
Juno Drivers ‘Gett’ Only Pennies Following $200M Acquisition - BradyDale
http://observer.com/2017/04/gett-acquires-juno/
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rdgthree
_“In a nutshell, we’re going to be nice. We’re going to be ethical. We’re
going to be respectful of our drivers,” he said. In that talk, Marco said his
partners planned to give drivers a stake in the company. In fact, it had
suggested it would set aside 50 percent of the company’s founding shares for
drivers, as we previously reported._

 _Initial reports on the deal indicated that all shares accumulated by drivers
would be nullified in the acquisition_

 _Another driver forwarded us a letter that offered $251 for 14,173 restricted
shares, a value of roughly $0.02 per share. This post[0], shared on the
UberPeople forum, shows an estimated value for restricted shares at $0.20
each, last July._

At least Uber isn't hiding behind some sign claiming to be ethical.

[0][https://uberpeople.net/threads/juno-refer-a-driver-get-a-
bon...](https://uberpeople.net/threads/juno-refer-a-driver-get-a-bonus.92609/)

~~~
seibelj
2 cents a share is better than nothing, which is what I got from the last
startup I worked at that got acquired...

~~~
hinkley
I worked at a place where, when we got acquired, our shares were worth about
$40,000, so everybody was pretty happy.

Then the stock tanked. And tanked. Six months later (1 year vestment) they
were underwater, and still dropping. Everybody was miserable.

If they had just handed us $250 on the day of the sale, I believe we would
have been a little unhappy but we would have gotten over it.

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marvin
Serious question: Is there any way at all for a minority shareholder to avoid
getting royally screwed in situations like these? Or are they completely at
the mercy of the majority to be very nice and decent and not just give them
the short end of the stick?

Would it e.g. provide any benefit at all to have a clause about dilution not
reducing ownership share more than the majority owners, or would it be
possible to weasel out of such an agreement too? How do the rich and powerful
do business with each other if agreements are this open to interpretation and
backstabbing?

~~~
yoaviram
It's all down to the shareholder agreement. For example ours says all
decisions are made by consensus, no matter how many shares you have. That's an
extreme case which works with a very limited amount of shareholders, but the
point is that you can protect minority rights.

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calcsam
The phrase "nullify a share grant" has no legal meaning that I'm aware of.

There are some semi-legal ways to do this, eg dilute some shareholders by
issuing a ton of new shares and give them to other existing shareholders (you
see this done in The Social Network). However, minority shareholders do have
rights and they can sue if there is no basis for the new grants.

What Juno seems to be doing is asking people to sign away both (1) their
shares and (2) their right to sue in exchange for around 10% of what they
previously thought was the cash value of their shares.

I suspect the reason for this is that the acquisition is taking place in
shares of Gett stock, not cash, and Gett doesn't want 10,000 small
shareholders on its cap table, but also doesn't have $50 million of cash lying
around to pay these drivers, so it's trying to pay them $5 million and make
the problem go away.

~~~
mcguire
Doesn't sound like they are real shares: " _Still, drivers have been building
up restricted shares (called RSUs)._ "

~~~
basseq
Most commonly (and traditionally), RSUs _are_ "real shares" of common stock,
just wrapped in another layer of requirements (e.g., vesting schedule). This
is not always true (e.g., Facebook and "phantom shares"). Regardless, RSUs
have a value that is pegged to common stock.

~~~
wweidendorf
RSUs =/= restricted stock; however, people tend to use the terms
interchangeably. A RSU isn't a real share until it vests (at which point it
becomes a common share), while restricted stock is a real share that has
vesting requirements or some performance requirements (or both).

~~~
basseq
So the bigger point here is that _RSUs are worthless_... until they vest (at
which point they aren't RSUs anymore). So, technically, Juno is being
_incredibly generous_ by offering _any value whatsoever_ for RSUs ("unvested
stock").

Now, even more technically, RSUs do have _value_ and are kept on company books
at the same value as the underlying stock. But they don't have value to the
RSU holder.

And unless you have an acceleration clause in your equity agreement (which
most people can't negotiate until they're pretty senior), those RSUs expire
with a $0 value. (The value of the underlying stock drops to $0 because the
corporation no longer exists.)

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noway421
Interestingly enough, just lately their landing page mentioned "50% reserved
for drivers"
[http://web.archive.org/web/20170203175819/https://gojuno.com...](http://web.archive.org/web/20170203175819/https://gojuno.com/),
but no that claim is gone

~~~
TuringNYC
Theoretically, it may still be 50% except the higher-class stock may have some
huge liquidity preference. Such is the unfairness of multi-class capital
structures. They can be very misleading, and the capital structure is often
kept obscured so there is no way to value the worth of a stock in different
scenarios.

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beaconstudios
at what point do we stop calling these companies "ridesharing"? The idea of
ridesharing and the sharing economy seems completely incompatible with Uber,
Lyft and friends, who are all basically private car hire firms.

~~~
pavlov
I keep waiting for pimps to rebrand their business as "body sharing".

~~~
mseebach
Great example, because euphemisms were certainly never a thing in prostitution
(and the word you're looking for is 'escort').

~~~
pavlov
I'm not sure what you're trying to say with the sarcasm. The entire point of
the joke was that using counterfactual euphemisms like "ridesharing" is a sign
of an industry that's on shaky legal ground -- and "escort" is indeed the
textbook example. Thanks for explaining the joke, I guess?

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greglindahl
None of the articles mention the amount that Juno raised, so it's possible
that this sale is smaller than the liquidation preferences.

~~~
gnicholas
Yep. The question of whether the payment to drivers for their RSUs is "fair"
depends on who is in line in front of them. It is possible that they could all
try to band together and somehow block the sale, but without more information
it's hard to assess whether that's a good idea or not.

I would assume that the company's offer isn't an amazing deal, because if it
were then the company would probably try to tout that to bolster/save their
reputation. OTOH, it's possible/likely that the only way to "prove" that this
is a good deal for drivers would be to violate confidentiality agreements with
many investors.

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s73ver
Here's the thing I really don't get: This is going to get out. This is going
to taint the brand. Why do something as shitty as this? Why do startups do
this? Is it honestly that hard to be ethical, and pay out what you promised?

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Kiro
Uber, Lyft, Juno. All the same.

~~~
metaphorm
this needs justification. how are they the same?

~~~
s73ver
Well, both Uber and Lyft have some pretty predatory car renting programs. And
with this move, Juno has shown that they're pretty crappy to their drivers,
just like Uber.

I guess we haven't heard of Lyft or Juno having a toxic culture of sexual
harassment and bro-ness, so there's that.

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spcelzrd
HN headline hurts my brain. Original is a stupid pun, but at least it makes
sense.

Juno Drivers ‘Gett’ Only Pennies Following $200M Acquisition

~~~
archildress
Yeah, the pedantry of the modified headline is far less readable than the
original.

