[HN Gopher] Gumroad raises $5M from Crowd SAFE in first 24 hours
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       Gumroad raises $5M from Crowd SAFE in first 24 hours
        
       Author : fastball
       Score  : 95 points
       Date   : 2021-03-16 05:39 UTC (17 hours ago)
        
 (HTM) web link (republic.co)
 (TXT) w3m dump (republic.co)
        
       | kgwgk wrote:
       | https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_sa...
       | 
       | "A SAFE ("Simple Agreement for Future Equity") is very different
       | from traditional common stock and it is important to understand
       | these differences in order to make an informed investment
       | decision that is right for you.
       | 
       | "A SAFE is an agreement between you, the investor, and the
       | company in which the company generally promises to give you a
       | future equity stake in the company if certain trigger events
       | occur. Not all SAFEs are the same and the very important terms
       | governing when you may get the future equity may vary across the
       | SAFEs being offered in different crowdfunding offerings. Despite
       | its name, a SAFE may not be "simple" or "safe."
        
       | smalter wrote:
       | a plug: we did a research report on gumroad's financials to give
       | potential investors a deeper look at the company:
       | https://sacra.com/research/gumroad-android-creator-economy/
       | 
       | here are 3 key points:
       | 
       | 1. gumroad experienced major covid tailwinds. whereas the
       | company's five-year compound annual growth rate is 37%, it grow
       | 94% from 2019 to 2020. they've been profitable since 2017.
       | 
       | 2. gumroad's core customer base is creators making less than
       | $10k/yr. gumroad is best positioned as an entry point for novice
       | creators to start selling quickly and easily online. as creators
       | cross the $10k/yr threshold, they become a churn risk because
       | all-in-one products like kajabi and podia offer a more fully-
       | featured product at the same price.
       | 
       | 3. at the campaign's $100m pre-money valuation, gumroad will need
       | to grow 40% yoy for 10 years to return double digit IRR.
       | 
       | check out our report for a full breakdown of financials,
       | competition and more: https://sacra.com/research/gumroad-android-
       | creator-economy/
        
         | eigenvalue wrote:
         | Sounds like a terrible investment at a $100mm valuation.
         | Probably worth closer to $35mm or $40mm tops.
        
       | ketamine__ wrote:
       | Is it just me or are most of the crowd funding opportunities
       | horrible? Valuations too high, terms suck, company sucks.
        
         | vmception wrote:
         | Not just you, I've wasted a lot of time with founding teams
         | that don't have access to venture capital due to lack of
         | network, they so often also have a lack of awareness on what a
         | good deal looks like, opting for completely arbitrary
         | sweeteners that just make them look desparate and further
         | uninvestible.
         | 
         | Hope the deal flow improves.
        
       | andygcook wrote:
       | The investment is being done on a SAFE with a $100M valuation
       | cap, not a $100M valuation with equity grants. That means
       | theoretically Gumroad could never have a qualifying event by
       | selling, going public, or raising a properly priced round by
       | accredited investors. And therefore, investors never get an ROI.
       | Dividends also require actual equity, not promissory notes. I'd
       | imagine even if all investors did convert, paying dividends would
       | be a non-starter given their company size and the number of
       | investors.
       | 
       | Using a SEAL or the Indie.VC V3 terms seems more inline with how
       | they want to run the company because it includes an instrument
       | for investors to get an ROI with a payback clause if you choose
       | never to sell.
       | 
       | I'd imagine there will be almost no pressure to sell because to
       | my knowledge, no past employees or current contractors have
       | equity, nor do they have outside institutional investors that
       | want a return for LPs. I'd be curious to hear what the board
       | structure is for oversight as well around important topics like
       | salary comp, potential acquisitions, etc. There isn't much
       | stopping the founder or a group of people from pulling out all
       | the profits for themselves or just paying outsized salaries.
       | 
       | Anyways, not dunking on it and just stating how some of the
       | structures work from what I understand. The Gumroad story is an
       | interesting one and I appreciate how they publicly share the
       | experiments about how they're running too. Will be interesting to
       | follow over the years.
       | 
       | [edit: grammar]
        
         | luckylion wrote:
         | The $1000 maximum investment will probably mean that it won't
         | be professional investors, but individuals who will likely not
         | understand the risk and the potential for misuse. Nicely sized
         | to fit into the stimulus check.
        
           | duxup wrote:
           | I'm concerned about the risk there as well, but I feel like
           | you can spin that both ways. There's a weird intersection
           | with opening investment to anyone and concerns about folks
           | making ill informed choices.
        
             | luckylion wrote:
             | That's true, but I think something like SAFE is very
             | different from crowdfunding for equity (and much more risky
             | and misnamed, it can be neither simple nor safe).
             | 
             | That intersection you mention will be an interesting place
             | in the time to come. I don't think we've found the sweet
             | spot between "only professionals can invest", "the retail
             | investors take on huge risks and aren't aware because of
             | wild models with strange names" and "the company can't
             | raise medium amounts because the regulation surrounding the
             | process would cost much more than they would get", but I'm
             | sure somebody is working on it.
        
             | nrmitchi wrote:
             | I think there's a difference between "open investing for
             | equity", and "open investing for a thing that one day may
             | turn in to equity given a certain set of events".
             | 
             | The majority of people will assume that "start up
             | investing" or "equity crowdfunding" (or whatever you want
             | to call it) is like the stock market, but on a smaller
             | scale. You invest money, and you get shares in the company.
             | 
             | I don't think the concern is around folks making ill
             | informed choices (Robinhood has shown us that that can
             | happen in the public markets as well), but more around
             | start-up companies taking advantage of the lack of
             | sophistication by the every-day investor in order to push
             | horrendous terms.
        
               | duxup wrote:
               | I wonder how it would be possible to ... make someone
               | know enough to make an informed choice and still allow
               | more opportunities to invest.
               | 
               | I like the idea of opening things up more like this but
               | worry that actual scams could be a problem.
               | 
               | It's not investing but similar to kickstarter and etc
               | problems.
        
               | nrmitchi wrote:
               | Probably by keeping the crowdfunding part, but with
               | reglation around the terms that have to be offered, and
               | actions you're allowed to take after equity crowdfunding.
               | But it's a pretty complex problem.
        
         | PragmaticPulp wrote:
         | > Using a SEAL or the Indie.VC V3 terms seems more inline with
         | how they want to run the company because it includes an
         | instrument for investors to get an ROI with a payback clause if
         | you choose never to sell.
         | 
         | My thoughts as well, though apparently it was unnecessary as
         | they filled the round in 24 hours despite the relatively
         | unfavorable terms for investors.
         | 
         | > I'd imagine there will be almost no pressure to sell because
         | to my knowledge, no past employees or current contractors have
         | equity, nor do they have outside institutional investors that
         | want a return for LPs
         | 
         | They did wipe out early employee equity, but this funding round
         | does have $1mm of institutional VC investment leading it.
         | That's a curiously small number given the high valuation
         | (effectively 1%) so I wonder if the VCs were more interested in
         | leading the first big public startup investing round than the
         | company itself. This raise is all over headlines today.
        
           | nrmitchi wrote:
           | > despite the relatively unfavorable terms for investors
           | 
           | This is a concern that I have around equity crowdfunding in
           | general, and I hope this situation doesn't go poorly and ruin
           | it for everyone.
           | 
           | The terms as described here are eerily reminiscent of the
           | Toptal story, where at the time many defending Toptal saying
           | "VCs should have known better". Does that same defense apply
           | to a group of individual investors who were (apparently)
           | limited to a maximum 1k check size?
           | 
           | There was a lot of hype around this investment, which
           | convinced a ton of people to try to get in on it, but I'm
           | legitimately worried that the masses don't understand the
           | actual terms of the round
        
       | tinyhouse wrote:
       | What do investors get? First time I hear about this site
       | Republic.
        
         | vmception wrote:
         | they get something slightly above what all your local
         | restuarants asked for on gofundme when they boosted your email
         | from the square point of sale system:
         | 
         | something close to non-dilutive financing and still hilariously
         | opportunistic
        
         | smalter wrote:
         | the instrument is called a crowd SAFE:
         | https://republic.co/learn/investors/crowdsafe
         | 
         | republic is an angellist spinoff: https://republic.co/help/how-
         | is-republic-part-of-a-family-of...
        
           | tinyhouse wrote:
           | Thanks, that's cool. I see Gumroad capped investments to
           | $1000 once they saw the demand. That's not that interesting.
           | It's great to have the opportunity to invest in private
           | companies. I will keep an eye on it.
        
       | greenie_beans wrote:
       | Whew, love some good HN cynicism this early in the morning!
       | Usually means there is something good.
        
       | rollover wrote:
       | This company is a disaster. They are even too stupid to
       | understand the concept of account deletion. "How to delete your
       | Gumroad account: From your Advanced Settings page, scroll to the
       | bottom of the page, then click Delete your Gumroad account? After
       | you've deleted your account, if you try to log back in, Gumroad
       | will make your account "live" once again. Therefore, if you
       | really want to delete your account, click Delete your Gumroad
       | account? and don't log in again. Just... just go." WTF? That's
       | not DELETION, that's SCAM and a GDPR violation.
       | https://help.gumroad.com/article/37-how-to-delete-your-gumro...
        
         | thecleaner wrote:
         | How is this stupid ? Facebook does the same thing.
        
           | giarc wrote:
           | Just because Facebook does it, does not make it right.
        
           | rollover wrote:
           | If you delete an account, the account must be gone. No login
           | possible anymore. Otherwise it's not deletion.
        
       | Zealotux wrote:
       | Gumroad is such a great model of company in my opinion:
       | https://sahillavingia.com/work
       | 
       | HN dicussion back then:
       | https://news.ycombinator.com/item?id=25673275
        
       | Gelob wrote:
       | I'm just waiting for youtube-dl to support gumroad
       | https://github.com/ytdl-org/youtube-dl/issues/26874
        
       | santiagobasulto wrote:
       | There was a pretty incendiary flame war on Twitter about this:
       | https://twitter.com/nathanbarry/status/1371549184701067265
        
         | paulgb wrote:
         | My only relationship to any of this is as a gumroad customer
         | but this seems like a cheap shot? Nathan alleges mismanagement
         | but doesn't go into details as far as I can tell.
         | 
         | To me the story seems to be that investors were ready to leave
         | gumroad for dead, Sahil made some hard decisions and managed a
         | very unlikely comeback.
        
         | duxup wrote:
         | What's up with the references to 'tanking' and 'mismanagement'?
         | 
         | It's like the worst of twitter right there, just a bunch of
         | tweet / word salad and accusations without anything to explain
         | what any of that is / back up the meat of the accusations ...
        
         | kjakm wrote:
         | Something I didn't realise until a while after reading this was
         | that the author of the tweets was previously a large Gumroad
         | customer + now runs a competing business (ConvertKit Commerce).
         | I believe the events he's talking about are also very public (I
         | think the Gumroad founder wrote a blog post about it that was
         | on HN not that long ago).
        
           | dharmon wrote:
           | Worse than feeling overly cynical is then having your
           | cynicism validated.
           | 
           | I recognized this guy's name, so skimming over the twitter
           | thread my cynical thought was "I bet ConvertKit is working on
           | a Gumroad competitor", and sure enough, they already have
           | one.
        
             | joshmanders wrote:
             | Him being a competitor really doesn't change the shitty
             | things Shl did.
        
               | duxup wrote:
               | >the shitty things Shl did.
               | 
               | What? I asked earlier about 'mismanagement' and other
               | accusations but nobody defines this stuff.
        
               | joshmanders wrote:
               | Good job downvoting instead of doing some self research.
               | It's not hard to find stuff.
               | 
               | The stuff Nathan talks about isn't even the worst. He
               | never mentions Shl's attempt to monetize racial injustice
               | and then telling a black woman she doesn't qualify for
               | the promotion because her skin isn't dark enough, then
               | blocking everyone who says what he did/said was not cool,
               | and instead of acknowledging and fixing his fuckups, he
               | just goes silent until the uproar dies down and then goes
               | on with business.
        
               | duxup wrote:
               | >It's not hard to find stuff.
               | 
               | What stuff?
               | 
               | The rest of your post sounds like some personal conflict
               | about some unrelated topic.... it's about racial
               | injustice now?
               | 
               | Are you saying the dude who posted that twitter thread is
               | concerned about that?
        
               | joshmanders wrote:
               | I'm saying Shl is a shitty person and screwing the
               | original creators of Gumroad out of their equity is just
               | a drop in the bucket for the shitty things he's done, and
               | Nathan creating ConvertKit Commerce in direct competition
               | with Gumroad doesn't negate the things Nathan brings up,
               | and other people have brought up in light of Shl taking
               | peoples money for nothing in return.
               | 
               | People are too quick to just ignore things people point
               | out because _gasp_ he has a competing project!!!
        
               | vmception wrote:
               | So neither you or Nathan have posted what you would like
               | to happen and why.
               | 
               | What is that? Rebrand Gumroad instead? A lower valuation?
               | Different kind of security issued with more rights? Shi
               | should be shut out from the capital markets and corporate
               | sphere forever? PSA to investors who have already 100%
               | subscribed the max raise?
               | 
               | I'm just grasping, what do you guys want to happen?
        
               | joshmanders wrote:
               | Why do we have to want something like that to happen? Why
               | can't we just be like "Hey, just so you know, this stuff
               | happened. Make sure you're not being duped into investing
               | in Gumroad without knowing who you're investing in."
               | Especially considering the terms on Republic not
               | favorable at all for investors.
        
               | vmception wrote:
               | okay, I can see that. yeah its quite rhetorical and open
               | ended, and the sale is already closed.
        
         | gadders wrote:
         | I think Nathan has put a slightly negative spin on what
         | happened to Gumroad- maybe implying that it was intended all
         | along - but he does have a bit of a point.
        
           | duxup wrote:
           | >he does have a bit of a point
           | 
           | Whats the point? Really though, I'm having trouble figuring
           | it out.
        
             | gadders wrote:
             | That Gumroad states it is "for creators" but the original
             | Gumroad creators will not benefit from the new funding
             | round.
        
               | duxup wrote:
               | IIRC 'creators' as far as Grumroad's tagline is concerned
               | are their customers.
        
               | gadders wrote:
               | Yes, understood, but I guess Nathan Barry's point would
               | be why treat your company co-creators differently than
               | your customer-creators.
        
               | duxup wrote:
               | Call me crazy but I think the deal between the two is
               | dramatically different up front, even what everyone does.
               | 
               | End customer's don't have any equity... in the end
               | neither did the employees. That's the same,
               | unfortunately. But they're the same that way.
               | 
               | I think those are two dramatically different deals you're
               | making with people, pretending they should be the same
               | seems oblivious to the actual relationships.
        
             | ceilingcorner wrote:
             | Read the top comment on this article.
        
       | PragmaticPulp wrote:
       | Gumroad is an interesting cautionary tale for employee equity
       | compensation.
       | 
       | The company was declared to have failed several years ago.
       | Employees were laid off and the investors released the IP (built
       | by the early employees) to the founder as a token of goodwill.
       | Presumably, they thought he might use it to start a new company.
       | Story here: https://www.businessinsider.com/startup-failure-
       | gumroad-why-...
       | 
       | However, he continued running the company with new part-time
       | employees, minus original investors and minus the early employees
       | who built the company. Apparently the company succeeded enough
       | that it's now worth $100 million. Early employees who built the
       | original site presumably don't have equity because they were laid
       | off and their options expired worthless as they were told the
       | company had failed.
       | 
       | On one hand, it's great to see a founder persevere and rise from
       | the ashes. On the other hand, watching the early employees lose
       | out on their equity because they were told the company was a
       | failure is not cool.
       | 
       | I've made some money from startup options through my career so I
       | won't agree that they're worthless as often claimed. However,
       | this is a good reminder that the game is very stacked against the
       | employees.
        
         | duxup wrote:
         | I like the idea that a startup that fails to be a unicorn can
         | still be something. The alternative are these companies vanish
         | because they're not worth an enormous amount in a short time..
         | 
         | I'd argue the first issue is not being more direct / everyone
         | understanding what it means to be an employee at a start up as
         | it is equity wise.
         | 
         | I'm not sure some token Grumroad tidbits thrown old employees
         | way really would change much / I'd argue obligations like that
         | would complicate any such resurrections.
        
           | PragmaticPulp wrote:
           | > I like the idea that a startup that fails to be a unicorn
           | can still be something.
           | 
           | The problem isn't that the company failed to be a unicorn.
           | The problem is that the company was declared to be worthless
           | and was given away to the founder (but not employees who
           | built it), but it obviously wasn't worthless as it's
           | currently valued at $100 million. Early employee equity was
           | wiped out in the process.
           | 
           | The point is that you can work for a $100mm company, build
           | the foundation of a $100mm company, yet walk away with
           | nothing because the investors and founders can play games
           | with your equity. Unlikely to happen again given how this
           | played out. However it must hurt to be an early Gumroad
           | employee doing the math on what their equity would have been
           | worth today after being told the company was worthless.
        
             | virgilp wrote:
             | > but it obviously wasn't worthless
             | 
             | I disagree, there's nothing obvious about it. On the
             | contrary, I argue that it _WAS_ worthless (in the same vein
             | that  "ideas are worthless" - not that they lack anything
             | of value, but that without sustained effort & dedication to
             | extract said value, they're really not worth much).
             | 
             | Also, it's entirely possible that the value of the company
             | was actually _negative_ for the investors. Happens with
             | other stuff too - sometimes you throw out junk that others
             | recondition & sell for large sums of money. Were you
             | tricked by those who resold your junk?
        
               | PragmaticPulp wrote:
               | > On the contrary, I argue that it WAS worthless
               | 
               | The founder continued running the company with part time
               | contractors and blogged about their profitability. It
               | wasn't worthless.
        
               | virgilp wrote:
               | The founder might've earned more at a FAANG or different
               | companies, just like the other early employees presumably
               | did. He didn't contact the investors to buy them out for
               | $1 - the investors did, because the tax cut was worth
               | more to them by that point.
        
             | ROARosen wrote:
             | The alternative was to close down the company completely,
             | I'm not sure how that would help the employees equity.
             | 
             | Besides, options are by nature expiratory unless certain
             | milestones are reached, which obviously wasn't the case.
             | And if the employees did have real equity there is no way
             | the founder could have gotten that without their consent.
        
               | PragmaticPulp wrote:
               | > The alternative was to close down the company
               | completely
               | 
               | No, the alternative was to give the IP and equity
               | ownership proportionally to the employees, not 100% to
               | the founder.
               | 
               | Instead, they gave it all to the founder and none to the
               | employees who built the IP (as far as I can tell from
               | public documents).
               | 
               | Employees were told they received nothing because their
               | work was useless. Apparently it wasn't so useless.
        
               | duxup wrote:
               | I'm a little confused about how this works in a sort of
               | mechanical function.
               | 
               | At the time it was deemed worthless or whatever term we
               | want to call it, the owners were the initial investors.
               | They sold it (well some of them) back to the initial
               | founder.
               | 
               | It's their ownership to sell....
               | 
               | I go back to my point that we need to be honest about
               | what the equity and rights of individual contributors
               | really IS more than some ephemeral expectation that
               | someone should get equity ... after most everyone has
               | given up... or after others work to resurrect it.
        
               | itronitron wrote:
               | Dropping the price to exercise the options to zero
               | dollars seems like it would be an equitable solution. If
               | the company is really worth nothing then why should an
               | option to buy a share of the company cost more than that?
        
               | duxup wrote:
               | >If the company is really worth nothing
               | 
               | I'm not sure I understand why that would be or why that
               | would even come up if you were investing in 'worth
               | nothing'.
        
               | p0ckets wrote:
               | Do we know for a fact that the investors sold the equity
               | back to the founder and not the company (like a stock
               | buyback)? The investors just wanted to get out, so
               | tracking down former employees, deciding how much equity
               | each one deserves, and selling them equity probably isn't
               | what they want to spend time doing. So the only real
               | options would be selling to the company, or to the
               | founder.
        
         | whack wrote:
         | > _However, he continued running the company with new part-time
         | employees, minus original investors and minus the early
         | employees who built the company. Apparently the company
         | succeeded enough that it 's now worth $100 million. Early
         | employees who built the original site presumably don't have
         | equity because they were laid off and their options expired
         | worthless as they were told the company had failed._
         | 
         | Let me start off by saying that I think most startup
         | compensation is downright bad for employees, compared to FANG
         | alternatives. I would like to be a startup founder one day, but
         | I realistically can't see myself as a startup employee.
         | 
         | That said, I don't think Gumroad did anything morally wrong
         | here. The layoffs were absolutely necessary, because the
         | company would have gone bankrupt without them. But it's false
         | to say that this caused employees to have no equity. Even if
         | you get laid off as a startup employee, you can still choose to
         | exercise your options and hold on to the company's equity, if
         | you think that they will eventually be worth $100M. No one
         | misled the employees about the company's future. They saw that
         | the investors were pulling out. They saw that the engineering
         | team was getting shredded. And they made the very reasonable
         | assessment that the company's equity isn't worth the cost of
         | exercising their options.
         | 
         | Blaming Gumroad for employees not having equity, is like
         | blaming AMD for their previous employees selling off their
         | stock during their near-bankruptcy days. Any company can and
         | will go through dramatic reversals of fortune. And whenever
         | there's such a turnaround, there is bound to be people who
         | missed out on the upside, because they didn't continue holding
         | through the dark times.
        
           | adamhp wrote:
           | I've seen similar sentiment being repeated about Sahil, even
           | by other successful founders like Nathan Berry.
           | 
           | It is a bit unfair to look at everything in hindsight and
           | assume Sahil acted maliciously. He did what he could to scrap
           | together the resources to save a failing company. It's not
           | like he ran some sort of shell game to rob the original
           | contributors of their equity. People always view the past in
           | this way and it is incredibly biased. You have to go back and
           | step forward in time with each piece of information as it was
           | available, and at the time it appeared the company was surely
           | _going to fail_.
           | 
           | In any case, I'd be curious to hear from some of the original
           | contributors as to how they felt they were treated or how
           | Sahil behaved.
        
             | PragmaticPulp wrote:
             | Frankly, the investors who set the initial valuation
             | (presumably used to set the strike price of the employee
             | options) and later the $0 valuation (rendering the options
             | worthless) and then giving away the IP that they declared
             | worthless (despite the company not fundamentally changing)
             | deserve a lot of the scrutiny.
             | 
             | If the company had simply been left to make their own
             | choices like laying off the employees and buying out
             | investors, this would have been a different story.
        
               | jonfromsf wrote:
               | I mean strike prices are usually unrealistically LOW, as
               | low as they can be without being fraud. There's a whole
               | industry of 409a valuations that is used to legally say
               | "we're selling preferred stock to investors as a 50MM
               | valuation, but the common stock which represents 80% of
               | the company is only worth 2MM". Founders want strike
               | prices to be low because options are free compensation to
               | employees.
               | 
               | The issue is the out-going employees thought that a stake
               | in the business was literally worthless, which turned out
               | not to be true. Very similar to the Blogger story
               | actually.
        
               | [deleted]
        
         | vmception wrote:
         | The employees didn't pay for their options because the options
         | were "out of the money" and the employees had various
         | confirmations that the shares would not be worth anything, but
         | they still had the choice to.
         | 
         | Yeah I guess cautionary tale is the good word here.
         | 
         | > watching the early employees lose out on their equity because
         | they were told the company was a failure is not cool
         | 
         | eh, they had the choice, this isn't a story of the share class
         | changing or the entity being changed, and you had to write
         | presumably because you don't know and are relying on the
         | financial unsophistication of many tech employees
         | 
         | can be a tough choice to both earn below market salary and then
         | be expected to use that income to buy your shares. sadly this
         | is due to various tax law changes over the last few decades.
         | 
         | but yeah this isn't "egregious enough" for me to garner
         | anything from it.
         | 
         | its a case study about how much you can do with contractors and
         | that you don't need venture capital or the employee structure
         | if you know what you actually want to build
        
           | PragmaticPulp wrote:
           | > The employees didn't pay for their options because the
           | options were "out of the money" and the employees had various
           | confirmations that the shares would not be worth anything,
           | but they still had the choice to.
           | 
           | That's a side effect of the problem, not the cause of the
           | problem.
           | 
           | Why did the employee options expire worthless? Because they
           | were issued at one valuation, then the investors changed the
           | valuation to $0. Yet the company and technology didn't
           | change. In fact, it kept operating with the same brand, same
           | customers, and website.
           | 
           | The investors and founder both dipped the valuation to zero
           | because it was in their best personal interests, dropping
           | employees with options in the process.
           | 
           | That's why I framed this as a cautionary tale for employees
           | looking to help startups. This wouldn't have been a big deal
           | if the company simply went through the normal failure process
           | where the IP was sold on the open market in the normal
           | process. Even if the founder had bought the company IP back
           | for $1 if no one else wanted it, that would have at least
           | persevered some appearance of fairness.
        
             | vmception wrote:
             | I see, thats strange, do we know who the investors were? I
             | didn't look at Crunchbase or anything yet
             | 
             | Just an odd thing to agree to, if the IP had value and
             | there were no creditors but the prospects were bad then
             | this was improper.
             | 
             | If there were creditors, what happened to them?
        
         | haltingproblem wrote:
         | Disclosure - I don't know Sahil and have never had any
         | interaction with him or Gumroad except as an ocassional Gumroad
         | customer.
         | 
         | I find this take to be disingenuous at best and outright
         | misinformed at worst. Sahil has been very public with what
         | happened [1]. Gumroad turned out to be a lifestyle business and
         | not a VC funded boom or bust rocket.
         | 
         | He could have easily shut down Gumroad and gone on to bigger
         | and better things. He persevered and today Gumroad has risen
         | from the ashes and creators are better off for it. Kudos to him
         | and his motley crew. He has extensively blogged about it and
         | been public about Gumroad's finances. Maybe one day Gumroad
         | will be worth $1B but it is a long road ahead and I wish the
         | new investors the best.
         | 
         | Back to Sahil's actions, unless you have actual instances of
         | wrongdoing by him, I feel you are just flinging innuendo.
         | 
         | [1] https://sahillavingia.com/reflecting
        
         | elnygren wrote:
         | This is why you want stock/equity instead. Everything else is
         | just toilet paper until it becomes stock/equity.
         | 
         | Usually countries have lots of laws and regulations protecting
         | small shareholders, but not really anything to protect people
         | who might become shareholders one day.
         | 
         | I wish companies had easy ways to give out real stock instead
         | of options... it's up to regulators to make this smoother,
         | easier, cheaper.
        
           | jelling wrote:
           | The problem is that the employee would have to pay taxes on
           | the value of the stack at the time it was issued. Given how
           | high valuations can be and still never pan out, giving
           | employees stock directly would cost them significant amounts
           | of money in most cases.
        
             | kirubakaran wrote:
             | RSUs + double trigger gets around this
        
         | jasode wrote:
         | _> , he continued running the company with new part-time
         | employees, _
         | 
         | I think he continued with part-time _contractors_ instead of
         | employees if I read his blog post correctly:
         | https://sahillavingia.com/work
         | 
         |  _> Instead, I found an Indian firm called BigBinary and hired
         | a few engineers as contractors.
         | 
         | >These contractors saved the company. They fixed bugs and
         | maintained the site while I answered support tickets, designed
         | features, and wrote about new initatives._
         | 
         | [I'll delete this post if it's inaccurate]
        
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