Beruflich Dokumente
Kultur Dokumente
Search
Uber
Travis Kalanick
Handcuffed to Uber
Posted Apr 29, 2016 by Connie Loizos (@cookie)
1,821
SHARES
Next Story
pdfcrowd.com
whove been with the ride-share company for at least a few years
open in browser PRO version
pdfcrowd.com
pdfcrowd.com
Its very hard to cry about that, its true. But there is bad news: at a 40 percent tax rate for shortterm gains, if the engineer opted to leave Uber, hed confront a tax bill of $119,880,000, not
including that earlier $300,000 needed to exercise the options. And leaving Uber would start the
clock. Hed have just 90 days to come up with the $300,000, and hed have to come up with the
rest of the money for the much larger tax bill by the next April 15.
Maybe Uber will be publicly traded by then. Maybe it wont.
Some highly valued companies have tried to ease this issue for employees by allowing them to
sell some of their shares to preapproved secondary sellers at certain points. Not so Uber, which
amended its bylaws in 2013 to restrict unapproved secondary sales. Not only does it not allow
employees to sell their shares to secondary buyers, it also wont allow them to use services like
those offered by 137 Ventures, which makes loans to founders and early employees using their
stock as collateral. (Snapchat, Dropbox, and Airbnb have similar policies.)
Our sense is that the company doesnt mess around, either. Four secondary players have told us
of employees whove tried to find ways around Ubers regulations, only to be stymied. Weve
been approached by big groups of early employees, and I know a lot has been written about
loans or hypothetical products to get around its policies, says one source. But Ubers position is
that if it learns [of a sale or loan] that goes around its share-transfer restrictions, there will be
consequences.
pdfcrowd.com
It may seem uncharitable on some level, but its very much by design, according to insiders, who
say Uber CEO Travis Kalanick has two primary motivations for keeping his companys shares on
lockdown.
The first dates back to Facebook, whose IPO was widely considered a bungled affair. In small part,
errors in Nasdaqs computer programming created problems. (Nasdaq later paid out tens of
open in browser PRO version
pdfcrowd.com
millions of dollars to both the SEC and to brokers who lost money because of those glitches.)
The bigger issue was the vibrant secondary market that sprang up around Facebook shares when
the company was still private. By the time Facebook went public in May 2012, many retail
investors had already shelled out several hundred thousand dollars for its privately held
shares. There was no pop, says one longtime Uber employee who asked not to be named.
Uber doesnt want everyone in the deal because, unlike Facebook, it wants a spike when it
finally has its public market debut.
Ubers second motivation is to retain the companys talent. Whereas some companies like
Pinterest have opted to make give employees greater flexibility when it comes to managing their
vested options, Uber has chosen instead to make it hard, if not impossible, for its employees to
move on to other companies.
If you had the ability to sell a portion of your shares to pay the tax on them, that would be one
thing, says one longtime Uber employee. But you cant. So unless youve already made a lot of
money or want to walk away from very valuable equity, you stay.
Uber management is all former Google and Facebook execs, notes this person. Theyve seen
the pitfalls of letting people exercise early, and they made sure, early on, that it wasnt going to
happen. Unfortunately, many [employees] who walked in here and received options didnt really
understand all these sophisticated systems.
Money, money, money, money . . . money!
open in browser PRO version
pdfcrowd.com
pdfcrowd.com
closing down owing to their thin- to non-existent margins. Uber isnt immune to financial worries,
either. Just this week, it agreed to shell out at as much as $100 million to drivers in California and
Massachusetts to settle a class-action lawsuit. Its unlikely the case settled the prospect of other
lawsuits stemming from disagreements over how Uber should classify its drivers.
Meanwhile, the company has already raised at least $9 billion in funding from a wide variety of
capital sources. That gives it room to grow and experiment. At the same time, later-stage
rounds typically come with preferred terms that aim to protect those new investors often at a
cost to earlier backers and employee shareholders. In fact, some speculated last week that
a tirade authored by VC Bill Gurley of Benchmark against dirty terms was aimed at Uber
management. (Benchmark led Ubers Series A round.)
Gurley didnt respond to related questions last week.
Asked for this piece about employees inability to sell or transfer their shares, Uber also declined
to comment.
Given the many other initiatives that Uber is juggling on any given day, thats not surprising.
In the meantime, Uber continues to chug along with the help of many employees who feel really
good about the company. So says one Uber employee who, its worth noting, has worked for
Uber for less than a year.
At Uber, as with all startups, the big question is how long that goodwill will last.
open in browser PRO version
pdfcrowd.com
1,821
SHARES
by Gravity
pdfcrowd.com
Microsoft
Legacybox
Forbes
pdfcrowd.com
pdfcrowd.com
CrunchBase
Uber
FOUNDED
2009
OVERVIEW
LOCATION
San Francisco, CA
CATEGORIES
WEBSITE
http://www.uber.com
NEWSLETTERS
open in browser PRO version
pdfcrowd.com
TechCrunch Daily
TC Week-in-Review
Delivered daily
Delivered weekly
CrunchBase Daily
The latest startup
funding announcements
View More
Delivered daily
Enter Address
SUBSCRIBE
pdfcrowd.com
pdfcrowd.com
21 Comments
Sort by
Add a comment...
Rebecca Dann
Booknes Thermidor Huh, I shouldn't. No one should.
Like Reply
Rebecca Dann please explain why no one should tip their driver. Even Ashton Kutcher said he would tip i
driver helped deliver a baby. Is this tip / no tip threshold too low for you?
Like Reply
pdfcrowd.com
California problems...
Like Reply
Jeff Pickhardt
The tax code should be fixed so that you don't have to pay AMT on illiquid ISO gains. This is such an obvious solu
and I hope Silicon Valley lobbies for it.
Like Reply
Rebecca Dann
Uber is breaking so many laws, hey - what's one more law to break!?
Just do it. Forget lobbying. Uber-MAFIA style!
Like Reply
Doug Wolfe
how is 29,940,000 40% of 30,000,000 again? Shouldn't that tax burden be more like 12M
Like Reply
Constance Loizos
doug, you're right. i was playing w different number sets and screwed that up. thanks for flagging. (englis
major.)
Like Reply
Constance Loizos I'm really confused now. Aren't we talking 300m which would make it 120m tax burden?
Like Reply
Phil Haslett
We at EquityZen did a similar analysis in 2014, for those that are curious: https://equityzen.com/.../uber-employee
open in browser PRO version
pdfcrowd.com
shareholder.../
Like Reply
Daniel Orlowski
Did they (insiders/board/founders) really reference FB by saying "No Pop...it wants a spike"??? It's been almost 4
years since facebook IPO and FB is up 200% from it's IPO price. Are they referring to a short-term spike so they c
cash out. Do the higher ups at Uber believe there is NO long-term potential with their own product?!?
I will be staying away from Uber when it does IPO.
Like Reply
Rebecca Dann
I'd be buying Enron and WebVan before buying uber.
Like Reply
Spot on Daniel. I get similar (sociopathic) vibes from Uber as we observed with Zynga circa 2012. They w
engineer their IPO (and associated pop) around ensuring top execs get to cash out to sucker retail inves
and keep employees locked up during this period. By the time the employee lockup expiration rolls aroun
the stock will have plummeted from the pop peak well below IPO price.
Like Reply May 2, 2016 11:24am
I guess now these employees know how it feels to be a stud athlete in his (or her) Freshman year in college. Not o
can an athlete not play professionally (and quite possibly a big payday) until three years removed from high scho
(with football, at least), they can't even make any money off of their likeness while they're in school - all while the
school makes millions off of them.
Like Reply
pdfcrowd.com
So basically if you can get a loan, refinance your house, have a lot of savings, or rich relatives to help you out, yo
can become a multi-millionaire. Otherwise, youre a slave to Uber. And just think, when most people hear of Uber
slaves, they usually think of the poor drivers!
Like Reply
No you're not a slave, you just lose a lot of money if you quit. Nobody is forcing you to work there, they're
making it harder to get something you're owed if you quit early. All it would take is a loan on the security o
the shares, which is legal as long as you can find someone to agree to it. Since the shares are worth a hu
amount it shouldn't be too hard to find someone to loan money on them.
As for the "poor drivers" stop concern trolling. The people who whine about how badly Uber drivers are
treated are the taxi drivers who will lose money, not the drivers themselves.
Like Reply Apr 30, 2016 3:08pm
Jesse Kiewiet
Mick Price, you should talk to more drivers.
Like Reply
Christian Hresko
No one is a slave to Uber. The engineers get paid bank. Leave if you don't like it - sticking around because of equ
is just an excuse to not quit. Also, 99% of all startups have this exact same structure (90 days after leaving).
Like Reply
pdfcrowd.com
Leo Romanovsky
That early engineer could have purchased their options with an early exercise and paid whatever the strike price
7 years ago - likely affordable and not owed any AMT. Not understanding how options taxes work is not an excuse
feel bad for folks!
Like Reply
Christian Hresko
Good point re: early exercise. I suspect most employees either don't know about or aren't told about this
one startup I worked at mentioned it - you basically have to teach yourself how stock options/grants work
Like Reply
First, they would need to come up with that money upfront to purchase their shares, which years ago wou
have been a much more expensive proposition. While today they could easily get a $300k loan secured b
$300M worth of stock (even if it is a startup), that would not be the case upon their inital grant, when Ube
was valued much lower. Second, they would be risking their investment and essentially becoming an inve
in the company. Hindisght is 20/20, but in most cases the employee would lose their money. Thus is the
nature of startups. A much simpler solution would be to remove the tax basis on restricted stock until the
stock became unrestricted. That would be much more employee friendly, something CA seemingly strives
Like Reply May 1, 2016 3:53pm
Jose Pablos
Travis formula for success :
Uber more Low rates = (more happy enthusiastics, dynamics,efficients mental retarders drivers) + (more cheap,
frugal, entitled, rude, libertine, disgusting, arrogant, tclassless, shameless drunks pseudo riders) + (less taxis)
open in browser PRO version
pdfcrowd.com
Lmao
Lmao
Pleased don't confuse exploitation with stupidity
"Stupid is the one who gives not the one who ask or get"
Simply awesome this is the shorter phrase I found all over the internet to describe the situation with the libertine
pseudo riders and the retarders driving for Travis
Is so funny to see how many people talk about slavery and ... See More
Like Reply
Rebecca Dann
But this is "innovation"...(rolling eyes).. it only requires you to have a very low IQ to believe in this bs.
Like Reply
Jose Pablos
Don't trust LinkedIn for anything... they don't verify or remove. Plus someone who drove for Uber one day can list
them as a past or current employer. Not the best example for this story versus companies where it's tough to be a
1099 worker.
Like Reply
Uber doesn't hire their drivers, they are independent contractors so they can not list Uber as an employe
Like Reply
pdfcrowd.com
Rebecca Dann
You don't quit MAFIA while still breathing, buddy....
Like Reply
Iftekhar Khan
UBER worth 60 Billion lol nice joke !
Its a hype lots of false advertising
Like Reply
I too find this hilarious. This company in seven years still hasn't turned a profit.
Oh, I've got a company for sale too. 50 billion dollars, first come, first served. It's an easy business to ope
We take investors cash and burn it... That's all we do. Sounds lucrative, no?
Like Reply
Drivers want to be employees because Uber is greedy and pays shit and employees just want to be drivers becau
Uber is greedy and wants to protect investors. What a wonderful company to deal with.
Like Reply Apr 30, 2016 7:10am
Sean Toomey
Cry me a river.
Like Reply Apr 30, 2016 9:11am
pdfcrowd.com
Uber is a ponzischeme! They heir drivers with a new car , take out the money of the car. It is like you sell your car
cash give 20% to Uber then the rest is to fix the car and pay the loan!
Like Reply
Some people just can't wait, they want there millions now, kind of can't blame them. Just knowing there's a big pay
would keep me around. That's the kind of society we live in today,everyone wants it now, even companies use tha
approach, they only want to grow by buying up other companies, not the old fashioned way,from the ground up.
Like Reply Apr 30, 2016 6:04pm
Maybe this is incredibly nave, but couldn't you play this one in your favour? I feel like if you somehow sat on $300
Uber stock, you could use that as collateral for a bank loan from pretty much any high-end high-street bank. Get
loan, exercise your options, get the hell out of dodge, pay your tax bill, and sit back and pay the loan when Uber I
Yes, it's unconventional, but it's a weird situation, and there's plenty of bankers who are willing to take a wellcalculated bet and make their institution a couple of million dollars in the process. Hell, you might even be able to
a private investor who would be willing to give you the money you need in exchange for some of the Uber stock.
Like Reply
The share purchase agreement may well restrict the legality of being able to use the shares as collateral
something like a loan. As that would mean that if you defaulted, the bank would get your uber stock. Whic
given the above, I doubt uber wants your bank having stock.
Like Reply
Jack Smith You may be right about the legality, but unless I'm mistaken, once the company IPOs, it loses
say in who owns stock, so whether it's a bank or a person holding the stock becomes less relevant.
You may be right though, I'm definitely a layman here. I just think it's so curious that this problem exists.
open in browser PRO version
pdfcrowd.com
Like Reply
I understand you're trying to illustrate a hypothetical, but to suggest a .5% employee stake at the point Uber raise
$11M would be undiluted after $10.6B has been raised? Not remotely plausible.
Like Reply
Constance Loizos
hi, yes, true. i was trying to keep things simple (partly for my own sake). there could well be employees wh
had a .5 percent stake and have seen it diluted down to something far smaller, like .1 percent. in the latte
situation, the employee would still have to come up with $12.2 M pretty quickly, which isn't really possible
unless you've worked previously at google or facebook, etc. (some of them have.)
btw, i'd like to add that i didn't intend for this to come across as a hit piece. some readers have compared
travis kalanick to a slave driver, which is absurd. uber isn't alone in enacting these policies. it just happen
be the most valuable right now, which puts its early employees in a uniquely strange position.
Like Reply May 1, 2016 8:22pm
Constance Loizos Fair enough, you had to set some parameters for your assumption. I would've concede
more strongly the likelihood of dilution further to enhance the argument's plausibilty.
By TC standards, this may feel like a hit piece (since most coverage of heavily-financed startups is glowin
positive), but I think in 'real' terms it's reasonably neutral.
I agree many startups have similar financial/stock terms for employees, and at least in the context of his o
employees (vs. drivers), I do not regard Kalanick as a slave driver. I regard him as evil in many other way
though, to ... See More
Like Reply
pdfcrowd.com
pdfcrowd.com
UP NEXT
CloudMagic can now tell you everything about the person who just emailed you
Posted Apr 29, 2016
CrunchBoard
Job Listings
QA Engineer at Matomy Media Group (Plantation, FL, United States)
Email Deliverability Analyst at Matomy Media Group (Plantation, FL, United States)
Developer at Matomy Media Group (Plantation, FL, United States)
Software Development Technology Lead at Virtual Health (New York, NY, United
States)
VP, Marketing at Virtual Health (New York, NY, United States)
More from CrunchBoard
pdfcrowd.com
About
International
News
Staff
China
TCTV
Contact Us
Europe
Events
Advertise With Us
Japan
CrunchBase
Send Us A Tip
Follow TechCrunch
open in browser PRO version
TechCrunch Apps
pdfcrowd.com
SUBSCRIBE
2013-2016 AOL Inc. All rights reserved. Aol Tech Privacy Policy About Our Ads Anti Harassment Policy Terms of Service Powered
by WordPress.com VIP Fonts by
pdfcrowd.com