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Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

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Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#11

Post by rhizome »

ivankirigin wrote: post #3
lquist wrote: post #2

As someone who is thinking about shopping his company around: YES YES YES There is no transparency in this market, and advice is especially lacking for those that have no VCs.

VCs are actually really important players here. They are so well connected and have worked on so many transactions, that they really help. I wonder how they would fit into an open marketplace. Another side is that talking to a VC about selling is a serious conversation. It can affect things like likelihood of follow on funding, so opening one door can close another.

They are so well connected

That VCs are thought of as a group of people who are well-connected, presumably to other well-connected people, does it make logical sense to think of them as a cartel?

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#12

Post by PaulHoule »

ivankirigin wrote: post #8
ryandrake wrote: post #6

"People don’t start companies looking for an acquihire. An acquihire is a failure case, and as a founder, you are motivated to avoid it. It is just so much easier to take a job." It might be easier to just "take a job" (debatable) but it is probably not as lucrative. As an engineer, your choice is: 1. Get aqua-hired for $1MM right away (well, maybe after a few years of working in the start-up) plus whatever your new…

Getting a team is hard! And if you've found one, you are worth more than a regular hide. Demonstrating skill through building a product is also hard, and also helps build value. I think of the math like this: are the next 1000 engineers at Facebook worth 1% of their market cap? Yes, the math works.

I think more fundamentally the prevalence of aqui-hires proves that software management isn't working.

In the kind of world where the government can't get the federal Obamacare exchange working, and people pretend that Waterfall is a competitor to Agile while really, the most common alternative is no process at all. Most companies are highly effective at demotivating software developers, and if you get hired through the usual process you'll start out on the bottom of the pyramid and behind the 8 ball.

If it costs them $1M+ to hire you there's just a chance they'll behave as if your time is worthwhile.

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#13

Post by ivankirigin »

notahacker wrote: post #10

I seriously can't see any upside to the acquirer. I don't believe "corp dev" teams' mission is to acquire "deal flow" by having failing startups pitch them as a source of million dollar engineers. Even if it was, I don't think there are any failing startups too ignorant to talk to Facebook and Dropbox without being incentivised by a marketing gimmick. Acquihires are not a seller's market. Other potential acquisitions…

> too ignorant to talk to Facebook and Dropbox

Many people I talk to have no idea how to start that conversation.

Another layer of your consideration for upside of the acquirer: what happens if one company does this and another doesn't? It's a lot like the seed funding changes that happened over the last few years, forcing later stage VCs to change.

Also, more transparency isn't perverse. The basic action here is positive, and you're talking about theoretical side effects. If your theories are right, then pull back.

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#14

Post by ivankirigin »

rhizome wrote: post #11
ivankirigin wrote: post #3

Earlier quoted context omitted.

VCs are actually really important players here. They are so well connected and have worked on so many transactions, that they really help. I wonder how they would fit into an open marketplace. Another side is that talking to a VC about selling is a serious conversation. It can affect things like likelihood of follow on funding, so opening one door can close another.

They are so well connected That VCs are thought of as a group of people who are well-connected, presumably to other well-connected people, does it make logical sense to think of them as a cartel?

no

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#15

Post by oh_sigh »

ivankirigin wrote: post #9
cliftonk wrote: post #4

Am I the only person who thinks that being on the buying side of this is a losing proposition? How many of those people at $1mm per head will make it through your technical interviews and fit in well enough with your culture? How long do they have to work for you before they split? It seems like you'd have to put together some pretty draconian terms attached to a deal like this and I don't think that would be fair fo…

These issues are present for every acquisition. Having a minimum price doesn't make them go away. Often the price is much, much more. I mentioned Instagram: $1B for 13 people and a product that makes no money (yet). You don't think the most recent 1000 employees at Facebook are wishing they joined a small startup instead? Dealing with this is non-trivial, I'm not trying to dismiss it. I'm just saying the idea and thi…

Except that if those 1000 employees joined a small startup, odds are that 920 of them would not even make it to the stage of acqui-hire

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#17

Post by ivankirigin »

oh_sigh wrote: post #15
ivankirigin wrote: post #9

Earlier quoted context omitted.

These issues are present for every acquisition. Having a minimum price doesn't make them go away. Often the price is much, much more. I mentioned Instagram: $1B for 13 people and a product that makes no money (yet). You don't think the most recent 1000 employees at Facebook are wishing they joined a small startup instead? Dealing with this is non-trivial, I'm not trying to dismiss it. I'm just saying the idea and thi…

Except that if those 1000 employees joined a small startup, odds are that 920 of them would not even make it to the stage of acqui-hire

Yeah, I think often the best choice is to join the larger company. But we're talking about perceptions, which are not the same as reality

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#18

Post by ivankirigin »

danielbru wrote: post #16

Exitround is a marketplace for startups to discreetly explore acquisition opportunities. Having a private, anonymous marketplace is a huge opportunity for both the startups, and the acquiring company.

I hear they are looking to sell, j/k

I'm excited about Exitround!

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#19

Post by ivankirigin »

PaulHoule wrote: post #12
ivankirigin wrote: post #8

Earlier quoted context omitted.

Getting a team is hard! And if you've found one, you are worth more than a regular hide. Demonstrating skill through building a product is also hard, and also helps build value. I think of the math like this: are the next 1000 engineers at Facebook worth 1% of their market cap? Yes, the math works.

I think more fundamentally the prevalence of aqui-hires proves that software management isn't working. In the kind of world where the government can't get the federal Obamacare exchange working, and people pretend that Waterfall is a competitor to Agile while really, the most common alternative is no process at all. Most companies are highly effective at demotivating software developers, and if you get hired through…

> If it costs them $1M+ to hire you there's just a chance they'll behave as if your time is worthwhile.

I like your last sentence.

There is another side here too: companies often overestimate their ability to manage acquisitions. A price floor means that those more likely to be poor integrations will be filtered out.

Re: Open Corp Dev: An Idea Too Bold For Facebook Or Dropbox

#20

Post by qq66 »

rhizome wrote: post #11
ivankirigin wrote: post #3

Earlier quoted context omitted.

VCs are actually really important players here. They are so well connected and have worked on so many transactions, that they really help. I wonder how they would fit into an open marketplace. Another side is that talking to a VC about selling is a serious conversation. It can affect things like likelihood of follow on funding, so opening one door can close another.

They are so well connected That VCs are thought of as a group of people who are well-connected, presumably to other well-connected people, does it make logical sense to think of them as a cartel?

No, because VCs don't team up with each other to try to restrict competition. That's the definition of a cartel. In fact, they regularly compete with each other by offering better deal terms (valuation, liquidation preference), or by bringing more to the table (counsel, networks, services).
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