Comment by cocktailpeanuts | Hacker News Reader

Comment by cocktailpeanuts | Hacker News Reader

cocktailpeanuts

> "I’m reaching out to share some great news"

This is disgusting. Remember that this letter is:

1. for common shareholders who will get absolutely nothing out of this deal.

2. yet it's asking them to sign so that they can go ahead with the deal.

3. And to top it off, "I'm reaching out to share some great news"? Are you kidding me?

To be clear, I support all entrepreneurs regardless of what ridiculous business model they're trying to pull off. I even think Magic Leap should be given a benefit of the doubt and they may be able to pull it off.

Also I think it's great that silicon valley celebrates failure. Without this type of environment it's hard for founders to shoot for the stars.

That said, people have taken this too far, and it's become ridiculous. It's no longer about it being ok to fail, but it's about "I failed, so what? I'm the genius and I totally deserve it and you just paid to tag along."

I totally despise bullshit like this. If you lost, just say you lost. And say sorry. Don't bullshit people about how "it's a great news that I'm asking you to sign this letter so that other people--not you--will get the money you actually deserve".

Indeed. What is the incentive for any common stockholder to sign what they will be asked to sign? I could imagine someone holding back purely out of spite.

Though I suppose, perhaps, if those common stockholders are employees who want to keep their jobs rather than be laid off, that might be one reason, though an individual wouldn't learn whether they'll be retained until a later stage of the acquisition.

Agree. If the goal of the letter is to get signatures, starting off with "great news" and then leading to "you get $0" does not seem to be the most convincing nor effective way to phrase a signature request.

Well, if the reader is an employee holding Common stock, and the employee signs just to keep her job, then she would have signed regardless of what the letter said anyways.

Basically, it's hard for me to see a Common stock holder reading the letter, and then going "Ya that makes sense, I'd buy this. Let me sign it now."

This was an internal email to investors. You have no idea what convos she's had with them previously about the situation but you're very quick to assume she's some self-important Jobsian figure.

Be human, chill on the assumptions. Startups are hard and you don't have all the data so Danielle deserves the benefit of the doubt, not some vaguely related ranting about responses to failure.

I normally never criticize founders when startups go down because I have been there too and understand how hard it is for the founders first hand.

But please enlighten me. What kind of conversations could have possibly happened before this letter that could justify saying something like "You invested money (or time) and we've just lost all of it. You will be getting $0. But I need you to sign this so that other people CAN get some money. Oh by the way, it's a great news!"

Most common stock holders are probably former employees (whereas preferred stock holders are VCs). At this point I'm sure they didn't expect much out of this anyway, but they were once people who truly believed in the vision. If I were one of those people I wouldn't be happy to hear this fake facade about how this is a "great news". Phrases like this you should only use it for PR you send to Techcrunch, saying you had an incredible journey. But not to former employees who made a lot of sacrifices. To those people you be honest.

Probably money and time. If they are common shareholders they likely had to pay out of their own pocket to exercise their options and also had to pay taxes on it. Not great news at all.

> But please enlighten me. What kind of conversations could have possibly happened before this letter that could justify saying something like "You invested money (or time) and we've just lost all of it. You will be getting $0. But I need you to sign this so that other people CAN get some money. Oh by the way, it's a great news!"

This reminds me of when my father's employer went out in the wake of the 1999 bubble popping. A couple of years later, the CEO sent him a very nice email saying "hey, mind signing over your stock please" and he was about to do it. I thought it was fishy that the ex-CEO want something worthless back, so I called my uncle who invests in SMEs on the side of his job and he agreed that we should ask for something back in return.

So we asked, and got, a few thousand for his stock, without a whisper of complaint from the ex-CEO (guess we asked for too little).

I'm reasonably certain that any of the common stockholders here can decline to sign and prevent the deal from going through.

No what they can leverage from doing that is a different story--blood from a turnip and all that. But, there's nothing that says they must take the deal as offered.

Drag along clauses exist but typically require that the stock gets paid for, if you're going to play tricks with multiple stock classes you can find yourself in awkward positions when you wish to screw the 'lower classes'.

Right. So, we may be able to infer that a drag-along doesn't exist or that the majority doesn't want to activate it, given that they are trying to offer zero to common, whereas a drag-along would typically require that all holders are treated evenly.

Also, the claim that the amount paid would go towards company wind-down makes you think that plan would be negated through a drag-along, as some of the cash would "leak" to common holders.

In fact, it's actually curious that they are the acquiring the company in earnest vs. just acquiring its assets. Not sure why they would acquire the liabilities to the tune of $500K just to shut-down. Just pay for the assets and let the company use the funds to shut itself down. But, who knows? Maybe there's something (like paying customers) that they are finding difficult to transfer as an asset for some reason.

All agreed. So, if you're holding common stock sit tight and don't sign anything, a better offer is likely just around the corner.

It was an unfortunate choice of words for sure, but read it from the lens of a CEO who likely just went through the hardest thing in her life and was lucky to see any outcome for preferred shareholders.

Remember -- common earned a salary, and judging from the burn, a good one, so it's eyes-wide-open in these things. Why hold a grudge and make it difficult for the company to move on?

This was a letter specifically to common shareholders only, and common shareholders got nothing. Common shareholders are all the employees past and present that put in all the effort to get the company this far. That's definitely not "great news" to them.

I agree. I lost about 60 cents on my investors' dollar and I called up every single one of them (including syndicated angels) and told them basically "I have some difficult news for you. Our company is failing and the best option is to sell to BigCo for 40 cents on the dollar. Thank you for investing in me and sorry I couldn't get you a better outcome. Please sign the acquisition agreement."

Reply on news.ycombinator.com