[sloanesturz]

A shame that they didn't raise this money through an IPO. I'm afraid of how long unicorns are staying private: it's a big bummer for their employees and early investors. It'll be a tough sell for early employees of the next batch of unicorns if Uber, Airbnb, Palantir, Dropbox, etc. stay private for 10-15 years or more!

[rpearl]

Dropbox and AirBnB have already been private for almost 10 years! (Palantir - 13!, Uber - 8)

I was at Dropbox for a while and left in no small part because of the frustrating lack of potential liquidity on my equity.

[chii]

i expect companies that remain private while dangling equities for it's employees to create an opportunity for them to sell privately - e.g., a liquidation event, where the buyer is an investment/VC firm that wants in. It's good for both parties - employees get a liquidation event, the VC gets foot in the door, and founders aren't diluted.

I guess, though, in this case, the employee is the party without power, as they are offered a price (which is probably lowballed, since they don't have a choice) in a take it or leave it fashion...

[trustfundbaby]

wow ... did you give up all your vested options? or at least buy a bit of them?

[rickcnagy]

I don't know, something feels off about Palantir being around for 6227020800 (13!) years...

[jlgosse]

I'm not saying this is the case with this round in particular, but it's not unheard of for early employees to take money off the table in a round like this

[maineldc]

There was a very "insider baseball" moment in 2011 with regards to AirBNB and a well known investor "discussing" taking money off the table. Note, the investor was basically saying that if the founders get some liquidity, you should offer the same to employees. I will never forget how much that raise my esteem him. [0]

So yes, if they were willing to do it in 2011, I am sure that they are doing it in this round too.

[0] - https://techcrunch.com/2011/10/01/chamath-palihapitiya-airbn...

[poof131]

Thanks for sharing that link. Always good to see which investors look out for employees and which founders don’t. Taking a dividend out of the company when most your employees shares are options and not eligible for a dividend is definitely not team spirited. The more transparency to these things the better.

[conanbatt]

To me it sounds like an argument the investor would make to leverage founders not getting equity.

Investors get paid before employees. What if airbnb had answered to him "we will do that, but also, you cannot make any money at all until employees get it, otherwise this shady way of things will harm you long term".

[maineldc]

Well, the investor made it quite clear in his note that he wasn't disagreeing with taking money off the table:

> My basic principle on this stuff is that if you want liquidity, that’s fine, but you should make it available to everyone.

[conanbatt]

Coupling one concession to a requirement makes its harder for it to happen: "Sure, I will give you a salary raise if you can commit to working any saturday i tell you to".

Think also that the least money the founder gets off the table, the investor gets lets capital into his investment itself, he is interested in getting as much money into the business itself, not into the founders pockets.

Arent the investors preferences clear in this point? HE prefers the founder not to get money off the table, and puts a requirement on it.

Another way to put it, he recommends a course of action, but is he the one adding extra money so that course of action goes to his preference? If he is, then by all means its at least a great gesture.

Addition: and also, think of it the other way around. What if a founder told the investors "you are not getting any money unless my employees are getting money as well". Becuase thats not how the deals are structured nowadays.

[brandur]

The company isn't compelled in any way to allow this though, and is actually disincentivized from doing so because it increases the probability of key departures as those people are able to extract some value.

If you're in such a position, you better hope that your founders _really_ like you.

[bogomipz]

I believe most do though, but with a right of first refusal. In which case they will buy them of direct you to their preferred buyer. Source: I have done this and my conversation with the broker for the secondary market who handles a lot of this said it is quite common and that in fact other at the same company I was at had done so. It might be frowned upon internally but you have to look out for yourself. Staying at a startup for 8+ plus years isn't very realistic for me personally.

[amenghra]

Many companies have periods of time where you get an opportunity to cash out a percentage of your equity. It gives confidence to early employees that the company has their back and they aren't really disincentivized to leave because they still have a majority of their equity "locked".

[bfwi]

How does secondary market transaction work, in these cases? Is it only when a round is raised that shareholders can take money off the table, or does it ever happen between rounds as well?

[samstave]

Can you ELI5 exactly how any employee "takes money off the table" --- I have always been farked in my dealings... so how do I profit? What is the best strategy?

[woodrow]

If the company allows it, they will facilitate transfer of stock from employees directly to investors as part of a funding round.

[alehul]

If investors are enthusiastically in disagreement about the potential of a company (both the buy + sell sides), it's probably better for the company's valuation to stay private. It blocks out any negative opinions' effect that you'd have if public via investors shorting / betting against the company.

This probably leads to an overly high valuation it wouldn't hold up to on the stock market, though, (i.e. Uber) so then the company feels pressured to stay private until they can justify that overly high valuation. In Uber's case, though, they'll keep raising money at absurd valuations and keep the cycle going.

Palantir is an exception: If they were public and had to disclose much information, their value would plummet, so it'll likely stay private in the foreseeable future.

[frgtpsswrdlame]

Isn't that bad for employees with stock options though? The market could tell them how much those options are really worth.

[alehul]

Completely, and a small part of why employees are cautioned on here to take salary over equity.

The market telling them would be a loss of billions for the investors/founders, both on the value of their own equity and the increased equity they'd have to offer employees (many exceptions apply, but this seems to be the case particularly with startups who lack an easy path to profitability but can show substantial growth).

[hkmurakami]

Palantir will regularly buy its employees' equity fwiw.

[jonknee]

But without the market you could easily be getting ripped off selling your shares back... They're not doing it out of the goodness of their heart.

[muninn_]

Becoming a public company has it's own set of issues, though.

[elastic_church]

Yeah weird how people hold up IPO as a holy grail. Its the worst thing to do if you are actually passionate about the company, if it is your labor of love.

Its the best thing to do if you want to make a lot of money from your money machine and are largely apathetic about the outcome of the business itself. Easy enough to find the next MBA graduate to feign passion for you while they are just trying to sell the company.

[aanm1988]

> Yeah weird how people hold up IPO as a holy grail

Because employees actually gain out of it. That's also a benefit as it gives more people financial freedom and they can go off and do their own companies. Instead these people get locked in to AirBnB for years.

[elastic_church]

Companies always have the option of giving dividends to common stock shareholders, buying out shareholders, simply giving bonuses or any number of things if they didn't continue to reinvest all capital and pursue losses.

Private companies even issue bonds on public bond markets, these can be as large or larger than equivalent equity offerings on the stock markets.

Don't let the mechanisms pursued by a handful of VC firms in Silicon Valley distort your understanding of capital formation.

[hkmurakami]

Prime example is Cargill. $100B in revenues, privately held.

https://www.cargill.com/about/financial/credit-rating-inform...

[elastic_church]

If any of these tech companies decided to just go with 6 months of positive revenues, they could issue bonds in Europe representing waaay cheaper capital than VCs and not have to worry about it for the next two decades.

[muninn_]

Yeah I lean toward this view as well. The point of an IPO is to raise capital. But when you do this, unless you own 51% of the company or there is a small group of like-minded individuals that own 51% of the company, you can wind up losing control and instead of doing things Wall Street doesn't like, you're going to have to focus on profitability and pleasing shareholders.

It's one route to take, but not the only one.

[hagbarth]

Yeah, but AirBnB took that route when they got private investors. They expect to get their money back with a good ROI.

That would be through an IPO or acquisition, either way you loose control of your company.

[zenlikethat]

True, you lose some control, but a small board of a private company is much easier to convince and compel on long-term vision and plans than the general public.

[imranq]

why is this downvoted? every company I've worked at that has IPO'd companies has been, in my experience, soul-sucking.