Silicon Valley cash by selling private actions

By Brad Stone

Vince Thompson does not appear in the Facebook accounts early. Few more 2 000 employees of the company even know his name. Brief passage of the veteran AOL (AOL) as first official ad-sales leader Facebook lasted less than six months. Despite this, when Thompson left the company in early 2006, it has exercised its options to buy shares of Facebook, as is the custom in Silicon Valley and has taken a significant share of the shares with him. About 18 months later, he moved to Los Angeles and began to consult for clients of media, such as the TVGuide.com on how to exploit new sources of income, and he began to think about how to create one for himself. He embarks on a quest, talk to friends in New York investment banking world, an unorthodox idea: sell part of its shares in Facebook, packaged with a colleague who had left Facebook, shortly after he did. (Thompson declined to comment for this story).

The idea seems very little practice because Facebook was not - and still is not - a public company. Who could buy shares? How could any outsider value a small business, with virtually no income?

A banker introduced Thompson in a New York firm called Restricted Stock partners, who, in mid-2007, had a small office park in the farm with two Windows that appeared on a brick wall. The firm specialized in facilitating trades in illiquid securities, such as the assets of bankrupt companies and preferred shares in public companies whose owners have special rights. Mobile Facebook stock would be any other type of transaction, but the tiny firm was looking for a chance to break into the market for private company stock.

Experience resulting stretching for several months, mainly because potential buyers could not deal with Thompson on a price. Finally, using Microsoft (MSFT) investment of 240 million in Facebook in October 2007 in a tag, a hedge fund purchased the shares at a price that assessed the social network accruing $ 7.5 billion. Net trade in Thompson and his partner million.

This sale - among the first of its kind - sends shock waves around the insular world of employees of Facebook and investors. Facebook shareholders could become rich regardless of the plans of the company for an initial public offering. Soon other former Facebookers were buzzing on the opportunity and investors and other companies in pre - IPO employees began to think about the receipt of their assets as well.

Partners of restricted Stock that, in the following year, executed several similar Thompson trades and a few other former employees of private, conducted business that he had found the opening that he sought. "The speed with which we have acquired private-company inventory after the initial trade was shocking," says Mr. Adam Oliveri, Director General of the Cabinet. It was"a smack in the face that there's something in this market, and we started turning our attention to it." In 2008, the company changed its name to SecondMarket.

Trade Facebook of Thompson and the other alleged secondary market operations which followed, the dynamics of creation of wealth in Silicon Valley have fundamentally changed. Transform the private company stock in cash, generating potentially massive wealth - even if you have worked briefly at a startup which is currently little money - is a click on sites like SecondMarket and its rival on the West Coast SharesPost, as well as via a network organized buyers and sellers that sprouted up to almost from one day to the next day.

View the original article here