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0 pointstyri_kai_psomi6y ago0 comments

What I don't understand is what is so mind boggling to GP? This is the norm for the vast majority of private companies.

0 comments

I think if you are including coffee shops, dry cleaners, and the rest of small businesses that are self-funded, I agree. If you look at VC backed high tech startups, I don't think that is the norm:

https://www.capshare.com/blog/4-key-insights-from-5000-cap-t...

tyri_kai_psomiOP6y ago

What about non-vc backed high tech startups, which are the by far the majority of tech jobs? (my company, fwiw) We have investors sure, but the two founders retain the control. All of the companies we have acquired were in similar situations. In fact it is precisely not until you get to VC-backed startups where this becomes surprising, such as in the GP comment I was referring to.

If you actually make money, have positive cash flow, and have a sustainable business model, you don't have to give up control. The investors will come to you -- foreign concept to the SV-SF "high tech" bubble, I know.

goatinaboat6y ago

non-vc backed high tech startups, which are the by far the majority of tech jobs?

Citation very much needed. The majority of tech jobs are not at startups of either kind.

1 more reply

throwawayjava6y ago

> high tech

WeWork?

wongarsu6y ago

WeWork presents itself as tech startup and is often presented that way. They are really more a real estate business, but in this context their self perception is the only relevant view

wpietri6y ago

That's not the case. For private companies where the founder has the majority share, sure. But what's unusual with WeWork is how the founder has control despite not having a majority share.

As others mention, there are historical reasons why WeWork got this. But things like WeWork and Uber are going to be the new historical reasons why founders don't get that as much.

kelnos6y ago

Assuming you mean just tech companies, yes, this is now the norm. But I suspect it's mainly due to backlash over the previous period, where many ignorant investors would oust founders and replace them with "professional managers" who would then either run the company into the ground, or sell it for scraps.

So I completely understand why founders, now given the opportunity, would write these sorts of share class structures into their business. It's definitely gone too far, though. But that's usually what happens.

chrisseaton6y ago

> This is the norm for the vast majority of private companies.

But they're trying to become a public company - that's the point.

kevinmchugh6y ago

That vast majority never goes public or gets close to doing so, right? Those companies aren't worth a billion or more

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