I’m a bit ignorant to RSU’s and secondary markets. Why were the executives able to sell but not regular employees? What stopped regular employees from selling ?
If a company is private then you cannot sell/purchase shares on public markets.
So, execs can go fundraise, which is selling shares to new investors. But what shares are they gonna sell? Newly minted ones, or shares someone already own?
The execs get to decide. In theory, there is no reason that "regular" vested employees couldn't also sell shares if execs designed it that way, beyond some complexity in management overhead (think figuring out information for 1000 people vs 10) as well as "turnover risk" where employees can cash out and leave.
Now you are saying, well, seems like employees are gonna leave now without cashing out, and you are right. That's why it's dumb. Poor decision making by execs. I'm sure there are a lot of people at datarobot that didn't even know this, and are just learning this now.
(Unless execs want both to make a lot of money and re-form the company, if that's the case, well then, great decision making by the execs)
It just comes down to who the board allows to sell stock and at what time. Most option contracts don’t allow sale of stock to secondary markets without approval and rank and file employees have much more restricted stock. Often founders and key executives will also get some liquidity and stock top up during funding rounds while no one else at the company has that option. By the time a company goes public most founders and key execs have already made quite a bit of money on the side.
So, execs can go fundraise, which is selling shares to new investors. But what shares are they gonna sell? Newly minted ones, or shares someone already own?
The execs get to decide. In theory, there is no reason that "regular" vested employees couldn't also sell shares if execs designed it that way, beyond some complexity in management overhead (think figuring out information for 1000 people vs 10) as well as "turnover risk" where employees can cash out and leave.
Now you are saying, well, seems like employees are gonna leave now without cashing out, and you are right. That's why it's dumb. Poor decision making by execs. I'm sure there are a lot of people at datarobot that didn't even know this, and are just learning this now.
(Unless execs want both to make a lot of money and re-form the company, if that's the case, well then, great decision making by the execs)