Is it a bad sign when a CEO of a company sells his stock?

Generally, yes.

In public markets, it is always not a positive sign. If it is a small amount, fine.

CEOs of public companies are typically not the founder. They are salary man (in Japanese terms) there with the goal to make bonus from LTIP and STIP structures. If they are selling it flags they don’t believe the stock is going to go up.

They typically are rich enough to not need money.

VCs let founders take money off to chill out

In startup land. if a founder sells it is normally because the wife is nagging and VCs want the founders to knock the growth out of the park without the founder worried about ending up with nothing.

VCs have fingers in many pies, founders have one finger and one pie.

I have friends with companies worth between $30m and $2b.

  • Property company – bunch of kids got out way early. Startup failed
  • Food company – CEO got $ to buy a house in Bangalore. Still going fine
  • Fashion company – got enough to buy a house. Company sold at a fire sale as couldn’t close their round

In all these cases the VCs wanted the founders to operate without being stressed. They don’t give you F_-U money, but they cover the downside in secondaries.

WeWork Co-Founder Has Cashed Out at Least $700 Million Via Sales, Loans

WeWork Cos. co-founder Adam Neumann has cashed out more than $700 million from the company ahead of its initial public offering through a mix of stock sales and debt, people familiar with the matter said—an unusually large sum given that startup founders typically wait for the IPO to monetize their holdings.

This is shady as s***.

You don’t sell out pre-ipo unless you have a reason.

Let’s see what happens… I wrote this in 2019. Guess what happened, lol.

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