like for a large-ish hardware company. Were investors and early employees screwed? Sure. But t
by zamfi 8y ago
For what it’s worth, this is what a fire sale / acqui-hire looks like for a large-ish hardware company.
Were investors and early employees screwed? Sure. But these execs could likely have gotten similar payouts over similar timeframes by simply jumping ship. As for Eero the company? Sounds like it was dead.
I don’t want to sound like I’m justifying this kind of behavior. But the main deceptive thing is calling this acquisition a “successful exit” — it was far from that!
- toomuchtodo 8y agoThe issue is founders won regardless of which side the coin landed on and the employees got screwed. I hope stories like this continue to break, and potential startup employees internalize the economic reality of working at a startup.
- librish 8y agoI don't think that's the right way to think about it. Everyone got "screwed" on equity, including the founders. Separately Amazon decided to set up packages for employees they thought were to valuable to lose. If an early employee was valuable enough they were probably included in the 10 who received it.
- toomuchtodo 8y agoI have been involved in M&A activity, and when we (owners) bought a failed competitor for clients and assets, we wiped out the owners (who had misstated some financial factors of importance) and made the employees whole (who had all been stiffed on pay). We didn’t have to, but it was the right thing to do. Everyone has different morals and ethics I suppose.
- arcturus17 8y agoBut if you're the guy doing M&A at Amazon how do you sell that to your boss, who has to sell it to Bezos, who at the end of the day has to sell it to stakeholders.
- toomuchtodo 8y agoGood PR is cheap and people talk.
- kevinpet 8y agoTotally different situation. You can't think of this "getting screwed" as employees qua employees getting screwed. These are common stock holders getting screwed while creditors are made whole and preferred shareholders recoup some of their investment. Employees who had been stiffed on pay are effectively the first priority creditors. Common stock is last.
- munk-a 8y agoI am so confused, were the owners just idiots about judging the value of the sale? There is no reason that all the stockholders should have voted to approve this sale unless they were going to walk away with something to pad their pockets so... did some majority shareholder sell out to amazon and get some separate remuneration? I feel like that should definitely be illegal. Edit: Oh, so the founders assumed they'd be acqui-hired and got screwed over after screwing over all the regular employees. Okay I'm totally fine with that.
- jachee 8y agoMan, I sure wish someone would screw me over with a high-six-figure cash bonus like they did those founders. Being poor is having no idea what that reality might seem like.
- librish 8y agoNo, the company was failing and the board decided that this was the best way for the investors to recuperate some of their lost capital. If they waiting longer they would've had to sell for less or go bankrupt which would have lost everyone even more money. (Obviously employees were already at $0 so they couldn't lose more).
- mamon 8y agoAs someone else already noted in this thread: employees were the only ones who actually made money on this company, in form of their salary received over the years. It's only the equity part of their compensation that went to $0.
- holy_city 8y ago>potential startup employees internalize the economic reality of working at a startup. Treat your salary as your total income and equity as a lottery ticket?
- toomuchtodo 8y agoNailed it. Also, loyalty only to yourself. You are a mercenary, seeking the highest total comp you can, ready to move jobs on a whim.
- holy_city 8y agoIf only the IRS felt the same way. Any income should be treated the same when it is realized as currency, none of this bogus taxation on unrealized gains when your equity doesn't have liquidity. That way we could exercise our options as they vest, instead of holding out until an event to get some liquidity. It keeps people trapped.
- TheDong 8y agoI see that as a bleak worldview. Yes, it's important to acknowledge that the company you work for does not have your best interests in heart. I don't think seeking the highest comp possible, at the expense of other factors, is generally a good strategy though. There is more to the quality of a job and your life than having the highest total comp possible. Having a lasting and enjoyable connection with your teammates is valuable too; you spend hours a day interacting with them, and teams of people you can really get along with are few and far between. If jumping ship every 6 months maximizes your comp, but you never get the chance to create professional relationships as you jump from ship to ship, I'd say that's going to usually be a bad tradeoff. There are other axis as well, such as a team with a reasonable manager who lets you spend time with your family, or a company that works in an area that aligns particularly well with your interests.
- zamfi 8y agoYou make it sound like the founders winning while employees get screwed is specific to acquisitions on crappy terms — it’s not. For most startups that raise a series A or beyond, founders win no matter what, even if not financially: they build connections with funders and founders, develop experience with management, extend their networks, and get a broader view of their sector. This is true even for companies that just straight go bankrupt. Emoloyees usually get none of these things (but often get even less of those things at a big company).
- digitalixus 8y ago> the main deceptive thing is calling this acquisition a “successful exit” — it was far from that! Corporate speak. Put a positive spin on everything!!!