Tag Archives: Facebook


WhatsApp: What an Acquisition Means for Employees

The announcement that Facebook is buying WhatsApp for $19 billion generated a lot of interest. The most popular question we received is what does the acquisition mean for the employees financially. IPOs tend to get all the headlines, but in many cases technology companies are acquired. This post will walk through the economics of an acquisition and how it affects all the parties involved. The Terms of the Deal From what I have read, Facebook will acquire WhatsApp for $4 billion in cash and approximately $12 billion worth of Facebook shares. In addition Facebook will grant $3 billion in RSUs to founders and employees that will vest over the next four years. I do not have any special insight into […]

Manage Vested RSUs Like A Cash Bonus & Consider Selling

If your company gave you a year-end bonus of $100,000, would you use all of it to buy your company’s stock? Hell, no. Yet, scores of our clients who own restricted stock units and work for Facebook or Google effectively have. You see, restricted stock units (RSUs) are taxed differently than stock options, and many employees who receive RSUs don’t understand the implications. Stock options have a tax advantage: they are taxed when you exercise, so you might have an incentive to sell the following year and take the gain or loss. Not so with RSUs. They are taxed at the time they are vested, not when you sell. Facebook, for instance, even withholds the taxes due on RSUs by […]

Are Rental Properties Good Investments?

Over the past six months, Wealthfront has given a seminar on how to invest well to more than 50 Bay Area-based companies, including Facebook (FB), LinkedIn (LNKD) and Yelp (YELP). The seminar helps the audience learn how to use Modern Portfolio Theory[1] to better manage investment portfolios. (Here’s a link to our slideshare presentation covering some of the same ground and to our seminar page) As you might expect, we talk about the idea that investing in individual stocks actually hurts portfolio returns over time. At almost every seminar, we get a question from the audience related to how someone should think about investing in real estate – not the home in which a person lives, but real estate rental properties. The […]

The IPO Millionaire Machine

The New York Times Bits blog writer Quentin Hardy recently interviewed Wealthfront CEO Andy Rachleff on the question of how many people – regular people, not executives – become millionaires after a typical tech IPO. Andy’s estimate is that tech IPOs will create about 12,000 millionaires in the next few years. Andy, also a co-founder of Benchmark Capital, helped Quentin do a back-of-the envelope calculation.  Here’s how that math works (What follows is a paraphrase from Quentin’s post). Including Facebook, the aggregate market value of the companies likely to go public in the next few years could be around $500 billion. Working backwards from that number, we can estimate the aggregate revenues of the companies at about $50 billion, because we […]

Wall Street Invades Silicon Valley

How Wall Street Brokers See The Facebook IPO

Brokers around the country have woken up to the wealth being created by Silicon Valley IPOs and are busy plotting to get a share of it. One trade publication for brokers and financial advisors published a kind of “cheat sheet” on big Valley companies, which ends with the suggestion that brokers should become less like the Flintstones, and more like the Jetsons, to be able to talk to these new clients. Seriously.  We are not making this up. The idea that seeming tech-savvy can be learned from a 1970s cartoon – that will go over well in the Valley. Here’s the link. We don’t want to pick on the writer (much), but sometimes a detail is very telling. The reference […]

2012 IPOs: High Expectations, No Assurances

2012 IPOs: High Expectations, No Assurances

By tradition, no IPOs are scheduled in the first two weeks of January, so this week marks the kickoff of the IPO year. Given the fact that technology is one of the few truly bright spots in the U.S. economy, and the expectation that Facebook will file, the expectations are extraordinarily high for 2012. Here’s a fast guide to some of the solid reporting on the topic. The volatility in the stock market is making it more difficult for IPOs. SecondMarket’s Barry Silbert recently pointed out in a VentureBeat interview that  “often there are factors like the credit crisis or the situation in Europe affecting the markets. It’s the reason entrepreneurs like myself never want to go public.” An article […]

Should You Hold On To Groupon Stock? What About Zynga?

The dust has settled a week after Groupon’s IPO last Friday. Here’s a quick Q&A on the offering. How much did Groupon raise? $700 million. It was the largest IPO by a U.S. Internet company since Google Inc. raised $1.7 billion in 2004, according to Reuters. Groupon is now trading on the NASDAQ under the ticker GRPN. All that sniping about accounting and the company’s business model? It’s history. At least for now. The company’s float was only a little more than 5% of the company, which means the firm is now valued at $13 billion. Shares rose to $20, above an initial range of $16 to $18, and by the end of this week were trading around $24. But […]

Why Watching Media Reports On The Market Is A Waste Of Time

Americans concerned about their portfolios (everybody) woke up to more bad news Thursday, as headlines about a global selloff permeated the media. If you believe, as we do, that it’s important to invest for the long term, rebalance in a disciplined way, and limit your emotionally driven moves to the level of tweaking (if you really need to), then getting consumed in these reports is counterproductive. Here’s a great piece on the topic: There’s no reason why stocks are down today. Check out the graph at the bottom of the post that shows the long-term gain in U.S. equities. Thanks to Abnormal Returns for the link. Investors are taking out their fear and frustration with the political system on the […]