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Comment by ackbar03 | Hacker News Reader

of course, hindsight is 20/20, but... Why did they accept the deal with the investors?? That seems like a horrible deal? Google search shows they only raised $416mio total, roughly speaking anything above that and below $559mio the investors could have accepted, pocketed a quick and tidy profit, screw everyone else, and nobody can do anything about it. Or is that too naive of me?

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Time value of money. You don't get paid to sit on money. You ar paid of you grow the money.

The founders wasted investor money on a non profitable enterprise. Employees got paid for doing non profitable work for investors. No one screwed anyone,they just flopped at their business and got rescued by a buyer.

Because the founders assumed they'd be able to turn the money invested into more than a 2x return

Indeed. And the founders agreed to this, and to the liquidation preference too. They knew the terms, knew what they were getting, and could have decided to not engage.

(They took millions, and surely must have engaged an excellent lawyer and sought advice, right? So they knew, or should have known.)

I agree that this can suck, but at the same time... would anyone be sad for the investors if they lost it all too? At least the founders and employees likely received some form of salary.

If anything, it is the employees that are out. The founders negotiated these terms, knew of what they committed to. The employees took options, likely without full optics into all of this.

edit: other parts of this say the CEO agreed to the terms, after the founders were pushed out. Still, what I say stands. The employees are the ones losing here, everyone else had optics into what the deal was.

Something to always think of when an employee and being offered terms. Insistence to know the funding arrangement seems key. Even perhaps the contractual option to be able to get your shares out, cashed, as part of any new funding deal seems prudent.

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