[gtwomd]

I guess no one else is allowed to have indirect lighting anymore (/s)

As someone not well versed in how startups work, why do they need to acquire the entire company to have the team work for them, as opposed to negotiating with the employees individually? Is it essentially a lump sum payment to stop what they were currently working on.

[KaiserPro]

a quick overview of the startup economy

1) have an idea, negotiate seed funding. Someone will give you a bunch of money to make an MVP. the "angel" or "seeder" will exchange money for a percentage of the company. They will have a say in how its run

2) grow the company according to the metrics that make you look valuable (market share is normally the common one)

3) growing costs money, so raise a "series a" same deal as before, either seeder/angels are bought out, or their share of the company is diluted in exchange for more monoey from the funders, typically a VC.

4) repeat until either bankrupt, IPO, Profitable, or boughtout.

Now. As an early employee, you are given shares in the company. Typically <1%. the more rounds you have, the more diluted that percentage gets.

when the company is bought out, your shares are exchanged for a price. however as you didn't put the money in, you are a way down the pecking order for getting the cash. Not only this, but a "buyout" price is rarely the headline price. For example CTRL-Labs[1] was "bought out" for $500 mill. However thats not the price they paid for the company. thats the price paid for the company and the "golden handcuffs" to keep employees.

of that 500mill some of is say <75m will go to physically buy the company, the rest will go towards golden handcuffs to keep the employees working. After all, if you give most of the company >$2m upfront, they'll say "work for facebook? fuck that, I'm retiring"

So to combat that, you'll get your 0.0001% of $75m, then offered a contract with the new company that will give you shares that will be released to you gradually after a certain cool off period, say one year (Fb and google give you 6.25% every 3 months.) That means that to get your $2m you need to work for the new company for four years.

[1]https://www.businessinsider.com/facebook-acquired-brain-comp...

[dragonwriter]

> As someone not well versed in how startups work, why do they need to acquire the entire company to have the team work for them, as opposed to negotiating with the employees individually?

Because otherwise, the team would have the option of continuing their current employment.

Take away the alternative they are demonstrably already choosing over you, and you have a better chance of getting and keeping them.

[proser]

It also usually triggers a liquidity event, so the team gets paid (or their equity gets transferred to OpenAI) in a way that provides a bit of a bonus and incentive to stick around.