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The 'Startup Boom' is a disguised jobs fair for big corporations

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Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#51

Post by ImprovedSilence »

brown9-2 wrote: post #39
tsunamifury wrote: post #38

Earlier quoted context omitted.

Important note: If you are a founder who has taken venture capital, you may not have a real choice in the matter.

I am curious though how often the other shareholders are able to force the founders into a sale against their will. Is this common / documented? Seems doubtful that a Big Co would go into a talent acquisition if the talent wasn't on board.

It really depends on who owns how much stock. And if you the founder are disgruntled or not, if you sell, you may have to work for them for a year to get your money. Life's tough when you sell you soul to a VC.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#52

Post by lallysingh »

pron wrote: post #41

I think the truth might actually be worse. I don't think that `the startup boom is really a disguised job fair for big corporations`. The dirty little secret is that startup scene is an arena and entrepreneurs are the gladiators. Big lumps of money, that seem imaginary to them are dangled in front of their eyes, and they're introduced to former gladiators that have attained fame and glory and were able to buy their f…

Don't be sorry, it's honestly spot on. It's a wonderful exploitation model of how young men (18-30s) think and feel natively. Big risks, big rewards. Legends, folklore, respect. The model was perfect 2000 years ago and finds new manifestations all over the place.

Of course, I'm not sure it's a terrible thing. Nobody actually dies, at worst a few years of hard fighting are expended before a "real job" is acquired. The hard, risky fighting, while exhausting, isn't a bad thing for the young.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#53

Post by philwelch »

patio11 wrote: post #9

This would be a very penetratingly insightful criticism if you had never heard of Airbnb, Dropbox, Twilio, etc etc. Some people at the current classes of YC and 500 Startups may well find themselves working for AmaGooBookSoft in 4 years, and may that be a happy outcome for all concerned, but you've got to torture the math to come to the conclusion that hiring acquisitions are where most of the money is changing hands…

It's somewhat disingenuous anyway, since Amazon, Google, Facebook, and Microsoft were all started within living memory, and Facebook hasn't even really exited yet.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#54

Post by neworbit »

To take a slightly more balanced view on it, acquiring the team and the early fruits of their research but not a market-dominating position was Cisco's growth strategy for a long long time - cherry-picking startups that had built an amazing new next-gen router or other critical appliance, or even just built the core of what would one day be one, and acquiring the team and what they'd built. Cisco then excelled at taking that from "great prototype" to "market ubiquity". You could do a lot worse.

And talent acquisitions alone aren't terrible either, at least for the founding team. They're never the home run investors hope for but they have been known to return a profit on "sunk costs" cash.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#55

Post by pg »

This guy has not done the math. An investor makes so much more from big successes like Dropbox and Airbnb than from HR acquisitions that they'd be acting counter to their own interest to focus their attention on the latter. Far from making out in HR acquisitions, early stage investors generally get screwed in them. We often make zero from an HR acquisition, between the liquidation preferences of later stage investors and the fact that much of the supposed acquisition price is set aside as incentives for the founders to stay with the acquirer.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#56

Post by lallysingh »

corford wrote: post #8
geofflewis wrote: post #7

This is one of the most ignorant, poorly written articles I've ever seen on Hacker News. it doesn't belong here.

It may not be a conscious conspiracy by the big boys but the reality of the startup scene isn't too far from what he describes. Edit: I'd also say that a certain section of startups are in on the game too - how many startups can you recall where their sole raison d'être and exit strategy was to be acquired by Google, Facebook or Apple? The dropboxes and facebooks of the startup world are much more rare.

Indeed. A lot of it comes from the lack of other exit-options. Large companies aren't cool anymore, so nobody wants their startup to become one --- that's just a means to the end of a big payout. Getting acquired is substantially less work than being a full-on success, and avoids a lot of the drudgework of the middle/large-stage parts of a company's lifecycle.

Back a dozen years ago (omg, has it really been that long now?), you'd IPO and use all that new money to hire people to take care of the actual business management for you. A founder could get back to hacking on new, fun stuff, or let his board bribe him to step down :-)

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#57

Post by lallysingh »

pg wrote: post #55

This guy has not done the math. An investor makes so much more from big successes like Dropbox and Airbnb than from HR acquisitions that they'd be acting counter to their own interest to focus their attention on the latter. Far from making out in HR acquisitions, early stage investors generally get screwed in them. We often make zero from an HR acquisition, between the liquidation preferences of later stage investors…

I have to ask, what are the "takes" on different exits? When do founders get the best return on their energy, vs the best return on the potential of their company? When do investors?

Edit: basic 3rd grade grammar.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#58

Post by mgkimsal »

twakefield wrote: post #46
patio11 wrote: post #9

This would be a very penetratingly insightful criticism if you had never heard of Airbnb, Dropbox, Twilio, etc etc. Some people at the current classes of YC and 500 Startups may well find themselves working for AmaGooBookSoft in 4 years, and may that be a happy outcome for all concerned, but you've got to torture the math to come to the conclusion that hiring acquisitions are where most of the money is changing hands…

Agreed. He should have read PG's YC Numbers [1]. The overwhelming majority of value in YC's portfolio comes from the top 10% all of which have likely turned down numerous acquisition offers. YC would much rather an IPO or late stage acquisition vs. acqui-hire liquidity event. [1] http://ycombinator.com/nums.html

so... wouldn't it make sense for the other 90% to be acqhired vs taking up space in the bottom 90% of the yc stable?

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#59

Post by twakefield »

mgkimsal wrote: post #58
twakefield wrote: post #46

Earlier quoted context omitted.

Agreed. He should have read PG's YC Numbers [1]. The overwhelming majority of value in YC's portfolio comes from the top 10% all of which have likely turned down numerous acquisition offers. YC would much rather an IPO or late stage acquisition vs. acqui-hire liquidity event. [1] http://ycombinator.com/nums.html

so... wouldn't it make sense for the other 90% to be acqhired vs taking up space in the bottom 90% of the yc stable?

Yes, but the company doesn't necessarily know whether it's going to be in that top 10% when acqui-hire offers occur. They usually occur on the upward trajectory of a company. So most investors would rather the company roll the dice on a bigger exit later than "settle" for the acqui-hire now.

The entrepreneur's perspective may be different.

Re: The 'Startup Boom' is a disguised jobs fair for big corporations

#60

Post by mgkimsal »

kjhughes wrote: post #35

Foremski totally missed the real "dirty little secret" regarding acquisitions. Acquisitions are really about control and ownership: Control of IP, control of customer relationships, control of planning, ownership of growth potential. It's placing a bet that ownership is strategically beneficial. Sometimes there's a defensive component. "We bought them for their talent" is the cover story. It maintains the secrecy of…

I don't disagree on that IP, but some of that intellectual stuff is still in people's brains. I do think 'talent acquisition' does play to the egos in some cases, but there's also the 'keep the talent' away from competition. Just because people know how it's done doesn't mean you should make it easy for them. Over time almost all this tech stuff gets commoditized (virtualization, search, big data, etc) but in the early stages, having some talent on staff that developed 'big search tech X', and keeping them away from competition, gives you a short term advantage.
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