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Frankly, the investors who set the initial valuation (presumably used to set the strike price of the employee options) and later the $0 valuation (rendering the
by PragmaticPulp 6y ago
Frankly, the investors who set the initial valuation (presumably used to set the strike price of the employee options) and later the $0 valuation (rendering the options worthless) and then giving away the IP that they declared worthless (despite the company not fundamentally changing) deserve a lot of the scrutiny.
If the company had simply been left to make their own choices like laying off the employees and buying out investors, this would have been a different story.
- jonfromsf 6y agoI mean strike prices are usually unrealistically LOW, as low as they can be without being fraud. There's a whole industry of 409a valuations that is used to legally say "we're selling preferred stock to investors as a 50MM valuation, but the common stock which represents 80% of the company is only worth 2MM". Founders want strike prices to be low because options are free compensation to employees. The issue is the out-going employees thought that a stake in the business was literally worthless, which turned out not to be true. Very similar to the Blogger story actually.
- deleted 6y ago[deleted]