I think Marc and Rolfe both have valid points (and highly recommend Rolfe's article). In addition, it's worth noting:
- The disconnect on valuations between Public + Private also relates to data points. We simply get more data points (via stock price trades) in the public markets vs private markets. ZenDesk (Symbol: ZEN) trades 775,000 shares a day. Private company Zenefits has only raised money once in the past 15 months. The reaction in private market valuations won't be immediate.
- Founders + VCs are getting what they want in private "Unicorn" financings, but employees are not. Consider:
- Founders get: the "Unicorn" status symbol + marketing (Mostly to hire top talent)
- VCs get: liquidity preference and other protective provisions for their investment (board seats, first-money-out, anti-dilution)
- Employees get: subordinated on the cap table, and have to wait longer for liquidity
There needs to be more education in the space for current/former employees on what this all means for them:
- If companies do eventually go public, then employees will (probably) do well
- If companies do well and get sold, then employees will (probably) do well
- If companies don't do well and get sold, then employees will *not* be okay (Good Technology, for example)
And as an extension of the need for more employee education, there ought to be more education for secondary investors in the pre-IPO space, as they'll most often be purchasing common stock from current and former employees (and therefore be subject to the same scenarios in IPOs and acquisitions).
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