100% no question that employees who hold vested shares should be able to participate in secondary sales at the same rate as founders. I understand and support founders being able to do this; I don't support and understand *only* founders being able to do this.
enjoyed this post, a bit different than what I've read of yours (mostly on SQL / AI / technical thought writing), and if those writings and conversations were "out there", this post was like gaining a glimpse into an alien's dining room in a far off galaxy, with all of the granular detail of a meal that I had never even known existed!
Although, of course, I am somewhat familiar with start ups, Silicon Valley (mostly from the TV show, which was amazing), but this particular ethical dilemma is far removed from any of my typical business experience, for I'd say "most of us" (in Middle America), which is simply from the perspective of a sliding scale of "dollars per hour" to work. Sometimes it's high, usually it's low, but I've never had to open myself up to the many ethical dilemmas of founders cashing out their shares.
I guess this comment is not much more than to say...wow that was interesting and a nice glimpse into how the other half lives.
So true! “If you gambling at a casino for years, with all of your chips on the table the whole time, the stress will eventually eat you alive. Nothing is more terrifying than knowing you could still walk out a loser; nothing will burn you out faster than wondering if your payout for years of work will be years of regret. Like, sure, stay motivated; stay ambitious; all of the clichés. But there’s a fine line between being hungry and being starved, and you’ll make good decisions and be a good leader on only one side of it”.
Some of my favorite posts - getting real life down to earth views on this stuff. Love it.
The VC “drive by advice” made me laugh.
Secondary sales seem totally reasonable if open to everyone - or atleast a group of people objectively defined somehow — and frankly seems like a smart idea to me. Like the first rule of IPOs - sell your stock (or so I hear). I wonder what the legal environment may be in the future for secondary sales? Any inkling of changes here?
Also the limited number of founders I know seem to see money as a byproduct. As one friend says - I’m not motivated by the money - but it is how I keep score. Motivation definitely varies by person and money is part of the equation, but I think it’s tied to proof of winning vs comfort on a beach for most founders. Therefore I bet many are not lacking in motivation because of a windfall.
just had a conversation about whether or not we should commit to paper that mark and i opt into a rule that we're not allowed to sell any more in secondaries (flat and not %) than the next largest amount of secondaries sold by anyone on the team
I think the issue with secondary sales is that they misalign incentives between founders and investors.
Absent secondary sales, founders can only make a fuck-ton of money by building a successful business. But with secondary sales, founders can make a fuck-ton of money just by building a business that looks good to investors, without actually building the business.
In theory, all businesses that look good to investors are potentially successful businesses. But in practice... there are a lot of ways unscrupulous founders can take advantage of the gap between good businesses and good investor slide decks to make money by screwing everyone else.
I'm confident there were a lot of founders that made 7, 8, and 9 figure sums in 2020-2021 knowing full well they were taking advantage of a bubble and had low chances of building viable businesses.
100% no question that employees who hold vested shares should be able to participate in secondary sales at the same rate as founders. I understand and support founders being able to do this; I don't support and understand *only* founders being able to do this.
Hi Benn,
enjoyed this post, a bit different than what I've read of yours (mostly on SQL / AI / technical thought writing), and if those writings and conversations were "out there", this post was like gaining a glimpse into an alien's dining room in a far off galaxy, with all of the granular detail of a meal that I had never even known existed!
Although, of course, I am somewhat familiar with start ups, Silicon Valley (mostly from the TV show, which was amazing), but this particular ethical dilemma is far removed from any of my typical business experience, for I'd say "most of us" (in Middle America), which is simply from the perspective of a sliding scale of "dollars per hour" to work. Sometimes it's high, usually it's low, but I've never had to open myself up to the many ethical dilemmas of founders cashing out their shares.
I guess this comment is not much more than to say...wow that was interesting and a nice glimpse into how the other half lives.
So true! “If you gambling at a casino for years, with all of your chips on the table the whole time, the stress will eventually eat you alive. Nothing is more terrifying than knowing you could still walk out a loser; nothing will burn you out faster than wondering if your payout for years of work will be years of regret. Like, sure, stay motivated; stay ambitious; all of the clichés. But there’s a fine line between being hungry and being starved, and you’ll make good decisions and be a good leader on only one side of it”.
Some of my favorite posts - getting real life down to earth views on this stuff. Love it.
The VC “drive by advice” made me laugh.
Secondary sales seem totally reasonable if open to everyone - or atleast a group of people objectively defined somehow — and frankly seems like a smart idea to me. Like the first rule of IPOs - sell your stock (or so I hear). I wonder what the legal environment may be in the future for secondary sales? Any inkling of changes here?
Also the limited number of founders I know seem to see money as a byproduct. As one friend says - I’m not motivated by the money - but it is how I keep score. Motivation definitely varies by person and money is part of the equation, but I think it’s tied to proof of winning vs comfort on a beach for most founders. Therefore I bet many are not lacking in motivation because of a windfall.
So much pointers for digging into how VCs really work on this one. But first, great piece, Benn.
Like. Really. Great. Piece.
If I took one thing from here, it seems raising funds is an art separate from building great companies. I'll now explore this even further.
Maybe the most important post you've written yet Benn.
just had a conversation about whether or not we should commit to paper that mark and i opt into a rule that we're not allowed to sell any more in secondaries (flat and not %) than the next largest amount of secondaries sold by anyone on the team
I think the issue with secondary sales is that they misalign incentives between founders and investors.
Absent secondary sales, founders can only make a fuck-ton of money by building a successful business. But with secondary sales, founders can make a fuck-ton of money just by building a business that looks good to investors, without actually building the business.
In theory, all businesses that look good to investors are potentially successful businesses. But in practice... there are a lot of ways unscrupulous founders can take advantage of the gap between good businesses and good investor slide decks to make money by screwing everyone else.
I'm confident there were a lot of founders that made 7, 8, and 9 figure sums in 2020-2021 knowing full well they were taking advantage of a bubble and had low chances of building viable businesses.