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

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.

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 for anyone involved.

"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 salary will be vs.

2. Slowly earn that $1MM spread over the course of 10 years or so as a regular employee.

I know which one I'd rather do.

Why not just skip all pretenses of "doing the startup" and "developing the product" and go right for the aqui-hire. Get a well-gelled team together (demonstrate the well-gelled-ness with a demo of some sort) and then shop the whole team around to a big company looking to acquire talent. If they're willing to pay $1MM a head for a team working on a start-up and then shut the start-up's project down, why wouldn't they simply pay $1MM a head for the team?

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 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 that consider themselves to have a potentially viable business model, defensible IP or some strategic value aren't going to be in the least bit interested in being acquired by you just because you have a "minimum price", but they might negotiate a lot harder when you do bid for them because "1.5x the minimum" just doesn't sound as attractive as 15 million dollars. And the VCs, who know that some of their portfolio's founders will cash out at $1million-per-engineer and some will earn nothing due to liquidation preferences, will just think you don't understand.

The only behaviours I can see it encouraging are perverse ones, like failing companies that have had enough introductory meetings to anticipate an aqui-hire offer hiring a couple of extra engineers to bump the minimum sale price.