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Valleywag
Venture capital's ancien régime is on the verge of being overturned. We hear Mark Zuckerberg, the founder of Facebook, may have cashed out — before an IPO, before a sale, and before his investors. In the company's recent financing round, insiders believe, he sold about $40 million worth of stock. A tiny portion of his $5 billion stake, but in cash rather than on paper, and "enough that he never has to think about money for the rest of his life," says a person made privy to details of the sale. On the Sand Hill Road of old, this is simply not how things are done.
But Zuckerberg's most important backer, Peter Thiel, does not work on Sand Hill Road. From his offices in San Francisco's Presidio, he's set about changing the rules of how startups get funding and how founders make their fortunes. Through his Founders Fund, he has begun issuing "Series FF" shares to the entrepreneurs he backs, giving them the right to sell shares alongside their companies to new investors. Thiel, who felt unjustly treated as the cofounder of PayPal, wants to let his protégés build companies without worrying about how to make rent.
Old lions like angel investor Ron Conway will probably view this development with outrage. They feel entrepreneurs, with no capital at risk, should not become rich until well after their already wealthy backers get paid, Today's startup generation begs to differ. The IPO market is still a shadow of its former self, and sales to large companies are an unreliable route to wealth — and a sure way to lose control of one's company. Meanwhile, vast pools of private money are waiting to be tapped.
Zuckerberg still owns nearly a third of Facebook . If the rumors are true, even if Facebook flops, the 23 year old would be set for life.
Update: An unimpeachable source says the sale didn't happen. Was I played? Perhaps so. Read my followup on why I think this rumor spread — and what its purveyors may have hoped to accomplish.
Comments
I suppose it's only right that MySpace ushered in Bubble 2.0, and the Facebook IPO will signal it's end.
Wow...
Facebook valuation down round is now imminent.
This doesn't really strike me as shocking, he's doing the smart thing of hedging his bets. If I were him I would have sold much more, considering social networks have notoriously short life-spans, Beacon was his great plan for world domination, and he was so disappointed that Microsoft took control of their ad inventory.
Mark's in the money. Jeez buddy, you could buy me for 0.01% of that (+ a place to plug in my hot rollers) . I could be your Lucy- Mark (Hell I've got a foot on her height wise, and I can grow facial hair.
Bargain ?!? Ummm YUP!
On second thoughts... Scrap that, I mean listen to me, I'm like a gay version of Julia Allison. Ironically, there's even a point I won't go to.
Would be surprised if all of this tied into something coming out about Zuckerberg in the future.
i would have cashed out 100% when Yahoo came calling to the tune of $750,000,000
Good move on his part. No one ever looks smart by overplaying their hand.
Love it. No reason for Mark to continue living like a college student when he's sitting on top of a $15B company. This is a great precedent for founder/investor expectations going forward. All smart founding teams will be pushing for Thiel-style FF shares.
Hey everyone needs to spend money here and then.. Whats wrong with him cashing out?
The only thing stopping this from happening more is the VC's that tend to try to dominate the board and prevent CEO's from selling stock.
So does he now start buying real shoes or get rhinestone-encrusted sandals?
Smart kid. Now he can make proper business decisions without having the psychological factor of remorse or regret of cashing out weighing him down.
not surprising, altho you would think this strategy would have made more sense 1-2 rounds ago... the risk was much higher for mark (as an individual) to pass up a decent acquisition offer and keep swinging for the fences. at this point, it's more gravy than motivational.
still, smart move & not undeserved / not a big deal.
What's wrong with Zuckerberg cashing out? The message it sends to Facebook employees and investors. They are the ones working the long hours or putting up the cash to make Facebook a player, but they don't even have real stock to sell and their CEO is already making millions. The message: I'm getting out while I can and too bad for the rest of you. If Facebook employees have any cojones there would be hell to pay at 9am Monday morning. I know today's employees are scared shitless of their employers but it seems to me that Facebookers have nothing left to lose-- their boss has already thrown in the towel. And there's so much employees can do to put management against the wall to get themselves a better deal. So yeah, great for Zuckerberg... bad for business. Money is not the only factor in the equation!
Please note: An unimpeachable source now tells me the rumor's untrue. Here's my theory on why it spread in the first place.
VC money should be funding the company's operations not stuff like this.
It is a smart move on his part though. He'll have some cash when the place is worth next to nothing in a couple of years.
Nick Denton, who still claims he's the world's greatest investigative journalist even though he twice incorrectly identified Fake Steve and swore both times he had me dead to rights, is determined to make a go of this Valleywag gossip blog.
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