I'm in the midst of dissecting the Groupon IPO prospectus. It's a real messy story, of a series of acquistions that created and grew the startup to IPO in less than four years.
My first set of self-generated stats has shown me something remarkable: The 10,000 employees got a very low ownership compared with the founders and early investors.
My analysis so far shows:
- There is only 7 percent of the company reserved for future stock options.
- LinkedIn had 15 percent.
- There is only 4 percent of the company that has been sold to employees via stock options. And the bulk of that was optioned to top executives.
- The value per employee of the 4 percent was (at IPO pricing of $20 per share) $60,000. Mason, the CEO was valued over $1 billion.
- LinkedIn value per employee was $617,000 and the founder CEO Hoffman was valued at $900 million
The gap between the top brass and the workings is stunning, the kind of thing in principal that The 1 Pecent Demonstrators are upset about. I've seen a lot of IPOs in my years, but this wide-gap sharing of ownership is a first-of-its-kind for me in venture capital backed new enteprises. (There may be more to come with Zynga and Facebook. If so, it's a new chapter in the history of modern startups).
Next week I'll have more time to dig into the swamp and learn more. Right now I've got to pack my bag and get ready for flying ithaca, New York to do final exams at Cornell University this week (I always look forward to seeing what cool ideas the students have come up with for their startup plans).
BOTTOM LINE: As founder CEO, give some thought to the gap between you and employees when designing your stock option plan. If you see a gap as large as that of Groupon, expect to be a target for critics and probably employees (who may leave for greener pastures). Planning a fair, competitive and motivating-retaining stock option plan is what serial entrepreneurs do well. It's part of their unfair advantage.
I wish you The Best on your Adventure!