That $425 million was more or less enough to make whole Good's venture capital investors, who owned preferred stock, but was a shock to employees, who had received common stock and stock options as part of their compensation, and who "discovered their Good stock was valued at 44 cents a share, down from $4.32 a year earlier."
The buyer was BlackBerry.
What went wrong for these employees? Of course there is a simple answer, which is that they were employee-shareholders of a company, and the company's stock went down, and so their share holdings lost value. That happens to lots of employees at lots of companies, and if Good's employees want to complain, they are unlikely to find too many sympathetic listeners at BlackBerry. (In the last five years BlackBerry's stock slid from nearly $60 to under $10.)
Still it feels like there is some difference between Good and Blackberry, some reason we should feel worse for Good's employee-shareholders than for the average public-company employee-shareholder whose stock goes down. An obvious possibility to start with is that Good was a private company, so there was no public trading market for its stock. Except that there was a market for Good stock, and Good employees - at least some of those mentioned in the article - were buyers, not sellers.
You know what I think: Private markets are the new public markets, and private companies now have many of the amenities that used to be limited to public markets. So, private companies can have trading markets for their stock, letting employees get liquidity at market-derived prices. Good's stock wasn't listed on Nasdaq or anything, but employees could sell if they wanted to, and could get a sense of the arms-length, third-party, market-ish price of their stock. But they chose not to sell - they chose to buy - because they thought the market price was too low.
Another possibility is that, unlike public companies, Good wasn't subject to Securities and Exchange Commission rules about disclosure, and so perhaps Good's investor-employees were deceived by bad or insufficient financial disclosure.
But Good had filed to go public, and so actually had a fair amount of disclosure. It had filed its audited financial statements as of the end of 2014. Its IPO prospectus also included a pile of risk factors.
So it's a mixed bag, but it looks to me like Good's employees were on notice - at least in the sort of formal, SEC-filing sort of way that public company employee-shareholders are on notice - that the cash situation wasn't that great, and they had financial disclosure that was more or less comparable to what you'd get from a public company. But they remained optimistic, held their stock and even bought more.
What else? There is the fact that Good's board of directors turned down an $825 million offer in March, gambling on doing better in an IPO, and ultimately did worse. Again, this is not unique to private companies: Public companies often turn down acquisition offers and end up regretting it when their stock goes down instead of up. But there is a difference: Most public-company boards are made up mostly of independent directors who own common stock in the company, but Good's board - as is common for private tech companies - contained a lot of directors representing Good's venture-capital investors, who owned a lot of preferred stock.
Preferred stock is different from common: Since Good's venture-capital investors were first in line to be paid back, turning down the deal in March was less risky for them than it was for common-shareholder employees.
Good's employee-shareholders faced more or less the same choice as the board: Cash out at a mediocre price ($825 million for the board, $3 per share for the employees) early in 2015, or gamble on a higher price in the IPO. And they both made the same choice: to gamble.
I think that might be the biggest difference between unicorns whose employees get gored when their valuations drop and public companies like BlackBerry whose employees' fortunes are also tied to their stock price: Public-company employees are just supposed to be risk-averse about their employer's stock.
But if you work for a - startup? unicorn? venture-backed technology company? - then the expectations seem a bit different. You are gambling on tech riches with your career, and the way that gamble pays off is when your unicorn goes public and your pre-IPO shares and options make you fabulously wealthy. Selling those shares before the IPO, to minimise your risk, misses the whole point.
But, again, you know what I think: Private markets are the new public markets, and companies with nine- and ten-digit valuations, hundreds of employees and years of operating history aren't dorm-room startups. Private-company trading is catching up with public-company trading; private-company valuations are catching up with public-company valuations. But private-company expectations haven't quite caught up yet.
The writer is a Bloomberg View columnist