[likpok]

Based on the lockup alone he can't have gotten that wealthy. LNUX had a 180 day lockup, after which the price had fallen to $40-50 (https://itsfoss.com/story-of-va-linux/). That'd be around $6 million based on the blog post (36 million at 274/share).

That's of course assuming he sold as quickly as he could. LNUX IPOed right before the dot com crash, a year post IPI it was 9/share (at that price, ~1 million to ESR).

[tptacek]

2 years after "Surprised By Wealth", he wrote a commentary about VA Linux's layoffs where he more or less said outright that he'd never cashed out, which wouldn't be surprising, since he was a director of the company. One assumes he managed to get something out, but since he doesn't seem to have had a full-time job after VA Linux, it's easy to see how one could have burned through it. It feels weird doing kremlinology on this stuff; what I feel like I understand about his situation is, wherever he was then, he isn't anymore.

Whatever else he was at the time, he was certainly employable. This LBIP thing is comical because regardless of his economic circumstances, he is practically the textbook case of someone you'd want to recognize as not load-bearing. That, by itself, is not a dunk; I'm a similar textbook case: loud, but not anywhere on the Internet's critical path.

[elcritch]

Thanks y'all for the context. I was mainly going on the context from that one slashdot link.

If he waited too long to sell and only got a ~$1 million that could quickly become $500k after taxes, especially in CA. Just another case of options/equity being worthless until there's cash in the bank.

[dtaht]

He never cashed out. He got nothing. Just the royalties on his books and the occasional consulting contract.

[gregw2]

I suspect there's no way ESR even got $1 million out of VA Linux.

1) ESR was on the Board of Directors of VA Linux and subject to the 180-day lockup so there is NO WAY he could sell under SEC regs until after 180 days so he couldn't get that $274/share ($36 million). I agree after 180 days his stake would be $6-7m "on paper" and 1 year out as you say ~$1million. However...

2) Per Wired article the day after the IPO covering Eric making foolish comments (actual comments: https://lwn.net/1999/1216/a/esr-rich.html Wired coverage: https://www.wired.com/1999/12/open-source-rich-opens-mouth/ ) ESR had options on 150k shares with a strike price of under 4 cents but there was a four year vesting schedule. I don't know his vesting schedule, but there's no way he had vested even half of that amount during the timeframe when the shares were still $40+. Per his resume (http://www.catb.org/~esr/resume.html) , he was a Director from November 1998 to April 2002 so not a full 4 years.

3) Confirming that further, per SEC filings required from insiders on the Board as he was, he has no registered sales while he was before he left the VA board, ie no sales in 1999-mid-2002: https://web.archive.org/web/20030201132729/http://biz.yahoo.... https://web.archive.org/web/20010615000701/http://biz.yahoo.... https://web.archive.org/web/20000815055303/http://biz.yahoo.... He is shown in that last link as having, in addition to the 150,000 shares "Initial Direct Holdings Statement" as having on Dec 31, 1999 "Acquired via Exchange" 12,952 shares with a then-market-value of 2,676,207, but he is not shown as having sold any shares. I am not sure what the taxable implications of whatever happened in that "Exchange" (if there were some, then could actually have lost money on the whole thing!) but I don't see that he sold them while he was a Director. He rode the stock the way down. Purely speculatively, I wonder if the grief he got about his comments at IPO time made it harder for him to sell while he was a Director. His sales must have been on the open market after he wasn't a Director, ie post April 2002.

4) Let's say he sold on the open market post-April 2002 sometime within the following 5 years. Per LNUX stock charts at: https://web.archive.org/web/20051208024613/http://finance.ya... https://web.archive.org/web/20020223103417/http://finance.ya... the stock bobbled between $1 and $6 from April 2001 to Jun 2007. $6 at (maybe) 162,952 shares is $977,712 max. Worst-case he had quarter vesting at IPO which he exchanged for 12,9k shares outright. And worst-case he had two more (but not the final year) years of options vested (75k) which he then sold for at a bad time for around $1 which was ~$87k. So somewhere between $100k and $1m (pre-tax!) seems likely to be what he made; the truth is somewhere in-between.

5) ESR has actually publicly answered some questions on this topic. Per http://esr.ibiblio.org/?p=556#comment-228165 :

"[Q:] If I remember correctly, you've made a fortune on VA Linux's IPO. Didn't you sell those stocks while they were up?

[A:] Nope. Didn’t sell before the bust. Too busy worrying about other things, like changing the world."

6) Some ironically less-connected open source contributors were able to put their own money at risk and buy up to 100 (or 140?) shares @ $30 each pre-IPO. They were able to sell on day 1. See Chris DiBona's comments at https://slashdot.org/story/99/12/09/1324204/va-linux-systems... ("Everyone who was in the program and faxed in thier forms is by default confirmed for 100 at 30$. To change your share allotment to 50 or 140 , you must call and tell them. .... You can sell now if you like. " and bgdarnel quoting from the "VA Letter" describing how eligibility in the "friends and family" allocation to open source contributors worked. But the limits of that allocation limited the upside to < $30k. Nice if you got it (and kudos to VA for doing that!) but not making-you-rich.

7) Other clients of the IPO underwriter(s) (e.g. Deutsche Banc, etc) who got larger allocations were able to make more money... if they flipped quickly enough. There were SEC probes around oddities surrounding the IPO allocations back at the time: https://www.zdnet.com/article/sec-probes-ipo-of-va-linux-500...

Sorry for this long research project. I don't care that much but I got curious and I kept finding more tidbits as I dug.

[dtaht]

One of my great sadnesses about the long term support of FOSS was that the great redhat experiment of letting open source contributors into the IPO´s strike price, has never been repeated. For a tiny amount of re-investment into the commons like this, it would have been a better, far less scary and undermaintained world.

I really felt then, that misunderstood, and underappreciated, complicated, dedicated creators of really great code, would have a floor under them from all the companies that used it and did not understand it.

https://www.cnet.com/tech/tech-industry/late-ipo-change-left...

RHAT going public and sharing the IPO strike prices with the devs they based their success on, was a great day for the prospect of an indirect financial return on years of craftsmanship and care.

I hope one day, the idea finds new life.

[nonce42]

Thanks for the research. I did similar (but less extensive) calculations a few years ago and came to the same conclusion that ESR probably got negligible money from VA Linux. Also, having your net worth drop from $36 million to ~0 can kind of mess someone up.

ESR's (slightly smug) post "Surprised by Wealth" at the time when he had $36 million on paper makes very interesting reading now: https://news.slashdot.org/story/99/12/10/0821224/esr-writes-... He implied that he was going to cash out in 6 months when his lockout expired, but that apparently didn't happen. Ironically, he said that he had much more faith in VA Linux than the U.S. economy over that 6 months. Also ironic in light of Loadsharers is his statement "Anyone who bugs me for a handout, no matter how noble the cause and how much I agree with it, will go on my permanent shit list."

[microtherion]

VA Linux was quite generous in selecting their "friends and family" beneficiaries. I was one of them (and made enough money to pay cash for a used car), despite not really having contributed to Linux at all (I made some contributions to Perl related to a different OS).

I later learned that the first day pop of VA Linux was deliberately engineered — large allocations were contingent on buying more shares at market prices on opening day.