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Winning A Bidding War With Facebook, Google Picks Up The Entire Milk Team
- jpdoctor 15y ago$2-4M/person, just for the people. Boy does this sound like the telecom bubble, and the internet bubble before that. The music is playing, find a chair.
- pawosty 15y agoThat's just incredible. Milk made one application, gave it away for free, summarily shut it down, and sold for $15 - $30 million. I understand these guys are very talented, and that Google was buying the talent more than the product, but that's quite a price for some gifted people!
- mbesto 15y agoSo talented that they couldn't build a product that netted profit...
- brosephius 15y agoYep...why go through the normal interview process to work at Google when you can get acqui-hired, get paid the same, but get a million-dollar "signing bonus"?
- veguss 15y agoDon't hate the player, hate the game my friend.
- veguss 15y agoWell, keep on hating the player and miss all the action then. Do remember when the bubble collapses, you will be hurt far more than the players who already made their millions and can weather the collapse.
- anon808 15y agowhy not hate both. everyone has a choice.
- PaulAnunda 15y agob/c if 99% of us were placed in that situation, we'd take the money
- Drbble 15y agoMilk was a rather quick flip, but if you consider a more average 4 year run to acquisition, and also consider the risk factor, isn't so much obviously better than just getting a job with Google salary and stock from the start.
- jpdoctor 15y ago> quite a price for some gifted people! Every time I saw this happen in the 90s the result was the same: Small team shows up in big company after big $$, gets frustrated with big company BS, doesn't really care and runs down the game clock until vesting is nearly complete, leaves without fanfare. I'm sure there must be counter examples, please let me know some if you have them.
- dpritchett 15y agoBret Taylor at Facebook.
- nuggien 15y agoHe didn't exactly get picked up to be some random engineer in a big corp.
- chollida1 15y agoThat's a good point. In his current role he is essentially the top technical person in the company. I wonder if the reason alot of acquired entrepreneurs leave is that they are used to having so much authority and latitude that getting a middle manager role at google just feels like wearing a straight jacket.
- jpdoctor 15y agoThanks for the counterexample. Just to be clear: His vesting clock is done?
- deleted 15y ago[deleted]
- inmygarage 15y agoTwo team-centric acquisitions that Google has made in recent years: Aardvark and Slide. Both were cases of products that were mostly ahead of their time or just-off re: product-market fit, and had genius teams. As far as I know, the majority of both teams are still at Google.
- joering2 15y agoSo I heard this hundred times before and while it feels like Google (in this example) is making mistake, perhaps the second bottom here is that they wanted to shut down a competitor (at some field) and the nice way of doing it is to acquire. Then Google won't care if they find themselves behind gold cage of Google or not. They may leave or whatever. I don't think dropping $30MM is a big problem for Google either. For me or you that may be a waste, for Google it is 1) drop in the ocean 2) cheap way to shut them down.
- geuis 15y agoNo. Suppose these 8 guys are paid $150k a year on average. Engineers, good ones at least, bring in more than they cost. In some cases like Instagram and Facebook, the ratio of users to engineers is in the millions. Google is similar. When you also bring into account the caché of someone like Rose, the lifetime earnings from that team probably well exceeds what was spent to aquire them.
- jpdoctor 15y agoAnd how do you think the reasoning went during the telecom and internet bubbles? Hint: Exactly the same. I encountered competing business plans which went along the lines of: Hire a team of 10 badass engineers, sell for $10-20M. It was a helluva time to hire people.
- brown9-2 15y agoYour argument assumes that that "caché" will translate into instant/increased earnings. That is far from a given.
- igrekel 15y agocaché = hidden http://fr.wiktionary.org/wiki/cach%C3%A9 http://fr.wiktionary.org/wiki/cach%C3%A9 maybe what you really mean is "cachet" http://fr.wiktionary.org/wiki/cachet http://fr.wiktionary.org/wiki/cachet I know it doesn't have an accent
- geuis 15y agoYou are correct. I don't use the word often (apparently) and always thought the correct spelling for "cachet" was with the little e. Thanks for the tip!
- mdda 15y agoNiggle : Cachet is the version that means 'prestige; distinction', caché is 'hidden' - both from 'cacher' (to hide, French).
- sbov 15y ago
- debacle 15y agoIt's a talent bubble, and while it sounds ridiculous it's not (completely) unjustified. The idea mine for the current generation of the Internet is less verdant than it once was, and so the cost of talent is escalating. Couple that with the new trend in 'Big Data' and the talent that is out there needs to attach itself to an entity that has the resources to provide that (often proprietary) data.
- Zakuzaa 15y agoThat's like a compensation for opportunity cost incurred by giving up startups for a while.
- webwright 15y agoI remember hearing in 2008 that Google valued engineers at 1-3m per. At Google's scale, an engineer can theoretically create at least that much value over a normal tenure (and denies their competition access to that resource). Google makes $1.2M/yr/employee... Presumably quite a bit more if you count dollars per engineer. I know it's not quite so simple as "add an engineer and make more revenue", but it seems correlative.
- jtreminio 15y agoForgive me for not knowing this, but when an acquisition like this happens that is solely for the talent, do the developers themselves get any part of those millions, or does it all simply go to the company owner? If it does all go to the owner, what would stop the developers from banding together and leaving all at once so they could pick up those millions directly, instead?
- runevault 15y agoIn a small venture backed company like that, i would assume the developers had shares in the company, and therefor would get some of the money.
- Ryan_Shmotkin 15y agoIt many cases the developers share (if not enough) are supplemented by a large additional bonus with a long vesting schedule. "Golden handcuffs"
- brown9-2 15y agoThe acquiring company has to give the employees incentives to stay. Otherwise they are under no obligation (barring a contract with the first company) to stay.
- notbitter 15y agoUsually: millions to the investors and founders for their stock. Employee stock will be worth little due to investor preferences. The acquirer will pay hundreds of thousands to retain a few "key employees", and tens of thousands to the ordinary developers (similar to what they'd get as a hiring bonus). This is why it doesn't make sense to be a startup employee. Your question about why developers can't capture more of their value is a good one. Obviously acquirers would prefer not to pay $1M signing bonuses if they can avoid it, but they also seem to be happier about paying off VCs than engineers.
- Drbble 15y agoYou seem to be assuming a gargantuan preference in this case. I thought just 1x to 2x was the max these days.
- j_s 15y agoI'd say the Milk Team won the bidding war!
- pja 15y agoThe Milk shareholders won the bidding war. The Milk employees probably had their share options converted to Google share options. Not necessarily a bad deal, but hardly the payday that the buyout makes for the shareholders. (Some companies have their share options vest immediately on a buyout to protect people against these kind of shenanigans. Not that it helped with a previous employer of mine since they ran out of money & when a buyer came along they required all the employees to waive that clause in the contract if we wanted the buyout to happen at all. Beggars can't be choosers and all that...)
- nostromo 15y agoI always wondered if Facebook would acquire Google Ventures companies. It looks like the answer is yes.
- abraham 15y agoNot necessarily. Facebook may have just been driving up the price for Google.
- bryanh 15y agoClearly the team is awesome, so the question is: with a talent shortage apparently driving the market crazy, are the premiums justified? Is it really that bad out there?
- badclient 15y agoAll we are missing is a league where these players can be drafted and traded.
- saryant 15y agoThere's a weekend project for someone.
- vibrunazo 15y agoA fantasy startup game? :)
- badclient 15y agoNot startups, founders.
- saryant 15y agoOther than the data gathering/entry part it'd be a pretty fun project. Anyone interested in working on it?
- bravura 15y agoUse crunchbase for the data.
- saryant 15y agoOf course! I was thinking LinkedIn but not all founders keep that updated or even use it. Should've thought about Crunchbase sooner. Other than the creepiness aspect it'd be kinda fun.
- cpeterso 15y agoThis is a very interesting idea. I could imagine a website that purposely copies CrunchBase's look and feel. Players create a startup company with a roster of founders to fill the usual CxO roles. Players score points for every venture round their company wins, acquisition, and (if you're lucky) IPO. :)
- hristov 15y agoI really don't get it. If the people are so valuable, why pay extra for the company and the investors. Just offer all the employees $1 mill dollar hiring bonuses, and if they gave up on Oink (as it seems they did) they will join you.
- davidu 15y agoVery bad karma in a very tight-knit community that is dependent on investors. Google has been said to do at least one M&A action per week. With that kind of pace, you can't burn bridges.
- ojbyrne 15y agoSo I don't see any confirmation anywhere. Techcrunch once told us that Digg was being bought by Google, so I'm somewhat skeptical.
- chrishough 15y agoIs it just me or are things getting a little bubbly...burp burp.
- Drbble 15y agoSome would say Facebook won. I am convinced that Facebook has a quiet strategy of driving up Google payroll costs.