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Given that the CEO is probably worth nowhere near $750MM absent his founders stock, isn't this just him just leaning into a binary outcome? Either Better.com ca
by HWR_14 5y ago
Given that the CEO is probably worth nowhere near $750MM absent his founders stock, isn't this just him just leaning into a binary outcome? Either Better.com can pay off the loan in 5 years or it's gone broke by the and he gives up his share in bankruptcy. I mean, it cuts out the "just squeaking by" option as him having to give up all his equity in something that was worth hundreds of millions is a big kick in the teeth, but what are the odds Better.com defaults and the stock is worth anything?
- PaywallBuster 5y agoSounds like a good bet!
- dh5 5y agoA quick search shows Garg's net worth is ~4B. Despite previous actions he deserves some amount of respect IMO for putting his own money on the line here.
- PaywallBuster 5y agoCould be based on the valuation of the company based on the latest funding round Which could be tanking as we speak I don't see any news of the SPAC merge to have succeeded (estimated for Q4 21) and this article shows they just laid off 1/3 of staff https://therealdeal.com/2022/03/15/future-city-better-coms-troubles-worsen/ https://therealdeal.com/2022/03/15/future-city-better-coms-t...
- ilrwbwrkhv 5y agoThe good ol' Elon Musk strategy
- ekianjo 5y ago> net worth is ~4B net worth is not the same as liquidity
- BorisTheBrave 5y agoNet worth is the more relevant value for a loan guarantee.
- hn_throwaway_99 5y agoBut I'd assume a huge amount of that net worth is due to Better.com's valuation. Valuation is, of course, just the amount the most recent investors paid for their shares, times the total number of shares. And those most recent investors include Softbank, who also gave the founder the loan. Seems like a pretty scary loop.
- reitzensteinm 5y agoIf Better can't itself afford to pay the loan back, bringing the personal guarantee into play, what value will the equity have? Net worth is an abstraction that's generally useful to reason about outcomes, but it's a leaky abstraction.
- _fat_santa 5y agoOne would assume Softbank made sure that the debt was collateralized with something other than Better.com shares. I'm sure a good chunk of that 750M is collateralized with better.com shares but I'd be willing to bet they made him put some other stock/investments on the line.
- jmvoodoo 5y agoIf softbank believes in Better, but not necessarily in Garg, then having him personally guarantee the loan against his own shares is an easy way to push him out cleanly if things go south.
- cyanydeez 5y agoUnless that loan underpins the value
- snypher 5y agoHard to respect when losing $750m would still leave you a billionaire.