Juno Drivers ‘Gett’ Only Pennies Following $200M Acquisition | Hacker News Reader

Juno Drivers ‘Gett’ Only Pennies Following $200M Acquisition

observer.com

82 pointsBradyDale46 comments

“In a nutshell, we’re going to be nice. We’re going to be ethical. We’re going to be respectful of our drivers,” he said. In that talk, Marco said his partners planned to give drivers a stake in the company. In fact, it had suggested it would set aside 50 percent of the company’s founding shares for drivers, as we previously reported.

Initial reports on the deal indicated that all shares accumulated by drivers would be nullified in the acquisition

Another driver forwarded us a letter that offered $251 for 14,173 restricted shares, a value of roughly $0.02 per share. This post[0], shared on the UberPeople forum, shows an estimated value for restricted shares at $0.20 each, last July.

At least Uber isn't hiding behind some sign claiming to be ethical.

[0]https://uberpeople.net/threads/juno-refer-a-driver-get-a-bon...

2 cents a share is better than nothing, which is what I got from the last startup I worked at that got acquired...

It's still pretty insulting.

I worked at a place where, when we got acquired, our shares were worth about $40,000, so everybody was pretty happy.

Then the stock tanked. And tanked. Six months later (1 year vestment) they were underwater, and still dropping. Everybody was miserable.

If they had just handed us $250 on the day of the sale, I believe we would have been a little unhappy but we would have gotten over it.

Careful reading too much into that. There's a difference between, "We will give you $100 or 500 RSUs" and "The street value of a RSU today is $0.20". How many times have we seen startups say, "We can't pay you a $100k salary, but we can pay you $50k and XYZ stock options, which is just as good because the company is going to explode!" That does not mean that XYZ stock options are worth $50k at grant.

How many times have we seen a company get acquired for a kingly sum, and right before the acquisition, the company plays tricks with the stock so the employees get jack shit?

Once would be too many, but I suspect most of the "tricks" (liquidation preferences, "secret" cap tables, etc.) are in play well before an acquisition. The acquisition is just laying your cards on the table.

Serious question: Is there any way at all for a minority shareholder to avoid getting royally screwed in situations like these? Or are they completely at the mercy of the majority to be very nice and decent and not just give them the short end of the stick?

Would it e.g. provide any benefit at all to have a clause about dilution not reducing ownership share more than the majority owners, or would it be possible to weasel out of such an agreement too? How do the rich and powerful do business with each other if agreements are this open to interpretation and backstabbing?

The rich have better lawyers on their side and get better terms. Still, the rich get screwed too. They just have more resources to handle it (or they become unrich).

It's all down to the shareholder agreement. For example ours says all decisions are made by consensus, no matter how many shares you have. That's an extreme case which works with a very limited amount of shareholders, but the point is that you can protect minority rights.

I think the cynical take is the only surefire one. If there isn't a liquid market where the thing can be sold (and thus a reliable price for it), treat it like it isn't worth anything.

It's a conservative strategy, avoiding risk rather than seeking to mitigate it.

The phrase "nullify a share grant" has no legal meaning that I'm aware of.

There are some semi-legal ways to do this, eg dilute some shareholders by issuing a ton of new shares and give them to other existing shareholders (you see this done in The Social Network). However, minority shareholders do have rights and they can sue if there is no basis for the new grants.

What Juno seems to be doing is asking people to sign away both (1) their shares and (2) their right to sue in exchange for around 10% of what they previously thought was the cash value of their shares.

I suspect the reason for this is that the acquisition is taking place in shares of Gett stock, not cash, and Gett doesn't want 10,000 small shareholders on its cap table, but also doesn't have $50 million of cash lying around to pay these drivers, so it's trying to pay them $5 million and make the problem go away.

Doesn't sound like they are real shares: "Still, drivers have been building up restricted shares (called RSUs)."

Restricted shares // RSUs are real shares, as long as they have vested. Restricted refers to the fact that they need to vest, as well as some other terms typically attached, like transfer restrictions.

Most commonly (and traditionally), RSUs are "real shares" of common stock, just wrapped in another layer of requirements (e.g., vesting schedule). This is not always true (e.g., Facebook and "phantom shares"). Regardless, RSUs have a value that is pegged to common stock.

RSUs =/= restricted stock; however, people tend to use the terms interchangeably. A RSU isn't a real share until it vests (at which point it becomes a common share), while restricted stock is a real share that has vesting requirements or some performance requirements (or both).

So the bigger point here is that RSUs are worthless... until they vest (at which point they aren't RSUs anymore). So, technically, Juno is being incredibly generous by offering any value whatsoever for RSUs ("unvested stock").

Now, even more technically, RSUs do have value and are kept on company books at the same value as the underlying stock. But they don't have value to the RSU holder.

And unless you have an acceleration clause in your equity agreement (which most people can't negotiate until they're pretty senior), those RSUs expire with a $0 value. (The value of the underlying stock drops to $0 because the corporation no longer exists.)

If these are in fact real shares, I suppose some enterprising fellow could offer drivers 4 cent a share in order to get a great deal to Gett stock?

Here's the other thing: those RSUs may still be restricted. According to the article, Juno launched "right around this time last year". Those RSUs may not have vesting schedules <12 months. Which could imply the company is, in fact, accelerating vesting at a % of the total value. Combine a <100% acceleration with some liquidation preference math for preferred stock, and there you go.

This is all conjecture. We have no idea how many shares are outstanding, liquidation preferences, etc. We don't know if RSU-holders are being "screwed", or how. The suggestion that the "par" price of a RSU is $0.20 could be "what-if" math. ("You could take $100 today, or 500 RSUs that might be worth even more in the future!")

   > The phrase "nullify a share grant" has no legal meaning that I'm aware of.

I think it was used more as a description of the effect of the acquisition agreement. And it is not uncommon to structure these agreements as an 'asset purchase' where the there is money exchanged for the 'good' assets of a company, and the shell is left behind holding the 'bad' or 'toxic' assets. In those agreements the acquiring company pays the shell company some cash for the assets, which the board of the company being acquired can generally decide to disburse in any way they choose, but they will generally do it in a way that minimizes legal exposure, so pay of outstanding loans, fees for breaking leases, contracts, Etc. and then the shell dissolves.

In that process all sorts of things can and do happen, and it depends on part on the corporate bylaws and the laws of the state in which they are incorporated.

That said, RSUs also have a notion of 'vesting' and prior to vesting are not available to the grantee. If you redefined the RSU program to never vest that would essentially 'nullify' the RSUs or if you simply cancelled them outright.

Vested RSUs are called "stock" :-) and the class of shares can have its own set of voting and liquidation rights.

Bottom line is that while there are 'common practices' the rules are pretty flexible. The major flex points are when the company is incorporated, when a stock pool is created (as it would be for RSUs and ISOs etc), and when a company is acquired.

Interestingly enough, just lately their landing page mentioned "50% reserved for drivers" http://web.archive.org/web/20170203175819/https://gojuno.com..., but no that claim is gone

Theoretically, it may still be 50% except the higher-class stock may have some huge liquidity preference. Such is the unfairness of multi-class capital structures. They can be very misleading, and the capital structure is often kept obscured so there is no way to value the worth of a stock in different scenarios.

at what point do we stop calling these companies "ridesharing"? The idea of ridesharing and the sharing economy seems completely incompatible with Uber, Lyft and friends, who are all basically private car hire firms.

Welcome to the "gig economy"

"ridesharing" is just one of those words now, it doesn't mean "ride sharing", it means a private car hire firm. I wouldn't expect that to change.

I keep waiting for pimps to rebrand their business as "body sharing".

There are 'Professional Cuddlers' $80-100/hr.

Great example, because euphemisms were certainly never a thing in prostitution (and the word you're looking for is 'escort').

I'm not sure what you're trying to say with the sarcasm. The entire point of the joke was that using counterfactual euphemisms like "ridesharing" is a sign of an industry that's on shaky legal ground -- and "escort" is indeed the textbook example. Thanks for explaining the joke, I guess?

the only true ridesharing apps are for longer distances such as blablacar.

We should have stopped a long time ago. There's no sharing going on other than me sharing my money with them and in return them sharing a ride. It's like calling a grocery store a "food sharing" company.

It's increasingly turning to "share-driving" (ala Sharecropping), especially with the predatory leasing programs being offered by Uber/Lyft.

Get your side-hustle on!

In case anyone isn't aware of the details:

https://news.ycombinator.com/item?id=13764994

a year after they started the program they changed which cars were considered "black" cars and this guys Lexus?? Was no longer a black car. They said it couldn't exclusively be used for black and had to pick up Uber X riders as well. Uber x pays a lot less. The people this happened to were basically bait and switched when Travis changed the terms on them. [...] They cut rates and required you to pick up cheaper fairs and you're underwater.

shame they weren't bought by Verizon. then we'd get 'unlimited ridesharing'.

I call them 'cyber-jitneys' or 'e-jitneys'. It's a term with a long history in our urban areas, referring to car hire that often operates outside taxi laws: https://en.wikipedia.org/wiki/Jitney

Great play, too: https://en.wikipedia.org/wiki/Jitney_(play)

None of the articles mention the amount that Juno raised, so it's possible that this sale is smaller than the liquidation preferences.

Yep. The question of whether the payment to drivers for their RSUs is "fair" depends on who is in line in front of them. It is possible that they could all try to band together and somehow block the sale, but without more information it's hard to assess whether that's a good idea or not.

I would assume that the company's offer isn't an amazing deal, because if it were then the company would probably try to tout that to bolster/save their reputation. OTOH, it's possible/likely that the only way to "prove" that this is a good deal for drivers would be to violate confidentiality agreements with many investors.

Here's the thing I really don't get: This is going to get out. This is going to taint the brand. Why do something as shitty as this? Why do startups do this? Is it honestly that hard to be ethical, and pay out what you promised?

Uber, Lyft, Juno. All the same.

[comment withdrawn]

I'd forgotten what search engines were turning into before Google. Excite is a real blast from the past.

this needs justification. how are they the same?

Well, both Uber and Lyft have some pretty predatory car renting programs. And with this move, Juno has shown that they're pretty crappy to their drivers, just like Uber.

I guess we haven't heard of Lyft or Juno having a toxic culture of sexual harassment and bro-ness, so there's that.

HN headline hurts my brain. Original is a stupid pun, but at least it makes sense.

Juno Drivers ‘Gett’ Only Pennies Following $200M Acquisition

Yeah, the pedantry of the modified headline is far less readable than the original.

Thanks, we reverted the submitted title of “Juno Drivers Shares 'Gett' a Couple Pennies Each in $200M Acquisition” to the original.

Reply on news.ycombinator.com