I honestly suspect not too many. A majority of the money that people will earn will just offset the difference in salary between Snap and larger more established companies that give out liquid RSUs - like Google. Plus Snap significantly backweights their equity. So the people who can cash out on all of their equity are a small percentage of the 2k employees (since it's still such a young company) and most employees probably haven't vested the full 4 years.
Still, the IPO will have an impact on the local economy - but probably not as much as is being purported.
Maybe someone with more experience in large financial liquidity events like this can chime in?
I saw GitHub’s valuation move from sub-$10M to more than $2B; beyond that, GitHub is turning a decade old this year. Traditionally, this would be a great point where lots of little companies get spun off from this created wealth, and employees and former employees would be able to help with that.
In reality, I can probably count on one hand the number of people from GitHub who are in a financial position to become true angels. This is far from a problem unique to GitHub; the entire industry is concentrating its cash in a select few.
https://zachholman.com/posts/slow-exits
HN discussion: https://news.ycombinator.com/item?id=13655855
Snap is not a slow exit. It may or may not produce a bunch of millionaires but it's definitely not what Holman was complaining about. In fact he would probably praise them for going public ASAP, like the old days.
>"A majority of the money that people will earn will just offset the difference in salary between Snap and larger more established companies that give out liquid RSUs - like Google."
I agree with you though, its not even just the full 4 year vesting schedule either because there's usually a 1 year cliff before the 1st year of vesting begins. And then of course for worker bees there's a 6 month lockup period where they can't sell while the fat cats are getting rich by selling on the day it opens.
If someone is good enough to get a $1mm stock option package at Snap, then if you divide that by the 4 years that it takes to vest, the difference between taking a job at Snap and pulling in a big Google compensation package isn't too far off.
$1mm/4 = $250k per year - $Tax = something that RSUs at Google could have accomplished with far less risk.
The real life changing amounts of money are going to very few people in the org.
How many people out of the 2000 have 0.02% of the company after its dilution? Maybe 150--200?
A 20B+ exit (assuming that's where it ends up) is a pretty phenomenal success. That's 2 million bucks (well above your target) per basis point. A pretty huge chunk of the org in traditionally highly compensated roles (product, design engineering, and kind of management roll, etc) will do very well.
You are underestimating how big of a success this is (again assuming that the IPO goes well) for Snapchat stockholders.
Evan and Rob took some money off the table in earlier rounds I believe.
This IPO is going to wipe out the unicorn bubble. The valuations for this company are utterly delusional.
It's being pumped on all the investment forums by people who seem to honestly believe that the embarrassingly dorky Spectacles are going to be the next iPhone, even though investors seem to be the only people who have even heard of the thing.
This IPO is going to tank.
Why do you think it's overvalued? And pets.com was in a fundamentally different situation. So fundamentally different that you might as well compare it to Enron.
I think that you are overestimating the speed at which the stock market corrects itself esp when it comes to tech. Look at Twitter. It's technically dying but it wasn't a fast death.
If we compare Snap to Ford (bear with me), we're looking at 40% the market cap (20bil vs 50bil) and .3% the revenues (400mil vs. 150bil).
Snap is definitely a valuable company with a lot of future prospects, but is it worth 20bil? Tech companies are extremely young animals and their valuations have yet to reach the accuracy of more established industries. This looks like a classic case of FOMA from investors.
The correction, in theory, should be faster this time around as we've already gained insights from Twitter.
Pets.com was insanity. It IPOed 15 months after it was founded and had no fundamentals of any kind. Snap is 6 years old and has hundreds of millions of retained users.
From the wikipedia page for Pets.com:
Despite its success in building brand recognition, it was uncertain whether a substantial market niche existed for Pets.com.[5] No independent market research preceded the launch of Pets.com.[5] During its first fiscal year (February to September 1999) Pets.com earned revenues of $619,000, yet spent $11.8 million on advertising.[5] Pets.com lacked a workable business plan and lost money on nearly every sale because, even before the cost of advertising, it was selling merchandise for approximately one-third the price it paid to obtain the products.[5]
> Snap is 6 years old and has hundreds of millions of users.
When you say fundamentals, that usually goes hand in hand with a business model that will promote profitability, which Snap has been unable to prove.
EDIT: They incurred a net loss of $514.6 million ending 2016. That is not a sound business.
Why has no community adequately planned for this sort of tech boom? Looks like the tragedy of the Bay Area housing crisis is going to replay itself, again and again. Seattle and Austin have already faced similar challenges.
I think current renters have reasons to want price pressure to stay down as much as new ones.
What community would spend time preparing for someone, literally overnight, to have more wealth and leverage than your entire community as a whole?
For comparison, that's 5x the size of Valve, and around 2x the size of Riot Games. Snapchat is doing nowhere near the amount of work being done at either Valve or Riot, as far as I can tell at least. So is this just a case of "growing because we have money", or is there in fact a legitimate reason behind such a large workforce?
Also, I don't think the comparison to Riot, Valve or any other game developer is useful. I am sure Snap is tackling plenty of knotty technical challenges, not the least of which is their forthcoming Spectacles. Also increased complexity != increase in headcount. If I had to guess, I would surmise that Snap employs a lot of people in ad sales and far more in customer service/messaging than any developer.
