
Color acqhired for $2-5M - ujeezy
http://appleinsider.com/articles/12/10/18/apple-reportedly-bought-colors-talent-but-not-the-company
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diego
An explanation of how this deal probably works:

Color had 41M in funding, of which $25M are left. That money goes back to
investors. Apple threw in maybe $5M. That also goes to investors.

Apple interviews each employee and decides who stays and who goes. The value
for Apple is that a team that works together well is more than the sum of the
parts, but only if they keep the people who would fit well within Apple.

The people who stay usually receive a retention package which could be a mix
of restricted stock units and cash, vests over three or four years, and is
determined by:

\- the experience and seniority of each person.

\- the perceived value of each person to Apple.

Apple tries to gauge what it would take for the core of the team to stay long
enough. Someone may need 500k over four years in addition to salary, someone
else may need 2M. It's impossible to say what is being offered to each
developer unless you're an insider.

For that reason nobody can know what the deal really costs to Apple, but it's
definitely more than what investors get. Otherwise, the really valuable people
would not go to Apple just for a paycheck.

Source: I've been involved in deals of this sort since the late 90s, mostly on
the side of the acquirer.

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allsystemsgo
Jeez. How do I become the guy that requires 2M to stick around? Are these
often irreplaceable programmers or are they typically product management
types?

~~~
erichocean
I don't think it's that they're "irreplaceable", in the sense that they could
never be replaced.

It's more of a time-to-market thing. I've spent years working on distributed
systems and sync algorithms, so when the time came to improve our setup to a
Google Spanner-like system, it was fairly easy for me to make the changes.
From that perspective, my ability to do that _right now_ makes me pretty much
irreplaceable at my company.

But I certainly am replaceable, in the sense that any other competent
programmer who'd spent as much time as me could presumably be doing what I'm
doing. It's just hard to find them. :)

~~~
001sky
This is a very analysis. short-term mission critical. and long-term. &etc.
well said.

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cbaleanu
So if I work for company A, and one day, company B comes to my boss and says :

B: 'Hi, sell us 10 developers for $n million'. A: 'Sure, any prefference?' B:
'No, not really what do you got?' A: 'Well I have a good 2 men team, 1 really
good debugger and blablabla...'

Maybe I'm biased, but when did we become comodity? Can you trade developers at
say a country fair or what?

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ssebro
This is a really interesting idea. If developers can be sold as a group, why
aren't we seeing group recruiting websites, where you can buy a team?

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majani
Might actually be on to something here. But what situations would you have a
cohesive team together outside of a company?

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ssebro
Developers know who other superstar developers are. If you allowed superstars
at different companies to band together and market themselves as a team, that
might be interesting.

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droithomme
$2 million for 20 engineers is $100,000 per engineer on average. That's not
much in an acquihire.

$100,000 is low just as a signing bonus for desired talent at an A list
company. Apple must not think very much of their skills. In which case, why
hire them at all? Strange!

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pbiggar
I find this hard to believe: $5 million for a team of 20 developers is
incredibly incredibly cheap. 20 developers would go for $20-$30m.

~~~
drewmck
$250,000 per developer with qualified subject matter experience in your
company's native technology. And there's 20 of them. It's a friggin' steal!

~~~
ryannielsen
Actually pbiggar is correct – the going market rate for employees (or, at
least, engineers) in an acquihire is usually around $1-2MM/employee. E.g. a
small startup with 4 engineers would be acquihired for $4-8MM. Thus, if this
were a full acquihire and Color has 20 engineers, I'd expect the acquisition
price should have been around $20-40MM, not $2-5MM.

In an acquihire like this, the acquisition price and each employee's final
compensation and options grant from Apple are entirely unrelated. diego has an
excellent post in this thread covering that in more detail. [1]

[1] <http://news.ycombinator.com/item?id=4670637>

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jusben1369
The problem I see with this is the profile of the developer. Color was a
cutting edge startup. I assume developers who went there did so with the idea
of tremendous upside on their stock options. Apple, while a fine company, is
really at the other end of the spectrum right? So if I'm at Color haven't I
made the decision to forgo the safety and security of a large company for the
upside of a startup? I suppose a few, after what's happened, may have changed
their mind. It does seem an odd fit though.

~~~
ams6110
Pretty clear there's no upside to Color stock options at this point. And that
may have caused more than a few of those risk-takers to reconsider whether
they want to do it again. Apple could look like a pretty nice deal by
comparison.

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EmergencyKnave
It's nice to see that the early employees of Color aren't going to end up
completely screwed, and have a stable job with a company that is doing well,
if they so desire.

~~~
reinhardt
And vice versa, it's nice to see that they are not getting ridiculously high
$1-2MM/head for the privilege of being acquihired to do basically the same job
they would be doing if hired through the regular channels.

