Disqus - Latest Comments for tylerwillis

Re: Presenting Founder Collective

twitter-2529971 — Tue, 10 Nov 2009 12:21:58 -0000

> Sounds like the partner most in-line with the startup will take lead on the investment for FC and will receive a bigger piece of the pie then other fund partners for doing so.

Yeah.

Board seat: sometimes, but not necessary. We are very flexible.

Re: Presenting Founder Collective

tylerwillis — Mon, 09 Nov 2009 20:19:08 -0000

Chris, can you expand a bit on this: "we also have a unique structure where active entrepreneurs lead investments, work hard to help their investments succeed, and share in the profits when they do."

Sounds like the partner most in-line with the startup will take lead on the investment for FC and will receive a bigger piece of the pie then other fund partners for doing so. Do they take a board seat? Are there expectations around time? How will partners mitigate their busy life as founder interfering with their commitment to their partners and board?

It's an amazing group of people, I can't wait to follow you all more closely in the coming years.

Re: Valuation and Option Pool

fredwilson — Sun, 08 Nov 2009 08:31:24 -0000

They did not

Re: Valuation and Option Pool

fredwilson — Sun, 08 Nov 2009 08:28:49 -0000

Its been done. It would have to be negotiated with all parties to the sale including the buyer and vesting would stick so that the employees would have to stay post close to earn them

All of those reasons are why it doesn't happen very often

Re: Valuation and Option Pool

terrycojones — Fri, 06 Nov 2009 19:30:44 -0000

No, not if the unissued employee pool stock is treated as the property of the pre-VC owners. Someone else was asking about this on this page too. That needs to be spelled out - I have seen deal documents where it was not. Similarly, it needs to be considered what happens when an employee leaves mid-vesting and can exercise their partially vested option. The remainder should go back into some form of treasury to potentially be re-issued, and revert in the meantime to being owned by its original owners.

It's a lot of work to keep track of all this. I once wrote about 6K lines of code to support running a stock option plan, and there were lots and lots of details and special cases.

Re: Valuation and Option Pool

tylerwillis — Fri, 06 Nov 2009 19:24:36 -0000

Right, but until the entire option pool is issued and exercised, the
investor owns more than 20%, right?

Best,
Tyler Willis
Director of Marketing, Involver
415-683-1742

Re: Valuation and Option Pool

terrycojones — Fri, 06 Nov 2009 13:10:14 -0000

Hi Tyler

It doesn't work that way (in my experience and in what I've read). The investor comes into the deal agreeing to buy 20% of the company for $2M. When the entire option pool is issued & exercised, that's the position they're in. At the moment after signing the deal, the employees own 80% of the company. Over time, as the option plan is used, those original investors are diluted down to owning 70% of the company, the incoming employees grow to own 10% and the investors arrive at their original figure of 20%. So it's the original owners of the company who are diluted along the way by the new hires, and not the investors. That's a big part of why a pre-money option plan is not popular with entrepreneurs. The investors are insisting that the dilution of future hiring is taken out of your hide, and that it's not shared.

Re: Valuation and Option Pool

tylerwillis — Fri, 06 Nov 2009 12:54:09 -0000

Hey Terry,

All shareholders (including investors) will be diluted as options are exercised. For example, If a company has 10MM shares, including a 1MM share option pool, and the investor owns 2MM shares, this leaves the entrepreneurs with 7MM.

So the value of the investor's shares 2MM/9MM. With every option granted (assuming it is later exercised) the denominator increases.

Re: Valuation and Option Pool

kidmercury — Fri, 06 Nov 2009 12:49:01 -0000

true, but of course in order for buckminster to get his piece craig needed to be able to allocate it to him. if he rolled up with a whole bunch of founders and support staff, that might not be possible. part of the single founder/small team advantage is that they have lots of equity to give around, IMHO.

Re: Valuation and Option Pool

tylerwillis — Fri, 06 Nov 2009 12:42:59 -0000

Kid M, I don't think CL is a fair example. both Jim Buckminster and Craig have equity. I'm also not sure they took venture capital (I don't think they did).

Re: Valuation and Option Pool

tylerwillis — Fri, 06 Nov 2009 12:35:37 -0000

I believe this is the case Terry, although because firms will often re-invest, my guess is it's not as hard a pill to swallow (the VC is taking a hit as a member of the A round, but dodging a hit on their B round investment).

Re: Valuation and Option Pool

tylerwillis — Fri, 06 Nov 2009 12:32:44 -0000

In one sense you're right: 10.5 vs. 12.5 will never really affect how an exit changes your life. However, if you have a big win (say 50MM), you should definitely fight for it -- it's still a million bucks that you could do something with (invest! buy a house! pay taxes on all the money you just made!)

The Math:
At a 5MM exit, you're looking at 525K vs. 625K
At 20MM, it's 2.1MM vs. 2.5MM
At 50MM, it's 5.25MM vs 6.25MM

Re: Valuation and Option Pool

tylerwillis — Fri, 06 Nov 2009 12:20:51 -0000

Fred,

If there were unused options in the pool, could the entrepreneur retain granting rights on these on the eve of a sale, i.e. so that they could distribute the remaining value amongst them or their team?

An entrepreneur recently advocated this to me; I told him I thought this would be disputed by the investors (who wouldn't want to be further diluted after winning) and the acquirer (who would likely see this as a strange occurrence and/or want to be involved in setting terms around any "golden handcuffs"*), and he told me that hadn't been his experience.

From your vantage point, would you fight this? Would you expect acquirers to balk?

*Golden Handcuffs might be inside baseball, for anyone reading this who's never heard that, Golden Handcuffs are "a system of financial incentives designed to keep an employee from leaving the company" (wikipedia). Think Stock Options that vest over 3 years or large cash bonuses for staying a certain length of time.

Re: Who Will Hire Don Dodge?

Don Dodge — Fri, 06 Nov 2009 11:18:40 -0000

Andrew, You are pretty close. There are several more big companies that might be interesting; amazon (cloud), Cisco (cloud/collaboration), and AOL.

There is also the Venture Capital path. There are several VC firms that could be interesting.

Lots to consider. I'll let you know when I have narrowed down the choices.

Don

Re: Who Will Hire Don Dodge?

tylerwillis — Thu, 05 Nov 2009 18:19:20 -0000

Involver, obviously :)

I actually think there's a decent chance at a First Round Capital or similar organization working with Don to add value to portfolio companies and source new deals. With the connections he has and the insight into building big ideas, Don would make a great seed/a round VC -- not sure if he'd be interested in being an investor, but it would be a good fit.

Re: Jake And Amir Dot Com - Guitar Shopping

tylerwillis — Thu, 29 Oct 2009 17:33:49 -0000

did that really require the extra dotcom?

jakeandamirsuperacefanforum.com was taken?

Re: Social data for search giants

tylerwillis — Wed, 21 Oct 2009 14:40:22 -0000

Wow, Microsoft just announced something that could lead to them actually doing this: http://kara.allthingsd.com/20091021/exclusive-g...

Re: Blog Stars

tylerwillis — Sat, 17 Oct 2009 20:06:50 -0000

I buy this framework, in my opinion it's best demonstrated by Arrington. He has turned opinion and thought leadership into not just the most popular tech blog, and his community has gotten so large that it has spun off numerous projects: Crunchpad and Crunchbase off the top of my head, but there are many more.

I don't think community synonymous with open-commenting. If your readers are creating value because they are interacting with other reads, then you've unquestionably built a community. So I'd agree with Fred, Godin is a community.

Re: The 'We Need To Own' Baloney

tylerwillis — Thu, 15 Oct 2009 14:41:25 -0000

don't do that, then the other side sees 'em. write them on the inside of your wrist :)

Re: A Marc Andreessen blog archive

tylerwillis — Thu, 15 Oct 2009 14:20:12 -0000

THANK YOU. This has actually been bugging me a lot recently, as I've gone to reference posts of his a few times this month and had not been able to.

Re: 18 Essential Tools for Every Word-of-Mouth Marketer

tylerwillis — Wed, 14 Oct 2009 17:26:04 -0000

Hey Clay -- not sure if you've looked deeply into Facebook tools -- would be happy to give you a tour of the FB Social Marketing Landscape sometime if you like (a long with a demo of our "potentially essential" tool that should be considered) :)

Facebook is starting to have third-party platforms that support social marketing -- but most aren't as well known as the options for twitter (i think because Facebook has their own solutions for some problems, and gets a lot of the story -- whereas Twitter is only about the ecosystem today).

Re: Day 11

tylerwillis — Wed, 14 Oct 2009 01:45:19 -0000

Dustin, this is extremely well-written, what a great character description.

If I met this guy, I would love to ask him the story behind his psuedonym, seems like their might be something interesting behind it.

Re: Why content sites are getting ripped off

tylerwillis — Wed, 14 Oct 2009 01:00:15 -0000

Fred Wilson had a good post on the defense of using both search and display advertising: http://www.avc.com/a_vc/2008/12/display-adverti...

Re: The problem with online “local” businesses

tylerwillis — Tue, 13 Oct 2009 23:41:40 -0000

Hey Chris, I wrote about my take on this for MediaPost after SXSW: http://bit.ly/mpfoursquare

It's a little over half a year old, but still valid in my mind. I still contend that this is the right business model for them (use the badges as promotional incentives that solve the model of "proving" people went to the venue), I'd also note that most small business owners like to ask "how do I know that person wasn't gonna come in here anyway" which could be answered by analyzing user history.

My belief that 4[] has a good market opportunity in front of them doesn't make the argument that local is rife with problems any less valid. If you don't have an innovative approach that is going to solve the problem of acquisition and retention, you should just hand your investors their money back.

Re: The problem with online “local” businesses

tylerwillis — Tue, 13 Oct 2009 23:14:52 -0000

I'm really interested in this space, would love to learn about both urban radar and hungry garden. willis.tyler@gmail.com