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There’s honor at stake when you give another investor discounted shares. And if you think in 10+ year time horizons, honor is truly a more valuable asset than

by aabhay 7y ago

There’s honor at stake when you give another investor discounted shares. And if you think in 10+ year time horizons, honor is truly a more valuable asset than cash

jessriedel 7y ago
Whose honor? I'm honestly confused about what the argument you're making. What's dishonorable about selling discounted shares if you can't keep them?
- cmauniada 7y ago
  If they decided to cash out for any amount, that would go against their track record of holding on to companies and exiting when they are much larger in evaluation. This would not only raise eyebrows, but eventually the truth will come out. Put yourself in the shoes of a buyer, if you were buying out Sequoia's shares and after a few weeks/months news came out that they only sold their shares because of this. Not only that, but that Finix is pretty much competing with Stripe, which they have no chance of succeeding at, it would tarnish Sequoia's reputation and also open them up to litigation. As someone else in this thread pointed, $21 Million is a rounding error for them.
  - jessriedel 7y ago
    > news came out that they only sold their shares because of this. Why would this be kept a secret? Why doesn't Sequoia, upon realizing their conflict of interest, say "Attention everyone: we have to sell this investment for conflict-of-interest reasons. We can't reasonably give you our board seat and other influence, just the financial state, so we will sell it for a large discount." Why would any of that tarnish Sequoia's reputation or open them up to litigation? (I mean, other than the minor reputational hit they have already taken for not doing thorough due diligence, which is being revealed regardless.)
    - cmauniada 7y ago
      Fair point, I am sure they have people much smarter than me in charge of making decisions like that. I am purely speculating at this point but that route could also lead to just being dragged out (if the offer was made public). There might be a lot of reasons, and I am sure there would have weighed all their options and gone with this decision.

by aabhay 7y ago

There’s honor at stake when you give another investor discounted shares. And if you think in 10+ year time horizons, honor is truly a more valuable asset than cash

jessriedel 7y ago

Whose honor? I'm honestly confused about what the argument you're making. What's dishonorable about selling discounted shares if you can't keep them?

cmauniada 7y ago
If they decided to cash out for any amount, that would go against their track record of holding on to companies and exiting when they are much larger in evaluation. This would not only raise eyebrows, but eventually the truth will come out. Put yourself in the shoes of a buyer, if you were buying out Sequoia's shares and after a few weeks/months news came out that they only sold their shares because of this. Not only that, but that Finix is pretty much competing with Stripe, which they have no chance of succeeding at, it would tarnish Sequoia's reputation and also open them up to litigation. As someone else in this thread pointed, $21 Million is a rounding error for them.
- jessriedel 7y ago
  > news came out that they only sold their shares because of this. Why would this be kept a secret? Why doesn't Sequoia, upon realizing their conflict of interest, say "Attention everyone: we have to sell this investment for conflict-of-interest reasons. We can't reasonably give you our board seat and other influence, just the financial state, so we will sell it for a large discount." Why would any of that tarnish Sequoia's reputation or open them up to litigation? (I mean, other than the minor reputational hit they have already taken for not doing thorough due diligence, which is being revealed regardless.)
  - cmauniada 7y ago
    Fair point, I am sure they have people much smarter than me in charge of making decisions like that. I am purely speculating at this point but that route could also lead to just being dragged out (if the offer was made public). There might be a lot of reasons, and I am sure there would have weighed all their options and gone with this decision.