[HN Gopher] Stripe sets one-year timetable to decide on going pu...
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Stripe sets one-year timetable to decide on going public
Author : amitparikh
Score : 118 points
Date : 2023-01-26 16:18 UTC (6 hours ago)
(HTM) web link (www.wsj.com)
(TXT) w3m dump (www.wsj.com)
| rvz wrote:
| Maybe they should have IPO'd or directly listed in 2019 at the
| very peak when everyone else was rushing to the exit as I said
| before [0]. Of course this is also not in hindsight either. [1]
|
| Seems like they now don't want to wait anymore and just unload
| their shares into the market and especially onto retail
| investors.
|
| [0] https://news.ycombinator.com/item?id=32567217
|
| [1] https://news.ycombinator.com/item?id=20993919
| cschep wrote:
| you know what they say.. hindsight is 2019.. :D
| fragmede wrote:
| hindsight is 20/20
| Province1108 wrote:
| Not really when the terms of private financing during the bull
| run were very generous for valuations and terms.
|
| There are big downsides to being public, including all the
| regulatory requirements and pandering to institutional
| investors.
|
| Now the bull market is over and private money is tighter, they
| don't really have a choice but to raise money publicly.
| neonate wrote:
| https://archive.ph/GqSBm
| TekMol wrote:
| It's interesting that there is so much technology and third party
| business involved in the process of moving value.
|
| - Visa has a market cap of $463B
|
| - Mastercard $362B
|
| - PayPal $90B
|
| - Block $48B
|
| Could it theoretically all be automated?
| fragmede wrote:
| I don't think visa is doing it by hand and pencil and paper
| though, and the value in those companies is that they're taking
| bioff the top of every transaction that runs on their rails. so
| it's already automated too a huge degree, it's just that
| automation is what _gives_ those companies that market cap
| TekMol wrote:
| But what is the value they provide, which justifies their
| earnings and therefore market cap?
| fragmede wrote:
| by being the digital rails. without visa/mc, all you have
| in your wallet is a piece of useless plastic. there's huge
| value in the convenience of not having to use cash, and
| then the rewards programs on top of that.
| treis wrote:
| Sure but that's not why Visa/MC are worth that much.
| They're worth that much because they're a duopoly that
| can dictate prices.
| mbesto wrote:
| > that can dictate prices
|
| Prices that are capped by the government:
|
| _The Fed's 2011 rules capped fees at 21 cents plus five
| basis points of each transaction, and also allowed an
| additional one cent fee per transaction for fraud
| prevention, where applicable._ [0]
|
| [0] - https://news.bloomberglaw.com/antitrust/biden-
| takes-on-visa-...
| treis wrote:
| That's for debit cards only. Which Visa/MC have knee
| capped with their monopoly power so it doesn't really
| matter. Actually helps as a distraction
| timerol wrote:
| No. (Channels patio11) As a society we have decided to delegate
| a bunch of responsibilities to the companies that move money.
| The most notable one is fraud protection. The companies that
| make this much money do so by pretending that a transfer of
| money is a clean, simple, and absolute thing. In reality it is
| messy, reversible, and fraud-prone. Being able to transfer $1B
| dollars as easily as you are able to transfer $1 would be a
| failure of the system, not a feature.
| TekMol wrote:
| I have been paying and being paid for decades now, and I have
| never involved a payment processor in a dispute I had with
| the other side.
|
| If arbitration is the reason these companies exists, it seems
| like bad deal.
|
| Maybe they sell an illusion?
| changoplatanero wrote:
| Maybe your credit card number was stolen without your
| knowledge and they took care of it for you without you even
| being aware
| willcipriano wrote:
| They took care of it for themselves, when someone commits
| fraud it isn't your problem because they used your name
| to do it.
|
| Imagine if you were defrauded for a few hundred bucks by
| someone claiming to be a big celebrity. You probably
| wouldn't even be able to get into contact with the actual
| person, let alone have them jump through a bunch of
| hoops, spend time on hold with your staff or go to the
| post office to send you copies of documents. They
| wouldn't bother to respond to you, they have no
| obligation to, whatever happened had nothing to do with
| them.
| abigail95 wrote:
| That would be whoever made the cards fault. We don't give
| credit for cleaning up your own mess, that's the minimum
| standard for engaging in a beneficial relationship.
|
| It's not a value proposition from gmail that you can't
| access my inbox just from knowing my address.
|
| I can't believe you can be a $400B company and the value
| comes from stopping fraud that you enabled by your own
| product design.
| TylerE wrote:
| Much of the fraud is merchants defrauding their
| customers.
| ddorian43 wrote:
| Nah.
| djbusby wrote:
| I've used banks and cards to help resolve fraud. Rarely,
| but I love it.
|
| And now the bank pushed me to use Zelle - which has zero
| protection.
| lxgr wrote:
| > [...] bank pushed me to use Zelle - which has zero
| protection.
|
| Also channeling patio11 [1]: This is actually a pretty
| interesting ongoing experiment as to whether banks can
| opt out of Regulation E.
|
| [1]
| https://twitter.com/patio11/status/1500993875627761666
| jchw wrote:
| To be fair, the trade-off is that there aren't any fees
| and it's nearly instantaneous. For the type of
| transaction similar to handing someone you know a wad of
| cash, it seems pretty good.
| lxgr wrote:
| > I have been paying and being paid for decades now, and I
| have never involved a payment processor in a dispute I had
| with the other side.
|
| Have you considered that the _possibility_ of disputes and
| the existence of a framework for resolving them is part of
| the reason for that?
| darkerside wrote:
| Countering your own anecdata with my own, I have. To the
| tune of $5,000+.
| pchristensen wrote:
| "I have never been owned by another person, so there is no
| need for a law against slavery."
|
| The world is full of services, valuable, difficult to
| provide services, that a given person will never consume.
| Doesn't mean no one else does.
| rglover wrote:
| Yes, with Bitcoin.
| methodical wrote:
| And by using Bitcoin to automate all these transactions you
| get a bunch of very cool features such as constantly being at
| risk of losing your life savings due to phishing, scamming,
| hacking, etc., etc., etc. unless you store a hard wallet in
| your intestines and memorize the recovery words (better hope
| you don't forget any or your life savings is gone!). The cool
| thing about all of this is that it's a _feature_ of Bitcoin
| to be able to irreversibly lose your life savings, without
| any ability to recoup your losses.
|
| All of this to say that Bitcoin is obviously the way forward
| for global transactions, despite the fact it processes
| transactions as slow as molasses and the only way to make it
| faster (Lightning Network) is to sacrifice the checks and
| balances that maxis praise as the hallmark of Bitcoin lol
| rglover wrote:
| > And by using Bitcoin to automate all these transactions
| you get a bunch of very cool features such as constantly
| being at risk of losing your life savings due to phishing,
| scamming, hacking, etc., etc.
|
| All lies.
|
| > unless you store a hard wallet in your intestines and
| memorize the recovery words (better hope you don't forget
| any or your life savings is gone!)
|
| Lies. Just write them down and store them securely. You can
| memorize them if you like. It's also wise to store multiple
| physical copies in various locations to avoid this exact
| scenario.
|
| > The cool thing about all of this is that it's a feature
| of Bitcoin to be able to irreversibly lose your life
| savings, without any ability to recoup your losses.
|
| Yes, you can't be utterly careless (and I'm not sure what
| the argument is for wanting to be).
|
| > the only way to make it faster (Lightning Network) is to
| sacrifice the checks and balances that maxis praise as the
| hallmark of Bitcoin
|
| Yes, which makes sense for small transactions between
| trusted parties. Large transactions can and should be done
| on-chain (also with trusted parties).
|
| --
|
| I'll continue to listen to the signal [1], not the noise.
| What makes me happiest is that the people who deserve to
| win the most will win over the people who deserve it the
| least. It will be the greatest wealth transfer humanity has
| ever seen and it won't require any violence or coercion.
|
| [1] https://twitter.com/LightningTipB0t/status/161501479879
| 79919...
| methodical wrote:
| > All lies.
|
| Doesn't bother to point out what part of it was a lie
| (because it isn't a lie)
|
| > Lies. Just write them down and store them securely.
|
| Welcome to the future of finance, make sure you don't
| lose your seed phrases written down on paper (it's the
| future, trust me bro)
|
| > Yes, you can't be utterly careless
|
| Contradicts saying that I was lying that you can lose
| your life savings due to phishing, scamming, or hacking,
| and that if you lose your seed phrases and can't access
| the wallet then your digital doubloons are gone forever
|
| etc.
| rglover wrote:
| > Doesn't bother to point out what part of it was a lie
| (because it isn't a lie)
|
| This "constantly being at risk of losing your life
| savings due to phishing, scamming, hacking, etc." is a
| lie. There is no inherent property of Bitcoin that makes
| you vulnerable to these. Any vulnerability in those
| regards is an individual issue, just like with the
| current system. You could mitigate those away with paid
| services under a Bitcoin standard (which is great because
| you could actually _pick_ the vendor you thought could do
| the job best).
|
| > Welcome to the future of finance, make sure you don't
| lose your seed phrases written down on paper (it's the
| future, trust me bro)
|
| Perhaps you prefer steel? https://www.amazon.com/Safe-
| Seed-Stainless-Recovery-Passphra...
|
| > Contradicts saying that I was lying that you can lose
| your life savings due to phishing, scamming, or hacking,
| and that if you lose your seed phrases and can't access
| the wallet then your digital doubloons are gone forever
|
| Fair enough. This is where an exchange comes in. You
| still have the option to trust a third-party to hold your
| Bitcoin if you wish. But of course, that comes with its
| own risks, just like trusting a bank (which can only ever
| guarantee up to $250K worth of your money under FDIC).
| ZephyrBlu wrote:
| I'm pretty favourable towards crypto, but it is
| absolutely an inherent property of blockchains.
|
| The whole point is that it's immutable and transactions
| are not reversible. That means users are susceptible to
| losing their money with no recourse.
|
| Seed phrases are also a pain in the ass. No one wants to
| deal with that, and average consumers would absolutely
| lose/forget/misplace them and lose access to their
| wallets.
|
| The risk of ruin in crypto is ridiculously high compared
| to traditional finance.
| TylerE wrote:
| This sort of vague handwaving of valid concerns is the
| definition of noise.
| methodical wrote:
| Almost like handwaving is the only way to disregard any
| of the real concerns people bring up about Bitcoin or
| crypto because there's not really any good way to dispel
| them with much logical proof.
| rglover wrote:
| I responded directly to what was said. There's no
| handwaving, you just don't like my response. Read my
| other responses in this thread, too.
| TylerE wrote:
| "All lies" is not a response.
| rglover wrote:
| That was only part of the response.
| abigail95 wrote:
| It's a different kind of cash (like banknotes). It has
| different security tradeoffs because the owner is the
| custodian and you aren't paying a chain of intermediaries.
|
| It's not a feature of cash that it can be stolen, every
| object can be stolen. The distinctive attribute is
| transactions are public and immutable.
|
| A car can be driven by its owner anywhere they like. If
| someone described a car to you as a suicide box you can
| crash and die in - you might say yes, the fact that cars
| can be driven freely by their owners means you might drive
| into someone else. But that's a consequence of the feature,
| not the feature itself.
| methodical wrote:
| The difference of course between all of the rubbish that
| crypto/Bitcoin is (since they are, at the end of the day,
| in the same boat), is that by entrusting central parties
| to handle financial transactions in our traditional
| financial systems we have methods by which we can reverse
| transactions, whereas in any blockchain system there is
| no real authority, by design, so any stolen assets are
| lost forever. There aren't security "tradeoffs", because
| there is not a way in which any blockchain based currency
| is any more secure than current finances, outside of the
| fact that no bank or government entity could take your
| digital beanie babies because they don't have the token,
| which isn't an issue in traditional banks either unless
| you're a criminal for the most part. And in order to get
| this "advantage" of blockchain, you have to completely
| remove its ability to be used as a currency since for any
| amount of crypto or Bitcoin to be useful in the real
| world it almost always has to be converted back into
| fiat, once again centralizing it. The whole concept is
| extremely flawed, hasn't really gained any ground outside
| of FOMO'ers, and will likely die out again soon,
| thankfully.
| asterix_pano wrote:
| - you can use an escrow account to reverse the
| transaction if needed - having full ownership of your
| money and it being censorship resistant (depending on the
| crypto) is certainly a plus if you don't fully trust your
| government. - the conversion to fiat is depending on
| adoption: the more adoption there is, the less necessary
| that would be. - you can decide to wire your money 24/7,
| internationally, instantly and with no fees (with the
| right crypto)
|
| Overall you get more control of your money. If you think
| of money as just another kind of information, it's normal
| to expect it to evolve in the digital age we are living
| in.
| lxgr wrote:
| Does Bitcoin support dispute resolution (i.e. chargebacks)
| yet?
| rglover wrote:
| It doesn't need to. Transact with vendors you actually
| trust who have a track record you can verify (which
| necessitates people being trustworthy to earn business--
| unlike our current economic order).
| kasey_junk wrote:
| And on the vendor side? Are you suggesting that either
| all sellers know a) the credit worthiness of their
| customers or b) don't extend any credit?
|
| Either one seems like a major downside for the seller.
| rglover wrote:
| > Are you suggesting that either all sellers know a) the
| credit worthiness of their customers or b) don't extend
| any credit?
|
| That's up to the business owner, but considering the
| utter destruction its done to the world I would say most
| businesses should not extend any credit.
|
| The nice thing about Bitcoin is it's a transaction layer
| and people can build services on top of it. Someone could
| start a guarantor business that other businesses pay to
| verify creditworthiness. They do that already now, the
| difference being that it's a completely dark system
| controlled by people with no incentive to fairly or
| accurately represent your worthiness.
| lxgr wrote:
| > Bitcoin is it's a transaction layer and people can
| build services on top of it
|
| The transaction layer is arguably the least interesting
| service the credit card and other incumbent
| transaction/payment networks provide.
|
| Deciding _whether_ to move money, and possibly whether to
| move it back, is where the value is created.
| rglover wrote:
| > The transaction layer is arguably the least interesting
| service the credit card and other incumbent
| transaction/payment networks provide.
|
| It isn't until you can't transact over it because your
| government blocked it or received an international
| sanction that prevents you, an innocent citizen from
| transacting. Or, if you reside in a country where that
| network does not exist.
|
| > Deciding whether to move money, and possibly whether to
| move it back, is where the value is created.
|
| Incorrect. The ability, not the decision, is where the
| value resides. I can decide all I want that I'd like the
| bank to send $20K to someone overseas for me, but that
| likely means jumping through several hoops to do it. With
| Bitcoin, I can just _do it_.
| lxgr wrote:
| How would that not lead to the inevitable concentration
| of economic activity in a few trusted platforms?
|
| Today, I can shop at pretty much any merchant on the web,
| under the reasonable expectation that my bank will file a
| dispute for me if the merchant makes a run for it and I
| never receive any goods or services. Even in case of
| merchant bankruptcy, I'm not exposed to any risk.
|
| In a world of non-reversible payments, I'd probably stick
| to Amazon exclusively. That seems pretty bad for
| small/new/independent merchants.
| rglover wrote:
| > How would that not lead to the inevitable concentration
| of economic activity in a few trusted platforms?
|
| Because it would force people to be honest in order to
| eat. Economic activity as a whole would become a lot more
| transparent because people will avoid hiring you or
| buying from you if you have a bad reputation. The inverse
| is also true, rewarding the business owner who invests in
| quality and customer service.
|
| > if the merchant makes a run for it
|
| Again, this is a discernment issue not a systems issue.
| In that particular case, you can set up an escrow
| transaction that only releases funds if the transaction
| goes through. EBay has already proven, too, that most
| people are honest by default so this is a non-issue.
|
| > In a world of non-reversible payments, I'd probably
| stick to Amazon exclusively. That seems pretty bad for
| small/new/independent merchants.
|
| That's a personal choice.
| lxgr wrote:
| > [...] it would force people to be honest in order to
| eat.
|
| But how do I detect honesty in first interaction with an
| unknown party?
|
| > [...] people will avoid hiring you or buying from you
| if you have a bad reputation [...]
|
| As a merchant, what if I have _no_ reputation? How do I
| ever get my first customer?
|
| > EBay has already proven, too, that most people are
| honest by default [...]
|
| ...on a centralized platform that can arbitrate trust!
| rglover wrote:
| > But how do I detect honesty in first interaction with
| an unknown party?
|
| It should be obvious. The guy who shows up to your intro
| meeting well-dressed, prepared, etc with references is
| going to be preferable to the guy who shows up smelling
| like vodka in tattered clothes.
|
| > As a merchant, what if I have no reputation? How do I
| ever get my first customer?
|
| The same way you do under the current system. Go work for
| someone else to build up credentials/experience, or,
| offer to do stuff for free in exchange for referrals and
| testimonials.
|
| > on a centralized platform that can arbitrate trust!
|
| Can, but often doesn't need to.
| lxgr wrote:
| > The guy who shows up to your intro meeting [...]
|
| Do you regularly hold in-person intro meetings for
| ordering sub-$100 items online?
|
| > Go work for someone else to build up
| credentials/experience, or, offer to do stuff for free in
| exchange for referrals and testimonials.
|
| And then passport it to my own store how, exactly? "Trust
| me, I'm honestseller897 on Amazon/eBay"?
|
| >> on a centralized platform that can arbitrate trust!
|
| > Can, but often doesn't need to.
|
| The fact that it does, when required, is the reason for
| rarely needing to.
| djyaz1200 wrote:
| Is there any way to buy stock from employees now?
| drexlspivey wrote:
| There are secondary markets for private companies' shares (like
| EquityZen) but I believe you need to be an accredited investor
| to participate
| paxys wrote:
| There have always been ways. Find an employee and make them an
| offer. Or use one of the many private marketplaces.
| umeshunni wrote:
| EquityZen had an offer to buy last week at a $75B valuation /
| $32 per share.
| JumpCrisscross wrote:
| > _EquityZen had an offer to buy last week at a $75B
| valuation / $32 per share_
|
| That's wildly off market, like 30%+. That's high, even for a
| retail platform.
| magneticnorth wrote:
| What do you mean by off market? Are you saying the value
| should be 30%+ higher or lower, and how did you get that?
|
| Obviously the usual kind of market isn't applicable here,
| so I'm curious what you mean.
| babl-yc wrote:
| I assume this is in part due to the 10 year expiration of ISOs?
| Stripe was founded in 2010.
| bbq wrote:
| Importantly they said within a year they will go public OR do a
| private market transaction to make employees liquid
| Aqua_Geek wrote:
| That's a LONG time (in total) for employees to wait for
| liquidity. Yes, they likely provided some opportunities for
| early employees to liquidate some of their holdings, but it's
| got to suck to sit on that much funny money for so long.
| msoad wrote:
| An IPO will be longer. With the locked out period it will be
| more than a year
| makestuff wrote:
| Not necessarily if they do a direct listing.
| khazhoux wrote:
| A direct listing would be very unfair to the banks that
| have patiently waited years to take a multi-billion-
| dollar chunk of Stripe's upside in exchange for setting
| the IPO price (integer between 20 and 50).
| mercedsownboy wrote:
| Thank you for a great chuckle
| htrp wrote:
| The level of shade is about as high as the expected ipo
| pop
| preinheimer wrote:
| They've had several options for employees to liquidate some
| of their holdings before now. They've generally only been
| open to current employees, but one a few years ago was also
| open to past employees.
| clintonb wrote:
| Those offerings are only for options holders. RSUs cannot
| be traded; otherwise, every RSU holder has to pay taxes.
| scarface74 wrote:
| As someone who only has dealt with public companies, how
| is that different from my having to pay taxes when my
| RSUs vest?
| a_t48 wrote:
| This happened to me this year with another company. They
| opened up the ability to sell back RSUs, and a chunk of
| them got sold to pay for taxes.
| lbotos wrote:
| I assume Stripe is giving out "Double Trigger RSUs" then?
| https://blog.pragmaticengineer.com/equity-for-software-
| engin...
|
| Otherwise people are getting taxed now anyway if they are
| getting RSUs at a private Stripe, right?
| calr wrote:
| Noob question that I am sure is answered many times. What
| are the catalysts for a private company switching from
| options to RSUs (double trigger). In my previous role I
| got RSUs (double trigger), but now at a much smaller
| startup I have an option package. As an employee RSUs are
| a bit easier to make sense of, but both are equity
| instruments at the end of the day. When, and why does
| that transition happen?
|
| Edit this is answered fairly well here:
| https://www.parkworth.com/blogs/pre-ipo-tech-giants-
| using-do.... The TLDR is SEC rules and limited perceived
| upside of options (although I imagine that could be
| solved via a lower strike price).
| chimeracoder wrote:
| > What are the catalysts for a private company switching
| from options to RSUs (double trigger).
|
| For employees at very early companies that are going the
| venture route, ISOs are a no-brainer. The company is
| small enough that the strike price isn't too onerous, the
| company is too small to hit up against the IRS limits,
| and they provide pretty good tax treatment under the
| assumption that the company will grow massively in value
| - like, 100,000x - which is the the optimistic case that
| everyone wants to optimize for.
|
| For employees at late stage companies (e.g. last funding
| round before IPO), ISOs are a rough deal. The strike
| price is large, so the only people who can afford to
| exercise them before a liquidity event are people who are
| already independently wealthy. The tax benefits are also
| still present, but smaller, because the expectation is
| that the company might grow 10x in valuation, but not
| 100x or 100,000x (most $100M companies are not going to
| grow to $10 trillion in valuation).
|
| RSUs avoid that problem, by requiring zero cash up-front,
| in exchange for less favorable tax treatment in the
| "company grows 100x-100,000x" case - which is fine,
| because that's less relevant.
|
| Of course, the billion dollar question is where the
| inflection point happens - when do RSUs become a better
| deal than ISOs? There's no universal answer to that, and
| some of that depends on specifics of the company, and
| some of that also depends on who you ask (certain people
| will benefit more than others from the switch at
| different points, so it depends on how much the company
| is weighing each of those [metaphorical] stakeholders).
|
| ISOs also have one other advantage for companies: because
| they have to be exercised within 90 days of departure, a
| large portion of ISOs that are granted will never
| actually be exercised (the employee will choose to leave
| them unexercised, either because they don't have the
| money to pay for the exercise price + taxes or because
| they don't want to). So every option granted is <1 share
| actually given up (in expectation), allowing the company
| to grant bigger compensation packages (because some
| portion of those will not actually be used, and can
| therefore be reallocated to someone else).
|
| With RSUs, every RSU granted is 1 share actually given up
| (except in the case where the RSUs expire, which makes
| the company look bad).
| calr wrote:
| Thanks for the in depth write up. Makes a lot of sense!
| arcticbull wrote:
| There's also usually a switch from ISO to NSO somewhere
| down the line, often fairly early. NSOs aren't capped at
| a 90 day post-termination exercise window. Some companies
| have extended the window to as much as 7 years -
| Pinterest comes to mind. There is _a_ cap, but it 's
| closer to the RSU cap than the ISO cap.
|
| The progression is usually:
|
| - Founders get shares with a re-purchase option for
| vesting. The company exercises the option if you leave
| before vesting ends to take back your un-vested shares.
|
| - Next ~100 people get ISOs.
|
| - Next ~2000 get NSOs.
|
| - Then, double-trigger RSUs until the company goes
| public.
|
| - Then, single-trigger RSUs.
|
| I agree with your general assessment. The difference
| between options and RSUs usually comes down to upside
| potential. An option is worthless at grant time (by law,
| it usually has to be issued at the 409(a)) and it's just
| the right to buy company shares. If you're buying the
| shares at the current price, there's no value in that.
| Options only gain intrinsic value of _future_
| appreciation in the underlying equity past your grant
| date.
|
| On the other hand RSUs are shares of the company, so they
| are worth at grant whatever a share of the company is
| worth.
|
| An option with a $10 strike price to buy shares of a
| company whose 409(a) is $11 has an intrinsic value of $1.
| An RSU of a company whose 409(a) is $11 has an intrinsic
| value of $11.
|
| Companies generally, in my experience, give you about 3X
| as many options as they would shares for the same role.
| Give or take. Companies usually switch from options to
| RSUs when they think that growth in the stock price is
| going to slow down - [edit] (and when they're hiring
| people with a higher aversion to risk!)
| ywain wrote:
| Correct. Stripe gave out stock options until around 2016
| or 2017, then switched to double-trigger RSUs.
| jcdavis wrote:
| it can be done (via eg waiving the 2nd exit trigger and
| converting to common) but is pretty complicated
| mguerville wrote:
| Interesting timing, wouldn't think it's optimal given macro
| conditions, but perhaps they don't want to wait however long
| it'll take to get back to the frothy markets
| shawnz wrote:
| It's because the earliest RSUs they issued are expiring this
| year: https://www.theinformation.com/articles/stripes-early-
| stock-...
| bgorman wrote:
| Wouldn't it be good for the company to let these RSUs expire?
| How does it benefit the company to make sure these exercise?
| Jakawao wrote:
| Employees tend to leave when a major portion of their
| compensation disappears.
| Blackthorn wrote:
| If they don't let them exercise, the existing employees
| will rightly see it as funny money and not actual
| compensation. They won't be employees for much longer after
| that.
|
| Especially since Stripe has steadfastly refused to go
| public so far...
| ball_of_lint wrote:
| Equity compensation and what it's valued at is a big factor
| in choosing to work at Stripe. If they start letting RSUs
| expire, it will make ~everyone value their equity
| significantly less; Stripe would likely have significant
| difficulties finding and retaining talent.
| [deleted]
| encoderer wrote:
| In some ways, yes, but I think if you game it out, you see
| how the company loses in a number of ways. First,
| repetitional risk. Second, it's likely that a liquidity
| provider would emerge who could offer, basically, to buy
| call options from individual holders for enough premium to
| cover the taxes due on exercise. (Stripe would not want an
| unaffiliated 3rd party accumulating a large position)
| winphone1974 wrote:
| Transfer and using them as collateral are typically
| prohibited explicitly in the agreement, so I'd be
| surprised if this could happen
| encoderer wrote:
| Then call it a promisary note.
| chippiewill wrote:
| It's not in the company's interest to piss off employees
| who can't afford to exercise their options without being
| able to sell them.
|
| My company recently got bought by a privately owned
| company. Because of the ownership structure of the
| purchasing company we weren't allowed to exchange our
| options or let new ones vest so my company's board approved
| cancelling and reissuing everyone's options with an
| acceleration clause so they'd completely vest at completion
| so we'd all get a full payout. They did this because they
| knew if they didn't that there would be an exodus of
| employees before the purchase went through.
|
| Employees represent a large % of the value of the company,
| if they all leave you just have a bunch of tech that no one
| else knows how to maintain or use. Institutional investors
| typically have such a large proportion of the shares that
| it's worth it to them to not just screw over employees
| because the employee sticking around and keeping shares is
| worth more than they'd save.
| Aqua_Geek wrote:
| They're options that are set to expire, not RSUs. Yes, the
| employees could exercise them to prevent them from expiring,
| but then Uncle Sam comes to collect his dues. And that's
| where illiquidity burns you.
| chimeracoder wrote:
| > They're options that are set to expire, not RSUs.
|
| Both options and RSUs are required by law to have
| expiration dates. And it's plausible that either or both
| could have expiration dates within the next 12 months.
| kasey_junk wrote:
| Double trigger rsu's in private companies also expire and
| holders of those have no option even to eat the taxes in
| that case. They just lose them.
| Aqua_Geek wrote:
| Good point. I forgot about that.
| [deleted]
| mkl95 wrote:
| TIL Stripe have lowered their internal valuation from $95bn to
| $63bn since mid 2022.
| paxys wrote:
| Considering so many public, profitable tech companies saw their
| valuations go down by 50-70% in that same period, that still
| seems too little of a cut.
| agloeregrets wrote:
| This assumes Stripe is not outperforming expectations. .which
| seeing the Amazon deal....
| objclxt wrote:
| It's unclear that the Amazon deal is outperforming
| expectations versus a quid pro quo on AWS hosting.
| agloeregrets wrote:
| Either is an upside. That's a huge contract that any
| payment processor would kill for.
| bdcravens wrote:
| Public companies have more external influences on their
| valuation. It's not like they literally lost 50-70% of their
| intrinsic value, only what the market with the associated
| psychology says they are worth. Private companies can stick
| closer to that intrinsic value.
| mathattack wrote:
| Intrinsic value involves discounting future cash flows.
| With rates up that should punish Stripe similar to the rest
| of the market.
| paxys wrote:
| > Private companies can stick closer to that intrinsic
| value
|
| It's normally the opposite. Public markets are a lot better
| at judging intrinsic value than a handful of VCs. Every
| single private company out there is either wildly over or
| under-valued, more so at earlier stages.
| TuringNYC wrote:
| Not to mention, VC valuations have all sorts of hidden
| stipulations such as liquidity preferences which skew
| headline private valuation numbers unnecessarily high.
| Public markets have a full view of the cap table and can
| better evaluate price w/o hidden tricks.
| jjeaff wrote:
| Plus, all VC investors have every incentive to juice the
| valuation after they have bought in.
|
| They don't have short sellers seeking out reasons to tank
| it like the public markets do.
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