5 ms·

I don’t understand why companies buy other companies for the talent and not product. Why not just make everyone working there an incredible offer at the same ti

I don’t understand why companies buy other companies for the talent and not product. Why not just make everyone working there an incredible offer at the same time? It would cost so so so much less than these massive buy outs. Maybe not all of them would take you up on it, but if you buy the company a lot of them may not stick around post-buyout anyway. I feel like this would be a lot more effective also because in a buyout, employees just make the same old salary at the new company. In my method, they make a ton more and are more likely to stay

alexwhb 2y ago
Ya that’s a solid point. Though many startups give their employees equity options… so you have to factor that in too. Also buying a start up for talent seems risky since many people that join startups are looking for a totally different energy than a large corporation, so it seems reasonable that there’d be a big drop off of that talent as soon as it gets acquired… especially if the vision is not aligned
dahart 2y ago
Multiple reasons. That it does happen should be reason to question your assumptions, rather than assume some obvious imagined alternative has been overlooked by everyone, right? While poaching one employee at a time might be usually legal, attempting to poach all employees of a company might not be legal, and either way is considered unethical. Paying off the investors may be the goal. Eliminating the product or competition ethically may be the goal. Buying the competition’s customers, and/or distribution channels may be the goal. Acquiring the top talent, while giving them the expected reward for having bootstrapped a company, might be the goal. Founders are often uninterested in a salaried position for themselves, but may be interested in a return for the company and payoff for everyone in it - as backpay for their investment, completely separate from their salary going forward. Also, your hypothesis is not accurate. Buyouts are not always, or even usually, massive. It’s common for them to be small and medium sized. It is definitely not a given that making persuasive individual offers would be any cheaper than an acquisition, let alone “so much” cheaper. Depends entirely on the situation.
- tiahura 2y ago
  Unethical by whom? The now richer employees? Or the salty cheapskate?
  - dahart 2y ago
    Investors and founders to name two. Taking over a company via mass poaching would absolutely invite lawsuits. The government for another. Hiring all the employees of another company is regulated, and it could be seen as anti-competitive behavior. You’re thinking of individual poaching, not whole company poaching.
    - tiahura 2y ago
      I'll admit, as an attorney, this isn't my specialty, and every jurisdiction varies, but the ye olde common law of tortuous interference requires something more than mere competition, this is America, not the EU. 2 DAN B. DOBBS, THE LAW OF TORTS §§ 448-52 (2001)("you are thus free to induce my customers, employees, or suppliers to deal with you instead of me, as long [as] they are not bound to me by contract"). Restatement (Second) of Torts § 768 (1979) (stating that interference with a competitor’s contractual relations is permissible if it does not employ wrongful means and is intended to advance the competing interest). Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001) (" we conclude that to establish liability for interference with a prospective contractual or business relation the plaintiff must prove that it was harmed by the defendant's conduct that was either independently tortious or unlawful. By "independently tortious" we mean conduct that would violate some other recognized tort duty.").
      - dahart 2y ago
        Correct, tortious interference has criteria, and making competing employment offers doesn’t necessarily or automatically meet those criteria, but it could if there are other factors involved. Again, it depends on the situation. You’ve asked two different questions. One about legality and the other about public perception. There are lots of things that are legal and still considered unethical. And there are lots of things that might or might not be legal, that businesses avoid simply because there’s legal risk, and/or avoid because there’s risk of negative perception. If everyone involved in a startup agreed to be individually hired, and divest interest in the startup, and there was mutual understanding on all sides, then there may be reasonable chances of success and no lawsuits. I think that probably has happened before. If not everyone agreed to it, and a company tried to acquihire all the individuals of a company forcefully without agreement by the investors and founders, there’s a high likelihood (risk) of legal conflict, and the likelihood will increase under US law if the acquiring company would start to look anything like a monopoly on the market in question after the unofficial “merger”, right?
dwaite 2y ago
Sometimes that does happen. Apple historically tends to look for shipping results, and the underlying software and services (such as using DarkSky's algorithms and server code as starting points) are often worth it over just putting offers out to key people. This obviously isn't always true; they do have some longer-term research projects and strategic initiatives we've seen leak out (cars and non-invasive blood glucose monitoring are common mentioned ones), but I think Apple generally would prefer to let others succeed or fail in the research. There's nothing _to_ Pixelmator IMHO other than the product. Apple knows how to do sepia tone filters already.
yoz-y 2y ago
Apple did do that when they were building an electric car: https://www.reuters.com/article/business/apple-s-auto-ambitions-sideswipe-electric-motorcycle-startup-idUSKCN0SD0DW/ https://www.reuters.com/article/business/apple-s-auto-ambiti...
- jahewson 2y ago
  No, this was a failing business and the employees fled.
jahewson 2y ago
> Why not just make everyone working there an incredible offer at the same time? Under civil law this is regarded as tortious interference. Businesses have a contract with their employees and if you interfere with it to harm the employer then you are liable for damages. If you tried to make a mass offer like this, the employer could likely get a judge to place an injunction against it immediately. If they don’t notice until further down the line, watch out: damages are unlimited. They can extend to a judge breaking up your new business unit and handing it back to the original employer or rewarding damages of the entire lifetime value of the business unit. That’s why you never see companies do this :)
- cultureswitch 2y ago
  I wonder what's the theory of harm behind such law. Employers competing over talent is... illegal? Explains a lot actually.
  - SupremumLimit 2y ago
    Step 1: make everyone an incredible offer Step 2: get them all hired away from your competitor who is now out of business Step 3: in a year or two, restructure all these people out (or just fire them if your jurisdiction allows) Step 4: your competitor is gone, and all it cost was a year or two of salaries. Seems like a great way to help out budding monopolies.
    - 93po 2y ago
      it seems like you can just prevent this by providing incentives for your employees to not get poached, and also companies that mass-hire-mass-fire would get reputations for doing so, and people wouldn't fall for it. making it illegal instead of requiring businesses to actually pay for retention and loyalty in a free market way is so silly
      - 1123581321 2y ago
        When a mass employment offer is made to steal or destroy another business, it's usually something ridiculous. For developers it might be a million a year each, for example. It's not an amount intended to be paid perpetually so it can be larger than the defending business can be paying to retain. It is not illegal to do general hiring at good rates and shop for employees at a particular company. That wouldn't have the same results as buying a company. Plus, you wouldn't own their creations; you'd have to rebuild or clean room steal it.

alexwhb 2y ago

Ya that’s a solid point. Though many startups give their employees equity options… so you have to factor that in too. Also buying a start up for talent seems risky since many people that join startups are looking for a totally different energy than a large corporation, so it seems reasonable that there’d be a big drop off of that talent as soon as it gets acquired… especially if the vision is not aligned

dahart 2y ago

Multiple reasons. That it does happen should be reason to question your assumptions, rather than assume some obvious imagined alternative has been overlooked by everyone, right? While poaching one employee at a time might be usually legal, attempting to poach all employees of a company might not be legal, and either way is considered unethical. Paying off the investors may be the goal. Eliminating the product or competition ethically may be the goal. Buying the competition’s customers, and/or distribution channels may be the goal. Acquiring the top talent, while giving them the expected reward for having bootstrapped a company, might be the goal. Founders are often uninterested in a salaried position for themselves, but may be interested in a return for the company and payoff for everyone in it - as backpay for their investment, completely separate from their salary going forward. Also, your hypothesis is not accurate. Buyouts are not always, or even usually, massive. It’s common for them to be small and medium sized. It is definitely not a given that making persuasive individual offers would be any cheaper than an acquisition, let alone “so much” cheaper. Depends entirely on the situation.

tiahura 2y ago
Unethical by whom? The now richer employees? Or the salty cheapskate?
- dahart 2y ago
  Investors and founders to name two. Taking over a company via mass poaching would absolutely invite lawsuits. The government for another. Hiring all the employees of another company is regulated, and it could be seen as anti-competitive behavior. You’re thinking of individual poaching, not whole company poaching.
  - tiahura 2y ago
    I'll admit, as an attorney, this isn't my specialty, and every jurisdiction varies, but the ye olde common law of tortuous interference requires something more than mere competition, this is America, not the EU. 2 DAN B. DOBBS, THE LAW OF TORTS §§ 448-52 (2001)("you are thus free to induce my customers, employees, or suppliers to deal with you instead of me, as long [as] they are not bound to me by contract"). Restatement (Second) of Torts § 768 (1979) (stating that interference with a competitor’s contractual relations is permissible if it does not employ wrongful means and is intended to advance the competing interest). Wal-Mart Stores, Inc. v. Sturges, 52 S.W.3d 711, 726 (Tex. 2001) (" we conclude that to establish liability for interference with a prospective contractual or business relation the plaintiff must prove that it was harmed by the defendant's conduct that was either independently tortious or unlawful. By "independently tortious" we mean conduct that would violate some other recognized tort duty.").
    - dahart 2y ago
      Correct, tortious interference has criteria, and making competing employment offers doesn’t necessarily or automatically meet those criteria, but it could if there are other factors involved. Again, it depends on the situation. You’ve asked two different questions. One about legality and the other about public perception. There are lots of things that are legal and still considered unethical. And there are lots of things that might or might not be legal, that businesses avoid simply because there’s legal risk, and/or avoid because there’s risk of negative perception. If everyone involved in a startup agreed to be individually hired, and divest interest in the startup, and there was mutual understanding on all sides, then there may be reasonable chances of success and no lawsuits. I think that probably has happened before. If not everyone agreed to it, and a company tried to acquihire all the individuals of a company forcefully without agreement by the investors and founders, there’s a high likelihood (risk) of legal conflict, and the likelihood will increase under US law if the acquiring company would start to look anything like a monopoly on the market in question after the unofficial “merger”, right?

dwaite 2y ago

Sometimes that does happen. Apple historically tends to look for shipping results, and the underlying software and services (such as using DarkSky's algorithms and server code as starting points) are often worth it over just putting offers out to key people. This obviously isn't always true; they do have some longer-term research projects and strategic initiatives we've seen leak out (cars and non-invasive blood glucose monitoring are common mentioned ones), but I think Apple generally would prefer to let others succeed or fail in the research. There's nothing _to_ Pixelmator IMHO other than the product. Apple knows how to do sepia tone filters already.

yoz-y 2y ago

Apple did do that when they were building an electric car: https://www.reuters.com/article/business/apple-s-auto-ambitions-sideswipe-electric-motorcycle-startup-idUSKCN0SD0DW/ https://www.reuters.com/article/business/apple-s-auto-ambiti...

jahewson 2y ago
No, this was a failing business and the employees fled.

jahewson 2y ago

> Why not just make everyone working there an incredible offer at the same time? Under civil law this is regarded as tortious interference. Businesses have a contract with their employees and if you interfere with it to harm the employer then you are liable for damages. If you tried to make a mass offer like this, the employer could likely get a judge to place an injunction against it immediately. If they don’t notice until further down the line, watch out: damages are unlimited. They can extend to a judge breaking up your new business unit and handing it back to the original employer or rewarding damages of the entire lifetime value of the business unit. That’s why you never see companies do this :)

cultureswitch 2y ago
I wonder what's the theory of harm behind such law. Employers competing over talent is... illegal? Explains a lot actually.
- SupremumLimit 2y ago
  Step 1: make everyone an incredible offer Step 2: get them all hired away from your competitor who is now out of business Step 3: in a year or two, restructure all these people out (or just fire them if your jurisdiction allows) Step 4: your competitor is gone, and all it cost was a year or two of salaries. Seems like a great way to help out budding monopolies.
  - 93po 2y ago
    it seems like you can just prevent this by providing incentives for your employees to not get poached, and also companies that mass-hire-mass-fire would get reputations for doing so, and people wouldn't fall for it. making it illegal instead of requiring businesses to actually pay for retention and loyalty in a free market way is so silly
    - 1123581321 2y ago
      When a mass employment offer is made to steal or destroy another business, it's usually something ridiculous. For developers it might be a million a year each, for example. It's not an amount intended to be paid perpetually so it can be larger than the defending business can be paying to retain. It is not illegal to do general hiring at good rates and shop for employees at a particular company. That wouldn't have the same results as buying a company. Plus, you wouldn't own their creations; you'd have to rebuild or clean room steal it.