5 ms·

It actually seems low to me too. $30 million is a lot of money, but given the number of companies with $1bn+ valuations recently, you'd think there would be at

It actually seems low to me too. $30 million is a lot of money, but given the number of companies with $1bn+ valuations recently, you'd think there would be at least 200 from those alone. It may be they are not counting paper wealth in private companies. It may also be that many of these $1bn+ valuations came in the last year or so (their data is from 2013.)

hkmurakami 12y ago
If the company is worth $1BB, then you must own 3% of its equity in order to have $30MM worth of equity of that company [1]. Non-founders rarely, if ever, are given that much equity (commonly cited numbers tend to top out around 2%). The most likely candidates are engineer #1 and an early VP, but engineer #1 has likely been diluted by over 30% since seed stage and even the exec will have been diluted by 10~20%. At $5BB, a nonfounder needs about 0.6% of the company. By this point though, dilution is usually even more severe, and engineer #1 will likely have had his/her initial share cut by close to 50%. This means that only the earliest of early employees, along with the VP level hires, will have $30MM at a typical $5BB startup (though $5BB startups are hardly typical). It's the companies that are another order of magnitude higher in valuation that mint wealth of that kind to dozens of employees. [1] ignoring liquidity preference for the sake of simplicity.
- will_work4tears 12y ago
  MM is often used to denote millions, but I don't think BB is used to denote Billions. Do you have a cite that indicates otherwise, because I don't see it on a quick search.
  - hkmurakami 12y ago
    I would suggest googling "$1BB". They're both rather commonly used. That being said, MM is more necessary because "M" also denotes 1000, and can thus be ambiguous.
    - will_work4tears 12y ago
      Interesting. Just to clarify why I asked, I googled "MM millions" and saw the answer right away but a search for "BB billions" came up rather empty (I read the first result and skimmed the title and snippet for the first page). "1BB" came up with bed and breakfast results. "$1BB" did have some results, though some were like me that this was the first time seeing it and they were asking about it. The other sites are blogs and nothing like Bloomberg. Anyway, thanks, next time I see it, I guess I will not be confused.
  - gohrt 12y ago
    M = 1000 MM = 1000 * 1000 NMM = 1000 * 1000 * 1000 pp = pages ll = lines so it's a natural logical extrapolation to go for bb = billions http://www.riskglossary.com/link/mm.htm http://www.riskglossary.com/link/mm.htm
    - panglott 12y ago
      If the analogy is billions to millions, BB = Billion * Billion
  - GFK_of_xmaspast 12y ago
    Even if you hadn't seen it before, it's clear enough in context.
  - panglott 12y ago
    Etymylogically, "million" derives via French from Italian "milione", the augmentative of "mille", thus a thousand thousand (MM). In British English "billion" originally meant "a million million" a la French "milliard", but has shifted to America "thousand million".
- ganeumann 12y ago
  From Forbes, yesterday: "Today, there are more than 80 unicorns, or companies with a valuation of at least $1.0 billion—that’s more than double the number last year, and, according to CB Insights, just three fewer than the last three years combined. As for unicorn exits: 2014 saw almost twice as many billion-dollar exits (32) as 2013 (17)." (http://www.forbes.com/sites/truebridge/2015/03/09/too-many-unicorns-why-billion-dollar-startups/ http://www.forbes.com/sites/truebridge/2015/03/09/too-many-u...) It's hard to tell if the "80 unicorns" includes the 49 exits from 2013 and 2014, although the wording (to me) suggests they do not. Regardless, many of these companies have co-founders and an early CTO hire often gets ~5-7% in options (which are then diluted, granted.) Also, if the minimum to be included is $1bn, then the average is somewhat higher (although not too much higher, given the shape of the distribution.) So, between the 2-5 people who might own more than 2-5% of the company, the 80-129 unicorns over the past few years, and the average unicorn valuation of $1.5bn to $3bn, all somewhat informed guesses, my swag was about 200 people with paper net worth of >$30mm. I mean, you could easily see a company like Slack, which grew very quickly, having 4 or 5. Of course, per the referenced paper, these people probably aren't flying much on private jets since, to my knowledge, NetJets doesn't accept unexercised stock options as boarding passes.
erdevs 12y ago
There is an enormous difference between paper money and real, liquid money. There is an enormous difference between the headline price an investor invests at, with all their Preferred rights, and what an employee can actually cash out at. There are very, very few cash exits of $1B+ in any given year. And far less than the majority of those have rights that allow employees, or even founders, to cash out at, for example, the sky high initial IPO market cap pop price.
- ganeumann 12y ago
  Well, sure, but the referenced paper mentioned "net worth", not cash. I assumed they were ignoring people whose net worth included hard to value private company stock.
  - erdevs 12y ago
    Yes, but that's kind of my point. I was replying to people speculating that SF must have more than ~526 people with liquid net worth above $30M. 526 doesn't seem a low estimate to me. Unless your counting unrealized paper Gaines... Before tax, and which often do not pan out upon liquidation the way a naive reading would imply they will on paper.
erdevs 12y ago
There is an enormous difference between paper money and real, liquid money. There is an enormous difference between the headline price an investor invests at, with all their Preferred rights, and what an employee can actually cash out at. There are very, very few cash exits of $1B+ in any given year. And far less than the majority of those have rights that allow employees, or even founders, to cash out at, for example, the sky high initial IPO market cap pop price.

hkmurakami 12y ago

If the company is worth $1BB, then you must own 3% of its equity in order to have $30MM worth of equity of that company [1]. Non-founders rarely, if ever, are given that much equity (commonly cited numbers tend to top out around 2%). The most likely candidates are engineer #1 and an early VP, but engineer #1 has likely been diluted by over 30% since seed stage and even the exec will have been diluted by 10~20%. At $5BB, a nonfounder needs about 0.6% of the company. By this point though, dilution is usually even more severe, and engineer #1 will likely have had his/her initial share cut by close to 50%. This means that only the earliest of early employees, along with the VP level hires, will have $30MM at a typical $5BB startup (though $5BB startups are hardly typical). It's the companies that are another order of magnitude higher in valuation that mint wealth of that kind to dozens of employees. [1] ignoring liquidity preference for the sake of simplicity.

will_work4tears 12y ago
MM is often used to denote millions, but I don't think BB is used to denote Billions. Do you have a cite that indicates otherwise, because I don't see it on a quick search.
- hkmurakami 12y ago
  I would suggest googling "$1BB". They're both rather commonly used. That being said, MM is more necessary because "M" also denotes 1000, and can thus be ambiguous.
  - will_work4tears 12y ago
    Interesting. Just to clarify why I asked, I googled "MM millions" and saw the answer right away but a search for "BB billions" came up rather empty (I read the first result and skimmed the title and snippet for the first page). "1BB" came up with bed and breakfast results. "$1BB" did have some results, though some were like me that this was the first time seeing it and they were asking about it. The other sites are blogs and nothing like Bloomberg. Anyway, thanks, next time I see it, I guess I will not be confused.
- gohrt 12y ago
  M = 1000 MM = 1000 * 1000 NMM = 1000 * 1000 * 1000 pp = pages ll = lines so it's a natural logical extrapolation to go for bb = billions http://www.riskglossary.com/link/mm.htm http://www.riskglossary.com/link/mm.htm
  - panglott 12y ago
    If the analogy is billions to millions, BB = Billion * Billion
- GFK_of_xmaspast 12y ago
  Even if you hadn't seen it before, it's clear enough in context.
- panglott 12y ago
  Etymylogically, "million" derives via French from Italian "milione", the augmentative of "mille", thus a thousand thousand (MM). In British English "billion" originally meant "a million million" a la French "milliard", but has shifted to America "thousand million".
ganeumann 12y ago
From Forbes, yesterday: "Today, there are more than 80 unicorns, or companies with a valuation of at least $1.0 billion—that’s more than double the number last year, and, according to CB Insights, just three fewer than the last three years combined. As for unicorn exits: 2014 saw almost twice as many billion-dollar exits (32) as 2013 (17)." (http://www.forbes.com/sites/truebridge/2015/03/09/too-many-unicorns-why-billion-dollar-startups/ http://www.forbes.com/sites/truebridge/2015/03/09/too-many-u...) It's hard to tell if the "80 unicorns" includes the 49 exits from 2013 and 2014, although the wording (to me) suggests they do not. Regardless, many of these companies have co-founders and an early CTO hire often gets ~5-7% in options (which are then diluted, granted.) Also, if the minimum to be included is $1bn, then the average is somewhat higher (although not too much higher, given the shape of the distribution.) So, between the 2-5 people who might own more than 2-5% of the company, the 80-129 unicorns over the past few years, and the average unicorn valuation of $1.5bn to $3bn, all somewhat informed guesses, my swag was about 200 people with paper net worth of >$30mm. I mean, you could easily see a company like Slack, which grew very quickly, having 4 or 5. Of course, per the referenced paper, these people probably aren't flying much on private jets since, to my knowledge, NetJets doesn't accept unexercised stock options as boarding passes.

erdevs 12y ago

There is an enormous difference between paper money and real, liquid money. There is an enormous difference between the headline price an investor invests at, with all their Preferred rights, and what an employee can actually cash out at. There are very, very few cash exits of $1B+ in any given year. And far less than the majority of those have rights that allow employees, or even founders, to cash out at, for example, the sky high initial IPO market cap pop price.

ganeumann 12y ago
Well, sure, but the referenced paper mentioned "net worth", not cash. I assumed they were ignoring people whose net worth included hard to value private company stock.
- erdevs 12y ago
  Yes, but that's kind of my point. I was replying to people speculating that SF must have more than ~526 people with liquid net worth above $30M. 526 doesn't seem a low estimate to me. Unless your counting unrealized paper Gaines... Before tax, and which often do not pan out upon liquidation the way a naive reading would imply they will on paper.

erdevs 12y ago