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Talent Acquisitions (marco.org)
367 points by davisml on July 20, 2012 | hide | past | web | favorite | 139 comments

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.

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".

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...

That STILL didn't stop them from being bought out...

I wonder how the poo-pooing of anything that isn't a $10m+ funding or $1bn+ market cap business on sites like HN encourages people to think "well, hey, perhaps I should go join a business like that if mine can't be."

Pooh-poohing is showing scorn or disdain.

Poo-pooing is what babies do in their diapers.

On second thought, maybe you did have it right ;)

Haha, thanks. I'm going to keep it as-is merely for the entertainment value now.

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

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.

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.


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.

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.

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.

Worse yet, say someone looked at sparrow dying and wanted to clone it, because it looks like there's a business there. Now they'll be pinched by people being cheap as shit on the upside and google migrating some of the best features into their presumably free iphone client on the low side. So I think google has now poisoned the well for better gmail clients on mac/ios.

I bought Sparrow a long time ago. They never asked me to give them more money...

As much as they solicited.

This comment was probably pretty glib and stupid, for what it's worth.

> I didn't get that from Marco's post at all.

What didn't you get? Both Macro's post and the parent are reasonable and non-contradictory. Marco says "I was only able to reject those offers because Instapaper is a healthy business" and the parent says "Well, congrats to Marco for having a successful and sustainable business".

My point is, you are disagreeing with two people in agreement. What you "heard" is a miscalculating brain that projected sentiments that don't exist.

Could be I misread the tone of the article. Perhaps I was reading it through the lens of everyone being upset about the current state of acquihires on the "Sparrow acquired by Google" thread.

Even so, if you take his advice and do what you can to support software you love to keep it alive, in the long run it may not be enough. Either way, my comment about why these things happen still stands.

Sorry, it just seems your position assumes start-ups will fail and that's why they try to get acquired.

It's not hard to bootstrap. The hard part is coming to terms with what is actually sustainable. It takes a while to figure that out.

Well yes, sort of http://cdixon.org/2012/05/18/the-default-state-of-a-startup-...

> The hard part is coming to terms with what is actually sustainable. It takes a while to figure that out.

Exactly. And if it takes longer to figure out than the money you have to burn, then why not at least try for some sort of exit before giving up completely?

I obviously can't speak for Marco, but I think what I take umbrage with is when developers plan this out from the beginning -- create a product/company that drives just enough attention to ensure an acquihire. The result ends up being pretty detrimental to the community.

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 also choose the latter. I'll be the first to admit I'm not trying to change the world or 'disrupt and industry' or anything lofty like that. But I think there are quite a few people who would eschew the big check for the opportunity to do something tremendous, and they deserve to be lauded.

Is this something you can really plan out from the beginning? How many millions of developers would love to be able to create a product that drives enough attention to ensure an acquihire?

Who knows, you might be right and some developers might be able to think of an idea, build it, and market it successfully enough to get the acquihire they want (along with a big paycheck), but I suspect most just want to build a product _someone_ finds useful.

Is this something you can really plan out from the beginning?

Yes, people build companies to flip all the time. Many/most of them don't make the front page of Hacker News.

Sure but it used to be that they were flipping a product/site. Users may have griped about the new management but the 'stuff' would still exist.

Seems strange to me that people would consider setting out to flip themselves (but I can believe that it happens).

If there's money in it, and it's possible, people will do it.

I know quite a few developers who only work on stuff that they hope will result in an acquihire. Can they guarantee it? Of course not, but I feel it's a pretty selfish approach to building something that's not just for your own use.

For example, in today's "the new digg" feedback survey, I told them I will not use the service until they have a sustainable revenue model (they happily tout their current lack of one), for this reason - the last thing I need is yet another service I like to be bought and then shut down. Granted, I don't believe they're starting out with the goal of being acquired, but this whole "useful stuff goes away because the people building it have no business sense" is pretty annoying to deal with.

I suspect most just want to build a product _someone_ finds useful

Don't forget to start by creating something YOU find useful, then.

I'm starting to think the main problems nerds have are mostly social, btw.

if there were developers who were good enough to have any confidence that they would be acquired for their talent, i suspect they wouldn't need to work for google to make their money.

Maybe it is to the point now where it is disingenuous for a company NOT to have a banner on every page stating if they are open to investments or acquihire? At least users would know there is an intention/desire/dream to head for greener pastures if given the chance.

It is quite alright to disclose as a small business owner that things are slow or somethings are not quite going to plan. If you've got a userbase that loves your product, it is amazing what goodwill can do to help find a solution.

You guys go realize that it is ok to dissolve a company and in the case of a software company, release or open-source the code right? If the service was popular, someone will pick up the torch and carry on with it.

I think almost every company would have to have such a banner. Everyone has a price. Even Marco ("and they didn’t want to pay enough"). Some prices are higher than 'the market' wants to pay right now but that doesn't mean there isn't one.

Yep. If I offered Marco $500MM with the sole condition that I could take the Instapaper source code and live stream my burning it with a blowtorch, I think we can safely say he'd take the money.

A private company probably. If a public company were to do that, then I think the shareholders might not agree with your opinion.

But who knows, along comes Microsoft who can write off huge amounts like the $6.3 billion for aQuantive.

Shouldn't that banner just be implied? Yes, company X is open to investments or being acquired if the right offer comes along. This should not be a surprise to anyone.

Should we require employees to wear a sign to work everyday saying that they will leave their job for a better one if the right offer comes along?

Is the size of a diamond on a wedding ring a similar comparison?

Can you explain what you mean? I think I have an idea, but I don't know if I'm thinking what you're thinking.

Sure, it wasn't meant to be snarky. I think a lot of folks simply have vastly different measurements for success. Some think it is binary meaning either total success or total failure. Others define multiple levels of success. Tie money and success together and the resulting discussions can be quite inflammatory.

I've seen a few folks chime in here already that one of the reasons they work for themselves is that for them freedom is greater than money. Not everyone agrees with that but wouldn't some personal and business interactions benefit from a bit more transparency of goals or stated missions? If you want to shoot for the stars, financially speaking or regarding market coverage, then tell me. That's great and I applaud your enthusiasm. If you are happy just providing reasonable service and expect to make a reasonable return then tell me too. At least that will allow me to make a somewhat informed decision about possibly interacting with you. Don't make us guess as most people are terrible gamblers.

Certainly people have different goals and ideas for what constitutes success. However, any company is for sale for the right offer. Conversely, any company looking to sell will turn down an offer that's bad enough. The owners may to even know what sort of offer they'll accept or reject until it's made. So, I don't know how you could add the proposed disclaimers, or how they would be useful.

I'm not sure how any of this relates to wedding rings, but I assume that's not too important anyway.

My S Corp. is not for sale. Neither is my 501c3 which will dissolve with my passing. Can you explain to me how "any" company is for sale for the right offer?

The diamond ring is a silly simplistic example of where some people don't have a price. If my spouse has a 5 carat diamond band, does she subscribe to some idea that if a 6 carat diamond ring were offered by someone else then that must surely be a better opportunity and "sell out?"

Some individuals don't have have a price for some things in life.

So if some company you really admire offers you a billion dollars and total freedom to do anything you want, anything at all, you'd turn it down? Why?

My work is my life and hence my 501c3. Either I'm fulfilled that I'm able to "do what I want" or I'm just a stick in the mud. I also don't plan to retire.

We can substitute work/employment for anything that you value. Family? Religious/spiritual beliefs/non-beliefs? Are you saying you'll stand for some value/idea/principle...up to a certain price? Nothing is verboten?

I can understand not selling out if you don't like the conditions. But if the conditions allow you to do whatever you'd have done anyway, why not?

Yes, of course. Each situation is different, and making a build-and-flip company from the start is another thing entirely. Usually they have free products and no business plan. In this situation, though, the two companies that are being bought today both had paid products and paying customers. My 100% speculative guess is that they didn't have enough traction or revenue to keep it up at their current rates.

I read this slightly differently.

I don't think this was a plea to developers to not sell up, I think it was a plea to people to support small companies to make not selling up a more appealing option.

Ehh, maybe the last sentence implied that (though it could be read both ways), but most of the article read like a humble brag about Instapaper being successful enough that it doesn't have to bother with this type of situation. That's all well and good, but it sort of rubbed me the wrong way.

Personally, I think that software should be protected by copyright only if its source code is placed in escrow and made available (a) when the copyright expires or (b) when the software ceases to be commercially available / supported (just as you can legally photocopy copyright books and pay a nominal per-page fee if they're out of print).

The purpose of copyright is to provide a limited monopoly in the interest of creating, in the long term, a public good. Without the source code, we never get the public good. Under this proposed law, Sparrow (and other, similar, products) would have to become open source once it was unsupported, or would not be protected by copyright in the first place.

I don't think that would work. You don't need copyright protection for closed-source code, because it's closed; no one can see it anyway.

I think podperson is talking about copyright protection for closed-source binaries.

Exactly. Closed source binaries are protected by "copyright" the way written works are. But written works are useful in and of themselves, whereas closed source binaries really aren't. It's the useful part -- the source code and algorithms -- that we want to become a public good, not the incomprehensible black box.

To get copyright protection you should be forced, eventually, to give away the good stuff.

Interestingly, in the early days of software development a lot of programmers didn't quite know what they needed to do to protect their software under copyright, and some I know personally went so far as to print out their code as books and deposit them with national libraries.

I really really like the idea of non-commercial use of a copyrighted work being legal 1 year (or so) after a copyrighted work is no longer commercially available. If it's not commercially viable, then copying it isn't going to lead to a loss sale, and it means that a work isn't locked away for 50 years.

In this specific case though, Sparrow was far from a low-to-modest traction product. Judging from their ranking history, they've been consistently in the Top 50 grossing overall on the Mac App Store[1], and Top 20 grossing utilities on the iPhone[2]. That's likely worth $2000-3000/day in revenue.

Those numbers are sustainable if you have a small team (1-3 people), but I'm not sure how big Sparrow's team was. Either way, I would say that they were in a very similar position to Instapaper, except the only difference being they had raised some VC funding (with all that implies regarding needing an exit in the future).

[1] http://www.appannie.com/app/mac/sparrow/ranking/history/#vie...

[2] http://www.appannie.com/app/ios/492573565/ranking/history/#v...

In Sparrow's case, though, one has to say that it looks as if they had a sustainable business. After all, they were always in the top 30 of the App Stores. That should equivalent to a lot of money.

Apparently it wasn't enough lot of money to not make Google's offer interesting.

Or, maybe, the chance to have a huge influence on one of the major Google products.

Erm, no.

Talent acquisitions happens when you have big potential to compete and are willing to cash out early instead.

Otherwise it's just giving up and getting a job.

That's another type of talent acquisition, yes... There are many flavors.

That's actually two ...and there's not much else.

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.

> 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.

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.

There are probably levels of freedom though. I like producing useful things and would work even if I have $10M right now (I would also be less stressed and probably produce better work ...).

So getting a modest amount of money annually, and increasing the freedom at which I can do my other things is also attractive. I think a lot of people really just want to be comfortable.

True, though in a situation I like that I'd take $100.000 away and pay a dev to work on my apps for that year, and probably continue working on it afterwards.

As someone who sold his company last year and is now experiencing life as a salaried employee again, amen to this... Freedom > money in the vast majority of cases.

I have this conversation with others and myself all the time. Money is nice but what is the opportunity cost of that money?

There are also opportunity costs to freedom. Viewing choices as a "freedom v.s. cost" is a pretty common model. I don't think it needs to be approached "freedom lovers" v.s. "money grubbers" dynamic. People have happily made both choices.

Love this attitude, and I also checked out your app.. Good job! Beautiful and looks awesome. Makes me wish I was more of an Instagram user than I am.

Thank you! It was quite a bit of work, but I enjoyed (almost) every minute of it so far :)

I'm with you on that. I'm doing a start-up just so I can enjoy the sun during the day, and work at night when I can't do anything outside anyways! I feel like now that we've got it backwards. We're not farmers, we don't need to work in daylight anymore...

That's a really nice comparison. Never thought about it that way. It doesn't apply to all situations, but you're right in that many, many jobs could just as well be done during the night so that people can spend the day enjoying sunlight.

>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 )

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.

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

No, I think the exact opposite.

Not that hard really. Not everyone sees life as bank savings optimization problem.

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.

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.)


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.

Great point. I guess we can draw parallels to other purchases we make. When I purchase a car, I get the car I paid for in that current state, they wont 'update' it for free, nor do we as consumers expect that. The app industry has created a covenant of sorts that says, pay for the software, and we will update it for x period of time going forward. Which is great for consumers but to be frank, kind of a bad deal for developers (considering most apps we buy are relatively inexpensive). Either developers have to adapt the more common pay for updates model (Sparrow 1 = 4.99, Sparrow 2 = 8.99) or it will be a pure 'create the best x' keep adding features so they can amass more and more users.

> When I purchase a car, I get the car I paid for in that current state, they wont 'update' it for free, nor do we as consumers expect that.

That's not entirely true. I buy a car knowing that if it needs repairs, I can repair it. Or at least go somewhere else to get it repaired. It will cost money, but so be it. I would not buy a car I had to rely on the manufacturer to fix. There are slow attempts at that in the industry, but by and large, cars are much more open than something like Sparrow ever was.

And yes, I consider carefully my choice in software the same way. I don't mind paying for software.

I also consider the business model. Does it make sense what they are doing? Does it make sense in the long term? Will they be around to support their own business?

The App Model doesn't make sense (and so I generally don't invest in it, at least for nothing critical).

Or Instapaper v2? Paid upgrades have been around since the dawn of software, and there are plenty of companies that have been around long enough to show it works quite well. Adobe is a great example, and Microsoft as well although they've obviously diversified a lot in the past decade.

Instapaper also offers a subscription plan http://www.instapaper.com/faq

If I remember correctly it adds search and the ability to use the full API by 3rd party clients.

So what's the takeaway for us as users? Should we prefer free apps with IAP or advertising because that's a more sustainable business model?

Another revenue stream, you say? Hmm. I wonder if Marco has a way for his users to pay him a little bit of money every month.

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.)

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?

> 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.

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

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.

Got it, thanks.

... 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.

Exactly. An "exit" can mean a lot of different things depending on the company, situation, financials etc.

Why does a 2-5 employee company have to get to be a $100M in the first place? It's pretty sad if this is indeed true.

reinhardt: I agree. I think the reason for this kind of thinking ("have to get to $100MM") is that developers are brainwashed (by all the TechCrunch-style hype about the few startups that make it very big) and forget common sense - that they can live very well indeed even if pulling in much less revenue than $100MM - hey, 1 to 5 mil or even 0.5 mil is enough for a pretty luxurious life for most people anywhere in the world, unless you want to buy yachts or something like that.

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.

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.

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).

Do you not get any value out of using a product while it hasn't been shut down?

Will you singlehandidly cover the developers' living expenses once the savings/investor runway is gone so that they can keep your data from being thrown away?

From an outsiders perspective there is very little you can go on to decide if someone is "inclined to accept a talent acquisition." First, this is a flawed statement to begin with, because startups don't accept talent acquisitions in general, they accept a particular one. The decision is driven by the particular offer, the plan for the post-acquisition timeline, the details of the current trajectory of the business, the long-term benefits to the team, the rapport with the people they are going to be working with, and so on. It's not just about dollar signs and all acquisition offers are very, very different.

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?

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.

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?

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.

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.

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.

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?"

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

Consider the potential fallout of trying to do a "hostile acquihire" -- first, you will kill the relationships with the startups investors, second, you will put the founders in a position where they are screwing their investors. Who wants to go work for a company that undermines your business relationships?

People do hostile acquisitions in other industries all the time. It's just business. Indeed, it's verging on anti-competitive to have some "gentlemen's protocol" as a way to keep investors happy. You're not buying anything the investors own (the good will and IP of the company), so why should they get paid?

My guess is that Google, etc, do this for anti-competitive reasons, as a way to keep engineer salaries from getting bid up. There seems to be a cultural stigma with paying much more to some engineers than others, which is why they don't just offer everyone at the target company a $250k signing bonus to come on board instead of cashing out the target company's investors.

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.

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

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?

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

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

> 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.

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.

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.

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?

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).

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.

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!

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...

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.

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

>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?

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 ;-)).

100 million dollars!

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."

> a welcome rest-bite

Was that supposed to be "respite"?

Yes, I can't spell very well.

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

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


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.

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.

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

The imap engine is open source : http://www.etpan.org/

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.

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

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

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.

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.

Startups are becoming the new resume... essentially.

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