Airbnb, Investor Chamath Palihapitiya Settle Differences; Employees Will Get Liquidity
Former Facebook employee — and newly minted venture capitalist — Chamath Palihapitiya is back involved in a new funding round for Airbnb, after the apartment-sharing company and he discussed the terms of the planned funding deal.
Palihapitiya had planned to take a pass on the deal after having taken issue with the way that the company had structured the financing. In a letter to Airbnb CEO and co-founder Brian Chesky (published here yesterday), Palihapitiya had bemoaned how the company was giving its founders a large cash-out, while not giving much to the company’s other employees. It would appear as if his note has sparked some changes in the deal, though it is not clear whether any changes were already in the works or how much the other employees are getting in the arrangement.
[Update: Marc Andreessen, of Andreessen Horowitz, which is the lead investor in Airbnb's latest $120 million round, said: "There have been no changes in the deal, but there will be a liquidity program for employees, which is in development.”]
In his original letter, Palihapitiya objected to the fact that the founders were getting a $21 million dividend without having to sell shares as part of a funding round that values the company at $1.2 billion
On Sunday, Palihapitiya sent an email to AllThingsD, with a note (see below) that Palihapitiya said was prepared in discussion with Chesky and Airbnb’s board.
So, in Silicon Valley’s perpetually churning deal machine, perhaps all’s well that ends well for Airbnb and its employees.
I wanted to follow up with you regarding your article yesterday. I wanted to confirm, again, that I did write the email that was unfortunately forwarded to you. Brian and I trust each other and know neither of us wanted this aired out publicly but it definitely made for an interesting Saturday. In any event, the email I sent was meant to be a framework for a discussion between me, Airbnb and Andreessen Horowitz on topics that concerned me as an investor but topics that should have remained private. In any event, the resulting publicity has been really unfortunate and I’d like to update you on what’s happened in the last 24 hours as I think it speaks to the good intentions of Brian and the founders of Airbnb.
Brian and I have spoken at length and based on our discussions, I’ve learned some new items that have proven to me that everyone is paying serious and thoughtful attention to the needs of all shareholders including employees. Specifically, the company has developed a strategy about their next financing round where all employees who have been with the company for some length of time will participate in a structured liquidity program. While the details haven’t been finalized, I know Brian and completely trust that he will execute on his commitment.
Further, I still really believe in Airbnb and think they are a very exciting company with tremendous growth potential. This was why I was excited to invest in the first place. Based on the strategic intent to balance employee and founder liquidity which will align long term interests, and further clarifications around the technical details of the financing, I feel comfortable that things are in a good place and, as a result, have decided to participate in the financing.
Again, its unfortunate that we have had to discuss this in public, but I also want you to know that this email to you will be my last public communication on this topic. I’m really looking forward to helping Brian scale and grow Airbnb into a huge, long-term company and, going forward, intend to spend more time with Brian face to face versus over email! :)
Thanks and take care,