Stock Based Compensation

“So, we, we've given roughly the same amount of stock every year in terms of absolute amount. It's roughly three hundred million dollars.”

“And so I kind of think like at some point the next shoe will drop and all of these tech companies have to really look at stock based comp because they literally incinerate most, if not all of their free cash flow fighting the dilution from stock based compensa…”

“For developed enterprises, it's not the best route. The best route is, to me, a much simpler one. If you create value working in a project, or you create value to whatever degree you create it, You should share in that value on a cash basis, meaning any time p…”

“But it's such a bogus metric. You know, the stock-based compensation, which is ignored in that metric, that's a real expense. And you all know it's a real expense, because if you weren't allowed to use stock-based comp, you'd have to pay cash comp, ok?”

“Some companies sort of like hype up their stock, and I feel like that's a mistake because what you do if you have a lot of stock-based comp is you're basically pulling forward the compensation that was going to go to all the people you're about to hire, And yo…”

“And for a tech company, oftentimes stock-based compensation happens to be the single largest expense component of a tech company. And yet somehow inexplicably, even though it's the largest single expense component of that company it is not considered to be eve…”

“When you don't, when you proforma something out, right, when you stop treating it like cash, right, it leads to a misallocation of resources because you're effectively saying this doesn't exist, and when you know, what happens when the cost of something disapp…”

“On a chart of maybe 40 or 50 names, we have maybe 10 names that are under 20% of their free cash flow as a percentage of stock-based compensation.”

“If you dilute free cash flow by 30 to 35% every single year for 20 years, guess what? Your dilution is 35%, you know. It's not a half of, it's not 50 basis points, it's not one percent, it's not two percent, it's literally, you know, a third of the company.”

“If you replace humans with bots, which is what this is, you're going to crush those things. SBC at the limit goes to zero because you don't have to give stock to a bot, right?”

“They paid employees 40 times the free cash flow that was generated for shareholders during the year, which is also equivalent to 10% of the enterprise market value of this company.”

“100%. This has been the greatest grift in the history of Silicon Valley for sure.”

“Coinbase, I think just reported SBC, which Hold your hat, Saks, was 70% of revenue. Not 70% of their earnings. 70% of their revenue.”

“So this company's been making money every quarter. They generate cash. But in the last quarter, they issued sixty million dollars in stock to employees to compensate them for the work that they do. So that's two hundred and fifty million roughly of dollars per…”

“And so what's, I think the single biggest conversation going on in boardrooms in Silicon Valley today is, hey, can we have a little bit more stock this year, whether it's options or whether it's outright RSUs, to give to employees, because if we don't give it …”