The NASPP Blog

Earlier this week, Facebook completed its acquisition of WhatsApp, with a final valuation of the deal coming in just under $22 billion. Yes, that is “billion” with a “b.” If you guessed that the bulk of that $22 billion comes in the form of stock, you would be right. Facebook paid $4.59 billion in cash, and the remaining $17 billion was paid in shares (178 million of them). In addition, employees of WhatsApp received a cumulative 49 million RSUs, vesting over the next 4 years. Acquisitions are nothing new, but there was a certain buzz around the periphery of this deal that seems to be pointing towards a new era of Internet entrepreneurship.

It hasn’t been that long since the dot com boom swept Silicon Valley and the world of stock administration, but it sort of feels like a distant memory with the recession etched even more recently in our minds. Almost as soon as we forgot the “boom” and “bust” of the dot com era, familiar rumblings began again. Late last year, Forbes magazine published an article suggesting that a new era of Internet start ups is upon us. In that article, the author shared data from the Kaufman Index of Entrepreneurial Activity (KIEA) that the entrepreneurial rate in the U.S. is already well above the dot.com bubble of 15 years ago. I’m no Internet expert, but if the WhatsApp deal is any indication, maybe it’s true.

Time will tell whether a new era is upon us. The Wall Street Journal and Dow Jones VentureSource now have a running list called “Billion-Dollar Startup Club“, which seeks to keep track of start ups that are valued $1 billion or more by venture capital firms. Currently at the top of the list is cab-hailing app Uber – with a valuation of $18.2 billion (as of June 2014). Not every M&A deal comes with a billion dollar valuation or price tag, but, as the Wall Street Journal points out, that club is getting less exclusive. And with more growing companies moving into the Billion-Dollar Startup Club, we’re certainly hearing about deals loaded up with stock compensation – many of which are creating instant paper wealth, and not just for founders. We’ve covered a lot of new ground in stock administration over the past 20 years, and the interesting part is that we just don’t know what lies ahead. If there is a new generation of start ups on the horizon, hopefully that signals a broader reach for stock compensation as companies get creative in sharing their wealth (or potential wealth) with employees.

-Jennifer