Comments on: How to prevent your investors from selling! http://www.texasstartupblog.com/2008/04/10/how-to-prevent-your-investors-from-selling/ Spurring innovation and entrepreneurship. Sat, 20 Mar 2010 04:33:34 +0000 http://wordpress.org/?v=2.7 hourly 1 By: Hippy http://www.texasstartupblog.com/2008/04/10/how-to-prevent-your-investors-from-selling/#comment-345585 Hippy Thu, 10 Apr 2008 21:10:17 +0000 http://www.texasstartupblog.com/2008/04/10/how-to-prevent-your-investors-from-selling/#comment-345585 Your latter two points are very well taken (the AOL deal especially: what a mess), but I would chime in that the former is only about 33% true. Although there is a poison pill aspect to the severance packages (it only kicks in if the company changes control), I really think this was mostly about employee retention under the assumption and/or hope they would win the fight. I just recently moved from the Bay Area, and it's extremely difficult for employers to find and retain good (technical) talent. Google and many others would love the chance to hire more than a few stars out of that company. Other employees might decide that this is as good a reason as any to begin working on that startup idea they've been kicking around. A situation like this could otherwise cause an exodus of employees and instill low morale in those that remain. If they lose their stars, then regardless how this drama plays out, they will be made irrecoverably irrelevant. The severance package was sheer genius for nipping that threat right in the bud. No one likes uncertainty, but now employees have far more to lose by leaving than by waiting things out and to see what happens. Your latter two points are very well taken (the AOL deal especially: what a mess), but I would chime in that the former is only about 33% true. Although there is a poison pill aspect to the severance packages (it only kicks in if the company changes control), I really think this was mostly about employee retention under the assumption and/or hope they would win the fight.

I just recently moved from the Bay Area, and it’s extremely difficult for employers to find and retain good (technical) talent. Google and many others would love the chance to hire more than a few stars out of that company. Other employees might decide that this is as good a reason as any to begin working on that startup idea they’ve been kicking around. A situation like this could otherwise cause an exodus of employees and instill low morale in those that remain. If they lose their stars, then regardless how this drama plays out, they will be made irrecoverably irrelevant.

The severance package was sheer genius for nipping that threat right in the bud. No one likes uncertainty, but now employees have far more to lose by leaving than by waiting things out and to see what happens.

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