If anything, having YC people there to walk you through that debacle is worth the price of admission alone.
Paul, how much of that document did you actually understand when you signed it, and how much was blind faith in your lawyers? (Serious question actually)
I consider deal documents to be object code, and my lawyers' explanation of what's in them to be source code. I inspect the source code fairly carefully, but I do generally have blind faith in the compiler, in the sense that I don't read the documents myself to see if the lawyers' interpretation of them is correct.
From what I've seen, I'd guess this level of understanding of deal documents is the norm.
Thanks for the answer. I'm glad it's the norm, because to be honest, being on this site, more often than not I feel pretty stupid.
It's nice to know that even those experienced in business deals don't understand all the legalese. The fact that I can somewhat read them doesn't make me feel so dumb!
> I consider deal documents to be object code, and my lawyers' explanation of what's in them to be source code.
PG, whenever you're ready to open-source some of the startup documents you've talked about, I hope you include this sort of "source-code" along with the "compiled" version.
After a while it's pretty easy to see past the boilerplate. Has anyone ever made the analogy literal by creating a language that 1) describes contracts (like this: http://szabo.best.vwh.net/contractlanguage.html), and 2) a compiler that turns it into something you could upload to the SEC, print and sign, or whatever?
This is done for contracts between insurance companies and hospitals all the time. There are also contract compilers and DSLs for financial instruments.
Interestingly, the number of shares given outright for Viaweb (393,591), not including options, would be worth only $7,915,115 today.
edit: (not taking into account splits)
Considering the four splits since the end of 1998, the total number of shares would be 6,297,456 (393,591 * 2 * 2 * 2 * 2) equivalent to $126,578,866 at a price of 20.10 (as of 2:04pm edt today).
From June of 1998 to the height of Yahoo's stock in December 1999, two splits had occurred making the total number of Viaweb shares 1,574,364. With a 108.17 price per share, Viaweb's shares were potentially worth a total of $170,298,954.
(Assuming they only held on to the 68,210 escrow shares, that still amounts to 272,840 shares after splits and a total of $29,513,102.80 on the day the escrow period ended.)
Uh, wow.
(This is assuming the numbers I am getting from Yahoo Finance are not corrected for splits, and I think they are.)
Even with the edits, your estimates are off. Historical prices in a chart are always split-adjusted. (Otherwise you would see big discontinuous jumps at each of the split-indicator dates.)
So the reported 108 YHOO high in December 1999 is equivalent to a price of 108 for a current 2008-share.
Thus the peak value of the (393,591 * 2^4) 6,297,456 2008-shares was about $680 million in December 1999. The other (61,126 * 2^4) 978,016 options probably added around another $100 million, assuming their strike price was very low.
Of course, timing is everything, and when the holdings were either hedged or sold determines how much ViaWeb shareholders actually came away with. A couple days after the exchange, June 12, 1998, the 6,297,456 2008-shares were worth about $45 million (at $7.11/share). One year later, when registration lockups may have expired, they were worth about $212 million ($33.8/share).
Looks like there were two 2:1 splits between 6/10/1998 (day of stock conversion) and 01/01/2000, so those 393,591 shares would have become 1,574,364 shares (assuming no one sold them before then).
At Yahoo's height, December 24th, 1999 (hilariously, almost the exact date the options were released from escrow after Viaweb's purchase), the share price was 101.81, which would have made the 393,591 shares worth about $40,071,499.
That's more than a 500% increase over today's value, representing 32 million dollars which could buy at least fifty Lamborghinis or seven million Caramel Frappuccinos.
I wonder if this is being upvoted because of a subconscious need to heal egos after the "YC is Cult" post - a comforting sense of "oh, right, there is a reason why we love PG/YC/HN".
It's not fun at all. I recommend it only for the incurably curious.
The only interesting part is how fast Viaweb was growing -- for all of 1997, they had $343K in revenue; for the first quarter of 1998, it was $290K. You don't have to extrapolate that too far to see a great deal for Yahoo.
The other interesting thing was their balance sheet vs. cash flow statement. For the first quarter 98, they had $106K in cash. In the same period, they burned $200K on operating activities, and only avoided bankruptcy ($14K at the beginning of the quarter!) with a $300K cash infusion from investors. They would've been dead in another month and a half.
I think PG has mentioned this in an essay (and in the Founders at Work interview). They were running out of cash during the Yahoo negotiations.
Edit:
"It was really close, too. When we were visiting Yahoo to talk about being acquired, we had to interrupt everything and borrow one of their conference rooms to talk down an investor who was about to back out of a new funding round we needed to stay alive. So even in the middle of getting rich we were fighting off the grim reaper."
If anything, having YC people there to walk you through that debacle is worth the price of admission alone.
Paul, how much of that document did you actually understand when you signed it, and how much was blind faith in your lawyers? (Serious question actually)