Talent AcquisitionsThe current climate of startup acquisitions, and the notion that your startup is your resume.

Acquisitions – 30,000-foot View

Companies always have a choice with a new feature Build Buy (Acquisition!)

BigCorp pays cash and stock to equity-holders in SmallCorp, and all property of SmallCorp is transferred to BigCorp Physical and intellectual property Software, products, etc. Typically, shares of BigCorp vest over a timeline

Reasons to Aquire

Require an asset of SmallCorp Product, methodology, intellectual property, human

capital Example: CoTweet (http://www.washingtonpost.com/wp-

dyn/content/article/2010/03/02/AR2010030201392.html)

Competitive Reasons Become the biggest player in the space Odd example: TweetDeck

(http://techcrunch.com/2011/05/02/twitter-to-buy-tweetdeck-for-40-million-50-million/)

Acquisitions are Investor Fodder

If you take money, they’ll want it back.

Acquisitions are the #1 way to return money to investors.

Talent Acquisitions

Purpose of the acquisition centered around the team

Typically smaller teams (<10 people)

More common now in software startups

“It's largely a process of elimination. And signals that the product will be discontinued. ” –Mike Arrington (http://www.quora.com/How-do-tech-blogs-(like-Techcrunch)-know-that-an-acquisition-was-a-talent-acquisition)

Facebook Acquisitions

Parakey – Facebook’s First Acquisition (http://gigaom.com/2007/07/19/facebook-buys-parakey/, http://techcrunch.com/2007/07/19/breaking-facebook-has-acquired-parakey/) Basically paid $4 million to hire Joe Hewitt (Firebug, FB for

iPhone) and Blake Ross (Firefox) “Facebook’s new mission: buy all talent under 25 in the

Palo Alto-Mountain View area.” –Om Malik

Facebook Acquisitions

FriendFeed (Paul Buchheit)

DivvyShot (YC-backed)

NextStop (Ex-Googlers) (http://techcrunch.com/2010/07/08/facebook-nextstop/)

Drop.io (Sam Lessin) (http://techcrunch.com/2010/10/29/facebook-acquires-drop-io-nabs-sam-lessin/)

Not Just Facebook

Seeing the trend with Zynga and others (http://emoney.allthingsd.com/20110405/zynga-continues-talent-acquisitions-by-placing-chips-on-online-poker/?mod=ATD_rss)

Top Talent is Hard to Find

Your startup is your resume

Development is commodotized (think outsourcing)

Some companies (Facebook, Dropbox, etc.) have defensible competitive advantages built around engineering talent

Nothing says you are capable of a job like doing it independently

A startup is, at the very least, a differentiator on a resume http://sahillavingia.com/blog/resume-building-and-talent-

acquisitions./

A Quick Note on Valuations

Typically, companies are valued at a multiple of earnings, or projections on what the products / assets will add to the BigCorp

Talent acquisitions affect negotiations greatly Companies are basically making a very expensive hire

(and wager), and it’s more like a high-stakes salary negotiation