1. You left before any of your stock vested. Assuming a standard four year vesting schedule and a one year cliff, this makes complete sense. (Although you are saying that you paid for your options, so this likely isn't the case here).
2. The company got shut down, its assets liquidated, and the founders and a select group of employees went to work for Google. This is perfectly sensible from a legal/operational standpoint, but is really unethical if the founders didn't take care of existing stock holders.
3. The founders had liquidation preferences that employees didn't have. This seems really unethical to me, but it's also something you could have seen when joining the company by doing the legal diligence.
Bottom line here is do the diligence, understand the mechanics so there is no confusion as to what they are later, and, most importantly, make sure company founders are decent people who'll pick the high road if/when presented with a choice. I don't think I could live with myself if I had to look in my fancy, gold-plated mirror every morning knowing that I screwed people that trusted me to lead them out of what's rightfully theirs. Make sure you get a good vibe from the people you work for - nothing can substitute chemistry, character judgement, and basic human decency.
- One really high offer from a social network. Talks fell through.
- One reasonable offer from a relatively unknown company (which they took, good culture fit).
- One completely terrible offer from a major tech company, with incredibly high salaries afterwards.
The first one would have been the best for investors, and good for the employees, except the culture fit wasn't quite there. The second was a great culture fit, but wasn't that great for the investors (especially considering it was a cash-and-stock deal and the stock tanked). The third would have been a fantastic deal for the employees and a slap in the face to investors (which is why they didn't take it).
It's funny how easy it is to take the asshole route when it comes down to it.
Chances are there was some issue with preferred vs common stock.
If the OP left after staying less than a year, they most likely didn't vest anything.
Happens all the time. Usually it means that the acquiring company issued a bonus to those employees it was bringing across. If you're not one of them, have a nice day.
So I just want to point out to others that this is one side of the story and it lacks a lot of details to draw any conclusion and ask for the names of the "guilty".
edit: since I'm getting some downvotes, let me expand a bit: it looks like said-company wasn't going anywhere, that fourk didn't work there for very long, that the founders ended up being hired by Google, and it's not clear that the company itself was really bought. So, and again I don't have the whole story either, it's not as clear-cut as "execs and investors made millions and completely screwed a key employee out of his due".
Also, while IANAL, that paperwork implied that the company was purchased by Google (at least technically), contrary to what Techcrunch said. Part of my reasoning for not wanting to name the company and founders was this exact reason: it's hard to get a full and complete picture of a complex situation from just one person through a couple sentences.
And I salute you for that. Don't get me wrong, I didn't mean to confront you or to expose the situation more than you wanted. (what I read is very easy to find anyway) It was more intended to the commenters who wanted names even though we had only your short account to go by.
Clearly, that kind of situations has happened to many startup employees (and will happen again and again…). I worked myself for a startup that folded, most people took their severance package and two months later the company was apparently sold. I don't think any of the employees really know the details of the sale, but I'd very surprised if it turned out that I had missed out on a big payout by not buying my options… :)
>> investors (who were merely reimbursed) ...
There are plenty of cases of employees getting seriously shafted (investors made lots of money, but employees didn't). This is not one of those cases.
You should be downvoted to hell for this stupid comment. You did "some quick googling" and now feel qualified to talk over people who were actually there? This kind of behavior is the plague of the internet. Someone who was actually present takes a back seat to a nerd reading the internet about it.
As I said in my original comment "I just want to point out to others that this is one side of the story", because some people wanted to have the names of the company and people involved to make sure never to do business with them.
On one hand, you have the (short) account of one person who was there; on the other, you have some information found on the web. Neither is reliable, they just give some hints at what might have happened. My comment was just pointing that out, since some people wanted to go do some public lynching.
So you see, in my opinion, your comment should be "downvoted to hell". I was careful to emphasize that what I found wasn't "the truth, the whole truth and nothing but the truth" either. Here's a sample: "it looks like", "this is one side of the story", "it looks like", "it's not clear", "and again I don't have the whole story either".
So no, I'm not the plague of the Internet. The unnecessary outrage and name-calling is.
So shady people or companies continue to be shady because people don't want to risk loss of potential income or reputation.
Idly allowing bad and potentially evil behavior to go unrecognized and unchallenged is by no means being a good person. Not to Godwin the thread, but your attitude is why evil flourishes, and on much grander scales than stock allocation.
Having said that, all you need is 2 minutes, google and you can easily deduce yourself what company he is referring to.
This is always possible with a company with a significant interest controlled by the preferred (which is another way of saying: a company funded by VCs.)
A minute of Googling turns up TechCrunch speculating YC and other investors got paid back in this deal, in which case I'd say this is pretty sleazy.
That TechCrunch article doesn't really present the event as a great exit, but more that the founders were hired to move on from a startup that wasn't really going anywhere. (the post specifically says that Google didn't technically acquire the company)
Seems both sleezy and a cautionary tale for those thinking of working at a startup from where I'm sitting...
So no. There's nothing sleazy about a preferred shareholder being treated preferentially, necessarily.
When you issue stock to someone, you accept a fiduciary responsibility for increasing the value of those shares to the best of your ability. That fiduciary responsibility includes siding with their interests if and when a conflict of interest arises.
If the founders really did receive a large pay day while taking the value of their non-preferred stock to zero, then it sounds like that fiduciary responsibility was ignored.
So yes. Sleazy is an appropriate word.