Equity in startups: Cap tables for Google, Apple, Genentech, Netscape, etc | Hacker News Reader

Equity in startups: Cap tables for Google, Apple, Genentech, Netscape, etc

wiki.epfl.ch

91 pointsaditya20 comments

This is a great example of the rule that "there are no rules". Here is the ordered list of Post-IPO ownership for "Officers & Executives", a category which includes founders as well as execs brought on between founding and IPO.

    Microsoft   71.2
    Ebay        60.9
    Oracle      47.9
    Netscape    45.4
    Apple       43.4
    Google      32.0
    Numerical   26.9
    Genentech   25.6
    Yahoo       24.4
    Logitech    23.1
    Sun         21.2
    Rambus      20.7
    Riverbed    17.9
    Atheros     15.7
    Actelion    12.0
    MIPS        10.9
    Cypress     7.7
    Vertex      6.1
    Virata      4.1
    Arm         3.7

So we founders, IF our company survives, and IF we remain with the company, and IF the company IPOs, are going to keep between 3% and 71% ownership.

One might be inclined to say that it's even worse for employees, they average $100,000 [page 13]...if the company survives and if ..etc. And they have no power to negotiate the terms under which their stake gets diluted. Google and Microsoft each minted thousands of millionaires among the rank and file, but those are the exceptions.

But presumably they're also getting paid market salaries.

I would guess that at least some of the early employees make it into the Officers and Executives club.

VP's are shown to average $1,000,000 on the same page. But that's only for companies which actually make it to IPO. And while $1,000,000 is a lot of money when it's yours, that's not FYM in Europe or the US.

I'd say it's Semi-FYM. You can't walk away for life, but you definitely don't have an issue with quitting to go lie on a beach for a year or two.

Most Google, Skype, etc employees made way more than that.

What's interesting to see is also that for most of these companies, the total number of shares issued at IPO was below 10%. Info on who sold what when would be interesting as well.

Bill Gates (44.2%) , Pierre Omidyar (32.5%), and Larry Ellison (30.6%) are the top three in terms of Pre-IPO ownership. I wonder how they managed that.

Also, Microsoft only had 5.4% VC ownership pre-IPO.

Ebay had ~20% of equity owned by outside investors at IPO. Oralce had 8.3% at IPO. There is an inverse relationship between outside investment and founder equity. VC funding should be seen as just another tool, not the goal of a startup. HN - for all it's benefits - sometimes obscures this basic fact.

I believe all three of them were profitable when they took their first outside investment. That seems to make a big difference.

What is the story behind the 90/10 split between Clark and Andreesen at Netscape?

Netscape was Clark's brainchild. He had left SGI (his previous startup) and recruited Andreesen, who wrote Mosaic at NCSA / Illinois. Clark brought so much to the table with his experience, connections, vision, etc.

You left out $4M of his own money as the initial investment.

There's that too. Clark recounted years later that he felt short-changed by the VCs over SGI and he wasn't going to let that happen again.

As a point of curiosity, what's the usual rate of stock vesting for early employees at most small tech startups?

4 years w/ one year cliff. Options, not stock.

Is "options, not stock" mainly to get around the 500 shareholder rule? How is the strike price of the options typically determined?

It's also typically a huge win for the employees: at a pre-IPO company, your stock isn't really worth very much, because it's hard to find somebody to buy it (for most employees). So instead of paying taxes for a highly illiquid asset, you instead get an option (probably with a really nice strike price), and you don't pay taxes until you exercise it.

It's more for tax purposes. You actually don't own the stock yet so you're not paying taxes on it.

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