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So, what's propping all of this up is the immense size of a typical startup acquisition. These acquisitions are typically priced at $5 million per engineer for

So, what's propping all of this up is the immense size of a typical startup acquisition. These acquisitions are typically priced at $5 million per engineer for an acqui-hire, and more if there's an actual product. These numbers are consistent to scale: for an established, public tech company to have a market cap of under $1 million per employee is unsuccessful. Think about that. A mere relationship (which she can end at any time) with an average engineer (most startup engineers aren't anything special, as startup success these days has more to do with marketing and sales than technical excellence) or technical person is worth several million dollars. Why? Companies like Yahoo buy startups at a panic price: several millions of dollars per head. That's the price of mostly mediocre talent. Also, acquisitions are fraught with peril. Good people tend to bounce and bad people tend to stay. Huge tech companies still do them. Why? Because their middle management filters are so broken they can't recognize talent at the bottom. Engineers who are just good enough to support a half-decent sales/product teem are, along with that sales team, valued at $2-5 million per head. And we still don't think of ourselves as exploited, when we suffer under closed allocation for a comparative pittance? These startups are an attempt to capture the immense surplus value that we (especially the top 10% of us) create. They used to enrich... engineers and makers, as well as investors. They now deliver our surplus value to... friends of investors (hired in as executives, or made founders) as well as investors.

yourapostasy 13y ago
Would you say most engineers are used to discussing compensation in annual terms, while buyouts are usually computed in forward-projected earnings terms, anywhere from 3-8 years for most small buyouts depending upon various factors? If so, then a $2-5M per head figure works out to $667K-1.67M per engineer per year for a 3-year projection, and $1.67M-625K per engineer per year for an 8-year projection. Even factoring in the overhead costs (an additional 50-100% bump to the annual figure), that is still a healthy amount of surplus capital in the picture that engineers should keep in mind when getting recruited, and should be negotiating for in prudently-structured stock grant terms if not in cash. So it isn't $acquihire_price_per_engineer - ( $my_annual_compensation_pkg + $overhead ) = OMFG!, but it still pencils out to a healthy amount per year anyone who is a principal contributor should be aware of.

yourapostasy 13y ago

Would you say most engineers are used to discussing compensation in annual terms, while buyouts are usually computed in forward-projected earnings terms, anywhere from 3-8 years for most small buyouts depending upon various factors? If so, then a $2-5M per head figure works out to $667K-1.67M per engineer per year for a 3-year projection, and $1.67M-625K per engineer per year for an 8-year projection. Even factoring in the overhead costs (an additional 50-100% bump to the annual figure), that is still a healthy amount of surplus capital in the picture that engineers should keep in mind when getting recruited, and should be negotiating for in prudently-structured stock grant terms if not in cash. So it isn't $acquihire_price_per_engineer - ( $my_annual_compensation_pkg + $overhead ) = OMFG!, but it still pencils out to a healthy amount per year anyone who is a principal contributor should be aware of.