
What's Really Going on With Color: A Small Apple Talent Acquisition - ashishgandhi
http://allthingsd.com/20121018/whats-really-going-on-with-color-a-small-apple-talent-acquisition/
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smacktoward
How do you "acqui-hire" a bunch of people from a company without buying the
company itself? Isn't that just, you know, _hiring?_

~~~
smackfu
Well, they're essentially buying the employees from the company, which is
different than normal hiring.

~~~
smacktoward
But why would you want/need to do that? I'm not an expert on labor law, but
AFAIK the company doesn't have any legal ownership claim to the employees or
their services; employment in the US is at-will
(<http://en.wikipedia.org/wiki/At-will_employment>), so if Apple and a Color
employee come to an agreement that the Color employee will go to Apple, Color
doesn't have much say in the matter. There's no Reserve Clause
(<http://en.wikipedia.org/wiki/Reserve_clause>) in tech.

Maybe the employees signed a non-compete agreement, and what Apple is buying
from Color is a waiver on those agreements? Non-competes don't have a great
record of standing up in court, but OTOH $2 million split 20 ways isn't that
much money per person either; might be considered cheaper than the risk of a
legal challenge. I dunno.

The reporting on this story could definitely do with some additional detail,
but given how rapidly the story's been changing we may just have to wait an
hour or two for that detail to be uncovered :D

~~~
ghshephard
The acquihire is traditionally done by converting unvested options from one
company to the next, quite often with a 15-20% retention bonus for employees
that stick around for 12 months.

The employees, of course, are free to walk away from those unvested options
and retention bonus, should they chose to do so.

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mlinsey
It's possible that both this report and the "double digit millions" report are
true. $2M divided among 20 engineers isn't enough to convince each engineer to
stick around at Apple for a few years vs. look for another job immediately.
Usually in this case, there are separate retention bonuses for each employee
that the acquiring company wants to ensure they keep. Sometimes these
retention bonuses are included in the reported price of an acquisition to make
everyone feel better, but the investors don't see any of that. So it's
possible that from the investors' perspectives, it's a trivial $2M deal, but
from Apple and the acquired employees' perspective, it's significantly bigger.

I have no information about Color so I'm not saying that necessarily happened,
just that it's a way of reconciling all the conflicting stories. The submitted
story on its own doesn't quite add up either ($2M for 20 employees is too
low).

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cube13
Well, considering Color's history, the promise of a steady paycheck for a few
years might be enough for that team right now. And the $2 million could be
signing bonuses for the engineers, which would be a decent chunk of one-time
money.

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waterlesscloud
They're paying millions to hire some people, but aren't getting any of the IP?
Isn't that unusual?

Maybe I just don't understand how these things work.

~~~
georgespencer
In this kind of deal, the reality is that Apple are getting some seriously
valuable IP.

They're hiring a team of software engineers who have been working together for
a while in an area which is clearly of interest to Apple (I'm betting they're
going to be working on Facetime).

They've been working with live video extensively. They know the lay of the
land. It's very valuable.

And if you want to acquire this many engineers from a company simultaneously
you're probably fighting against a huge amount of non-competes, so approaching
the company and negotiating directly for the hires is the best way to avoid
getting slapped with a lawsuit.

~~~
001sky
To paraphrase, they are getting the intellectual/s without the property.[1] =D

__________

[1] What is interesting, though, is that they may have legal reasons for this.
Any extant creditors, for example. We may see a second stage disposition of
the IP. Transfer of people for $$ != transfer of legal-owned Gaap assets, when
it comes to _fraudulent transfer_. Relevant >
<http://en.wikipedia.org/wiki/Fraudulent_conveyance>

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zoowar
The real talent would have left long ago.

~~~
pacaro
Having been involved in an informal[1] acquihire a long time ago, I both agree
and disagree with this.

Engineering talent isn't always correlated with great organizational
awareness, so while some of the better people will have moved on by the time
it gets to this stage, there will still be strong engineers left.

That being said by this stage it is unlikely to be a team on top of its game,
and if the stories about an increasingly poisonous work environment are to be
believed, Apple is going to have to do a winnowing process, and keeping the
"team" together may well be counter productive.

[1] Informal acquihire in the sense that our CEO got wind of a company closing
down its remote sub (remote to them, local to us) and made a blanket offer to
the team

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mitchellwfox
It's reassuring to hear that what has often been cited as a case-study in
over-ambitious fundraising and over-enthusiastic investment did, in fact, turn
out to be a sobering lesson for entrepreneurs.

The tales of double-digit million dollar exit were frankly baffling and would
have painted a very different picture of the current acquisition market.

