BUSINESS BLOGS
BUSINESS BLOGS
category: business
29 Jun 2008

I hate to post my third anti-VC rant in two days… but upon learning that some former Facebook staffers are looking at unloading some of their vested shares at a value of $3-4B (when supposedly Facebook locked in a $15B value earlier this year), it sort of reiterates my whole argument for providing liquidity preferences to founders, and in some exceptional cases, executives and employees, too.  Read more in Bulls Make Money, Bears Make Money, Hogs Get Slaughtered.

Trust me, if you surround yourself with the right talent, cashing in some of your chips definitely does not make you less hungry for success… it just makes you more patient for it.

But, VCs go through their box of deceitful cliches to lock in talent and vest shares rigidly in the hope of retaining hungry employees and luring them into a bigger payoff when all they do is end up looking like jerkoffs.  Oh, look, it rhymes.

But ask yourself how effective it is to invest money in a company and not let anyone take any money off the table, only to realize that some former Facebook staffers (who probably left because Mark Zuckerberg had no desire to sell any time soon) are cashing in their chips for 33 cents on the dollar?  Way to go geniuses.  No wonder your batting average is in the toilet.

SAI and TechCrunch have more on this seemingly unbelievable story.   In the broader landscape, I personally think that Facebook is surely worth something, but $15B?  We all know that was MSFT agreeing to that in order to you-know-what block Google from the deal.  But the reason why Facebook board member Peter Thiel pushed for such a lofty valuation wasn’t just greed to push up his investment in the social networking site, but because he knew that the Ponzi scheme effect would also push up the value of his investment in Slide… which is basically valued as a function of Facebook.