Funny how the startup scene changes.
Years ago, Paul Graham wrote essays like 'You weren't meant to have a boss'. Nowadays talent aquisitions are seen as huge successes while (money aside) we are celebrating that some former founders found jobs at big companies.
(I am also more pragmatic in this question than years ago, so I am not criticizing anyone.)
I'm curious what the average founder's take is in a talent acquisition. http://ycombinator.com/nums.html indicates that 80% of YC's acquisitions have been for <$10M - so does that work out to about $1-2M per founder, after investors and employees get their cut?
Not chump change by any means, but skilled engineers in Silicon Valley can easily make $250K/year in total compensation. If a startup takes about 3 years of ramen wages to come to fruition and then the founders are locked up for another year while they vest, the plain old employee will have made about $1M in the time that the startup founder made maybe $2.5M. Startup founder is still ahead, but they took on all the risk of their startup failing and them getting nothing, and the difference is only about a factor of 2 instead of an order of magnitude.
Yes, talent acquisitions tend to be 1-2m per founder. The founders make more after tax though because they pay long term capital gains tax rather than income tax.
A talent acquisition is not usually the founders' first choice. What they get in return for the risk of the startup failing is the chance of a really big success. A talent acquisition is usually a backup plan. As a backup plan it's a pretty good deal.
(A talent acquisition is sometimes the founders' first choice if it happens early enough. Then it's a better deal because the money is divided by less time.)
>(A talent acquisition is sometimes the founders' first choice if it happens early enough. Then it's a better deal because the money is divided by less time.)
I thought acquisitions were one of the last surviving relics of indentured servitude, besides universities. My guess is that it's still a better deal when you adjust for risk, likelihood of large success, and fully look at the expected value matrix. Though I'm skeptical that you can really discuss probability in the context of multiple people's talents, without historical data (the best proxy I see is that you were _chosen_ by pg or other tier 1 VC, and said VC has this historical record, etc.)
$250k easily? I think that's a level of skill that is not at all common.
I'm not saying nobody gets paid that all, but developer compensation needs to be more realistically looked at on this forum. I'd say the majority make less than $100k, and $150k or more puts you in the top 5 percentile.
The level of skill needed to build a company from scratch and have it bought by Google is also not all that common. Apples-to-apples here: if you're going to compare a startup founder to an employee, you should compare them to someone of equal skill.
Anyone can "build" a company from scratch.... But it takes a lot to build a successful company from scratch, which isn't what Fridge did here. I mean, I know not everyone is a startup founder, but the costs and barriers to being one is pretty low these days... just start a website, say you're doing something special, and you can call yourself a "founder".
That's still missing the "and have it bought by Google" part. I know how low the barrier to entry for founding a company is - hell, I've done it myself - but there's still a fairly high bar to being acquired, or even aqhired.
Well, if you're making that magical $100K and you vest after three years for, oh let's say $300K, that'll bring you up to $600K not including benefits and other compensation that could, in theory, make you $250K if you're willing to swallow the opportunity cost of working at $100/yr.
You should note: founders do make a salary which lowers risk. We have to eat and pay the bills somehow. So the opportunity cost you speak of is simply the net loss of potential salary - startup salary. Founders probably take nothing in a year one, something small in year 2 (50-80), and year 2+ is variable.
Another consideration is you learn a lot more than you generally would at a big company. There's a lot of value in knowledge and many (despite it sounding corny) deem that as invaluable--worth forgoing 100K/year in salary.
Startup founder will also have no shortage of people willing to back her next company and a network of interesting people she can draw on for advice for life. Might that be even more valuable than the money?
This is not always true. Plenty of founders who spend time working instead of networking end up with a sparse network and very few people even aware of their success.
Less true if you are the kind of startup which could get talent acquired in the first place.
In the bay area at least, it would be really hard to be working on something worthwhile and remain totally sequestered from a network. The bigger problem is not getting caught up in it to the exclusion of spending time working.
I'm sure it is different outside the bay area, and is absolutely different outside the USA.
I tend to think of offers in terms of how long I can live on the savings from a single year. If you make 100k and save 20k, you make 200k and save 120k[1]. It's not 2x but 6x.
[1] I'm not considering taxes and so on, but the basic idea of leverage still applies.
That's a fair way of looking at it, but again, you need to compare equivalent lifestyles. If a startup founder lives on $30K/year because they were constrained to that for the 3 years they were growing their startup, you should compare that to an employee also living on $30K/year. In both cases, their expenses are negligible compared to their income. The employee banks about 7 years for every year he works (modulo taxes, which are not insignificant), while the startup founder banks nothing for the first 3 years and then banks 60-70 years in the final year.
I wonder how many of these talent acquisitions happen because of being related to YC? There are many startups out there with strong talent. Not many of them get acquired for talent reasons.
How do talent acquisitions happen? Do they usually start with exploring partnership opportunities?
I'd draw a distinction between talent acquisitions to go join the general pool of people at a big company, and talent acquisitions to work on the big new focus of a "sleeping giant", in something similar to what you were doing before.
Wasn't Etherpad the latter, and then they found out that big new focus had been canceled and quit? Same with Dodgeball, Aardvark, Jaiku, Jotspot, and any number of other acquisitions.
You shouldn't assume anything about what your job duties will be in a big company, even if it's written into your contract. Big companies have an internal logic that often makes no sense to the outside world, and usually depends upon what the decision makers are paying attention to at the moment. Priorities change.
Other than YouTube and Android, nothing Google has set out to do approaches how seriously they are taking Google+. Bigger than gmail, definitely (which, for acq, is tied to o Grand Central I think)
Wave had its own issues, mainly due to being political and inviolate, from what has been written outside google. It was really sad to see etherpad get caught up in that.
I never really understood talent acquisitions. They are still puzzling to me. If you only need the talent why pay for the company? A huge chunk of the money you are paying for a company goes to the investors.
Why not just offer the people that you like multi-million dollar signing bonuses and have them join you. But what if they want to stay in the company and believe in their product, you say. Well if that were the case why would they agree for their company to be acquired in a deal that shuts down their service?
Perhaps your puzzlement comes from a lack of exposure to all the variables? Not being critical here, I don't know anything about your background.
For some people, they have a demonstrated level of competence which allows them to work on what ever they are passionate about. If that is combined with a modest disregard for money such that they work somewhere because they are passionate, and for any salary as long as it meets some base level. If you want to hire them it is effectively impossible.
You have recruiters call them, they brush them off. You invite them to conferences and schmooze them with all the great things going on at BigCorp and they thank you politely for the invite and don't call back. You shower them with flattery, gifts, whatever and they persistently ignore you.
But if they get passionate about an idea and start a company around it and work day and night to breathe life in it, and more importantly take outside money, then BigCorp gets a chance. If BigCorp can convince the investor(s) to sell them the company they can move this thing you are passionate about into their company and have this star entrepreneur follow it.
Then there is a somewhat less sensational side, you've started a company and you've convinced people to invest, people who are now your friends, and it hasn't turned out quite the way you hoped it might. Perhaps the timing is off, or there was some gotcha you thought would be insignificant but turned out to be much more difficult, or maybe someone turned up a patent or something that makes your idea impossible to implement. Maybe its as simple as customers are willing to pay you what you need to make in order for you idea to be a viable business. You've got talent, you demonstrated an ability to execute, but your investors aren't going to come in on another round of funding because they, like you, no the concept as planned is dead.
You are friends with these folks (your investors) and you don't want to screw that up, so if BigCorp comes along and buys the company which pays off the investors, you get to keep your friendships intact, BigCorp gets to put some golden shackles on you for some period of time, and you get to try again after the shackles come off.
The short of it is that its rarely successful for a large corporation to 'poach' employees by luring them away with promises of better pay and more regular working hours.
Sorry if its just me but I always thought that if you've spent some time around HN, you can tell between talent acquisitions that occur out of need(other option being going dead) and talent acquisitions that occur from a position of power(ie. friendfeed). In the former case, congratulations are still in order for the founders not coming out completely empty handed, but I would not term it as "huge successes".
Congratulations != huge success(in the big picture sense)
Maybe this acquisition will bring the interests of someone like myself, that are non-public personas and wish to keep it that way, to the table where we can participate publicly. We would be able to use a single handle in our Circles marked 'public', so we could be blocked but still not be stalked.
Wow, congratulations! I'm really impressed by how successful Google+ has been so far, and I'm sure you guys will help make it even better.
It will be interesting if you can post in a year or so about what it was like going to work for Google as a talent acquisition in a related space to your own startup (i.e. what was better and what was different). I'm sure the food will be an improvement, but it will be interesting to hear how it was learning to use the google internal deployment environment (in general, non-NDA terms).
Also, thank you so much for extending data availability on frid.ge until the end of the summer!
Didn't know what fridge was so I watched the video on their website, funny thing is at some point the speaker goes like: "share whatever you want without worrying of other people or google seeing it!" that made me smile
The wording on this article makes it sound as though this was NOT an acquisition of the company, but a "job offers for everyone on the team" sort of deal. To be clear, was the company acquired, or did everyone quit and join Google? How do investors generally react to deals of the latter form?
Edit: The Techcrunch article [1] states that the company as a whole was acquired, in this particular case. However, how do these deals work out for investors when the company is not acquired, but the entire team quits and joins Google? Note, this is seemingly what occurred with YC Summer 08 company Scoopler yesterday, as mentioned in the TC article.
You know what? I was going to go back, find the URLs, compare them, offer a summary as to why they are different, list which ones have content and which ones don't, characterize their differences, and basically do all the homework. This, in addition to having taken the time to find the duplicates to start with.
Then I thought - why? Had enough, don't care, can't be bothered, and won't waste the time. I'll just let the front page full up with half a dozen or more duplicates, and not bother that it waters down the value of HN. It won't last.
So screw it. Thanks for the heads up - I'm deleting them all, and I really, really won't bother again.
ADDED IN EDIT: I was also going to defend pointers to duplicates, even in the instances when there is not yet substantial discussion, but I just don't care any more.
Yup. I've taken the opportunity to review my HN usage, and I get significantly less out of it now than I used to, and it just sucks my time to nearly no benefit.
I may keep posting links - the bookmarklet makes it easy - but the discussions here now seem to add very little, so I'm not bothering any more.
If it makes any difference, I appreciated your efforts. I hope veterans of HN don't become discouraged because they were the most influential in causing me to finally create an HN acct (oddly enough, I don't take that action lightly), and try to contribute to a group I've learned so much from.
Thank you. I appreciate that, but it doesn't make much difference. For me, HN is now more of a sink than a source. On balance as many people hate the dup detection as like it, and the comment threads no longer seem to shed the light they once did. I guess I've changed, and my interests no longer really align with HN.
So I'm moving on. I still have the bookmarklet, so I may still remember to submit things, but I doubt I'll do much more than glance at the Front Page occasionally.
Jaso: the re-assessment has convinced me that I'm not learning any more. I did once upon a time, but I'm not now. That's why I'm largely stopping reading, certainly stopping reading the comments. I'll still read the links submitted by people I've learned to trust - people who have similar interests to mine.
I've never used Reddit, so I can't comment about that.
ADDED IN EDIT: Just to clarify a little - there are still people here from whom I can learn a lot, and I'm sure there are still comments and submissions that I can learn from, but they are drowned by stuff I consider irrelevant, repetitive, uninteresting, or otherwise not something to learn from. The gold is hard to find now, the returns are no longer worth the effort.
Well if it makes you feel any better, a friend and I started another service that hopes to give people more control over the quality of their front page. We literally just released started inviting people to the site today.
If you'd like an invite, let me know. james@forrus.org
A shame they are not migrating the content into Google+, in some form, for customers who want it. But then I suppose fridge was a group thing, so getting consent could be tricky.
Congrats guys. Google+ saw a trend within small groups and decided to enter that market. However, I would assume small groups aim to limit your time spent with those who aren't as close to you. Now, I have tons of circles, and connecting with even more people than ever. Its organized well, but whats the point? Facebook has Lists right? Buying out Fridge and growing a community from the ground is a much better/sustainable strategy for google. Just an opinion :)
Man, I was really disappointed to click this link and find that it was not a news story about William "Refrigerator" Perry from the Chicago Bears joining the Google+ team.
It's funny that places like Google even perform talent acquisitions. I guess when you're controlling billions of dollars a few million here or there is a comparative "drop in the bucket" but it really has to be about covetousness or something, because there is a large supply of talented engineers that would be willing to work at Google as normal employees, and certainly many of these would have the same capabilities as the Frid.ge team. Does it really cost anything close $5M-$10M to find a handful of employees with that skillset? I'd say Google is definitely doing it wrong if so -- I can understand a premium for demonstrating competency with something like Frid.ge, but it just seems quite inflated when all Google ends up with in the end is a few employees for a few years (if that). I have to say I'm pretty skeptical that talent acquisitions are a decent deal from the acquirer's side of things.
No offense or displeasure to the Frid.ge team of course, if they're happy with it that's fine. I just don't see it as an economically effective investment from Google's end. Perhaps part of it is the extra headlines that are inevitable when a YC company gets acquired? Just doesn't seem like a good value to me.
Why would it be in that same ballpark? Google has a notoriously silly hiring process so its costs are probably higher than the costs of some other companies, but really 5-10MM to hire 3-4 people? I guess if they're willing to spend that on a "talent acquisition" it may not be that far out of line with normal hiring costs but I'd say there's certainly a problem there.
As I stated in my post I understand that demonstrating ability via Frid.ge can certainly be valuable and worth a premium. It just seems to be much higher than one might expect Google to spend on normal hiring processes.
I like Austin, but a group I was part of used Fridge and it made my pull my hair.
Thanks to Fridge, I now know how my grandmother feels like using a computer. The UI was really overwhelming and I could never find what I was after or why things were sorted a certain way.
Since Fridge itself is shut down, I'm not curious exactly how their model worked. Anyone know of (or care to make) a technical description of how it works?
