Talent Acquisitions

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.<p><i>Most</i> 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.<p>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.<p>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.<p>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.<p>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'm the author of the popular Mac Instagram Client "InstaDesk" (<a href="http://www.instadesk-app.com" rel="nofollow">http://www.instadesk-app.com</a>) 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.<p>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 <i>and</i> the continuation of InstaDesk is guaranteed).<p>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).<p>So yeah, support the products you love, and spread good news about them, and give them good reviews.

&#62;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.<p>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.<p>(Or maybe Marco means people should join his subscription program: <a href="http://www.instapaper.com/subscription" rel="nofollow">http://www.instapaper.com/subscription</a> )

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.<p>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.

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?<p>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).<p>My own takeaway is if you don't want your apps to disappear, use open source apps.<p>(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?<p>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.<p>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?

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.<p>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.

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.<p>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.<p>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?<p>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.<p>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?

100% agreed. I've been in the same situation a few times lately. However, I <i>do</i> support people who make the decision because I sure would <i>if the right deal were on the table.</i><p>Long term though, I'd prefer "talent collaborations" to acquisitions. Did Nike "acquire" Michael Jordan? Sponsoring and supporting, not acquisition.

I'm having a tough time understanding talent acquisitions.<p>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?

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

&#62; 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.<p>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.<p>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.<p>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.<p>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.<p>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.<p>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.<p>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?

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.<p>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.<p>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.<p>More details are on our blog post: <a href="http://blog.selligy.com/post/27652044305/apple-help-the-best-app-developers-not-get" rel="nofollow">http://blog.selligy.com/post/27652044305/apple-help-the-best...</a>

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&#38;a environment. Thank you

&#62;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<p>So if Marco was paid enough, would he let big companies shut down Instapaper by acquiring it?

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.<p>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."

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.

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.

<a href="http://www.youtube.com/watch?v=t5i7JDNACtI" rel="nofollow">http://www.youtube.com/watch?v=t5i7JDNACtI</a>

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.