FanDuel founders to receive no cash from sale to Paddy Power Betfair
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To put it another way, founder friendly private equity is not really a thing and venture capital is a philosophy that is rare outside Silicon Valley (though it has become more common in the last decade or so). Venture capital is playing long odds based on possible future value, private equity seeks to buy current assets at a discount. This sort of outcome would be a hit to a venture capital firm's reputation. It's not an unexpected outcome when private equity invests.
Put another way, losing money on a PE deal is terrible. Losing money on fewer than half of one's VC investments is positively great. When FanDuel sold, it didn't have enough upside left to justify pure venture capital. It was a distressed sale whose alternative was closing down shop. In this timeline, employees got a few more years of cash salaries. On the net, they did better with KKR et al than they would have without.
I think most of their employees would have easily been able to get jobs elsewhere.
As it is, I don't really understand why, and I feel it's overly negative (though I expect to understand why I'm wrong once you explain it more fully).
I'm not disagreeing with your statement, but "toxic" is a strong word and I'd like for you to elaborate.
The same person at a later time (or someone who has obvserved that trauma second hand) can sometimes form a calm, rational, politically correct depiction of the issue for you.
If you demand the latter, you will learn much slower, because you are rejecting the best available information on what things are traumatic to people.
I just really object to how casually OP waved off people losing their jobs.
Employees staying onboard under the assumption that their equity, which is part of their total comp, may yet be worth something - that brings on a serious opportunity cost. If someone stays at FanDuel making $160k/yr + $0 in common stock options versus $350k/yr at Google, that's a shame. If 100+ employees do it, it's tens of millions of dollars of opportunity cost.
That kind of position at Google is one of the hardest to get in the industry. While I wouldn't label this attitude as "toxic", the idea that people from any random startup can just go get a $350k job at Google if it fails is detrimental to this industry. I doubt most of those working for FanDuel (or anywhere else, really) could clear that bar. Not to mention, Google has a limited capacity to absorb people, so the more who apply the higher the bar gets.
PE wants to incentivize leadership, but the concept of 'founder' and all that means, is somewhat beyond.
That said - KKR etc. definitely want to incentivize company leaders to make money, and might likely put in significant bonuses for CEO's in the event of an acquisition.
But yes ... PE entities may care less about this.
But note that it will also be a 'hit' to KKR's reputation in this area. You can be dam sure that future mid-stage entities are going to think twice about the terms of the deal.
https://en.wikipedia.org/wiki/Corporate_raid
Wikipedia has a nice overview of the topic of this thread:
https://en.wikipedia.org/wiki/History_of_private_equity_and_...
and of course KKR was the most famous corporate raider in America:
https://en.wikipedia.org/wiki/Barbarians_at_the_Gate:_The_Fa...
And yes - as part of the acquisition, it's usually loaded up with debt, which is the weird reason why a company should always take on debt (if they are cash flush, then 'raiders' can borrow money to buy the company and load up up with debt since there is room for it).
If you mean 'reputation' - well - yes, if you sell to a known 'raider' well, then they'll do as they please.
As far as 'spending on their own interests' - well that actually can create problems as minority shareholders can sue.
Then again, so much of startup culture actively conspires to make deal structure/cap tables/liquidation preferences opaque, because nobody wants to say "Hey, come work for this startup for 2σ under market salary and x% equity. Never mind that the equity will get crazy diluted and a liquidation event might get cleaned out before it ever gets to your end of the table. That is, if a liquidation event ever happens!" So I don't feel totally ignorant about not understanding it, just yearning.
Presumably some of them have vested stock, and it just got zeroed out. If there's ever a good time to ragequit, this seems like the appropriate hour.
A 6-7 figure stock-based retention package would seem normal for the 3 acquisitions I've been through. Vesting length is all over though (short as 1 year, long as 4).
Maybe. Often acquisitions are just for the customer list. Betfair is located in London (and Dublin for tax purposes IIRC), it has no office in Scotland.
If the value of the company of the company is less than the value of liquidation preferences, then the employees' stock is worth ~zero. Its value doesn't suddenly go to zero at the moment a transaction takes place. The transaction happens at that price because that's the value.
The value of anything is the lesser of what someone will pay for it and what the owner will sell it for. The PE team may have raised expectations about the value before the sale, so that everyone thought they would get something despite the preferences. Then they sold it for less...
1) info on the share structure and preference structure
2) a somewhat accurate valuation of the company
Whilst it's possible that people value their own shares wrongly due to missing/wrong info about #2:
- (major) Misunderstanding or not knowing #1 almost always creates a larger error or uncertainty in the calculation, than does an error in #2, and
- (minor) With #2, it's impossible to be certain anyway, so everyone has some of level of error
I was just involved in the sale of a company that had no assets, an outstanding court case against it that it was losing, and a tax bill of $3.5m against it. The buyer paid $5m for it. That number was literally the fist number that I plucked out of the air during the first conversation we had with the buyer, and somehow it stuck as the deal valuation.
Unless you're in the room during the deal, you have no idea what number is going to be used.
If you had said 'it had no physical assets' or 'book value of its assets was zero' or similar, it would make sense.
But if literally had no assets, what was the buyer buying? The name of the company?
Back on topic: even after the 5MM exit value is known, it's impossible for me to value the shares of an employee who owns 1% of the shares. The value is almost certainly between zero and 50k, but without seeing the share docs, no one knows.
As you say, if you have 1% of the company, then you could have 1% of $1 (which was a serious offer for the same business made 3 years ago) or 1% of $5m. The big difference is not in the 1%, but in the sale price. To get the same difference from share structure, you'd need a variance in shareholding of 1%-1000%.
Though I'll grant you that share classes and preferences can reduce your value to 0, but it's a lot harder for preferences to raise the value an order of magnitude.
Again, if you're not in the room when the deal is done, you have no idea what anything is worth, or whose interests are really being looked after. There's all sorts of shady deals and backhanders that can go on with bonuses and commissions that mean that everyone except the shareholders come out good.
It's kinda like the old poker saying: there's always a sucker at the table. If you don't know who it is, it's you. Same for acquisitions... if you're not in the room when the deal is being done, then you're the sucker.
“the aggregate value being paid for FanDuel “is approximately $465m”.”
“2014 and 2015 respectively led $70 million and $275m” (345 million)
“Mr King is expected to receive a payment of up to $11.3m as a result of the Paddy Power Betfair deal. The firm’s current chief technology officer Robin Spira is due to make up to $3.5m, its legal officer Christian Genetski stands to make up to $6.2m, and it chief financial officer Andy Giancamilli is due to receive up to $5m” (Those add up to $26 m)
So it looks like the investors got just over 7% return on a venture investment. (Which is not an unusual ask for preferred shares).
So many ways it could go wrong. There are less risky ways to make . 7%, with a lot less work.
Seems the founding CEO spent 10 years there and got nothing, but a new CEO of 6 months walked away with $11MM.
If you have the skills to be good at a startup, you can go to one of the big boys for a lot of cash.
Happy to be corrected if someone is in the know or has a reference, but it's pretty common on large fund raising rounds.
Or ask for more cash.
The most important thing is being educated. Every time this topic comes up on HN it appears that many people are unaware that liquidation preferences are a thing and many sales that are down-rounds have no money falling on common.
Given how much the big tech companies are paying though, especially when it comes to RSUs, I'm not sure this calculus makes sense anymore, especially for early employees. Founders may do exceptionally well on many cases, but for most early employees at startups there really isn't that much potential upside in most cases, compared to the guaranteed earnings you can get at a top tech company.
I can confirm that RSU payouts at the giants far dwarf what you can get at almost all startups. The total comp difference is insane.
If you are paid in stock, and the founders make a deal that reduces the payout value of that stock (in this case to zero) they have stolen from you in a way that has no recourse. Literally they paid you with something that was presumably claimed to have value, and then after a few years made deals that made that worth less. Even though you had already been “paid”.
How much education can you do that would protect you from this?
This article further affirms my position: it’s not just founders that got no payout, the employees didn’t either. Cool beans, you work your ass off for a company at below market rates with the promise that you’ll get a big payout when it sells, and then it turns out even when it sells for half a billion your stock is worth nothing. This isn’t the lottery of “the company may fail” this is the lottery of “I hope VC doesn’t rewrite the charter to ensure that we don’t get paid”. Oh, and the CEO alone got 11million. That sounds like there was plenty of money available
This is theft in all but name.
:D
this is distinct from a decade+ long private equity drama, only to find out that you, all employees and even the founders get nothing from the exit event. This is where getting to the exit is wrought with landmines, just to find out your particular exit is horrible but a fairly standard affair.
now that there is competition lets talk about what we can do to make both markets better
That said, if one has the choice between a startup job vs. one with equity with real value, they should only consider taking any startup comp package with the intention of being fully okay with their decision if the equity goes to zero. And note that this is a decision you can reevaluate periodically.
Read https://github.com/jlevy/og-equity-compensation and ask all of the questions. Probably ask a couple more, like about liquidation preferences and conversion of vested ISOs to NSOs with long expiration if you leave before liquidity.
Starting a company is hard. You can struggle to make it profitable, never get there, and end up deeply in debt years later.
Fanduel became relevant mainly because of the marketing it was able to purchase without that it would have fallen by the wayside. You need lots of money for that.
The founders must have needed cash at a critical time so they must have had a reason to put their shares second to the shares of the equity firm.
It makes no sense to feel bad for them. They knew what they were doing and they got more time out of the business than they would have gotten otherwise.
Yes, it's not the greatest outcome but it really is,"just business."
And please spare us all the 'powerful' squeezing out the weaker BS; the FanDuel founders would have had incredibly high-priced legal counsel for an investment round of this size and knew exactly what the upside and downside was for every possible variation of success.
An update on that: New Jersey won, 6-3, with Kagan joining the conservative wing of the court in this majority. The conclusion is that Congress and the states each have concurrent power to regulate sports gambling. Congress hadn't actually done that directly, but rather had banned states from legalizing it. That's been struck down.
Opinion analysis from the excellent SCOTUSblog: http://www.scotusblog.com/2018/05/opinion-analysis-justices-...
The ones that probably got screwed are the employees that got options thinking they would cash out in the future.
Was always impressed with their growth, but it seems to be a good reminder to be wary of the cost of that growth.
Is declining to accept a liquidation preference at seed level a red flag for any serious investor? What about subsequent rounds?
Notes are debt. They're inherently higher than stock on the capital structure. They may convert into shares with no preference. But as long as they're notes, they're higher than even preferences shares.
When selling the a non-distressed company, equity will receive cash.
Liquidation preferences and bankruptcy priority only matter when a company is distressed.
Investors may be receptive to nixing liquidation preferences, particularly early on, if the founder agrees in writing to take no employment benefits. Asking an investor to relinquish their downside protection while retaining your own (a cash salary) is cause for further questions.
That said, it's awkward to (a) ask for capital while (b) prominently communicating that you see the risk of selling the business below where they've valuing it as being non-negligible. If you, as the founder, have that little faith in the venture, a better conversation may be hand about what can be done to increase your confidence in it.
Liquidation preferences aren't required, particularly later on. But you’ll give up on other terms by filtering for investors who don't care for them.
Your mileage may vary etc.
I think it's a pretty fair term. It prevents investors getting screwed by a sale for less than the round valuation, which could look quite attractive to a founder who could get their first million, screwing their investors in the process.
The UK tends to have stronger protection for employee shares -not that there haven't been some dodgy deals BAXI getting taken over by carpetbaggers and screwing the owners is a well know case in the UK.
And I have been on the receiving end of losing $1,000,000 at Poptel if only ICANT weren't such a bunch of ass%^&&S and the CoOp had been a bit more tech savvy - still water under the bridge.
Poptel was a worker co op btw so I had .5%
Unless the investors were trying to retire, this seems incredibly short sighted.
Also, from the details in the article about "drag along" and whatnot, the typical terms for a Silicon Valley investment appear to have even more drag along to them.
Taking investment from scum private equity like KKR didn't turn out well? Wow, who could have predicted.
It's been well known for at least a decade what private equity does to businesses. Either the founders couldn't raise from anywhere else, or they got greedy.
Structuring a deal without LPs would mean that founders could push for extremely early exits, cash out with modest (though life changing) returns and investors could lose most of their investments. Adding that kind of risk would make it even harder for first time founders to raise a round.
With what I know, it's hard to attribute anything the VC firms did to malice.
https://smile.amazon.com/Venture-Deals-Smarter-Lawyer-Capita...
Why would a merger blocked by the FTC trigger a clause like this?
From here : https://www.legalsportsreport.com/14930/fanduel-equity-inves...
This was not a clueless Joe being forced to sign a non-negotiable contract with a giant company. Presumably those clauses and investment contracts were negotiated between lawyers of both parties. Why did they accept such clauses?
They're super standard and for the most part make sense.
Liquidation preferences say if your firm is worth $90 million, and I invest $10 million, I get my $10 million back before you (i.e. the common stock holder) get anything. If the firm sells for $200 million, I get $20 million and doubled my investment. If the firm sells for $20 million, I get $10 million back and the common splits the remaining $10 million. If the firm sells for $9 million, I get it all. This makes sense because management (a) owns lots of common stock and (b) manages the company. As a risk-sharing measure, it makes sense for the people closest to the operations (and extracting a cash salary) to bear more downside risk.
Drag-along rights are the corporate equivalent of collective action clauses [1]. They exist to prevent a person who holds two percent of the company from preventing shareholders who own 60% from selling. (Approving mergers requires supermajorities in most jurisdictions.)
[1] https://en.wikipedia.org/wiki/Collective_action_clause
Disclaimer: I am not a lawyer. This is not legal advice. Consult with a lawyer before negotiating fundraising terms.
Most investments in Silicon Valley are clean deals, with a liquidation preference of 1X and nonparticipating preferred. Companies without a clean deal usually were too thirsty for unicorn status ($1B valuation) or had difficulty raising money.
I'm describing non-participating preferred, which as you point out is far more common.
Here's how it would go with participating preferred. As before, I invest $10 million at a $90 million pre-money valuation. If the firm sells for $200 million, first I get back my $10 million. Then I convert to common and get 10% of the remaining $190 million, or $19 million. Before I got $20 million (10% of $200 million). Now I get $29 million. (In the down round scenario, the outcome is the same.) Participating preferred is--nowadays--increasingly confined to distressed finance.
TL; DR Participating preferred gets to have its cake and eat it too. Non-participating preferred must choose between (a) its preference or (b) converting to common.
These terms are by no means confined to distressed finance. Many unicorns got their “billion dollar” number using adverse terms such as these
Which explains this outcome, Fanduel was a “unicorn”:
https://seekingalpha.com/article/4010443-fanduel-unicorn-bac...
I don’t have any inside information about what happened — this is just generic speculation about what might have led to this outcome.
At this point there have been enough cases where startups have clawed back the shares the issues, never gone public even when they’ve “made it” so you can’t sell your stock, or in this case outright stolen from their employees by changing the company charter to retroactively devalue all the stock that they used to pay their employees.
[edit: charter is not spelled “charta”. I’d swear I used to be able to spell...]
If this is your mentality, don't work for a start-up.
Employees don't get preferred stock. Founders don't get preferred stock. Your downside protection is your cash salary. Asking for preference as a non-capital contributing stakeholder conveys a fundamental mis-understanding of start-up financing's tradeoffs. (I would be highly suspect of a company throwing preferred stock at employees. It smells like something between incompetence and a scam.)
Common stock pays when companies do well. It diverges from non-participating preferred when companies sell for less than their most-recent valuation. Investors get preferences, employees get cash salaries.
> say no executive can make money off a sale of the company or a funding round unless all the employees who have been paid in stock have been given first rights to convert their stock
Everyone could convert their stock. But the stock was worthless. Preferences are obligations, like debt. If a company with $400 million in debt due on acquisition sells for $300 million, should the owners get a pay-out?
> what happened here: theft
If KKR et al hadn't invested when they did, FanDuel would have closed down. This wasn't a tradeoff between employees making money and not. It was a tradeoff between employees (a) losing their jobs years ago and (b) keeping their salaries and having the chance, if the company did well, of making more off their options. They kept their jobs. But the company didn't do terrifically well. The lotto didn't pay out, but HR did.
As far as the employees losing there jobs years ago: if that had happened they would have got jobs elsewhere, maybe jobs that paid them what they were worth.
Other things that make it theft: people who got the biggest pay outs were the ones he rewrote the charter to ensure that the employees got nothing.
This is theft. If you change the value of something you have already used to pay someone, it is theft.
And yeah “it’s a lottery”, but what they did was basically the same as you buy a lottery ticket that says there a 10% chance of winning $1000 if you wait 6 months before scratching it off, and then 5 months later they say “we’ve change the reward amounts, now it’s $100. Except instead of being a lottery ticket it was the employees time, money, and cost from losing out on other opportunities.
In very simple probability terms. The value of stock as payment for employment at a startup is
ExpectedValue = amount * P(non preferred stock gets money) * ExpectedStoxkPrive
The exact amount you would accept for working at a startup obviously varies from person to person. You estimate the probability that you’ll be able to sell your stock, based on the details of the company, and offer to work in exchange for what you consider a fair amount. After that the company deliberately changes the probability of you receiving a pay out on the stock you have already been granted. That is they retroactively changed what they paid you.
Also employees don’t get cash salaries, they get a mix of cash and stock. The statement is: we know your time is worth more than we can afford to pay you in cash. So we will accept that you are reinvesting part of your earnings as a capital investment in the company.
The company depends of capital being invested until it is profitable. The stock being granted to employees is because the employees are directly investing their own money into the company.
The difference between employees and VC is the VC have enough ownership of the company to steal from the other owners.
No one takes on more debt / raises more funds unless they have to. If your company needs to raise more capital your stock options are worth exactly 0 dollars. You already lost that bet, because your company isn’t solvent without external funds.
The new investors may give you a new bet, but don’t think your original bet still stands - you lost that when you had to do another round of founding. You should also expect the new bet to be significantly worse than the old bet, because you have no leg to stand on in the bargaining of the terms of the new bet.
The “investors” changed the terms of incorporation /after/ they’d accumulated control of the company, specifically to change the payout rules so that only the VC funding got paid.
This salary is pretty much always lower than what you could make elsewhere. The benefit to working at a startup can be simulated by taking a well paying job at a non-startup and playing the lottery.
I think much better advice is to (a) be sure you have a good understanding of the cap table, and what the liquidation preferences are for the preferred investors, and (b) have a general sense of how likely it is for your shares to be diluted over time.
My personal risk level is maybe lower than “I quit my job and started a company”, but I consider my work to have value, and I consider an employer structuring employment agreements such that my return is is given a lower precedence than another investor to be either sign that they do not value my work at at least market rate, and given the risk entailed my expected income should be much greater than market rate.
Your claim is basically: startups have been able to screw employees because that’s what startups do.
The funding your describing for example is /not/ funding, it’s an extremely high interest loan, and in that case should not be considered a share in the company.
I also realized I had not said earlier: the theft in this case did not happen when the company was sold, it happened when one group of shareholders rewrote the company charter for the express purpose of devaluing the shares belong to all employees.
This gets to the heart of my problem with the “pro let yourself get screwed” argument: because VC funding is miscategorized as ownership rather than a loan, it is in their interest to screw the people who actually invest in the company.
Maybe it makes me unemployable for believing that my work has value and my not believing that “taking on risk” should mean “others should be able to treat my investment in the company as being not real investment” is unrealistic.
But I find it hard to feel sorry for anyone stupid enough to sign a contract that has any room to legally discard your investments. Is it bullshit that this company did that? Yes. Is it the employee’s fault that they had their investment stolen: yes.
Would I ever sign a contract that allowed someone to dilute my investment in anything without compensation? Of course not, because that’s stupid.
So you’d never buy a share in a public company either, since public companies are allowed to issue additional shares to new investors when they raise capital.
I don’t see anything wrong with your view. It’s basically an extremely conservative risk tolerance perspective. But it’s extreme, and extreme views tend to leave money on the table.
Not all start-ups are the same. My last start-up took VC from a top tier entity and exclusively used common shares for all owners, no exceptions under any circumstances. No special arrangements, every share was the same.
My current start-up will follow the same pattern. No investors will be allowed in without accepting their position as common shares. If they don't like it, they can fuck off. It's important to tell all interested investors how things are going to be up front and to stick rigidly to it. There's enough capital sloshing around right now that the tilt is aggressively in the entrepreneur's favor, use that to your advantage while you have it (it'll last until the next recession).
Build things that don't absolutely require venture capital (but can be accelerated by it if it makes sense). And or build in a very lean manner, to boost your chances. Maximize your leverage by getting as far as you can without venture capital. Under no circumstances allow venture capitalists to have anything other than common shares, with no special arrangements (their money does not get out first). But it limits the prospective VCs? See the first item.
This may be a good tradeoff for a business with a long enough pre-investment runway, where the VC money is merely an optional accelerant, as the post you're replying to advocates.
OTOH, it would be very interesting to see how everything comes out in the wash. Suppose one needed to raise a hard floor of $5mm: a VC that might take 10% ownership for 1x preferred and a board seat, well, what will they demand when it's strictly common on offer for that $5mm--20%, 30%? Playing along with the idea of making it big, wouldn't it make more sense not to give up so much equity?
Who would pay that cash? Where would the money come from? How does the buyer valuate that money coming out of somewhere when figuring out their offer? How does it interact with the preferences on the investors’ stock?
> “Mr King is expected to receive a payment of up to $11.3m as a result of the Paddy Power Betfair deal. The firm’s current chief technology officer Robin Spira is due to make up to $3.5m, its legal officer Christian Genetski stands to make up to $6.2m, and it chief financial officer Andy Giancamilli is due to receive up to $5m” (Those add up to $26 m)"
All these guys can be classified as "late stage" employees and I can't believe that these guys were given a way much more bigger payout than to the founders or to the original team of founding employees. I am not saying they don't deserve the payout however some comments below stated that these guys are possibly the reason why the company could even have an exit thus rewarded accordingly but wouldn't one argue that if the founders did not start the company, there wouldn't be anything to sell with? I am just completely confounded how unfair compensation is regardless of what the terms of the VC were.
My honest question to YC members - What is the general advice shared between the YC community to prevent this happening to founders and/or founding employee(s)?
That said in this case someone took external funding, those “investors” took control of the company, kicked out basically everyone who would work for them (not the company), placed their own executives in the company. Changed the terms of incorporation to make sure that no one else got money. And then the people they put in charge agreed to sell on terms that again favorited only themselves and the VCs, finally the VC ensured that the people they put in charge got paid off nicely.
Meanwhile the employees who could not influence any of this - the founders choose the funding terms - got their prior income stolen by having their investment artificially reduced to zero.
The founders fucked themselves, but also all of their employees. Who I would bet were not told that their shares were going to be artificially reduced to zero value
Preferred shares are for investors, and they have 'preference' during liquidity, i.e. if the company is sold, they get their $X back first, then the rest is split among all shareholders etc..
'Clawback' terms are almost always applied to investors, not employees, in which case, by virtue of type distinction, you'll never get those.
Though it's reasonable to ask about certain aspects of share rights, there's no way on earth a regular startup is going to give you all the details and fine-print on their stocks that'll give you all then information you'd be after.
Unfortunately, basically nobody gets this information when joining a startup. Even later stage investors don't necessarily get to see all the terms of earlier investors, depending on the situation.
Instead of paying employees below market rate, the startup pays employees an actual fair market rate. Note that because of the short term failure risk of a startup a fair market rate is /still/ higher than market rate and an established company. Now each time they receive a paycheck the employees give you back a chunk of the money in exchange for common shares. The end result is the employees have the same amount of cash and shares, and the company has the same amount of cash.
Employees working below market rate are investing in the company. Getting paid isn’t “security” it is the part of their income the employee is choosing not to invest in the company.
But they're still not investors.
Putting in a considerable amount of hard cash, is a fundamentally different thing than considering the after-tax value of some possible future gain from employment ... and then putting in hard cash. (Though it's definitely a valuable calculation to make on the part of the employee.)
If someone walks around the Valley talking about how they are 'investors' in X, Y or Z because they worked there for some time as an employee, but did not invest in a round, they will definitely be misinterpreted because the premise is simply not generally accepted. Moreover, this person would either be marked as 'not understanding what he is saying' or 'purposely misleading people'.
Consider the vastly different terms attached to the equity of either side ... and that so many actual startup employees who have done modestly well on some exit and then do 'part time' Angel investing, generally participate along the lines of classical 'investors terms' , not on the terms of the employees of the startups they fund. There's a reason that this is the common standard, and that there is no movement afoot to put investors and staffers on the same terms.
It seems like a fiction that benefits "real" investors at the expense of employees "investment". As long as VCs can maintain this fiction they can exploit the other stockholders. Sort of like "Well, you're just a woman, you're not a "real" fill-in-the-blank. We shouldn't have to pay you like one."
Investors are in a totally separate class for so many reasons, and it's why there are distinctions in the type of equity they get.
The market for both talent and capital is very liquid and there really aren't that many secrets - so the current equilibrium between capital and talent is a function of the reality of market dynamics, not some sort of 'secret marketing magic' that VC's use. Although on a case by case basis, there's going to be some leveraging by VC's on some level, one could argue the corollary is the number of completely-full-of-crap 'founders' who are full of rubbish, some of them not even aware they are, or who are simply not aware of the real amount of risk they are offering. Silicon Valley is full of people who are making things for companies that will fail, and are therefore taking huge salaries at the expense of capital.
In fact, VC as an asset class is kind of a loser overall, globally - and almost all of the returns go to the top handful of funds, so one could argue that it's the mid-to-long tail of VC's that are the 'chumps' in the equation, because they're literally losing money while staffers making 'stuff that nobody wants' are walking away with small fortunes in salary for which there was no ROI.
So 'investors' are different than 'employees who take equity as comp' - and the 'power balance' between them can favour one side or the other, even as this clear distinction remains.
My heart breaks for them.
This is why VC's are called vultures. They claim they want you to have skin in the game, yet the founders get screwed. I know folks are thinking but the VCs are not making much, so what? Their entire game is to make it all up from another startup 100x which is why they take massive equity for $$$ invested.
1. This is terrible UX and while I understand the need to make money this roadblock does nothing but increase bounce rate.
2. “Continue” is pretty deceptive unless you count the article headline as part of the article.
3. I assume this survey is trash but I am going to take it as an experiment then report back.
4. I wish HN would develop a policy on articles that rely on subscriptions or other inputs to actually read. I don’t think they should be banned but they should be paywall flagged so they can be turned off. Its better for comments (people actually read article) better for users not downloading data they can’t use and then being disappointed they can’t participate
Edit: it was a demographics survey for a giftcard drawing that would probably be sold onwards to a marketing firm if you provide an email. I guess it’s not too much to ask for but I suspect many people will be unwilling to do it because they are skeptical, not interested enough or simply have no idea how long it will take and arent willing to invest the time.
To receive no cash = will not receive any money
From sale to = as a result of the sale of (FanDuel)
PaddyPower Betfair = to the company Betfair, which itself is owned by PaddyPower
The founders of FanDuel will not receive any money as a result of the sale of FanDuel to the company Betfair, which itself is owned by PaddyPower.
That's slightly more people than just the founders. I'm sure the employees were expecting some compensation.