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Talent Acquisitions

Talent Acquisitions. The 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!)

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Talent Acquisitions

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  1. Talent Acquisitions The current climate of startup acquisitions, and the notion that your startup is your resume.

  2. 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

  3. 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/)

  4. Acquisitions are Investor Fodder • If you take money, they’ll want it back. • Acquisitions are the #1 way to return money to investors.

  5. 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)

  6. 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

  7. 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/)

  8. 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)

  9. 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./

  10. 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

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