I was at Dropbox for a while and left in no small part because of the frustrating lack of potential liquidity on my equity.
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...
If you're in such a position, you better hope that your founders _really_ like you.
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...
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".
> My basic principle on this stuff is that if you want liquidity, that’s fine, but you should make it available to everyone.
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.
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.
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).
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.
It's one route to take, but not the only one.
That would be through an IPO or acquisition, either way you loose control of your company.
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.
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.
https://www.cargill.com/about/financial/credit-rating-inform...