You perhaps thought we forgot you this fine Friday. We did not! (Busy day.)
Hope you have a terrific weekend, everyone. See you soon.:)
Top News in the A.M.
TiVo, whose name became synonymous with the act of recording live television shows, is being acquired by Rovi for about $1.1 billion, the companies announced this morning. Dealbook has more here.
Fitbit just won a ruling that invalidated the last of the Jawbone patents that were the subject of a dispute at the U.S. International Trade Commission.
LinkedIn surprised Wall Street yesterday with better-than-expected first quarter results. TechCrunch has more here.
Handcuffed to Uber
Plenty of people would give everything to be an early employee at seven-year-old Uber. But Uber employees who’ve been with the ride-share company for at least a few years have discovered a considerable downside to their ride with the transportation juggernaut. They can’t afford to quit. Startup employees have to exercise their options within 90 days of leaving a company or else lose them and at Uber, that cost is simply too high.
A quick scan of LinkedIn for former employees underscores the point. Of Uber’s roughly 6,700 employees, only a tiny fraction have left, and in most cases, those hires weren’t around long enough to be worrying about vested options.
Employees of privately held companies have long wrestled with this issue. (We wrote about it herelast summer.) With valuations of many privately held tech companies having soared so dramatically in recent years, the amount of capital needed to buy employee options has escalated at an unprecedented pace for employees at a variety of places.
Uber appears to be the most extreme example ever, however. In a completely hypothetical example, let’s say an early, top Uber engineer was given .5 percent of the company. Now let’s say this person was awarded options in 2011, when Uber raised $11 million in Series A funding at a reported $60 million valuation. His ownership stake at the time would have been $300,000. Yet today, that same stake (undiluted) would now be worth $300 million at Uber’s reported current post-money valuation of $60 billion. That’s a paper gain of $299,700,000.
It’s very hard to cry about that, it’s true. But there is bad news: at a 40 percent tax rate for short-term gains, if the engineer opted to leave Uber, he’d 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. He’d have just 90 days to come up with the $300,000, and he’d 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 won’t.
Some highly valued companies have tried to ease this issue for employees by allowing them to sell some of their sales to preapproved secondary sellers at certain points. Not so Uber, whichamended 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 won’t 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 doesn’t mess around, either. Four secondary players have told us of employees who’ve tried to find ways around Uber’s regulations, only to be stymied. “We’ve 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 Uber’s position is that if it learns [of a sale or loan] that goes around its share-transfer restrictions, there will be consequences.”
It may seem uncharitable on some level, but it’s very much by design, according to insiders, who say Uber CEO Travis Kalanick has two primary motivations for keeping his company’s shares on lockdown.
Cardiac Insight, an eight-year-old, Kirkland, Wa.-based company that makes advanced cardiac and respiratory sensing and computing technologies, has raised $2.5 million in Series C funding from undisclosed backers. More here.
Slantrange, a nearly three-year-old, San Diego, Ca.-based company that develops aerial remote sensing and analytics technology for customers in agriculture, has raised $5 million in Series A funding led by The Investor Group. More here.
Stance, a 6.5-year-old, San Clemente, Ca..-based lifestyle apparel company, has raised $30 million in Series D funding led by Mercato Partners. Earlier backers August Capital, Kleiner Perkins Caufield Byers, Menlo Ventures,Shasta Ventures and Sherpa Capital also joined the round. Beehive Startups has more here.
VividCortex, a four-year-old, Charlottesville, Va.-based database performance monitoring company, has raised $4.5 million in Series A funding led by New Enterprise Associates, with participation from Battery Ventures.
World View Enterprises, a three-year-old Tucson, Az.-based space tourism company spun off from Paragon Space Development Corp., has raised $15 million in Series B funding led by Canaan Partners, with participation fromNorwest Venture Partners, Tencent, Moment Ventures and Base Ventures. TechCrunch has more here.
Mayfield, the 46-year-old Sand Hill Road firm, has raised $525 million across two new funds, including a $400 million early-stage firm and a $125 million fund that will be used to support those of its portfolio companies that gain traction and need later-stage funding. Mayfield has raised 14 early-stage funds previously. It closed its last fund with $365 million in 2012. More here.
Reports in the Russian and tech press today that Google tried to acquire the Telegram messaging app last year for $1 billion have been firmly rebutted by Telegram founder Pavel Durov. More here.
Carl Icahn has sold his 45.8 million Apple shares since the start of the year, telling CNBC yesterday that he’s concerned about China’s policies regarding the technology giant. More here.
Investor Chris Sacca spoke at a conference yesterday, telling his interviewer that there’s a “greed case for diversity.” More here.
Bloomberg unmasks the men behind Zero Hedge, Wall Street’s renegade blog.
Venmo, the hugely popular peer-to-peer payment service owned by PayPal, is under investigation by the Federal Trade Commission over “deceptive or unfair practices.” The Verge has more here.
Fiat is reportedly in the late stage of talks with Alphabet‘s self-driving car division about a technology partnership. The WSJ has more here.
SpaceX, the space exploration firm founded by Elon Musk, is planning to send an unmanned spacecraft to Mars by 2018.
When the landlord is a friend.
The downside of Nest cams.
Before you avenge your father’s death, please leave a positive Yelp review for my secret dojo.
People really seem to like this grill disguised as a garbage can. (Just remarking.)