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Based on personal experience and friends who have been at unicorns in their early days - the first 50 employees average about $0. The next 100 average about $0.
by madaxe_again 4y ago
Based on personal experience and friends who have been at unicorns in their early days - the first 50 employees average about $0. The next 100 average about $0.
In every case, the stock that the employees holds gets reclassified and diluted until it’s a funky employee-only stock that’s only saleable back to the company at nominal value, but the company isn’t buying.
So sure, maybe there’s some kind of nominal value, but actual cash money? $0.
I hold 10% of a business valued at £150M. My holding is worth £0 because I can never sell it to anyone.
- sverhagen 4y agoDoesn't that mean these the decision makers also don't have liquidity? If so, wouldn't the lack of liquidity not be for them still believing that there's a bigger payday behind the horizon? Still sucks if you want/need the cash now, of course.
- ethbr0 4y agoWithout employee power on the board, there's nothing to prevent leadership from issuing themselves a different class of stock. Especially for pre-IPO companies that are beholden to fewer financial regulations. Either you have power, or you have a promise. ... And promises depend on how much you trust your counterparty.
- j-bos 4y agoAre these experiences in the US? Asking because I imagine conditions would differ country to country.
- madaxe_again 4y agoUS, U.K., EU - I mean, sure, maybe you’ll have better luck in Liberia.
- blitzar 4y agoZuckerberg, Brin, WeWork Guy etc all first 50 employees of unicorns ... you saying that their 100's of billions are actually zero value because they are 100's of billions of funky employee-only stock that’s only saleable back to the company at nominal value? Also why pay $3.5bn of tax on $0 of value? Given how sharp tech is about tax minimization you would think they would have better tax people.
- pjc50 4y agoThey're not usually employees, they're owners. Adam Neumann even managed an extraordinary scam whereby he had the shares with voting power and the investors didn't. https://www.washingtonpost.com/business/2019/10/24/adam-neumanns-billion-dollar-exit-package-wework-is-lesson-giving-founders-too-much-control/ https://www.washingtonpost.com/business/2019/10/24/adam-neum...
- blitzar 4y agoAhh ok, so Marissa Mayer then ... didn't make anything more than salary from being #20 employee at google? Adam Neumann even managed an extraordinary scam of being currently worth 2x the company that made him all his money ...
- jossclimb 4y agoAnyone reading this comment, know that this is the other end of the extreme to saying everyone does well. The truth is far more in the middle with many shades of grey.
- sgc 4y agoWithout data it is all just anecdotes. I don't know where the definitive data is to say it is white or black, or reasonable characterized as gray rather than a shade of one of the two extremes. IPO data is public of course, but not the pre-IPO contortions affecting the set up for that moment.
- gbasin 4y agoAt least in the US, this will only be true before a company goes public. After that point, the shares will all be freely salable and have the same value (except for a small premium for supervoting shares which some founders may retain).