A founder who believes in his business, will never cash out early. period.
He would always get more after an IPO or exit. So why would he?
I assume the founders are not stupid, they know their valuation is not justified.
He would always get more after an IPO or exit. So why would he?
I assume the founders are not stupid, they know their valuation is not justified.
That is just not true.
You have zero clue of any one founders back story. How many years have they been building their business and not taking a pay check? Not taking health insurance? Struggling... Taking a payout, in some cases, can motivate someone who has been putting in 24/7 for year(s) to keep going. It can also allow the people in your life (family) to support you in pushing forward with your passions.
They are not selling their stock for that $20M lump.
The only 'foul' thing here, is that their employees (option holders) will probably get nothing.
Granted, most of that money would probably have gone towards AMT, but let's not vilify AirBnB before we hear their end of the story.
If they didn't believe in the company they could just sell it today for $500 million (or whatever) and put $50 million in their pockets instead of $5 million.
Selling 5% of your total shares for $3,000,000 sets you up well for life. Not great, but well. At 4% interest that's $120k/year. After that, it's gravy.
On Wallstreet they call this "fuck you money".
Total off topic.
Instead of selling though, they're raising more money, taking some out themselves, and setting their sights on an even higher level of success.
Makes sense to me.
Their product is an inferior version of hotel rooms.
There is a high possibility that they are bankrupt some day.
What the founders are doing makes perfect sense to me, maybe there will never be an IPO or Exit.
Maybe studying economics diseased my brain, but i can't see why competitiveness doesn't matter any more.
I am utterly fascinated with the capital markets and many aspects of finance. The returns reflect a true understanding of the markets. And yes, for the record, tech startups are in many ways less stressful than finance startups :)
As far as "altruism" is concerned, the value-add to society is wholly artificial: if our financial systems weren't structured to force retirement and pension funds to invest in the capital markets, I highly doubt anyone would say they were doing something good for the world.
I'm not saying twitter is a failure by any means, but none of the people that built the company are still there ( Jack Dorsey started square so maybe he is that small percentage of people that can juggle two amazing startups ). When all the founders cash out early, it just makes it questionable.