It also casts doubt on claims that raising corporate taxes will hurt the economy. If companies aren't spending any of the cash they already have, how will giving them more to stuff under the mattress help?
Until you dig deeper and find out that US corporations are accumulating debt at the fastest pace in world history. Their cash is required to continue to offset the massive debt being acquired. If interest rates go up at all in the next ten years, bankruptcies will skyrocket. A lot of companies are being irresponsible with debt right now because they can issue it at hyper low rates.
BuzzFly's founders usually have earnouts ("golden handcuffs") and thus have an incentive to stay, but merging them with FatFrog's executive hierarchy is difficult and rocky. They tend to be resented, especially if there's an age difference (i.e. the BuzzFly founders are 25 and FatFrog execs are 40+). The executive merging is difficult in acq-hires because no one will take orders from a 26-year-old whose IUsedThisToilet virtual bathroom graffiti app just got bought for $87 million.
BuzzFly's top programmers, who are by this point the vitality of the organization, don't have the huge amounts of stock that would be incentive to stay. Their company also just got acquired so this is a great time to go for a major external promotion, especially since titles in a soon-to-be-eaten company are pretty easy to self-upgrade. So the top engineers face the "decision" between (a) use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company, or (b) become some subordinate Software Engineer, Level 4.B.ii at FatFrog while watching their original work (whatever remains of BuzzFly) goes into maintenance mode... and has to be rewritten in C++.
The weakest engineers, who never could have gotten jobs at FatFrog, but were able to get onto the BuzzFly train when Buzz was desperate, stay along.
So the actual result of an acq-hire is that the execs are rejected like a bad transplant, the best engineers bolt, and the worst ones stay on board.
* Most acquired founders aren't made execs. Most end up as Product Managers or team leaders.
* The weak engineers from acquired companies can't sneak into google. They must go through the typical Google interview process.
use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company
* ^ Sorry but this is just unheard of. Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition. It's got little to do with acquisition. The guy must just be good.
no one will take orders from a 26-year-old whose IUsedThisToilet
* ^ You are using the most extreme stereotype of what is acquired. Now, I understand that your example of IUsedThisToilet wasn't mean to be taken literally but I question why you'd make up a name than use one of many examples from an actual acquisition. Of course, making up a name like IUsedThisToilet helps you with your argument. Only it is not rooted in reality.
The scenario is not "I was engineer #3 at a startup which was just acquired by Google. I'll take a corner office at Facebook now, please." It is "I was engineer #3 at a startup which was just acquired by Google. Hello, Mr. VC. Sure, I'll join that company you just funded as VP of Engineering."
This second one, ahem, does not strike me as supremely implausible.
Any start-up worth their salt is very deliberate in hiring. Now, if you don't care about where you are working and are merely chasing titles, I'd argue you can get a VP position without needing to be part of an acquisition.
Really, all the problems that the OP lists are nonexistent at Google. The only big problem I can think of is integrating the acquired codebase into Google's.
Max Levchin acquired the title after Slide's acquisition.
In most companies, VP of Engineering is inside the Engineering department. The idea that management is its own department is rather odd.
Perhaps not in title, but no one with serious ambitions is going to give up his business without expectation of high-level clout, unless he's dumping it because he thinks it's a dog. You don't sell off your dream to end up in the middle of some rusty hierarchy.
The weak engineers from acquired companies can't sneak into google. They must go through the typical Google interview process.
I was talking about acq-hiring in general, not Google in particular. Hence the ludicrous names (FatFrog, IUsedThisToilet).
Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition.
It's also hard to get acquired. Not many people out there can say that they "completed an exit".
I'm not saying that it's easy to get that kind of job. I'm saying that after one's company is acquired is one of the best times to vie for an external promotion. You can ride the "star" glow, or you can become a Software Engineer 2.B/middle-division. Your choice.
Actually, founders do sell off their dream to end up in the middle of some rusty hierarchy. It happens all the time. Why? You answered it yourself: they are selling their dream. The money from the exit is usually worth the "rusty hierarchy" of the acquiring company.
NOTE TO SELF: Startup Idea: Create a new drop.io, and combine it with some of the features of MegaUpload. Call it MegaDrop.