5 ms·

Actually HR acquisitions vary a lot. At one extreme they're indistinguishable from failure, but not at the other. They're equivalent to failure if the acquire

by pg 14y ago

Actually HR acquisitions vary a lot. At one extreme they're indistinguishable from failure, but not at the other. They're equivalent to failure if the acquirer doesn't give the the founders any more than they'd give equivalent people recruited through ordinary channels. But there are some HR acquisitions where the acquirer gives them much more. It's twisting the meaning of the word "fail" to call those failures. The startup may not have hit the the proverbial home run (yet) but they've done well enough to convince someone to give them a lot of money. While founders may have other goals for their startups, that's usually the economic goal. For some (to be honest, probably most) the economic goal is the main one. And if you achieve your main goal, that's not failure.

mibbitier 14y ago
It'd be interesting to know how many people do startups "for the money" - 'economic goals'. I always assumed pretty much everyone did a startup because it's fun and gives you the freedom to do what you love. There seems to be a line of thought that says "a) do a startup, b) solve the money problem, c) do what you love"... Why not just do what you love to start with? If you don't love doing a startup, don't do it. Do something else.
- brudgers 14y ago
  The money is still a way of keeping score.
  - staunch 14y ago
    Which is a way of pretending it's not about the money.
jusben1369 14y ago
Another way to think of it (failure) is not in monetary compensation but rather whether the technology, or even at the very least the concepts, are utilized in the go forward scenario. So HR acquisitions where everything is shuttered may just be opportunistic hiring opportunities with nice signing bonuses. However, if the technology or applied knowledge live on then those can't be failures. If they were the logical extension of the author's current definition is that the only way a company can avoid being termed a "failure" is to go public. Any acquisition prior to that is a failure.
sampsonjs 14y ago
As Mattheij pointed out, that's possible, just not very likely.
tptacek 14y ago
Pedantic point: to be a success, the financial outcome from an acqui-hire probably needs to account for the financial sacrifices taken during the building of the company. You can get a much better deal from an acquirer than you would have from their HR process and still come out behind for having landed there via a startup buyout. It obviously goes without saying that that outcome needs to be shared across the whole team, too. Technically, wouldn't you also want the financial outcome to capture the risk that the startup was all going to come to nothing? Finally, most importantly, and (admittedly) orthogonally: even with acqui-hires, what we're hearing are the "success" cases. Even those cases where the backbiting HN threads are tearing the company down for "obvious" failures, those are, relatively speaking, successes. We don't hear about the majority of seed-funded startups, which don't get any offers at all.
- viscanti 14y ago
  Prior opportunity cost is a sunk cost. The "exit" needs to be evaluated based on realistic alternatives at that point (i.e. keep going or shut it down). The fact that you may have left money on the table to join a startup no-longer factors into the equation. It comes down to making the best choice given all the current alternatives, not all the possible past alternatives that could have been taken.
  - tptacek 14y ago
    The question isn't, "is the acqui-hire the rational next step for the founders?" We can assume that acqui-hires virtually always are.
    - viscanti 14y ago
      If sunk costs (based on missed opportunity cost) factors in, then you also need to know what future earning opportunities would be for all (or most) founders/employees had they taken a job in Big Corp vs working at the startup that was acquired. You'd at least want to be able to realistically forecast earnings over the next 10 years. If they've increased their future income by more than what they gave up, it's a net win. The problem is that's impossible to accurately forecast. An additional problem is that the basis is only financial, when (most?) startup employees aren't there just to make the biggest possible payout. There's an increase in responsibility and autonomy across the board in a startup. How is that valued for each individual? The point in saying "was the acquisition a success" can only accurately be viewed by looking at the other alternatives at that moment. Any other analysis is significantly flawed.

by pg 14y ago

mibbitier 14y ago

It'd be interesting to know how many people do startups "for the money" - 'economic goals'. I always assumed pretty much everyone did a startup because it's fun and gives you the freedom to do what you love. There seems to be a line of thought that says "a) do a startup, b) solve the money problem, c) do what you love"... Why not just do what you love to start with? If you don't love doing a startup, don't do it. Do something else.

brudgers 14y ago
The money is still a way of keeping score.
- staunch 14y ago
  Which is a way of pretending it's not about the money.

jusben1369 14y ago

Another way to think of it (failure) is not in monetary compensation but rather whether the technology, or even at the very least the concepts, are utilized in the go forward scenario. So HR acquisitions where everything is shuttered may just be opportunistic hiring opportunities with nice signing bonuses. However, if the technology or applied knowledge live on then those can't be failures. If they were the logical extension of the author's current definition is that the only way a company can avoid being termed a "failure" is to go public. Any acquisition prior to that is a failure.

sampsonjs 14y ago

As Mattheij pointed out, that's possible, just not very likely.

tptacek 14y ago

Pedantic point: to be a success, the financial outcome from an acqui-hire probably needs to account for the financial sacrifices taken during the building of the company. You can get a much better deal from an acquirer than you would have from their HR process and still come out behind for having landed there via a startup buyout. It obviously goes without saying that that outcome needs to be shared across the whole team, too. Technically, wouldn't you also want the financial outcome to capture the risk that the startup was all going to come to nothing? Finally, most importantly, and (admittedly) orthogonally: even with acqui-hires, what we're hearing are the "success" cases. Even those cases where the backbiting HN threads are tearing the company down for "obvious" failures, those are, relatively speaking, successes. We don't hear about the majority of seed-funded startups, which don't get any offers at all.

viscanti 14y ago
Prior opportunity cost is a sunk cost. The "exit" needs to be evaluated based on realistic alternatives at that point (i.e. keep going or shut it down). The fact that you may have left money on the table to join a startup no-longer factors into the equation. It comes down to making the best choice given all the current alternatives, not all the possible past alternatives that could have been taken.
- tptacek 14y ago
  The question isn't, "is the acqui-hire the rational next step for the founders?" We can assume that acqui-hires virtually always are.
  - viscanti 14y ago
    If sunk costs (based on missed opportunity cost) factors in, then you also need to know what future earning opportunities would be for all (or most) founders/employees had they taken a job in Big Corp vs working at the startup that was acquired. You'd at least want to be able to realistically forecast earnings over the next 10 years. If they've increased their future income by more than what they gave up, it's a net win. The problem is that's impossible to accurately forecast. An additional problem is that the basis is only financial, when (most?) startup employees aren't there just to make the biggest possible payout. There's an increase in responsibility and autonomy across the board in a startup. How is that valued for each individual? The point in saying "was the acquisition a success" can only accurately be viewed by looking at the other alternatives at that moment. Any other analysis is significantly flawed.