To save someone else a few seconds with a calculator, that's an average of just over 24 million per acquisition. Not that each was acquired for an equal amount.
Here's why acq-hiring is a disaster. Let's say FatFrog is the acquirer and BuzzFly is the acquired.
BuzzFly's founders usually have earnouts ("golden handcuffs") and thus have an incentive to stay, but merging them with FatFrog's executive hierarchy is difficult and rocky. They tend to be resented, especially if there's an age difference (i.e. the BuzzFly founders are 25 and FatFrog execs are 40+). The executive merging is difficult in acq-hires because no one will take orders from a 26-year-old whose IUsedThisToilet virtual bathroom graffiti app just got bought for $87 million.
BuzzFly's top programmers, who are by this point the vitality of the organization, don't have the huge amounts of stock that would be incentive to stay. Their company also just got acquired so this is a great time to go for a major external promotion, especially since titles in a soon-to-be-eaten company are pretty easy to self-upgrade. So the top engineers face the "decision" between (a) use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company, or (b) become some subordinate Software Engineer, Level 4.B.ii at FatFrog while watching their original work (whatever remains of BuzzFly) goes into maintenance mode... and has to be rewritten in C++.
The weakest engineers, who never could have gotten jobs at FatFrog, but were able to get onto the BuzzFly train when Buzz was desperate, stay along.
So the actual result of an acq-hire is that the execs are rejected like a bad transplant, the best engineers bolt, and the worst ones stay on board.
Here's why your post is a disaster in terms of faulty assumptions.
* Most acquired founders aren't made execs. Most end up as Product Managers or team leaders.
* The weak engineers from acquired companies can't sneak into google. They must go through the typical Google interview process.
use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company
* ^ Sorry but this is just unheard of. Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition. It's got little to do with acquisition. The guy must just be good.
no one will take orders from a 26-year-old whose IUsedThisToilet
* ^ You are using the most extreme stereotype of what is acquired. Now, I understand that your example of IUsedThisToilet wasn't mean to be taken literally but I question why you'd make up a name than use one of many examples from an actual acquisition. Of course, making up a name like IUsedThisToilet helps you with your argument. Only it is not rooted in reality.
And yet that $1.9B is only a fraction of Google's cash reserves. And Apple's is nearly $100B. Corporations are hoarding cash at record levels. As of last January, the top 17 US corporate cash reserves amounted to nearly half a trillion dollars. It's not unreasonable to speculate that corporate hoarding is contributing to our flat economy, when you consider how that cash would be multiplied if it were turned loose. Companies are holding onto cash because they're afraid of slow growth because of high unemployment, which becomes a self-fulfilling prophecy when they don't invest in new business and hire more people.
It also casts doubt on claims that raising corporate taxes will hurt the economy. If companies aren't spending any of the cash they already have, how will giving them more to stuff under the mattress help?
That headline meme sounds impressive: corporations hoarding cash.
Until you dig deeper and find out that US corporations are accumulating debt at the fastest pace in world history. Their cash is required to continue to offset the massive debt being acquired. If interest rates go up at all in the next ten years, bankruptcies will skyrocket. A lot of companies are being irresponsible with debt right now because they can issue it at hyper low rates.
Well obviously. You could say the same thing year over year. If we were counting the ones that were started and not yet completed, it would just subtract from the amount of the next year.
It will continue in 2012 as in the filing Google said, “Acquisitions will also remain an important component of our strategy and use of capital, and we expect our current pace of acquisitions to continue."
garethsprice|14 years ago
jimminy|14 years ago
CWIZO|14 years ago
michaelochurch|14 years ago
BuzzFly's founders usually have earnouts ("golden handcuffs") and thus have an incentive to stay, but merging them with FatFrog's executive hierarchy is difficult and rocky. They tend to be resented, especially if there's an age difference (i.e. the BuzzFly founders are 25 and FatFrog execs are 40+). The executive merging is difficult in acq-hires because no one will take orders from a 26-year-old whose IUsedThisToilet virtual bathroom graffiti app just got bought for $87 million.
BuzzFly's top programmers, who are by this point the vitality of the organization, don't have the huge amounts of stock that would be incentive to stay. Their company also just got acquired so this is a great time to go for a major external promotion, especially since titles in a soon-to-be-eaten company are pretty easy to self-upgrade. So the top engineers face the "decision" between (a) use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company, or (b) become some subordinate Software Engineer, Level 4.B.ii at FatFrog while watching their original work (whatever remains of BuzzFly) goes into maintenance mode... and has to be rewritten in C++.
The weakest engineers, who never could have gotten jobs at FatFrog, but were able to get onto the BuzzFly train when Buzz was desperate, stay along.
So the actual result of an acq-hire is that the execs are rejected like a bad transplant, the best engineers bolt, and the worst ones stay on board.
badclient|14 years ago
* Most acquired founders aren't made execs. Most end up as Product Managers or team leaders.
* The weak engineers from acquired companies can't sneak into google. They must go through the typical Google interview process.
use the transient "hotness" of their startup name to get a huge promotion to a VP-level role in another company
* ^ Sorry but this is just unheard of. Getting VP-level role at top companies is very hard and if a developer of an acquired company could score a VP-level role elsewhere after the acquisition, he could probably do so before the acquisition. It's got little to do with acquisition. The guy must just be good.
no one will take orders from a 26-year-old whose IUsedThisToilet
* ^ You are using the most extreme stereotype of what is acquired. Now, I understand that your example of IUsedThisToilet wasn't mean to be taken literally but I question why you'd make up a name than use one of many examples from an actual acquisition. Of course, making up a name like IUsedThisToilet helps you with your argument. Only it is not rooted in reality.
vannevar|14 years ago
It also casts doubt on claims that raising corporate taxes will hurt the economy. If companies aren't spending any of the cash they already have, how will giving them more to stuff under the mattress help?
shingen|14 years ago
Until you dig deeper and find out that US corporations are accumulating debt at the fastest pace in world history. Their cash is required to continue to offset the massive debt being acquired. If interest rates go up at all in the next ten years, bankruptcies will skyrocket. A lot of companies are being irresponsible with debt right now because they can issue it at hyper low rates.
fpgeek|14 years ago
freehunter|14 years ago
SquareWheel|14 years ago
profitbaron|14 years ago
mace|14 years ago
ThaddeusQuay2|14 years ago
NOTE TO SELF: Startup Idea: Create a new drop.io, and combine it with some of the features of MegaUpload. Call it MegaDrop.
samwillis|14 years ago