# Former Uber employees have gone into debt to hang onto shares they still can’t sell



## jocker12 (May 11, 2017)

Uber employees are lining up to sell their stock to Japanese technology giant SoftBank, which will buy up to 17% of outstanding shares for $33 each. The price represents a 30% discount to Uber's last valuation, of nearly $70 billion, but for current and former employees, the SoftBank tender offer is a rare chance to convert paper wealth into actual cash.

"Everyone's been reconnecting to discuss the tender offer," Lane Kasselman, a former communications lead at Uber, told Quartz. "A lot of the former employees have been waiting two to four, even five years, to see liquidity, so it's pretty exciting."

To qualify for the tender offer, participants must have at least 10,000 Uber shares and be "accredited investors," an SEC designation (pdf) for wealthy individuals. Current Uber employees can't sell more than half of their stake; there are no restrictions on former employees. The deal is on the table until Dec. 28, and could fall through if there aren't enough shares on offer for SoftBank and a small consortium of other investors to purchase at least a 14% stake in the company.

Working at a successful startup is often viewed as a quick path to prosperity, but the reality is more complicated. Startups tend to offer equity packages, typically in the form of stock options, to compensate for below-market salaries. But as companies like Uber have stayed private longer, most employees haven't been able to get rich from those shares. Quite the opposite, some former Uber employees have gone into debt to hang onto shares they still can't sell.

Two former Uber employees, both of whom left the company in 2016, told Quartz that Uber gave them just 30 days after departing to exercise their options. One of those former employees paid about $100,000 to exercise more than 20,000 incentive stock options (ISOs), plus a tax bill of over $200,000. The other paid about $70,000 to exercise about 5,000 ISOs, and then about $160,000 in taxes. Both former employees took out loans from family members to make the payments, and requested anonymity to discuss their personal financial situations.

Uber, founded in 2009, is the world's most valuable technology startup. From 2013 to 2016, the ride-hailing company's valuation climbed from $3.5 billion to nearly $70 billion.

"It makes you start thinking, is this a real bubble, around Uber?" one of the former Uber employees told Quartz. "Everyone I know, when they were in this situation, really thought about leaving their shares on the table, because it was so much money out of pocket."

Under current tax law, the income from exercising ISOs, a special type of option typically reserved for executives and senior employees, falls under an alternative tax calculation designed to prevent high-earners from using deductions to avoid paying tax. Non-qualified stock options, more commonly awarded to regular employees, are taxed the year they're exercised on the gain in the stock.

Andrea Coombes, investing and retirement specialist at personal finance site NerdWallet, calls this the "dark underside of the stock-option dream." "Potentially they can be worth a lot of money to employees," she said. "But as an employee who's holding stock options and hasn't yet exercised, it's smart to think of those as a potential benefit, not necessarily money in the bank."

Until this year, Uber gave former employees 30 days to exercise their options, an unusually short window of time. Options that weren't exercised by former employees before they expired were reabsorbed by the company. Uber changed its policy (paywall) in the spring so that former employees now have up to seven years to exercise their options.

Uber prohibits the sale of its shares on so-called secondary markets. Employees who have been at the company for at least four years can sell up to 10% of their holdings back to Uber at a discount, though not one as steep as what SoftBank is currently offering.

Uber declined to comment.

Travis Kalanick, Uber's co-founder and former chief executive, famously said he'd take the company public "as late as humanly possible." Dara Khosrowshahi, Uber's CEO since late August, has said he'd like Uber to go public by 2019.

https://qz.com/1149381/uber-softbank-shares-debt/


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## heynow321 (Sep 3, 2015)

Kinda hard to dump your shares on the gullible public with such a crappy business model .


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## jocker12 (May 11, 2017)

heynow321 said:


> Kinda hard to dump your shares on the gullible public with such a crappy business model .


It's called geek stupidity.


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## Rat (Mar 6, 2016)

jocker12 said:


> Uber employees are lining up to sell their stock to Japanese technology giant SoftBank, which will buy up to 17% of outstanding shares for $33 each. The price represents a 30% discount to Uber's last valuation, of nearly $70 billion, but for current and former employees, the SoftBank tender offer is a rare chance to convert paper wealth into actual cash.
> 
> "Everyone's been reconnecting to discuss the tender offer," Lane Kasselman, a former communications lead at Uber, told Quartz. "A lot of the former employees have been waiting two to four, even five years, to see liquidity, so it's pretty exciting."
> 
> ...


So where is the debt?


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## heynow321 (Sep 3, 2015)

Rat said:


> So where is the debt?


 The people exercised their incentive stock options aka they were essentially given stock which is considered an economic gain aka The taxman wants his cut. The problem though is there is no liquid secondary market that these people can sell their shares in and turn them into cash . So to pay for their tax bill they have to borrow the money from other sources.

Pretend you won a car that was worth $30,000 which would be considered an economic windfall or gain thus you would need to pay taxes on it. Let's pretend the tax bill is $8000 and for whatever reason you can't sell the car because there are no buyers for it. You would have to borrow that $8000 from somewhere because uncle Sam needs to get paid.

That shit happens to game show contestants all the time


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## uberdriverfornow (Jan 10, 2016)

Rat said:


> So where is the debt?


they took out loans to exercise the stock options

some idiot really paid $70,000 which also cost them $150,000 in taxes ? that can't be right


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## Mars Troll Number 4 (Oct 30, 2015)

uberdriverfornow said:


> they took out loans to exercise the stock options
> 
> some idiot really paid $70,000 which also cost them $150,000 in taxes ? that can't be right


A stock option isn't what you think it is.

A stock option is only the right to buy stock (at a reduced price), not actual stock.

So these employees had to pay both money to buy the stock, and taxes for getting "paid" the discount, then they have to hold onto it until they can actually sell it to someone.

They had to borrow money to pay $70,000 worth of stock that's theoretically worth $600,000


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## uberdriverfornow (Jan 10, 2016)

Mears Troll Number 4 said:


> A stock option isn't what you think it is.
> 
> A stock option is only the right to buy stock (at a reduced price), not actual stock.
> 
> ...


you're only taxed when you dispose of the stock, rather, sell it, there is no tax just for buying it, even at the discount

https://www.thebalance.com/incentive-stock-options-3192970

*



Tax treatment of exercising incentive stock options

Click to expand...

*


> Exercising an ISO is treated as income solely for the purpose of calculating the alternative minimum tax (AMT), but is ignored for the purpose of calculating the regular federal income tax.


the only tax you will pay is based on the difference in price between the what you originally paid for it and what you wound up selling it for


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## Rat (Mar 6, 2016)

heynow321 said:


> The people exercised their incentive stock options aka they were essentially given stock which is considered an economic gain aka The taxman wants his cut. The problem though is there is no liquid secondary market that these people can sell their shares in and turn them into cash . So to pay for their tax bill they have to borrow the money from other sources.
> 
> Pretend you won a car that was worth $30,000 which would be considered an economic windfall or gain thus you would need to pay taxes on it. Let's pretend the tax bill is $8000 and for whatever reason you can't sell the car because there are no buyers for it. You would have to borrow that $8000 from somewhere because uncle Sam needs to get paid.
> 
> That shit happens to game show contestants all the time


I don't think any tax is due until they sell the stock


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## UberIsverycaring (Dec 5, 2017)

Rat said:


> I don't think any tax is due until they sell the stock


Oh Rats!!!


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## tohunt4me (Nov 23, 2015)

Thousand of Uber Drivers have gone into debt providing a service at rates below value in forced Subsidation of Uber.


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## Who is John Galt? (Sep 28, 2016)

Rat said:


> I don't think any tax is due until they sell the stock


Your first three words are correct.

.


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## tohunt4me (Nov 23, 2015)

UberIsverycaring said:


> Oh Rats!!!


Uber Cares !


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## Cynergie (Apr 10, 2017)

Well now, KARMA IS A REAL B*TCH. 

China will be invading Mexico with Didi in 2018. This will be LyfUber's game changer in N. America next year. 

https://www.theverge.com/2017/12/7/16748178/didi-chuxing-mexico-expand-ride-hail-uber

Looks like Uber's employee drones are seeing the writing on the wall. Rat's are starting to leave the ship folks. 

This Uber employee/shareholders dumping their shares is sweet music to my ears. Because I hope every CS rep that sent me a canned FUBAR response to my genuine concerns and complaints as a driver gets PUNISHED by evil Karma, Murphy's Law AND Lady Fortune, the Goddess of Fate who controls the stock market.

And it's getting worse with Uber exceeding it's $30Billion/quarter burn rate. Uber burned 2X as much as Didi and 7X as much as Lyft in 1Q 2018 this year. Yet investors are STILL insisting on propping up this operationally failed leviathan.....

http://www.zerohedge.com/news/2017-...-uber-opens-its-books-shows-staggering-losses

The rideshare industry is a market with billions in potential to be made. Don't see it going away anytime soon given the growing demand and inability of the taxi industry and public transportation sector to meet it. But to be profitable in this market, you need a profitable business model that doesn't depend on investor money subsidizing the cost of every pax ride. Just so you can claim to be the cheapest rideshare on the market (with the ultimate intent of retaining your market leader status by growing the fastest).

IMO, to be a profitable rideshare, you need an efficient operation that actually generates increasing revenue on a consistent basis. This means RAISING fares to make them profitable for your accounting department, RAISING fares to make them operationally competitive for your driver base and investors, have a transparent driver ranking system that REWARDS top tier drivers, dropping FAKE SURGES designed to control where drivers go etc etc. All without cutting/cheating the very drivers who generate that very revenue for the shareholders. Basically cease and desist screwing over drivers the way Lyft now apparently excels at doing.

When will Uber's investors stop insisting on subsidizing pax rides with their investment dollars? When will they quit this reverse pyramid scheme? Smh

With Didi in the western hemisphere, China will undoubtedly use Mexico as stepping stone to attempt market penetration in N America. Then it's GAME CHANGER TIME. Assuming bilingual LyfUber drivers don't jump the gun and attempt to moonlight by driving in Mexico for Didi that is. LMAO

*IMO as of next year based on it's current business model, Uber is going to be a sinking chicken. With the Titanic trussed to it's leg. All the way to the bottom of the Mariana's Trench....*

_And I hope Travis, Uber's Board of Directors & 100% of Uber CS employees go with it._ 

edit:

".._.Two former Uber employees, both of whom left the company in 2016, told Quartz that Uber gave them just 30 days after departing to exercise their options. One of those former employees paid about $100,000 to exercise more than 20,000 incentive stock options (ISOs), plus a tax bill of over $200,000. The other paid about $70,000 to exercise about 5,000 ISOs, and then about $160,000 in taxes. Both former employees took out loans from family members to make the payments, and requested anonymity to discuss their personal financial situations_..."

This made me laugh.

Just like with Amazon, high tech company employees don't voluntarily jump ship unless they have

1) a superior job offer from an industry competitor
2) voluntarily left because they were victims of sexual harassment (or other company policies) or
3) involuntarily pushed out because they were the perps of said victims in #2

Uber has had the distinction of all 3. With departing CEO/execs for other Silicon Valley employers, disgruntled female employees, and over sexed male employee predators in that hyper-masculine Enronesque work culture of theirs....

My guess is these are most likely employees from the ones Uber fired last year over the 2016 sexual harassment scandal. LMAO


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## jocker12 (May 11, 2017)

Cynergie said:


> Well now, KARMA IS A REAL B*TCH.
> 
> China will be invading Mexico with Didi in 2018. This will be LyfUber's game changer in N. America next year.
> 
> ...


100% agree with every single word you've written.


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## ABC123DEF (Jun 9, 2015)

tohunt4me said:


> Uber Cares !


Yes...Uber cares...about UBER!


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## UberIsverycaring (Dec 5, 2017)

jocker12 said:


> 100% agree with every single word you've written.


I agree with 98.5% of it.


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