Re:My company sold for $100M and I got zilch – how can that be?
by zucker42 on Friday October 25, 2019 @05:20PM
(#21359354)
I have no knowledge of the startup world, but based on the article, if both the founder and employees have common shares then their incentives are aligned (i.e. the founder wouldn't want to sell the company unless the price was well above the preference overhang). Of course, deception can pay a role in making this less fair.
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Re:My company sold for $100M and I got zilch – how can that be?
by krajzeg on Friday October 25, 2019 @06:23PM
(#21359830)
The article mentions at least one reason why the incentives often aren't aligned: a carve-out agreement that guarantees specific people (often founders) a cut from the "preferred" part of the pie. As I understood it, this cut is completely unrelated to the amount of shares (common or otherwise) those people own and is a separate agreement saying that they get eg. 10% of the money in the event of a sale.
Re:My company sold for $100M and I got zilch – how can that be?
by ummonk on Friday October 25, 2019 @06:17PM
(#21359798)
Often, founders get paid money directly as part of the acquisition to make them greenlight it.
Re:My company sold for $100M and I got zilch – how can that be?
by tptacek on Friday October 25, 2019 @06:20PM
(#21359813)
How often is often? Can you name 3 such cases?
Re:My company sold for $100M and I got zilch – how can that be?
by fiter on Friday October 25, 2019 @07:00PM
(#21360071)
Often enough that it is mentioned in the article.
Re:My company sold for $100M and I got zilch – how can that be?
by tptacek on Friday October 25, 2019 @07:57PM
(#21360415)
Carve-outs in general are mentioned in the article. A common type of carve-out: the employee retention pool. The article does not say that founder carve-outs are common. I'm sure they've happened, but you said they happen "often", as a way to get founders to greenlight deals. Do you know how often that happens?
Re:My company sold for $100M and I got zilch – how can that be?
by fiter on Friday October 25, 2019 @10:31PM
(#21361290)
I don't know how often that happens, so I can't add anything to that part of the discussion.
I can only reason that it depends on whether the founder still has voting control of the company, but that's implied with "greenlighting".
WeWork is a similar situation where the founder is effectively getting a carve-out to greenlight the deal. That's only one example, though.