4 ms·

Venture-capital infusions shrank Box founders’ stakes, ignited strife

37 points by pierrealexandre 11y ago

pg_is_a_butt 11y ago
not rich enough to pay for wsj paywalled articles at least. dumb link.
vitalus 11y ago
Behind a paywall :(
- curiouslurker 11y ago
  google the headline to get a direct link!
  - rhino369 11y ago
    Interesting, Binging the headline doesn't work, but googling does.
  - downandout 11y ago
    Even better, just type "site:" and paste the url into google/your chrome location bar after it [1]. The only result you'll receive is the link. [1] https://www.google.com/search?q=site%3Ahttp%3A%2F%2Fwww.wsj.com%2Farticles%2Frich-but-not-silicon-valley-rich-1429842736 https://www.google.com/search?q=site%3Ahttp%3A%2F%2Fwww.wsj....
  - evunveot 11y ago
    Note: this trick doesn't work in Firefox now that Google defaults to https. Firefox won't send a Referer header when you're going from an https page to an http page, so wsj.com doesn't know you're coming from Google. (I don't know whether it sends one for https-to-https cross-domain links.) Ninja edit: that is, this is how my Firefox behaves. Not sure if it's caused by an add-on like HTTP Everywhere or something like that. But it seems like I read something from the DuckDuckGo blog describing this behavior. Chrome sends a Referer of "https://www.google.com" https://www.google.com" (i.e. just the domain), so wsj.com lets you past the paywall.
  - dohertyjf 11y ago
    Once the page is indexed a simple cache: in front of the URL in Chrome might work.
  - myth_buster 11y ago
    I believe there are browser extensions that let you configure referrer on per site basis. Hence for WSJ if you set google, it would bypass paywall.
gkoberger 11y ago
Stories like this make me think it's almost not worth starting a company. Give 1,200 talented people an awesome place to work, be CEO of a company you truly enjoy leading, provide thousands of companies with a service that makes their lives easier, entertain 150k Twitter followers, make a bunch of your employees first-time millionaires, make millions for your investors, make yourself more money than you'll ever be able to spend... and people still consider you a failure.
- SilasX 11y ago
  If that's failure, I don't want to win.
  - gkoberger 11y ago
    For the record, my point was that Aaron is anything but a failure, and all the press and people saying/implying this upset me.
    - ricardonunez 11y ago
      I see your point, but I'm sure for their families, friends, VCs and all the people that really matter to them, they are successful and inspiring. Everybody else is not important.
- ojbyrne 11y ago
  Except you're out at 35, a few million in the bank, and a track record that has VCs lining up around the block for whatever you do next.
- austenallred 11y ago
  I read the first sentence and thought you were saying it's not worth it. I'm glad I finished your comment. There's certainly a difference between $100 million and $1 Billion, but not one that will change your level of happiness.
- declan 11y ago
  This article was on the front page of the Wall Street Journal today. One thing that struck me when I read it this morning is that the headline is practically unrelated to the article: the word "rich" appears only in the article's 7th paragraph, and the bulk of the piece is pretty straightforward reporting on Box's fundraising efforts. Box's market cap is approximately $2B. If the founders ended up with, say, $150M combined (the article says over $100M), it may be a relatively small slice -- but of a pretty big pie. I suspect 99.9999% of HN readers would be happy with the results that those two folks managed, and the fact that the company, in this post-Sarbox era, conducted a successful IPO. To put it in perspective, I'm not aware of a single YC-backed company that has had an IPO, though Dropbox seems a likely near-term candidate.
equil 11y ago
mirror that bypasses the paywall https://archive.is/WKcLi https://archive.is/WKcLi
- oaktowner 11y ago
  Thank you!
driverdan 11y ago
> Mr. Cuban put in $250,000 and got a nearly one-third stake in the fledgling firm. Why would someone give up a third of their company for $250k? That seems crazy to me.
- justizin 11y ago
  Clearly, you are not a fan of "Shark Tank" ;)
- gkoberger 11y ago
  Less crazy when it's 2005 and you're a college student with no money, and you look at Cuban as a business partner rather than an investor.
- austenallred 11y ago
  Because giving up 1/3 of a company that will make you rich is better than your company failing. You couldn't always get a $5 million valuation for your pre-revenue, pre-traction product. When it comes down to it, you have to take what you can get.
- anigbrowl 11y ago
  Because you don't have much capital or revenue when you're just starting out, you take what you can get. If you demand a minimum of, say, $5 million for such a stake and nobody is willing to give it to you, what then? Your unshakeable self-belief isn't going to magically make payroll or pay for your overhead or purchase That Thing You Need.
- AndrewKemendo 11y ago
  1/3 * $0 = $0
wilsynet 11y ago
Success in a VC backed company means dilution. Massive success means massive dilution. The only time it doesn't mean that is when we're talking about super unicorns (Facebook) or primarily self-funded early on along with early traction (Workday).
kzhahou 11y ago
> Aaron Levie and Dylan Smith are worth more than $100 million combined after turning the cloud software firm they started in a Berkeley, Calif., garage into Box Inc., with 1,200 employees and expected revenue of $285 million this year. ...But getting there took 10 years. This illustrates very well the disparity between founder and non-founder equity. It's considered a negative that Levie and Smith got only $100 million combined. They're not Sergey-rich, but it's still fuck-you retire-early start-a-foundation become-an-investor money for each of them. Meanwhile, given that the sum of non-founder equity (i.e., all employees combined) typically adds up to less than the founders', you've got at most $100 million to spread over 1200 employees. Employee number 1 might have a couple million dollars bonus from his 10 years, but it'll go down quickly from there for everyone after the first few. Where's the WSJ article on them, and the thousands of others who are never written about when silicon valley companies go public? The ones who joined a company early, or when it was in the red, or under pressure from all sides, and helped it grow and succeed... and they walk away still not being able to afford a house in Mountain View, while their founders pick out colors for their Ferraris?
- kareemm 11y ago
  This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.
  - BallinBige 11y ago
    first 5-10% of google and paypal employees MADE BANK
    - rhizome 11y ago
      Those in the closest inner circles to get hired when they were coming up. It continues to pay to run in the right circles and know the right people.
    - kzhahou 11y ago
jtzhou 11y ago
> In May 2011, Citrix Systems Inc. offered to acquire Box for about $600 million, nearly triple the online storage company’s value in February. > Draper Fisher Jurvetson, of Menlo Park, Calif., pressured Messrs. Levie and Smith to think long and hard about selling. The venture-capital firm stood to get $9 for every Box share it bought for 29 cents. One reason one should hesitate about taking big-name VC funding is that you can get stuck in the "home run" mentality.
oh_sigh 11y ago
It's only their own fault...not sure how this is news worthy.

pg_is_a_butt 11y ago

not rich enough to pay for wsj paywalled articles at least. dumb link.

vitalus 11y ago

Behind a paywall :(

curiouslurker 11y ago
google the headline to get a direct link!
- rhino369 11y ago
  Interesting, Binging the headline doesn't work, but googling does.
- downandout 11y ago
  Even better, just type "site:" and paste the url into google/your chrome location bar after it [1]. The only result you'll receive is the link. [1] https://www.google.com/search?q=site%3Ahttp%3A%2F%2Fwww.wsj.com%2Farticles%2Frich-but-not-silicon-valley-rich-1429842736 https://www.google.com/search?q=site%3Ahttp%3A%2F%2Fwww.wsj....
- evunveot 11y ago
  Note: this trick doesn't work in Firefox now that Google defaults to https. Firefox won't send a Referer header when you're going from an https page to an http page, so wsj.com doesn't know you're coming from Google. (I don't know whether it sends one for https-to-https cross-domain links.) Ninja edit: that is, this is how my Firefox behaves. Not sure if it's caused by an add-on like HTTP Everywhere or something like that. But it seems like I read something from the DuckDuckGo blog describing this behavior. Chrome sends a Referer of "https://www.google.com" https://www.google.com" (i.e. just the domain), so wsj.com lets you past the paywall.
- dohertyjf 11y ago
  Once the page is indexed a simple cache: in front of the URL in Chrome might work.
- myth_buster 11y ago
  I believe there are browser extensions that let you configure referrer on per site basis. Hence for WSJ if you set google, it would bypass paywall.

gkoberger 11y ago

Stories like this make me think it's almost not worth starting a company. Give 1,200 talented people an awesome place to work, be CEO of a company you truly enjoy leading, provide thousands of companies with a service that makes their lives easier, entertain 150k Twitter followers, make a bunch of your employees first-time millionaires, make millions for your investors, make yourself more money than you'll ever be able to spend... and people still consider you a failure.

SilasX 11y ago
If that's failure, I don't want to win.
- gkoberger 11y ago
  For the record, my point was that Aaron is anything but a failure, and all the press and people saying/implying this upset me.
  - ricardonunez 11y ago
    I see your point, but I'm sure for their families, friends, VCs and all the people that really matter to them, they are successful and inspiring. Everybody else is not important.
ojbyrne 11y ago
Except you're out at 35, a few million in the bank, and a track record that has VCs lining up around the block for whatever you do next.
austenallred 11y ago
I read the first sentence and thought you were saying it's not worth it. I'm glad I finished your comment. There's certainly a difference between $100 million and $1 Billion, but not one that will change your level of happiness.
declan 11y ago
This article was on the front page of the Wall Street Journal today. One thing that struck me when I read it this morning is that the headline is practically unrelated to the article: the word "rich" appears only in the article's 7th paragraph, and the bulk of the piece is pretty straightforward reporting on Box's fundraising efforts. Box's market cap is approximately $2B. If the founders ended up with, say, $150M combined (the article says over $100M), it may be a relatively small slice -- but of a pretty big pie. I suspect 99.9999% of HN readers would be happy with the results that those two folks managed, and the fact that the company, in this post-Sarbox era, conducted a successful IPO. To put it in perspective, I'm not aware of a single YC-backed company that has had an IPO, though Dropbox seems a likely near-term candidate.

equil 11y ago

mirror that bypasses the paywall https://archive.is/WKcLi https://archive.is/WKcLi

oaktowner 11y ago
Thank you!

driverdan 11y ago

> Mr. Cuban put in $250,000 and got a nearly one-third stake in the fledgling firm. Why would someone give up a third of their company for $250k? That seems crazy to me.

justizin 11y ago
Clearly, you are not a fan of "Shark Tank" ;)
gkoberger 11y ago
Less crazy when it's 2005 and you're a college student with no money, and you look at Cuban as a business partner rather than an investor.
austenallred 11y ago
Because giving up 1/3 of a company that will make you rich is better than your company failing. You couldn't always get a $5 million valuation for your pre-revenue, pre-traction product. When it comes down to it, you have to take what you can get.
anigbrowl 11y ago
Because you don't have much capital or revenue when you're just starting out, you take what you can get. If you demand a minimum of, say, $5 million for such a stake and nobody is willing to give it to you, what then? Your unshakeable self-belief isn't going to magically make payroll or pay for your overhead or purchase That Thing You Need.
AndrewKemendo 11y ago
1/3 * $0 = $0

wilsynet 11y ago

Success in a VC backed company means dilution. Massive success means massive dilution. The only time it doesn't mean that is when we're talking about super unicorns (Facebook) or primarily self-funded early on along with early traction (Workday).

kzhahou 11y ago

> Aaron Levie and Dylan Smith are worth more than $100 million combined after turning the cloud software firm they started in a Berkeley, Calif., garage into Box Inc., with 1,200 employees and expected revenue of $285 million this year. ...But getting there took 10 years. This illustrates very well the disparity between founder and non-founder equity. It's considered a negative that Levie and Smith got only $100 million combined. They're not Sergey-rich, but it's still fuck-you retire-early start-a-foundation become-an-investor money for each of them. Meanwhile, given that the sum of non-founder equity (i.e., all employees combined) typically adds up to less than the founders', you've got at most $100 million to spread over 1200 employees. Employee number 1 might have a couple million dollars bonus from his 10 years, but it'll go down quickly from there for everyone after the first few. Where's the WSJ article on them, and the thousands of others who are never written about when silicon valley companies go public? The ones who joined a company early, or when it was in the red, or under pressure from all sides, and helped it grow and succeed... and they walk away still not being able to afford a house in Mountain View, while their founders pick out colors for their Ferraris?

kareemm 11y ago
This is why being a super early employee is one of the worst deals in tech: marginally less risk than the founders, long hours, minimal equity, and likely below-market salary. There are upsides, but outside of a few rare cases, I can't imagine joining a company at this stage.
- BallinBige 11y ago
  first 5-10% of google and paypal employees MADE BANK
  - rhizome 11y ago
    Those in the closest inner circles to get hired when they were coming up. It continues to pay to run in the right circles and know the right people.
  - kzhahou 11y ago

jtzhou 11y ago

> In May 2011, Citrix Systems Inc. offered to acquire Box for about $600 million, nearly triple the online storage company’s value in February. > Draper Fisher Jurvetson, of Menlo Park, Calif., pressured Messrs. Levie and Smith to think long and hard about selling. The venture-capital firm stood to get $9 for every Box share it bought for 29 cents. One reason one should hesitate about taking big-name VC funding is that you can get stuck in the "home run" mentality.

oh_sigh 11y ago

It's only their own fault...not sure how this is news worthy.