
Talent Acquisitions - davisml
http://www.marco.org/2012/07/20/talent-acquisitions
======
jazzychad
Well, congrats to Marco for having a successful and sustainable business where
he has the option and leverage to decide what he wants to do when these offers
come knocking.

 _Most_ startup/bootstrapped companies are not in that position. Most end up
failing and winding up with nothing, but there are some that will end up with
these talent acquisition situations.

Remember, both sides (the acquirers and the acquirees) have to agree to the
deal. Google doesn't just come along and say "we want to acquire you for your
talent" and the other side has no say in the matter.

In this situation you are faced with a choice. Talent acqs happen because a)
the acquire target is not really doing that well, and b) they have a group of
people that work well together that the acquiring company wants to keep
together to do great things under their umbrella.

Given the choice between: keep working on your low-to-modest traction product
which isn't producing a lot of revenue and wonder how you might pay rent next
month OR a multi-million dollar check/stock offer at a large, successful
company... which would you choose? I would take the check in that situation.
Sometimes you can't achieve your world-changing vision before your investor
and personal money are gone.

The goal of a company should be to succeed and be self-sustaining, of course.
But sometimes that doesn't happen, and these talent acqs happen for a reason.

~~~
tptacek
I didn't get that from Marco's post _at all_. I heard a developer saying "stop
blaming indie developers for accepting generous offers from companies and
start supporting their products instead".

~~~
joshstrange
I got a similar vibe. Also I DID support sparrow. I told absolutely every
person I know with a mac that they should use sparrow. Every computer I setup
at work and for friends I installed sparrow by default. I have tweeted about
loving sparrow. I'm really not sure what more I could have done other than
wear a sandwich board around with their logo on it. That STILL didn't stop
them from being bought out...

~~~
tptacek
The market price for their desktop app was $9.99. How much support do you
think you were really offering them?

~~~
ajross
Which brings up a great digression: the app store gold rush has left us in a
situation where it's no longer feasible to sell high-maintenance, low-market
software directly to consumers. Consumers will buy games and media in high
volume, so you can sell those at a discount. But email clients? Photo apps?
Nope. The only way to make that stuff is to sell it as some kind of "cloud"
service where you make your money on eyeballs elsewhere. And even then you
generally can only make it big that way as part of a larger product suite
(c.f. Instagram).

I'd look to the open source world for good geek tools, honestly. I think
expecting people to sell them to us in the app stores just won't work. No one
will buy this stuff at the $50/seat the developers would have to charge to
avoid the Google and Facebook buyouts.

~~~
wensing
I love a good pricing discussing so I wish I knew what you were saying when
you say:

 _The only way to make that stuff is to sell it as some kind of "cloud"
service where you make your money on eyeballs elsewhere._

And

 _No one will buy this stuff at the $50/seat the developers would have to
charge to avoid the Google and Facebook buyouts._

Can you please re-state? For some reason I can't follow.

~~~
nitrogen
I'm not the OP, but I read those two statements something like this:

1\. The minimum price to sustain development as standalone software is
$50/seat.

2\. Consumers will not pay $50/seat for this software.

3\. Some businesses have been successful with cloud-based monetization.

4\. Therefore, the best chance for success is to sell a cloud service, rather
than standalone software.

~~~
ajross
That's exactly it. Though to be fair, I pulled the $50 number out of you-know-
where. The point is more that the caramel-latte-priced software model only
works for items with huge volume.

------
terhechte
I'm the author of the popular Mac Instagram Client "InstaDesk"
(<http://www.instadesk-app.com>) and I can only confirm this. The reason why I
started this whole thing was because I was fed up with working in corporations
and not being able to control my life. Now I can enjoy the sun during the day,
outside, sitting at a lake, and work late into the evening - or vice versa
work at the lake.

Even if a huge corporation would offer me a lot of money, I still wouldn't
want to join since I would loose so much more. Money doesn't make me happy,
freedom does. So, as long as InstaDesk (or other, future, apps) generate
enough money for me to survive, I really doubt I would sell (with the
exception that if the offer is, just as Marco said, really good _and_ the
continuation of InstaDesk is guaranteed).

However, a free life where I'm not obliged or controlled by anybody is just so
so so good. (I say this after having worked in IT companies and startups since
2000).

So yeah, support the products you love, and spread good news about them, and
give them good reviews.

~~~
Domenic_S
> _Money doesn't make me happy, freedom does._

Guess what money buys?

The only problem (in this context) is that it has to be a fairly large amount
of money, and all in one chunk. Seriously, if Facebook offered you $10MM for
instadesk, under the condition that you'd have to work for them for one year,
you'd turn that down? No way. You'd be silly not to take it, because you could
put in your one year and then be free for (basically) ever.

~~~
buro9
I think that is false.

I think freedom is more like love... money can not buy it, you have to work at
other things to get it. If you think money buys you freedom then you become a
slave to money rather than a person living with freedom.

I've recently quit the corporate treadmill and am working on a startup. I've
gone from an annual 6-figure (GBP) income from my day job and projects, to an
£8k income from one actually profitable bootstrapped company.

I don't think I could go back to the corporate world, and whilst a VC firm is
currently trying to court me I fear it's just a talent acquisition attempt.
I'm not interested in any scenario that isn't me pushing my work forward.

The only thing I'm interested in is the freedom to work today on something
that I care deeply for and believe in. My entire existence is focused on one
this thing: This idea I have must come into being.

No money can stop me from doing this, and that is freedom to me. To, today,
choose everything I do and how I do it. To be happy knowing I have no
distractions just to put food on the table, to be able to dedicate myself to
this.

Today I can truly say that there is no amount of money for which I'd enslave
myself again. Perhaps there might be such a figure tomorrow, but today there
isn't. I live day by day, and I think that tomorrow I will feel the same way.

One fear I had in the corporate world earning that large sum of money... "What
if I never quit and follow my dream?", "What if I spent my whole life working
to secure the ability to follow my dream and then my life ended?". If you can,
go for the freedom today. Money isn't worth it, it's such a bad measure of
success, status, happiness and worth.

That said, if you execute your dream well and others agree. Then I think that
money comes.

So freedom may bring you money... but money won't bring you freedom.

------
smackfu
>If you want to keep the software and services around that you enjoy, do what
you can to make their businesses successful enough that it’s more attractive
to keep running them than to be hired by a big tech company.

Nice words, but I doubt it matters. Sparrow got nothing but support for their
entire company history. Every review was golden. Every user was a paid user.
And they still sold out.

(Or maybe Marco means people should join his subscription program:
<http://www.instapaper.com/subscription> )

~~~
tptacek
This is a series of nonstatements. Obviously, Sparrow did not get so much
support that Google's offer was unattractive. Post as many gold stars as you
want: if Google is outbidding the user base, it's hard to blame the developer
for accepting their offer.

~~~
smackfu
You don't think a message of "support developers or they'll sell out" is a bit
tone deaf today?

~~~
tptacek
No, I think the exact opposite.

------
tb303
So now that I've paid for instapaper for iPhone and iPad, I don't have to give
Marco any more money. That means the only way he stays in business as the
product grows (being that I am not a revenue source anymore) is by either a)
figuring out an additional revenue stream from the data or b) discontinuing
the apps I paid for and charging me for new ones.

The same goes for sparrow. These one-time purchase apps don't have continued
revenue per user. So we can write rants on the internet all we want about
"don't give in to the acqui-hire," but obviously the benefits of taking
google's money greatly outweighed the future of trying to run a business by
selling an app on the App Store.

~~~
JeremyBanks
Instapaper isn't _entirely_ without other revenue. The web interface displays
ads, and he offers a $1/month subscription that improves some features. (I pay
for it so that I can send larger compilations to my Kindle.)

<http://www.instapaper.com/subscription>

~~~
wpietri
Yes. I subscribe not because I cared about whatever features he was offering
at the time. (I think it was all about the iPad, and I've never owned one.) I
did it because I wanted to make sure he was getting paid enough to keep doing
it.

Glad to see that he's happy and feels like he's making enough.

------
dilap
Well, sure, I paid $20 or whatever for Sparrow (twice, actually), and I get
the impression that tons of other people did too, but it didn't make much
difference, did it?

And it never will -- there are always going to be developers who are in it for
the money and will leave you high-and-dry (which is heartbreaking, in a very-
small-violen way, but fine).

My own takeaway is if you don't want your apps to disappear, use open source
apps.

(Except for some reason, open-source apps seem to tend to be terrible, UI
wise. Not sure why this is, though I have a couple half-baked theories.)

------
socratic
Was the intent ever not to get talent acquired?

I'm very confused by all of the anger at Google and Facebook for acquiring
these companies. The companies look like they were designed to get talent
acquired in the first place! They both have very small teams (2--5), Sparrow
at least appears to have taken very small amounts of funding (just seed a year
or two ago), and I can't name a consumer desktop application (especially a
really generic one like mail with tons of free competitors) that has become a
major $1bn+ (or even $100m+) business in the last several years. There
probably aren't enough eyeballs for ads, and App Stores have made consumer
software cost expectations too cheap. What's more, Sparrow is pretty much
designed to make Google's offering better.

Is this interpretation wrong? Could these small teams have built independent
companies (rather than attractive teams for talent acquisition) on Mac desktop
software in 2012?

~~~
sigkill
_> App Stores have made consumer software cost expectations too cheap._

Not just that. Previously when you released a paid desktop app, you weren't
expected to give out free upgrades to the user. With the App store model, if a
user purchases your app at V1, and five years down the line you're making a
V4, the user will probably still feel entitled to getting the "update" (note,
I said update, not upgrade) for free.

~~~
hntester123
What do you mean by update vs. upgrade? Update = bug fixes only vs. upgrade =
more features? Or something else?

~~~
sigkill
Oh sorry I should clarify myself. But yes, you are correct.

Update is basically like bug fixes, or resolving incompatibilities and stuff
like that. [For eg. Windows XP -> SP1 -> SP2 -> SP3]

Upgrade would mean adding new features. Moving along with the times. New
technologies etc.

~~~
hntester123
Got it, thanks.

------
gwillen
If I think you are inclined to accept a talent acquisition if offered, I _will
not use your product_. Why would I? It's insane for me to trust my data to
someone who's going to throw it away to make a buck.

If you accept a talent acquisition, you will -- and should -- have a devil of
a time getting customers at your next venture, having thrown away the
customers from your previous one. Tread lightly.

~~~
dasil003
Sorry, but this is wishful thinking. Being acquihired is not going to affect
any individual's future ventures in any meaningful way. You might scrutinize
every new service's ownership before you click sign up, but you are not even a
blip on the radar.

It might be true that overtime this will erode customer's confidence in
startups in general, but so will being shut down because the founders are
starving. And it's not like major corporations are guaranteeing products for
the long-haul either.

Basically, the whole computer industry is one big case of buyer beware. If you
really care about your data use open formats, open protocols and free software
whenever you can.

~~~
hntester123
I agree with this statement of yours:

>Basically, the whole computer industry is one big case of buyer beware.

But not with this:

>If you really care about your data use open formats, open protocols and free
software whenever you can.

Your first statement actually kind of contradicts your second - if we think of
"buyer" as "user" even if the person has not bought the product - for the
reason given below:

There's no guarantee that a particular free software will continue to be
supported, just because it is free. Example: iText, the popular and widely-
used Java PDF generation library. It was free and open source earlier but some
time back got converted to a commercial for-pay product (except that, IIRC,
you may be able to use it for free if you make your own product that uses it,
free/open source as well).

------
antr
This talent acquisitions issue is also fueled by angel investors and VCs
telling entrepreneurs that (i) they should not focus on revenues/profit, and
(ii) grow fast quickly.

This advice is some of the worst advice to give entrepreneurs, because
revenue/profit is fundamental for any company's survival, and growth does not
translate to long-term success.

Then again, investors are in a constant conflict of interest with owning a
piece of a long-term profitable businesses, and their expertise is not close
to knowing how to manage a profitable business. Having said that, VCs are good
at flipping startups to cash-rich companies, who seem to care little on value
dilution. How many acquired companies have Google, Microsoft, Yahoo, AOL, New
Corp, etc shut down?

Which makes me think: what is the net value of Venture Capital flips to the
economy?

------
rpbertp13
A talent acquisition signals something more than a job offer. It shows that
you're able to conceive and build a product that people are willing to use. It
also means that you've had experience negotiating terms. This is very
important when/if you decide to take an entrepreneurial step after being at
the acquihirer.

All things equal, future investors are more likely to trust someone who has
had an acquisition in the past. You're more likely to get press exposure. All
these things are meaningless if you're building something no one wants, but
they definitely help if you're on the right track.

------
rayiner
I don't understand the point of talent acquisitions. Couldn't you spend half
the amount of money you would have buying the company just giving the
developers enormous signing bonuses to come work for you? Why buy out the
original investors in the target company when it's the developers you want?

~~~
Domenic_S
It's really just a huge premium to get a team of people (this is important)
who have built something similar to what you want to build (also important).

And you get the IP as well, which is nice. In some cases you're consolidating
power and shutting down competitors. It makes a lot of sense in some
situations.

~~~
rayiner
If you paid half that premium to the members of the team, you'd be much more
likely to get them all to come over as a bloc than you are by purchasing the
company. And you'd have the other half left over for hookers and blow.

Unless you value the goodwill or IP of the target company, it makes no sense
to buy out the original investors of the target company.

~~~
drewcrawford
You consider the position of the hirers, but you fail to consider the position
of the investors and the founders. Why would they be incentivized to accept
this offer?

First: why would the investors of a company allow the team to be bought out
from under them? A good investor will align the incentives so that the
founders are incentivized to exit at the same time as the investor.

Second: why would a founder of a successful company accept a hiring deal? Most
founders (heck, most developers) turn down several job offers before the
second cup of coffee. And even if the $ paid to founders for acquisition vs
pure hire is identical, there is an important psychological distinction
between being bought and being hired that affects both the negotiations and
the status and authority of the "employee" at the acquiring company and thus
their wellbeing and autonomy. These factors matter.

~~~
rayiner
If you want the employees, and not the assets of the company, who cares about
the investors and founders? They're not parties to the transaction. How could
they stop the team from being "bought out from under them?"

~~~
gfodor
Usually the founders are key members of the talent being acquired.

------
petercooper
100% agreed. I've been in the same situation a few times lately. However, I
_do_ support people who make the decision because I sure would _if the right
deal were on the table._

Long term though, I'd prefer "talent collaborations" to acquisitions. Did Nike
"acquire" Michael Jordan? Sponsoring and supporting, not acquisition.

~~~
dasil003
No, but if there were a more profitable basketball league than the NBA they
would have got him for sure.

------
yuliyp
I'm having a tough time understanding talent acquisitions.

You have a set of people working for the startup and the outside investors in
the startup, and you have an outside company trying to purchase them. The
outside company offers $X for the company in an acquihire. Let's say all the
outside investors own fraction Y of the company. Why can't the outside company
offer a total of X * (1-.5Y) in signing bonuses to the people in the startup,
leaving both them and the employees strictly better off? Are founders and
early employees just walled off with non-competes to make this not realistic?

~~~
neilparikh
This is explained well in this thread:
<https://news.ycombinator.com/item?id=4272973>

------
DanielRibeiro
Being a long time instapaper user, thanks for sticking with it.

------
andy_herbert
> I was only able to reject those offers because Instapaper is a healthy
> business, and the life that Instapaper provides for me and my family is
> better than what the big companies offered.

The subtext I'm reading here is that none of the offers Marco has received yet
are attractive enough for him accept. So he is in the exact-same position as
Pulp Wallet and Sparrow then, it's likely that quite a few offers came
knocking before the right one came along.

------
usea
My take on this is: 'Tis better to have loved and lost than never to have
loved at all.

If you use and love a product, then the developers get acuihired and the
product dies, getting upset about it is kind of childish. Get some
perspective. You had X months with that product that you loved, it's better
than 0 months.

If you built your own product that relied on theirs, well you knew the risks
going in. Fare better next time.

------
ruswick
I don't understand why people get all bent out of shape when software they use
gets shut down. At the end of the day, it's just one app. They're are plenty
of other options for email clients, and god knows better ones will come out in
the future. People act as if something close to them is going away forever.
It's just an email client and you can still use it, it just won't be actively
updated.

I also don't understand the impetus behind blaming Google or Facebook and
treating it as if they are antagonizing you as a user. They made an offer and
the developers accepted it knowing they would not be able to develop their app
any more. This course of events is one that the developers actively chose.
Frankly, I think it's great that these guys are getting acquired. They worked
hard, caught the attention of a big company and were rewarded handsomely.
After all, that's why they developed the app in the first place: to make
money. There's absolutely no warrant for you to expect that the developers put
their lives on hold so that you can have a piece of software.

As for Instapaper, I think that Marco is disconnected. If he is in a position
where he has enough money so as to be able to ignore offers for his app and
instead run a lifestyle business, fine. I also think that part of his attitude
towards a buyout comes from the fact that, despite that he denies it and
refers to it in jest, Marco is actually fairly rich. He was one of the
earliest employees at Tumblr, a company now worth ~800m. That means that even
the most minimal equity would give him a net worth in the millions. That's
great for Marco. But I'd imagine that very few people are in his place. A lot
of app developers probably dream of being acquired. Who can blame them?
Everyone wants money.

So, although Marco has enough money where he can basically ignore the need to
sell, most app developers don't. The Sparrow guys obviously didn't.

------
loeschg
Yeah it's just a tough situation. Even as a developer, I'm pretty sure I'd
have trouble turning down a huge paycheck to go work for a reputable company.
I've never built anything that's had a huge fan base though.

What are ways to show appreciation for a company/product you like aside from
buying their product, tweeting an occasional praise, and liking their FB
content? Is that enough?

~~~
petercooper
_Even as a developer, I'm pretty sure I'd have trouble turning down a huge
paycheck to go work for a reputable company. I've never built anything that's
had a huge fan base though._

The situation when you _have_ built a big fan base or other sort of
"attention" asset is that taking a job is surprisingly _risky_.

I had this situation with a potential acquirer. The job was awesome, the
company was great, but the goodwill and potential I've built up is too
valuable to part with lightly. Why? The worst case is you get bought out at
too low a cost and then, for whatever reason, you're out of a job a month
later. Now you have a little pile of money in the bank and.. back to square
one. That's a risk regular employed folks don't have.

This is why most talent acquisitions are in the 7 or 8 figures. It's enough
money to eradicate the risk of taking on a full time job and losing one's
hard-built business assets for most people (even low 7 figures each is enough
to pay off mortgages, cars, and have healthy savings).

~~~
dangrover
This. I sold out (Etude), worked for a year or so, and now I just have money
(not seven figures though). Have been floundering ever since trying to put
together the next thing. Having runway kind of makes it worse, even.

~~~
petercooper
Whoa! The music app? I remember seeing that for the first time, had no idea
Steinway picked it up. Congratulations man.

I had a similar situation with one of my first businesses. Low six figure
acquisition and then.. oh, what do I do now? It took me almost 4 years to
figure it out(!) and now I'm back on my feet again. Good luck!

------
nilayp
Sparrow being my favorite app... and Marco's post encouraged me to write a
blog about the state of productivity apps in the App Store.

Excellent apps like Sparrow are damn expensive to write. If Apple cares about
keeping companies like Sparrow alive (they should) they can do two things to
help us.

1) Allow Apps to charge monthly/annual subscriptions. 2) Give ad/social
marketing campaign data to devs so they know which of their efforts to attract
users is working.

More details are on our blog post:
[http://blog.selligy.com/post/27652044305/apple-help-the-
best...](http://blog.selligy.com/post/27652044305/apple-help-the-best-app-
developers-not-get)

------
jonathanjaeger
I agree with the sentiment, but the difference between what you have (a
healthy business, as you mention) and some other acquisitions is that some see
the writing on the wall. True, some businesses throw in the towel too early
for an attractive offer, but others know that without being the leader in a
space they can't live up to their valuations, investment amount, or can't find
a viable and sustainable business model for their product. It all depends on
whether you're still having fun at your current business and whether it has a
chance at succeeding. It's going to vary from startup to startup.

------
bvlaar
This is very reassuring to instapaper users in this m&a environment. Thank you

------
arrowgunz
>I don’t want Instapaper to shut down, I don’t want to move my family across
the country, and they didn’t want to pay enough

So if Marco was paid enough, would he let big companies shut down Instapaper
by acquiring it?

~~~
petercooper
While there are certainly people who would refuse to sell at any price
(Zuckerberg was probably in this camp), I suspect the vast majority of people
(even 100% ethical, moral, up-standing folks) have a price.

Would I sell my business for $100m tomorrow even if the whole thing got
destroyed in the process? I sure would (though I'd use the money to start a
new one ;-)).

------
maybe_someday
While I understand Marco's position, personally I'm not in that position and I
don't want the pressure of running on my business so if someone is willing to
offer me 7 to 8 figures plus a massive salary for my startup then I'm not
going quibble.

As I once told an owner offering me equity "I'm at a stage of my life where
finical stability is a welcome rest-bite so don't be offended if I duck out
early."

~~~
Domenic_S
> _a welcome rest-bite_

Was that supposed to be "respite"?

~~~
maybe_someday
Yes, I can't spell very well.

~~~
Domenic_S
I kind of like rest-bite. Phonetically similar, kind of means the same thing
:)

~~~
gruseom
That's the second solecism you've redeemed in this thread alone. You could
make a career out of this as a minor superhero :)

<http://news.ycombinator.com/item?id=4273080>

------
crazygringo
So... how about open-sourcing Sparrow? Seems like that would solve a big part
of the problem, no? Wonder if Google would let that happen.

~~~
CognitiveLens
As much as the talent behind software drove the acquisition, Sparrow also had
some very solid, semi-innovative features and a sophisticated IMAP engine that
are now valuable technical/IP properties for Google. I would be very surprised
if they open-sourced anything from this acquisition.

~~~
thibaut_barrere
I don't know: from earlier researches, it seems Sparrow is based on LibEtPan
which is open-source:

\- <http://www.etpan.org/libetpan/index.html> \-
<https://twitter.com/sparrow/status/6396505883676672>

------
clarky07
Everyone has their number, but I can't see giving up my freedom and time to
work at a big company again. I'd be willing to sell a business to start a new
one, but I'd have to be in a bad situation to take an acquihire. I'm sure I'd
do it if the number was big enough, but I'd hate it for 2 years or whatever
the lockin was.

------
pclark
<http://www.youtube.com/watch?v=t5i7JDNACtI>

------
cheap
Marco is the man. I knew there was a reason I bought Instapaper for all my
devices.

------
oxwrist
Thank you, Marco. If only more people would think the same...

------
rogerchucker
Very few people invest in an app hoping that it will stick around - people
mostly invest in the service the app provides. Or the service the app enhances
(like Sparrow enhancing the Gmail experience). If that app is gone for
whatever reason, the market will simply move on to other solutions. Apps are
not ecosystems and expecting stickiness is too much wishful thinking.

------
wavephorm
Meh, all the whining about this is complete bullshit. If you didn't pay for
the product, and instead downloaded the free version, and used it
indefinitely, expecting the developer work on it, full time, without
compensation, and didn't pay him for his hard work, then you got exactly what
you payed for.

------
wavephorm
Startups are becoming the new resume... essentially.

