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Comment by randomacct3847 | Hacker News Reader

Biggest thing I noticed is that the cofounders only own a little more than 1m shares each, which is less than .5% each!

Painful amount of dilution....wow.

This isn't accurate. He has another ~6M shares of class B, look at footnote (1) for his holdings:

"Consists of (i) 4,663,809 shares of Class B common stock held by El Trust dated August 3, 2015, for which Mr. Green serves as trustee, (ii) 675,564 shares of Class B common stock held by The Green 2014 Irrevocable Trust dated June 12, 2014, for which Mr. Zimmer serves as trustee, (iii) 360,979 shares of Class B common stock held by The Logan Green 2016 Annuity Trust, for which Mr. Green serves as trustee, (iv) 360,979 shares of Class B common stock held by The Eva Green 2016 Annuity Trust, for which Mr. Green’s spouse serves as trustee, (v) shares of Class B common stock issued pursuant to the Founder Option Net Exercises and (vi) 1,180,329 shares of Class A common stock underlying RSUs for which the time-based vesting condition would be satisfied within 60 days of December 31, 2018 and assuming the satisfaction of the performance-based vesting condition. Subsequent to December 31, 2018, a portion of the shares described in this footnote were transferred between the trusts described in this footnote for estate planning purposes."

This is incorrect. The S-1 shows asterisks for the co-founders and are likely just placeholders. In the previous S-1, it showed that they owned roughly 7% together.

https://twitter.com/MikeIsaac/status/1101542615042801664

Crunchbase lists 19 funding rounds. They've gone through the ringer.

Weird, I didn't think they were that cash-starved for most of their history.

Why not? They sell $2 bills for $1 at scale. They need constant funding.

They were rumored to be for sale 3 years ago and no one wanted them. They seemed to be on deaths door.

Still, a $150M-90M personal net worth at the 18B-30B valuation window. They're not going to starve either.

Idk. I’m very bearish on Lyft. It’s a pure bet on US ridesharing. They didn’t expand internationally (now those markets are saturated) and didn’t get into delivery (Uber Eats alone is worth 5-7b).

Do you think ridesharing is just going to die as a product or do you think it will become easily commoditized and all margins will essentially disappear? I think it's going to be around for at least another 10-15 years, and considering how much money uber and lyft had to burn to get to where they are now, I feel like it will be quite hard for competitors to capture relevant amounts of market share in the US

The business is clearly not sustainable..it’s not that there’s changes in demand but the company will literally run out of money in a very short amount of time unless something drastically changes with their business model

They probably de-risked their stake with some buyback during some of the rounds.

you could have made that much with a few good crypto choices

Sure, or by picking the right Powerball numbers.

I mean if I went all in on crypto from the start and sold around end of 2017/beginning 2018 I would have been a multi billionaire. But that's not the point. Similarly, if I "only" bought far OTM option on FANG between 2010 and 2017 but not march 2014-2015 I would have also been a multibillionaire. Heck, I could have went long volatility at high leverage in February 2018 and be a good way to a billionaire. The point is, of course, if you make "good choices" one can be a multibillionaire in many ways. Alas, I am not a multibillionaire because "good choices" are good mostly in retrospect.

Would you please work on commenting more substantively? We're aiming for the kinds of discussion in which we stand to learn something.

https://news.ycombinator.com/newsguidelines.html

This is something that always strikes me about the amount of money swilling around in tech. $90M is an absurdly huge amount of money. By absolutely any outside objective measure of work put in to payoff it is off the scale. To look at this as the founders having lost out is almost comical.

Well apparently you can play baseball and make $330m.

Yes, it’s a lot, but to build a $30b company and make 90m pre-tax (maybe 50m post in CA) is something...

The obvious comparison is Travis Kalanick, who is definitely a billionaire and retained much more of Uber.

On the other hand, the baseball player will create much more than that in value while Lyft has lost billions of dollars. If someone here is underpaid it's not the Lyft founders.

Lyft has enriched its investors far more than any baseball player could even dream of. You're just looking at accounting losses. But when this IPOs, early stage investors will have all made billions.

But that's not creating value. Unless the lottery creates value for people who buy the right tickets.

The current price is the market's expectation of value throughout the existence of the company. The market believes that these past cash flows are not indicative of the company's future ability to create accounting value. And you may choose to value a growth company by its historical cash flows, but the market doesn't.

The value was created on the company itself, thanks to the early funds of the investors. Value was definitely created..

What value is exactly a baseball player creating? Lyft has provided WAY more value to society over its lifetime.

The baseball player brought joy to other humans, which is the whole bottom-line point of the entire economic system.

Lyft has burned piles of investor cash to give people artificially cheap taxi rides; the wealth-transfer is zero-sum and it's actually worse than that because their dumping distorts the real transport market (and exacerbates the negative externalities of cars). You could argue they've done some genuine value creation by being a more efficient taxi dispatcher, but if there was any substance to that then they'd have a profitable business.

Drawing viewers' eyes to lucrative television timeslots for advertisers, selling tickets to local stadiums, and selling merchandise such as jerseys and figures.

Those are all wealth transfers, though, not really value creation. The only value creation by the baseball players is the entertainment provided (which is definitely not nothing).

How about getting a massage? “Wealth transfer”? Or “value creation”?

Value creation, they're fixing/entertaining the customer.

> The obvious comparison is Travis Kalanick

That's why I said outside objective measure. By any objective standard 90M is an insane amount of money for one person to have. One billion is so far off the scale it is impossible to describe.

I’m making the point that you have two cos whose main US product is virtually indistinguishable from one another. The founder from one became a multi billionaire and the others are 1/20th of the way of becoming one.

Lyft and Uber's revenue numbers are quite distinguishable from each other.

I'm making the point that when you look at both objectively rather than in comparison they are both absurd amounts of money.

If you had a billion dollars, would you immediately give away $900mm, since you appear to be arguing the difference is meaningless? Just because they're both a lot of money doesn't mean it's not important to the people who have said money.

But you're injecting that point into a discussion about a different point as though it provides more insight. It's not particularly interesting; we get it, they're fabulously wealthy. But no one contested that, which is why several people are trying to explain that it's not what they were talking about.

An S-1 filing encourages relative financial comparisons by design and intention. It's not surprising that Lyft's founders are extremely well off now. What could be surprising is the degree of dilution they experienced. Those kinds of financial technicalities require us to engage in discussion that treats objectively fantastic returns in terms of relativities.

We're about four replies deep into a conversation chain by now. I would have imagined that if people didn't want to talk about my original observation they would have simply not replied to it! "Interesting" is an obviously subjective term, I find the relative measures that Silicon Valley apples to wealth absolutely fascinating.

> The obvious comparison is Travis Kalanick, who is definitely a billionaire and retained much more of Uber.

That's because Kalanick got screwed by VC's previously and made sure that wasn't going to happen again.

The founders (theoretically) created $20B in value and you think $90M is sufficient compensation?

$90M is definitely enough to be more than comfortable the rest of your life. But a $5B payout would have meant they could start a VC firm, invest in the next several generations of startups, partially self-fund something ambitious like a Space-X, start funded non-profits, etc.

> The founders (theoretically) created $20B in value and you think $90M is sufficient compensation?

...yes? I don't really see what's so absurd about that idea.

It also seems more than a little disingenuous to suggest that the founders were the only ones that created that $20B in value. They didn't single handedly create the apps, the marketing platform, drive the cars, etc. etc.

> But a $5B payout would have meant they could start a VC firm...

https://en.wikipedia.org/wiki/Y_Combinator

> In 2009, Sequoia Capital led the $2 million investment round into an entity of Y Combinator which would allow the company to invest in approximately 60 companies a year as opposed to their previous 40 companies a year. The following year, Sequoia led a $8.25 million funding round for Y Combinator to further increase the number of startups the company could fund.

I think they'll be OK if this is their goal.

You can do all of those things and more - easily - with $90m.

Elon invested more than $100M in SpaceX and they came very close to death before they finally succeeded with their last rocket. So it's not clear that you can do all of those and more, easily, with $90M.

I’m as pro founder as it gets but they alone did not create that value. Tons of employees, and the investors who put up the money, helped along the way.

But they did lose out. You're confusing a comment about relativities for a comment about absolutes.

No one is saying they're not going to be well off, or that it wasn't a worthwhile use of their time to build the company. They're just saying the return is smaller than it could have been. Your "objective outside measure" isn't enlightening in that sense, because the point is specifically about relative measures.

Responding to a discussion about funding dilution by saying, "well they're well off anyway!" is kind of odd, because that's not really relevant. Dilution also materially impacts non-founding employees, and small changes in dilution could have outsized impacts on their returns.

It's also comparable to negotiating with a company who tells you that you're still getting a lot of money "by any objective measure" even if they won't meet your ask, because their offer is higher than the median wage for your locale. Yeah, sure, but that's a pretty empty observation isn't it?

There is always a greater goal to achieve that requires more money: 90M to retire? Sure, it’s plenty of money. 90M to do greater and better things? Not so much. Hell, even Bill Gates would gladly take more money that what he already has in order to achieve his foundation goals.

Your point of view is not objective, but subjective to how much money you need to have in order to do the things you are planning to do.

Looks to me like they've made out pretty well on the personal front considering they've run their business at a loss every year.

Unfortunately that's not what matters to Wall Street or VCs. They could arguably have scaled slower and made sure each market was profitable, but since everyone wants "growth over everything", they were forced to scale as quickly as possible.

They are actually successful in the minds of VCs because their revenue has been growing.

I know a couple of bootstrapped founders running businesses with $10M+ ARR. They own the business in full. Any exit event would net them the same figure as Lyft's founders.

Makes you wonder if raising money to run a business like Lyft is worth it from a personal financial perspective. The bootstrapped founders I mentioned are extremely satisfied with no outside interference or investors breathing down their necks

But then again, not everyone can build a $10M ARR business

Companies like Lyft, Uber or Airbnb changed the world. Literally.

Are you looking at page 192? Logan Green(1) 1,180,329 John Zimmer(11) 1,180,329 Ben Horowitz(5) 15,040,924

So the last line is 15million common stock held by A16Z

thats only shares owned though.

page 169 shows that Logan Green also has 3.5M in vested (unexercised) options and about 2M in unvested options.

Were the cofounders able to cash out shares previously? Maybe they took some chips off the table?

The S-1 notes a lot of RSUs and options outstanding, that I assume are owned by the founders (and employees). So I assume when those kick in it'll be more than that.

Also suspect there has been some secondaries where early investors, founders and early employees have sold some of their shares to late stage investors.

Yeah, this shows Lyft as having gone through ten rounds of funding with the last one being a "Series I" round. I've not seen that too often before!

I read that as "Series 1" and had to do a double take.

> Painful amount of dilution

Lyft had a modern secondaries policy. Many early people sold shares.

Secondary sales is existing shares changing hands, there's no dilution.

> Secondary sales is existing shares changing hands, there's no dilution

Sorry for being unclear. I was positing an alternative mechanism, apart from dilution, through which the founders could have ended up with a small share of the company.

Might be a conscious choice?

Well yes they chose to dilute themselves every time they accepted a new round of funding, but that is much smaller than I ever imagined

Anything is better than zero.

Conscious in that they had to sell large pieces of the pie to fuel growth with all the cash burn that has entailed.

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