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That can't possibly be the outcome Argo.ai engineers were hoping for, since any stock/options they had in Argo presumably vanished and all they got in the end w

That can't possibly be the outcome Argo.ai engineers were hoping for, since any stock/options they had in Argo presumably vanished and all they got in the end was a job @ Ford.

dylan604 4y ago
if the company was not profitable, stocks/options don't really seem that valuable. if the company folds, there's 0 value to them. so it's not like they "lost" anything. also, if a company closes and you're on the brink of having no job, a job "@ Ford" seems like a pretty fancy parachute to me.
- pengaru 4y ago
  > if the company was not profitable, stocks/options don't really seem that valuable. if the company folds, there's 0 value to them. so it's not like they "lost" anything. Plenty of unprofitable startups have worthwhile acquihire-style exits. But it requires the leadership actually doing their jobs in marketing the company to potential buyers and getting some competing offers. Just because you're unprofitable doesn't mean there's nothing of value. Are there patents? Is the team proven to work well together and ship state of the art product? Are there any customers? The conversation in this thread makes it sound like argo.ai was basically functioning like a Ford business unit already. If I were an argo.ai team member with stock/options that became worthless when the company's funding dried up, then Ford conveniently shows up to hire everyone after their stakes are worthless, I'd not be a happy camper and would be seriously questioning if argo.ai leadership acted in good faith on behalf of the employees/shareholders. But I know nothing of what went on here. Just what I'm seeing here on HN...
  - hn_throwaway_99 4y ago
    Note to all startup employees: If your company closes or sells for less than the total amount of funding the company took, you (almost always) get nothing from your equity. People should really understand this, because it drives home the point that taking a ton in funding rounds sets the bar that much higher for your equity to be worth anything. That is, startup investors almost always have at least 1x preferences, which means they get paid back first before common stock has any value at all. Thus, if part of your compensation is common stock options, you should absolutely demand to see information from the cap table about how much investors have already put in (and remember, of course, they may always add more in later rounds). I don't know all the details of what happened with Argo.ai, but given that Ford took a $2.7 billion impairment charge, my guess is they would have never been able to sell for more than their total funding.
  - beambot 4y ago
    Look at comps then: Aurora has a market cap of $1.6B with approximately $0.9B cash on hand ($1.1B as of 12/31, burning $200M per quarter). In short: It's trading for less than 2x cash-on-hand. Argo was underwater -- certainly not above a $1B liquidation preference.
PragmaticPulp 4y ago
Given the timing of their investments and the extreme valuation they had during the bubble, it’s likely that most recent hires’ option packages would be worthless in today’s market. The startup options market has become very skewed against regular employees in recent years. I wouldn’t be surprised if the bulk of the cap table and preference stack was captured by early management hires and investors. Other comments in this thread suggest that leadership wasn’t acquired into Ford, so maybe wiping them all out and giving the employees good jobs at a real company with real stock is the best outcome for the current market.
mparkms 4y ago
Someone I know was rehired to Ford from Argo and got an extremely generous offer. He seems pretty happy about it.
- kortilla 4y ago
  Numbers? I’m curious what AI comp looks like these days.
  - eganist 4y ago
    North of 700 TC* *Anecdata
    - smcl 4y ago
      What does that mean?
      - eganist 4y ago
        700k total comp, so probably between 150-300k base salary, 50k bonus, and the rest in stock comp, usually vesting in batches over four years. Anecdata just means anecdotal data, i.e data points I know from people personally but not a representative sample.
        smcl 4y ago
        Ahhh thanks! I figured "TC" was "total compensation" but wasn't sure how to interpret 700 since $700k/yr seemed enormous, but if it's salary for a year plus a chunk of stock that vests over a few years that makes more sense.
        eganist 4y ago
        Well..... It's still an enormous chunk. Assume you're making 350 cash comp (300+50 bonus), that's another 1.4m in stock vesting over 4 years (350/y)

That can't possibly be the outcome Argo.ai engineers were hoping for, since any stock/options they had in Argo presumably vanished and all they got in the end was a job @ Ford.

dylan604 4y ago

if the company was not profitable, stocks/options don't really seem that valuable. if the company folds, there's 0 value to them. so it's not like they "lost" anything. also, if a company closes and you're on the brink of having no job, a job "@ Ford" seems like a pretty fancy parachute to me.

pengaru 4y ago
> if the company was not profitable, stocks/options don't really seem that valuable. if the company folds, there's 0 value to them. so it's not like they "lost" anything. Plenty of unprofitable startups have worthwhile acquihire-style exits. But it requires the leadership actually doing their jobs in marketing the company to potential buyers and getting some competing offers. Just because you're unprofitable doesn't mean there's nothing of value. Are there patents? Is the team proven to work well together and ship state of the art product? Are there any customers? The conversation in this thread makes it sound like argo.ai was basically functioning like a Ford business unit already. If I were an argo.ai team member with stock/options that became worthless when the company's funding dried up, then Ford conveniently shows up to hire everyone after their stakes are worthless, I'd not be a happy camper and would be seriously questioning if argo.ai leadership acted in good faith on behalf of the employees/shareholders. But I know nothing of what went on here. Just what I'm seeing here on HN...
- hn_throwaway_99 4y ago
  Note to all startup employees: If your company closes or sells for less than the total amount of funding the company took, you (almost always) get nothing from your equity. People should really understand this, because it drives home the point that taking a ton in funding rounds sets the bar that much higher for your equity to be worth anything. That is, startup investors almost always have at least 1x preferences, which means they get paid back first before common stock has any value at all. Thus, if part of your compensation is common stock options, you should absolutely demand to see information from the cap table about how much investors have already put in (and remember, of course, they may always add more in later rounds). I don't know all the details of what happened with Argo.ai, but given that Ford took a $2.7 billion impairment charge, my guess is they would have never been able to sell for more than their total funding.
- beambot 4y ago
  Look at comps then: Aurora has a market cap of $1.6B with approximately $0.9B cash on hand ($1.1B as of 12/31, burning $200M per quarter). In short: It's trading for less than 2x cash-on-hand. Argo was underwater -- certainly not above a $1B liquidation preference.

PragmaticPulp 4y ago

Given the timing of their investments and the extreme valuation they had during the bubble, it’s likely that most recent hires’ option packages would be worthless in today’s market. The startup options market has become very skewed against regular employees in recent years. I wouldn’t be surprised if the bulk of the cap table and preference stack was captured by early management hires and investors. Other comments in this thread suggest that leadership wasn’t acquired into Ford, so maybe wiping them all out and giving the employees good jobs at a real company with real stock is the best outcome for the current market.

mparkms 4y ago

Someone I know was rehired to Ford from Argo and got an extremely generous offer. He seems pretty happy about it.

kortilla 4y ago
Numbers? I’m curious what AI comp looks like these days.
- eganist 4y ago
  North of 700 TC* *Anecdata
  - smcl 4y ago
    What does that mean?
    - eganist 4y ago
      700k total comp, so probably between 150-300k base salary, 50k bonus, and the rest in stock comp, usually vesting in batches over four years. Anecdata just means anecdotal data, i.e data points I know from people personally but not a representative sample.
      - smcl 4y ago
        Ahhh thanks! I figured "TC" was "total compensation" but wasn't sure how to interpret 700 since $700k/yr seemed enormous, but if it's salary for a year plus a chunk of stock that vests over a few years that makes more sense.
        eganist 4y ago
        Well..... It's still an enormous chunk. Assume you're making 350 cash comp (300+50 bonus), that's another 1.4m in stock vesting over 4 years (350/y)