Founders cashing out is a big red flag. I said it about Groupon. I've said it before. This really is taking it to the next level: cashing out with a dividend to retain control and ownership.
I absolutely agree that for any cash out it should be open way beyond the founders. In fact, this is a good way for larger startups to kick the 500-shareholder limit can just a bit further down the street.
I see Airbnb as a fundamentally risky business. At some point Airbnb will be large enough to warrant the attention of local and state authorities because many people offering places to stay are doing so illegally or in violation of their own lease agreements.
This woman who had her apartment wrecked is just the tip of the iceberg. It is only a matter of time before a headline about a serious physical assault or worse. Airbnb can count their lucky stars it was "only" a ransacking and vandalism.
No, it's not. Palihapitiya agreed that there should be a secondary component to the financing.
When a company is "shooting for the moon" and has a chance at a >$1B exit, investors want the entrepreneurs to cash out a portion of their stock, because it gives them the financially flexibility to swing for the fences. It aligns the founders and management team with the late-stage investors.
Fred Wilson does a great job explaining why founders and early investors cashing out in late-stage financings is a Good Thing for everyone.
Probably the founders of AirBnB would agree that theirs is a risky business, which is one excellent reason to take some money off the table.
Think of it as hedging your bets, on the one hand you keep a large chunk of stock because the company may weather all the storms ahead successfully, on the other hand it may not. The insecurity can be translated in to a strategy where you remove some money now in case the 'worst case scenario' becomes a fact.
Nobody is forcing any of these guys to do business under these terms. If the VC doesn't want to be part of the round then they should just pass on it, it's not like there is a guy with a gun behind them making them ink the contract. If they don't like the terms, don't do the deal.
You start with "founders cashing out" and end with the woman who had her apartment wrecked? What is common here, other than that you don't like Airbnb?
Reminds me of Freud's story about the peasant who says to the other peasant "Hey, you broke my pot" and the other says "First, I didn't borrow your pot, second, it was broken when you lent it to me, third, it's my pot."
Founders cashing out is a big red flag. I said it about Groupon. I've said it before. This really is taking it to the next level: cashing out with a dividend to retain control and ownership.
I absolutely agree that for any cash out it should be open way beyond the founders. In fact, this is a good way for larger startups to kick the 500-shareholder limit can just a bit further down the street.
I see Airbnb as a fundamentally risky business. At some point Airbnb will be large enough to warrant the attention of local and state authorities because many people offering places to stay are doing so illegally or in violation of their own lease agreements.
This woman who had her apartment wrecked is just the tip of the iceberg. It is only a matter of time before a headline about a serious physical assault or worse. Airbnb can count their lucky stars it was "only" a ransacking and vandalism.