
GitHub Founders Will Own More Microsoft Stock Than Its CEO - rattray
https://www.bloomberg.com/news/articles/2018-06-04/github-billionaires-will-own-more-microsoft-stock-than-its-ceo
======
netvarun
Oh what sweet irony. [http://tom.preston-werner.com/2008/10/18/how-i-turned-
down-3...](http://tom.preston-werner.com/2008/10/18/how-i-turned-
down-300k.html)

~~~
twax2
That's a good story, but I wouldn't exactly call it ironic. Tom Preston turned
down the Microsoft offer because he "wanted to work on something he truly
loved", not because he was opposed to working at the company. And he
succeeded, no matter who he sold Github to.

------
Apocryphon
_Each of the three could receive about 12.3 million Microsoft shares, assuming
they control equal stakes in GitHub. A 0.16 percent holding would give each of
them about 10 times more shares than Chief Executive Officer Satya Nadella,
and roughly 14 times more than President Brad Smith. Among insiders, only co-
founder Bill Gates’s 1.34 percent holding would exceed theirs, according to
data compiled by Bloomberg._

Imagine an Apple buys NeXTSTEP styled coup by acquisition.

~~~
caymanjim
Apple only bought Jobs and some ideas. NeXTSTEP was worthless. Yeah, it turned
into OSX, but they could have started with Linux or BSD just as easily. This
analogy only holds if the GitHub founders stick around, and they've already
announced a new CEO.

~~~
CameronBanga
I’m not sure I’d call anything that turned into iOS “worthless”.

~~~
megablast
I think they are saying there was so much work involved in getting it to that
stage, they could have built on any OS and not spent any more time doing it.

~~~
candiodari
You mean a huge company could have released 1000 PM's and hundreds of millions
of dollars, 99% of which would be spent on political infighting and empire
building ... Wait weren't we trying to build a product ? NO ! I NEED MORE
HEADCOUNT NOW !

Buying can be far more effective than building, especially for large
companies.

------
ramen-san
Interesting that Microsoft paid with shares. They effectively just issued
$7.9B in equity without having to go to the public markets for it. Granted
it’s only ~1% of their $780B market cap... but this also suggests they believe
their shares are perhaps a little richly valued.

~~~
sireat
Most big cap tech stocks seem a bit richly valued by classical measures.

I'd love to see more discussion on the acquisition valuation here.

Considering that Github had sales of around 200M last year and is losing
money, the 7.9B is a pretty rich multiple.

Sure Github is a nice fit for Microsoft (more perhaps than something like
Minecraft is).

Still, this seems more like mindshare or perhaps defensive purchase.

~~~
ramen-san
Agreed - definite 'strategic' rationale for the purchase. Can't get there by
any conventional valuation method. But to put things another way, do you
believe that having Github as a Microsoft property (or the insurance that
buys) is worth 1% of the company? Not too hard to get to big numbers when
we're talking about a 3/4 trillion dollar company.

This one kind of feels like Skype, in that it felt like they overpaid there as
well (I remember thinking that Silverlake had performed a masterful coup with
Skype) ... only time will tell whether Github loses their mojo as in the Skype
situation. I'm not a skype user, but my general sense is that the service has
been completely eclipsed by everything else in that space.

------
yla92
_Andreessen Horowitz invested $100 million into the software startup in 2012,
the single largest check it had ever written.

The firm owned about 13 percent of the company after that deal, according to
Pitchbook, and made sure to take its pro rata rights — or right to follow up
with more investment at a later date — when Sequoia Capital valued the company
at $2 billion in its own deal in 2015. Those were the only two times that the
10-year-old company ever raised money._ [0]

So, the other two winners are a16z and Sequoia?

[0]: [https://www.recode.net/2018/6/4/17424664/github-microsoft-
sa...](https://www.recode.net/2018/6/4/17424664/github-microsoft-sale-
andreessen-horowitz-returns-billions)

------
aroman
50% of a $7.5 billion sale is going to 3 people? insane.

what about the employees?

~~~
tjr225
They won the lottery on the backs of their employees. Unfortunate, but also
unfortunately acceptable in today's climate.

~~~
darawk
You mean the employees who chose to work there understanding the terms of
their deal? The employees who probably just made a ton of money themselves
from this deal? What exactly is unfortunate about this? Are you upset that
some people made a lot of money?

~~~
sdiupIGPWEfh
> You mean the employees who chose to work there understanding the terms of
> their deal?

As if anyone can just choose to be working for a company with the right terms,
in a position to make a multi-billion dollar sale, and also somehow not get
screwed out of what they thought their terms guaranteed.

~~~
Trundle
you're right, people can't. If you want shot at a significant chunk of a multi
billion dollar sale you start your own company. As the github founders did.

If you want up be paid $x a fortnight right from the get go then you get a
job.

I don't see how the success of people who chose to do A means people that did
B got screwed, just because they both worked on the same project. The
decisions they made and context of their choosing to work on it were still
different things each with their own pros and cons

 _Unless_ there was some more to it. Like share /options shenanigans that
might not be legally fraud but fraud in spirit. No one seems to be saying that
happened here though.

~~~
khazhoux
> If you want shot at a significant chunk of a multi billion dollar sale you
> start your own company. As the github founders did.

False dichotomy. People join startups (esp. early ones) thinking they have a
shot at a significant chunk. But even for the very first employees, the equity
numbers are ridiculously small. I don't understand why they sign up for it.

All my friends in startups work damn hard and poured huge chunks of their
lives into it, and it has not been fun watching them be offered meager
positions post-acquisition, while their founder/CEOs get multi-million
paydays.

~~~
paulie_a
That is why you get paid for your time, and it is probably a lot. Leave work
at work and move on when it is time. It's just a job. Those founders did much
more than the people you know. They took a massive risk at complete failure

------
zpr
> assuming they control equal stakes in GitHub

That seems like a pretty big assumption. And as mentioned in other comments,
what about the employee stock pool? That must account for some chunk of it
also.

------
swyx
interesting that the stock grant was based on monday's close price. is that
common? or accurate? because if true they would technically want the stock to
TANK on the announcement so they could get more shares? :) just fun to think
about.

they deserve it for the risk taking and management. github is a once in a
decade, maybe century, company.

------
stankypickle
Good for them! GitHub is a great tool. Just hope microsoft doesn't screw it
up.

------
zulrah
How much influence with his stock will the github founder have in this case?

------
kristianp
They're going to be selling a lot of those shares come tax time!

------
spiderPig
So jealous of the founders. Making it this big at such a young age. This is
generational wealth.

OTOH, anyone else think Microsoft has massively overpaid for Github? Feels
like Satya's Nokia moment to me.

~~~
bryanlarsen
"has massively overpaid"

Certainly seems like it, but I was spectacularly wrong when I said that about
Google's purchase of YouTube and about Facebook's purchase of Instagram, so
I've learned to stop saying that.

~~~
imh
Youtube is the weirdest one for me. I _still_ don't get it, even though I'm
_already_ clearly wrong. ¯\\_(ツ)_/¯

~~~
bryanlarsen
Youtube is responsible for ~10% of Google's revenue, according to analysts.

~~~
petra
any idea about profitability ?

------
stealthmodeclan
If you want the world to be equal.

Do not help someone succeed.

Do not join startups where founders get 50%.

Employees of this startup just made the world more unequal.

~~~
tomhoward
Github's founders became billionaires by making powerful developer tools
available to everyone at low or zero cost, thus making millions of developers
more productive and wealthy.

Bill Gates and Steve Jobs became billionaires by making personal computers and
software available to billions of ordinary people, making them more productive
and wealthy.

Larry and Sergey became billionaires by making information and smartphones
available to billions of people, and in doing so helping some of the world's
poorest people lift themselves out of poverty.

What do you prefer: a world in which a handful of people are vastly more
wealthy than the rest but where everyone's material wellbeing is improving, or
a world in which everyone is equal but we all have little wealth and little
technological progress?

~~~
stealthmodeclan
That's the basis of socialism vs capitalism.

~~~
tomhoward
I don't like to wade into black vs white ideological debates, but it's worth
noting that every economic system has had wealthy elites and a relatively much
poorer majority.

I'm all for discussing ways in which society's wealth can be distributed more
fairly and how the worst-off can be helped to live more comfortable and
optimistic lives.

But the evidence would suggest that when you constrain the wealth-generating
capacity of the highest-achievers to reduce the overall wealth being created
by a society, the people at the bottom are the first to suffer.

~~~
ionised
What evidence?

~~~
tomhoward
Like I said I'm not interested in ideological arguments on this topic, and the
tone of your comments suggests you are.

The evidence I'm referring to is the comparison over the past 100 years or so
between open economies where people can keep a substantial share of the
rewards for their innovations, vs controlled economies where people can't. In
any scenario, elites find a way to be elites. The comparison that matters most
is how badly off are the poorest.

To answer your other comment and to avert a needless argument, I agree it's
not black and white and I agree no system is perfect and that it's an
unresolved question as to what kind of system is optimal in terms of
generating wealth and distributing it fairly.

My initial comment was simply to point out to the root commenter that the
action they recommended would more likely lead to the opposite outcome to what
they hoped.

------
arthurcolle
This is such a tragic outcome for GitHub. Microsoft is a joke. Immediately
plan to migrate all my projects off thr platform, no matter how painful
that'll likely be

~~~
voltagex_
Have you ever heard the phrase "cutting off one's nose to spite one's face"?

I don't see the need to migrate immediately, even if that need becomes evident
later (I don't think it will, but yeah, it could happen).

I understand the reaction, but I thought we all migrated off Slashdot and
spelling Microsoft with a $ a while ago.

