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Ask HN: How much should a bootstrapped startup ask for an acquihire?

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Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#41

Post by lessnonymous »

ryandrake wrote: post #40

If they're not buying any product or technology, I don't understand why a company would pay more than zero. If it's common for companies to pay "$X million per engineer" to simply acquire people, then from the employees' point of view, why even job hunt the traditional way? Wouldn't it make more sense to get a few engineering buddies together, form a 2-3 member LLC, and shop around for an acqui-hire? You'd get jobs A…

In an aquihire, they typically ARE buying the product to get the talent capable of building the product in question.

Let's say you've built some product capable of receiving millions of http connections a minute from thousands of servers and then distributing those to thousands of servers as they request a new batch. But you can't find a market. However this is (was of course) a real-world problem for Twitter.

Suddenly you are a really attractive aquihire. Maybe they'll use your tech, but more likely they value your problem solving experience in their specific problem domain.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#42

Post by rgo »

Do you know why they are acquihiring you?

Bootstrapped or not, VC funded or not, profitable or not, a company's value is given by its potential. This potential will be measured (with different metrics, some of them quite subjective) by both parties, then negotiated hopefully to somewhere in between. In your case, you need to come up with your number by best estimating what the value of your team will be once acquired and assigned your new task.

Ie. you are making a cool AI board but you got no traction (hence no VC, revenue or customers). Now Intel wants to acquihire you to make their next generation of synaptic chips something cool. Just lately IBM closed a deal valued at $100M with a Chinese manufacturer for their synaptic chips. Since they are looking at an internal BP for the acquihire of a $100M potential, a 10x ROI puts you all at $10M. Now you have your own BP that you can use to support your intended price for the deal.

Once you have that potential value, you will want to figure your opportunity cost and BATNA by looking at the potential value of your product or company in X reasonable years. This will be your leverage for negotiating.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#43

Post by dpatru »

jonnathanson wrote: post #30
chollida1 wrote: post #27

I'm going to disagree with the consensus here and say that the price per employee is probably lower when its a bootstrapped company vs a vc funded company, all other things being equal for two reasons: 1) With a VC you have someone in your corner with considerable connections and pull( The VC), to advocate for you. As someone who has been on the acquiring side of the table I think alot of people would be very surpris…

Especially true for a bootstrapped company with no customers and no revenue. In fact, in this case I would actually wonder why the acquirer needs to do an "acquihire" at all. Perhaps that term is being misused here? An acquihire is generally a buyout of the team, not the technology, the product, or its business prospects. As the team, I would think about how uniquely skilled you are in the domain for which you're pre…

BATNA = Best Alternative To a Negotiated Agreement

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#44

Post by jonnathanson »

dpatru wrote: post #43
jonnathanson wrote: post #30

Earlier quoted context omitted.

Especially true for a bootstrapped company with no customers and no revenue. In fact, in this case I would actually wonder why the acquirer needs to do an "acquihire" at all. Perhaps that term is being misused here? An acquihire is generally a buyout of the team, not the technology, the product, or its business prospects. As the team, I would think about how uniquely skilled you are in the domain for which you're pre…

BATNA = Best Alternative To a Negotiated Agreement

Yes, I'm aware. That was the spirit in which I used the acronym, i.e., the would-be acquirer's BATNA is probably to build or hire a different team on the open market, for X dollars over Y timeframe. Hence, you should attempt to quantify their BATNA in dollar/effort terms to arrive at an understanding of how much they'll value you. Apologies if that wasn't clear somehow.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#45

Post by AznHisoka »

nedwin wrote: post #33
chollida1 wrote: post #27

I'm going to disagree with the consensus here and say that the price per employee is probably lower when its a bootstrapped company vs a vc funded company, all other things being equal for two reasons: 1) With a VC you have someone in your corner with considerable connections and pull( The VC), to advocate for you. As someone who has been on the acquiring side of the table I think alot of people would be very surpris…

The challenge of not having taken funding as well is that you can't use your last valuation as a bench mark. ie they offer you $1m, you can't say "Well, that's far below our last valuation of $5m" or "in order to make our investors from our last round whole, at an absolute minimum, we would need to meet our last valuation of $5m". Depends what you're optimizing for. Price is only one factor.

That's true. Most companies though just shouldn't cave in to those arguments. They should respond with "Pfft... you want us to meet this imaginary paper valuation even though your revenue and technology doesn't even support it.. go ahead and fail, and get $0 from it."

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#47

Post by jmathai »

I see that number thrown around a lot as well. Unsure exactly what it means and how accurate it is of most acquihires.

Does $1M include salary over X years? Is it just the retention? How much is paid up front?

How mature is the product you've been working on? Is it something you've been doing on the side with your co-founders? How much time has been put into what you've done; both as a product and as a team.

You'll have to see what they're going to offer. I imagine you don't have much leverage though so the final price will be in the ballpark of their offer.

My email is in my profile, feel free to ping me for personal experience with this.

Re: Ask HN: How much should a bootstrapped startup ask for an acquihire?

#48

Post by jtfairbank »

fleitz wrote: post #17
gamerDude wrote: post #8

Don't negotiate against yourself. This question is all about how valuable you are to that company. Does hiring the team and getting the technology increase their profits by 10%, 100%, 1000%? How much value are you bringing to the new company? And don't devalue yourself because you aren't VC funded. Don't negotiate against yourself into saying a lower number. Find out how much you think your worth and come with your t…

Fully agree, the bootstrap / vc funding metric is commoditization. People pay a lot more for 'ancient grains' than 'hard winter red'.

Can you explain your metaphor in the second sentence?
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