October  9, 2011  source: San Francisco Chronicle, SFGate

 Venture capitalists have long been known to toss the occasional bone to an entrepreneur working 100-hour weeks on a meager startup salary. But we're talking pay-down-the-mortgage money, not retire-on-a-private-island money. — Nat Goldhaber

Early payouts to startup execs a troubling trend

by James Temple, San Francisco Chronicle

An embarrassing e-mail that recently leaked onto tech blogs revealed that Airbnb's latest venture capital round includes a $21 million cash-out for the company's founders, extending the disturbing trend of generous early payouts at tech startups.

In the note intercepted by All Things D, venture capitalist Chamath Palihapitiya told the San Francisco company's chief executive that he was passing on the recent $112 million round not because of the cash-out, but because it failed to adequately spread the financial love to rank-and-file employees.

“I really think you can do better than this … and that you are better than this,” Palihapitiya wrote.

Much of the subsequent coverage focused on that well-deserved smack and, in the end, Palihapitiya agreed to participate after a deal was reached to provide the staff some form of liquidity. And so once again all was well across the shimmering valley of silicon.

Or was it? Little noted in the blogs was the cash-out itself. You wouldn't know it from the way some companies and venture capitalists are acting today, but this is a new phenomenon, at least at these multimillion-dollar levels. And it's a very troubling one in the eyes of some investors.

Nat Goldhaber, managing director at Claremont Creek Ventures in Oakland, said venture capitalists have long been known to toss the occasional bone to an entrepreneur working 100-hour weeks on a meager startup salary. But we're talking pay-down-the-mortgage money, not retire-on-a-private-island money.

A big chunk of the $200 million to $300 million round that Dropbox is now raising will be set aside for founders, according to reports in both VentureBeat and TechCrunch./

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Read the full article by James Temple at SFGate