I really don't get why you'd take money off the table while at the same time growing like crazy and diluting the stock significantly.
Porsches and houses worth well over a million $US within 6 months of picking up $250K funding in a year when revenues were projected to hit 1M makes absolutely no sense.
They should have simply matched growth to income and ridden the growth-curve instead of diluting and splurging on luxury goods.
Lots of bad decisions here, including vesting for founders, a culture of blame and so on.
Totally agree but this is an unfortunately common behavior. During the dot-com boom many people picked up hugely expensive homes based upon the the perceived value of their shares. We all know how that turned out for most.
Even now I hear of people buying homes way out of their means because they have some stock in the currently hot company of the week that has some assumed paper value.
Uh, yes? Spending money you don't have -- I'm not talking about lines of credit here -- is stupid. There's no way to soften it up, it's just a stupid thing to do.
Investors recognize there's a problem there, so there's a trend these days to find ways for startup employees to cash out a bit.
That, however, applies mainly to later rounds. The YouSendIt guys made classic rookie mistakes. They mistook startups for a get-rich-quick scheme, but they aren't; median time to exit for a startup is 7 years from funding. And that's if you're lucky enough to exit at all.
Porsches and houses worth well over a million $US within 6 months of picking up $250K funding in a year when revenues were projected to hit 1M makes absolutely no sense.
They should have simply matched growth to income and ridden the growth-curve instead of diluting and splurging on luxury goods.
Lots of bad decisions here, including vesting for founders, a culture of blame and so on.