Anything is a possibility. I’m just projecting what I think is most likely based on my experience in a broad range of M/A deals and presuming sophisticated/rational parties involved in the transaction.
Given TR being a CA company, you are probably right (I have no insight). But her interest (or lack there of) in Zwift may result in her either: going along for the ride or being bought out by Z (lots of dependent factors). BTW: Nate’s equity compensation will come in 2 parts - 1) the portion for the value of TR at time of acquisition, and 2) an upside incentive (e.g. 3 or 4 year vesting schedule).
Could be the shareholders (whoever they are) want out and TR doesn’t have the cash to buy them out. I would hate to see the present value of TR if shareholders get greedy.
TR is a Nevada domestic LLC. On the Nevada Secretary of State site Nate is listed as the only member. Not sure if all members are required to be disclosed by the state of Nevada.
Sure, absolutely…and other possibilities as well. I was just trying to illustrate that simply because a company is bought doesn’t mean that it is failing or running out of cash, etc.
A lot of equity Peleton Equity holders got very rich on that IPO. It’s IPO’d at $29. Some folks might have cashed in at that point and might have put a lot of $ in their pocket. For those that held on a bit, it peaked around $150, so that would have been a good time to sell if given a crystal ball. Even the “crash” has only brought it back down to $27, so it’s worth directionally the same as it did at the time of IPO. An IPO in itself is usually positive because it gives stakeholders a way to sell their portion of the company without having to sell the entire company. If TR was a public company right now, Zwift could still acquire them, but each individual owner could make a decision if they still want to cash out or bet on the future growth of the company. The struggle with a private company with multiple owners is that it’s really hard to determine company value and cash individuals out unless a sale happens.
Yeah, but they caught lightning in a bottle…they went public in late 2019, riding successful market gains, but then COVID hit and it simply exploded. That is highly unlikely to happen to Zwift (and numbers indicate that it already has declining participation / membership).
And given the time frame that most people have to hold shares before they can cash out, betting on IPO success is a massive gamble, IMO (and I would argue it is increasingly unlikely to happen now).
A pending divorce (in a community property state) for a major equity holder will almost always create this dynamic for a private company. There is no easy way to determine value and that becomes a fight. Even if value can be agreed upon, nobody has the cash to write a check for half the value. The stakeholder doesn’t want a long term payout, they usually just want out. An acquisition solves all of that really quick. We’re all doing a lot of speculation here and there may not even be an acquisition in play right now, but it fits a really common pattern.
Stock vesting rules certainly vary, but an IPO is just establishing market value and providing a path to sell your shares. There isn’t anything really negative about it. A lot of folks got rich at peleton before the “lightning” happened. I’m sure they were kicking themselves for cashing out when it want to $150, but maybe not so dumb after it dropped back down to earth.
I agree that taking an equity stake has risk, but it’s a risk/reward thing. If they never IPO, there is generally no way to get the equity out unless the company is sold again and that’s not a guarantee either depending on how the deal is structured.
LLCs are a legal entity under US tax code, and each state has different rules on formation. I’ve setup LLCs and S-Corps in Oregon, California, and Texas. Nolo press has some good high-level articles about LLCs and state-level requirements.
As difficult as this may have been/is financially, this would be a great scenario for Nate (i.e. ability to focus on the business, with results flowing to him).
Edit: I looked up TR at MA business entity search and they filed 10 August 2021 (pdf available from that URL) as foreign LLC, clearly showing TR as a Nevada LLC, and listed Nate and Chad as managers.
Like the podcast related stuff, I like variety. That “serious” stuff is great for those that want it. I am more into the “playful” side of this right now
I actually think this is evidence of something in the works. If they could raise legacy pricing with minimal subscription losses and it end in a net gain, then that would help their valuation. Or… perhaps legacy pricing was contention do the deal, and he was trying to get a grasp of how it could get resolved. Note that alot of people used the “he made a promise” arguement. Well that promiss is gone if zwift owns TR, so there is a data point he gathered. Either way, I think the timing of that supports that some kind of thing, maybe not a total acquisition is in the works.
I covered this earlier, but here’s a summary: It is highly likely that Eric laid out to Nate that TR’s grandfather pricing approach could be a significant impediment to growth and is certainly not scalable for a growth-focused company, such as Zwift. [Speculating] So Nate agreed to test the waters on TR customer reaction on the Forum.
IMO, just a smoke screen. The way he framed the pricing question seemed completely out of character for Nate. In fact, if you go through the responses where you would have expected a response from Nate (e.g. product-market fit), he didn’t participate, and yet where he did was incidental matters.
