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I think any other analysis is too complex to offer any real insight. We can look at the NPV of the possible future earnings, to get a better idea. For the giv

I think any other analysis is too complex to offer any real insight. We can look at the NPV of the possible future earnings, to get a better idea. For the given opportunity cost, what's the impact on future earnings (over the next 10 years or so)? Does working at a startup that gets acqui-hired give you a potential to make earn more in the future? If so, how much more? What if you break even in the long-run, but you value autonomy over money? So you get a couple additional years of more autonomous work in for the same total money. That's still a win, but we lack the financial forecasting instruments to properly value that. The same can be said for all other non-monetary possible motivations for working at a startup. Looking at the money you may have given up, and requiring that ALL of that be made up in one lump sum to be a success event seems silly. It misses future income (which is relevant and can/should also be forecasted), as well as a number of other salient factors. Any financial model we come up with, will still be just an opaque gage. So if we're really just looking for a simple heuristic, looking at possible alternatives is an ideal choice (but as heuristics go, which all evaluations of this would be), it misses some things. I'd still argue it's the best simple evaluation metric, and that we're not losing much by foregoing a more complex analysis.

001sky 14y ago
Referring back to PG post, Exit A | Nil value added = Failure Exit B | Some value added < capital invested = 'not a failure' Then the qualification was added Exit C | Value added > capital invested = Success (threshold case)[1]. That is just objective data/nomenclature. Ex post and not complex.[2] Not forward looking. Not "personal".[3] Exit B is the typical case "Acqhire" or HR acquisition [4]. You, then raised the special case[5]: Exit B2: Value added != face value consideration [6] and also presumably, Exit B3: Value added > face value consideration >?< Capital Invested >>This murky area = PR SPIN ZONE. My comment on game theory was to consider threshold success as [7]: Exit B4: Value added + Reputation impact [8]+ face value consideration > Capital Invested. This would mean some deals, even though they are not a financial success, if cash consideration was the only variable, still might be a legit "win" for everyone involved, when reputation is considered. Note: LHS terms, when distribution not only total amount is considered, have a feedback loop Edit: formatting Notes: _____________ [1] Ideally, includes return = opportunity cost [2] Final node optimization, is fair question. But tconsiders that a forgone conclusion. Note Tpacek's comment: tptacek | link The question isn't, "is the acqui-hire the rational next step for the founders?" We can assume that acqui-hires virtually always are. [3] The game theoretic optimization of the final node is messy. Don't be short sighted. Keep in mind, playing nested sequential games. [4] Although logically, the product could be shut down in C. [5] This is special vs a typical exit, but obviously common to [B] type Acquires. [6] The "face consideration" is what goes to the equity of the startup. [7] If you handle the exit well [3], reputation >> 0 is very possible, assuming a recurring game, etc. [8] For both the investors and the team.

001sky 14y ago

Referring back to PG post, Exit A | Nil value added = Failure Exit B | Some value added < capital invested = 'not a failure' Then the qualification was added Exit C | Value added > capital invested = Success (threshold case)[1]. That is just objective data/nomenclature. Ex post and not complex.[2] Not forward looking. Not "personal".[3] Exit B is the typical case "Acqhire" or HR acquisition [4]. You, then raised the special case[5]: Exit B2: Value added != face value consideration [6] and also presumably, Exit B3: Value added > face value consideration >?< Capital Invested >>This murky area = PR SPIN ZONE. My comment on game theory was to consider threshold success as [7]: Exit B4: Value added + Reputation impact [8]+ face value consideration > Capital Invested. This would mean some deals, even though they are not a financial success, if cash consideration was the only variable, still might be a legit "win" for everyone involved, when reputation is considered. Note: LHS terms, when distribution not only total amount is considered, have a feedback loop Edit: formatting Notes: _____________ [1] Ideally, includes return = opportunity cost [2] Final node optimization, is fair question. But tconsiders that a forgone conclusion. Note Tpacek's comment: tptacek | link The question isn't, "is the acqui-hire the rational next step for the founders?" We can assume that acqui-hires virtually always are. [3] The game theoretic optimization of the final node is messy. Don't be short sighted. Keep in mind, playing nested sequential games. [4] Although logically, the product could be shut down in C. [5] This is special vs a typical exit, but obviously common to [B] type Acquires. [6] The "face consideration" is what goes to the equity of the startup. [7] If you handle the exit well [3], reputation >> 0 is very possible, assuming a recurring game, etc. [8] For both the investors and the team.