Lyft Is Angry About Lockups

In my former career, I was in the business of structuring derivatives, which in my case often meant that I was in the business of saying no to derivatives. “Derivatives” is sort of a vague term, and there is a persistent folk belief that they have magic powers, that any legal or financial problem can somehow be solved by doing a derivative. In this folk belief, the derivative structurers are wizards with arcane powers, respected and feared as long as they can make the rains come, but also treated with great suspicion when the harvest fails. I had a lot of conversations like this:

At this point I would say I had to jump to another call, but it is important to point out that I wasn’t very good at this. If you were really good, you would construct a magical derivative that would somehow thread the needle, hedge the client’s risk and not violate the agreement. If you were slightly less good, you would construct a derivative that wouldn’t hedge the client’s risk, but you’d be a good enough salesperson to pitch it to the banker and maybe even to the client. (Short a basket of correlated stocks, sure!) If you were … let’s say, average … you would construct a derivative that would hedge the client’s risk and definitely violate the agreement, sell it to the client, and let him worry about getting sued.