Category Archives: Start-up data

Work Rules! by Googler Laszlo Bock

I had been advised many times to read Work Rules! with Subtitle “Insights from inside Google that will transform how you live and lead”, yes, another book about Google but not just another.

I just began reading it and the first pages are revealing: a company success is linked to its culture, and its culture comes from its founders. So Bock talks about Page and Brin early life. He refers to three portraits, Larry Page: Google should be like a family by Adma Lashinsky, Fortune, 2012; Larry Page’s University of Michigan Commencement Address in 2009; and The Story of Sergey Brin by Mark Malseed, Moment, 2007. Let me extract a few little things:

My father’s father worked in the Chevy plant in Flint, Michigan. He was an assembly line worker. He drove his two children here to Ann Arbor, and told them: That is where you’re going to go to college. Both his kids did graduate from Michigan. That was the American dream. His daughter, Beverly, is with us today. My Grandpa used to carry an “Alley Oop” hammer – a heavy iron pipe with a hunk of lead melted on the end. The workers made them during the sit-down strikes to protect themselves. When I was growing up, we used that hammer whenever we needed to pound a stake or something into the ground. It is wonderful that most people don’t need to carry a heavy blunt object for protection anymore. But just in case, I have it here.

It is said that the future of any nation can be determined by the care and preparation given to its youth. If all the youths of America were as fortunate in securing an education as we have been, then the future of the United States would be even more bright than it is today.

And about Brin entrepreneurship skills or unique personality: The Brins’ story provides me with a clue to the origins of Sergey’s entrepreneurial instincts. His parents, academics through and through, deny any role in forming their son’s considerable business acumen — “He did not learn it from us, absolutely not our area,” Michael says. Yet Sergey’s willingness to take risks, his sense of whom to trust and ask for help, his vision to see something better and the conviction to go after it — these traits are evident in much of what Michael Brin did in circumventing the system and working twice as hard as others to earn his doctorate, then leave the Soviet Union.

“I do somewhat feel like a minority,” he says. “Being Jewish, especially in Russia, is one aspect of that. Then, being an immigrant in the U.S. And then, since I was significantly ahead in math in school, being the youngest one in a class. I never felt like a part of the majority. So I think that is part of the Jewish heritage in a way.” Today, of course, being a young billionaire, he’s again in a class by himself. “I don’t feel comfortable being one of the crowd,” he reflects. “It’s kind of interesting — I really liked the schools that I went to, but I never rooted for the sports teams. I was never one of the crowd supporting something or not. I like to maintain my independence.”

A final note of serendipity in what I just read: The history of Russian Jewish emigration in the mid-1970s can be neatly summarized in a joke from the era: Two Jews are talking in the street, a third walks by and says to them, “I don’t know what you’re talking about but yes, it’s time to get out of here!” Just have a look at my recent post about A History Of Communism Told Through Communist Jokes. Nice coincidence…

Some thoughts about European Tech. IPOs

As some of you may know, I love to crunch data. Among my hobbies are cap. tables of startups which went or at least filed to go public. I have now more than 450 such companies and you can have a look at a recent summary of 400+ such companies in Equity in Startups. In the recent days, I had a look at startups going public on European stock exchanges (Paris, Amsterdam) through their IPO prospectus. What a difference to Nasdaq based S-1 filings! So much less information that it was frustrating to me. Here are the examples of Cellectis, Kalray and Adyen.

I am not sure you will take the time to have a look, but knowing how much founders, employees, investors own in these startups is more complex than Nasdaq-based ones. Just have a look at the difference between Cellectis going public in PAris in 2007 and then in 2015 on Nasdaq.

How can you read who are the people behind all these stuctures in Adyen shareholding?
And why are the past rounds not available more systematically…?

Should you want to have a look at more data, here are the 450+ cap. tables!!

Equity Structure in 450+ Start-ups by Herve Lebret on Scribd

Are Biotechnology Startups Different?

This is a research work I did recently and after trying very shortly to publish it in academic papers, I stopped trying. Maybe it is not good enough. Maybe the research world and I do not fit! It is the result of two series of research I have done for years, one about Stanford-related spin-offs and another about equity in start-ups.

I encourage you to read it if the field is of interest for you or just have a look at the tables below which I extracted from this 5-page short document.

Finally, an explosion of new IPO filings in IT

In the recent years, there had been regular filings in the biotech field, but IT had suffered. then Dropbox and Spotify filed and successfully went public. This probably gave confidence to “unicorns” and many have filed recently such as Smartsheet, DocuSign, Zuora. Carbon Black is the latest one with an interesting history. here is its S-1 filing and below my computed cap. table.

Carbon Black was founded in 2002, has raised close to $200M since inception (not counting the money raised by 4 startups is has acquired, Confer Technologies, Objective Logistics & VisiTrend). It has a royal list of VCs, including Kleiner Perkins, Sequoia, Highland, Atlas or lesser know funds such as .406 or Accomplice. I do not know who the founders were, but I could get the name of Todd Brennan who has left in 2008. Who else, help me! Finally the company is based close to Boston, not in Silicon Valley… This is just the latest of my compilations, that you may find in a previous post Equity in Startups.

Sensirion prepares its IPO

Sensirion finally announces its IPO. The spin-off from ETH Zurich was founded in 1998 and many were expecting such an event from a very succesful but quite discrete company. Sensirion has disclosed some numbers and I had followed the development of the company thanks to some data from the Zurich register of commerce. So as usual here is my guess of the capitalization table. And I look forward to compare it with the data from the IPO prospectus when it will be published…

Felix Mayer and Moritz Lechner, co-founders of Sensirion

Again this is guessing only. As you might see, the early funding rounds are unknown to me. I am not sure about how many shares the founders, main investor and employees have adn I am not sure either at which price the company will be priced. I based my numbers on about twice the company sales in 2017… The company claims Knoch has 55% of the company, the founders 14% and employees 8.5%. It does not look to far…

The Sensirion IPO prospectus is not public and is confidential so I cannot publish more than I have here. I can only write I was not too far from the truth despite some discrepancy…

And Now Spotify

A few days after Dropbox filing for an IPO, here is Spotify. Their F-1 can be found here. The data from the filing document is not exhaustive enough for me, many pas financing rounds are not described but the Luxembourg register of commerce helps too.

Spotify founders Martin Lorentzon and Daniel Ek

Just like for Dropbox, this is a filing only, so the price per share is tentative and the valuation is not fixed yet. The price per share could probably go from €20 to €100…

Rewarding Talent – A guide to stock options for European entrepreneurs by Index Ventures

I recently read an article mentioning a new report by Index Ventures Rémunération du risque : la France s’en sort bien ! and a few days later a student of mine mentioned a new app by Index to help entrepreneurs allocate stock options: Index Ventures Option Plan beta. Thanks Javier! I had a look, tweeted about it and then thought it was worth a blog article…

I advise you to read the full (143-page) report – link here. It includes great information at the macro (national policy) and micro (startup) level. There are minor differences with my past analyses such Equity in Startups published in Sept. 2017 or my recurrent class about Equity Split in Startups which you can find here:

What is particularly interesting, I think, is their summary:

1 European employees own less of the companies they work for than US employees. For late-stage startups, they own around 10%, versus 20% in the US.

2 Ownership levels vary much more in Europe than the US. In Europe, employee ownership in late-stage startups ranges from 4% to 20%. In the US, ownership is more consistent, as stock option allocation is driven by market forces.

3 Employee ownership correlates to how deeply technical a startup is. An AI or enterprise software startup requires more technical know-how than a straightforward e-commerce startup. These employees are more likely to seek stock options.

4 Ownership policy details adopted by startups vary between the US and Europe. For example, provisions for leavers, and accelerated vesting following a change in control.

5 In Europe, stock options are executive-biased. Two-thirds of stock options are allocated to executives, and one third to employees below executive level. In the US, it’s the reverse.

6 European employees still don’t expect stock options much of the time. US employees joining a tech startup with fewer than 100 staff would typically expect stock options straight away. This is much less true in Europe, although expectations are steadily rising.

7 European option holders are often disadvantaged. In much of Europe, employees will be paying a high strike price, and they will be taxed heavily upon exercise as well as sale. Leavers often get nothing.

8 There is wide variation in national policy across Europe, with the UK most supportive of employee ownership. Regulations and tax frameworks are radically different across Europe. The UK’s EMI scheme is most favourable, better than what is available in the US, and France is also good. Other countries, including Germany, lag behind in our opinion.

The top US and European (former) start-ups in 2017

Since I published my book in 2007, I have regularly been doing the exercise of comparing the largest US (former) start-ups and their European counterparts. You can look at my data in 2016 in The top US and European (former) start-ups in 2016. Here are my update lists:

Things have not changed that much. Yahoo is out. Rovio is in…

Rovio (Angry Birds) is going public

Rovio, the Finnish start-up creator of the famous Angry Birds game, will fly to the Helsinki Stock Exchange next week. Apparently it should be a success as the offer is oversubscribed and has just been closed despite the recent challenges the start-up had to face, as the next figure shows.

I will not comment more but just add my usual capitalization table.