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A founder who believes in his business, will never cash out early. period. He would always get more after an IPO or exit. So why would he? I assume the founde
by sek 15y ago
A founder who believes in his business, will never cash out early. period.
He would always get more after an IPO or exit. So why would he?
I assume the founders are not stupid, they know their valuation is not justified.
- staunch 15y agoThis line of thinking has been thoroughly discredited. Many of the most successful companies today had founders that took money off the table early. If they didn't believe in the company they could just sell it today for $500 million (or whatever) and put $50 million in their pockets instead of $5 million.
- steve8918 15y agoTaking money off the table implies selling their stake, ie. shares. They didn't sell their shares. They gave themselves a one-time dividend.
- staunch 15y agoYou're right that selling shares is far more common, but the concept is the same. The founders raised an extra $20 million so they could sock it away themselves.
- colinplamondon 15y agoWhat? It's a whole lot easier to swing for the fences when you're already a millionaire. Selling 5% of your total shares for $3,000,000 sets you up well for life. Not great, but well. At 4% interest that's $120k/year. After that, it's gravy.
- sek 15y agoIt also takes a lot of pressure from you and maybe distracts from building the company. On Wallstreet they call this "fuck you money".
- staunch 15y agoIn Silicon Valley all the best people aren't in it just for the money. Can't say that about Wall Street.
- angryasian 15y agokeep drinking the kool-aid
- staunch 15y agoYou must think Steve Jobs has spent the last few years working at Apple, when he probably should have been doing something less stressful, because he wants yet another billion dollars?
- sek 15y agoWhat are you talking about? Total off topic.
- staunch 15y agoI'm giving a example of someone who exemplifies the Silicon Valley mentality that I refer to above.
- sek 15y agoWe were talking about people who do the exact opposite and try to get FU-money before they led companies to success.
- staunch 15y agoAirbnb makes many millions in revenue and has phenomenal growth. They could easily sell the company today for hundreds of millions. That is success. Instead of selling though, they're raising more money, taking some out themselves, and setting their sights on an even higher level of success. Makes sense to me.
- angryasian 15y agoit also makes it a whole lot easier if the company is on shaky ground and built up by hype, when everything does happen to implode in on itself. I'm not saying that this is airbnb's case but ... I'm not saying twitter is a failure by any means, but none of the people that built the company are still there ( Jack Dorsey started square so maybe he is that small percentage of people that can juggle two amazing startups ). When all the founders cash out early, it just makes it questionable.
- brandnewlow 15y agoZuckerberg, Moskovitz, and Parker each got $1m from Accel when they raised their $12.7m Series A according to David Kirkpatrick's The Facebook Effect.
- sek 15y agoThe reason there was competition between VCs, this is a different motivation and the amount is not that high.
- Murkin 15y agoYou missed the point, they take the money as dividens. They are not selling their stock for that $20M lump. The only 'foul' thing here, is that their employees (option holders) will probably get nothing.
- sek 15y agoThey sold shares for 20 Million to the investors to pay out this dividend, so the outcome is the same.
- sek 15y agoAm i wrong?
- philwelch 15y agoWell, and that investors are being asked to "invest" millions of dollars into the founders' personal wealth.
- prostoalex 15y agoI don't pretend to know the ins and outs of this, but the dividend is to common stock. What if the next step after closing the deal would be founders telling employees to exercise as much as possible, and then announce the dividend? Granted, most of that money would probably have gone towards AMT, but let's not vilify AirBnB before we hear their end of the story.
- todojunkie 15y ago"A founder who believes in his business, will never cash out early. period." That is just not true. You have zero clue of any one founders back story. How many years have they been building their business and not taking a pay check? Not taking health insurance? Struggling... Taking a payout, in some cases, can motivate someone who has been putting in 24/7 for year(s) to keep going. It can also allow the people in your life (family) to support you in pushing forward with your passions.