Why does yahoo keep buying companies simply to acquire talent? Isn't it just easier to just post a job ad? I don't think there's a shortage of talented programmers working in social media.
how does buying a team actually work - when the company gets bought from the shareholders, can't the employees tell yahoo to piss off and not sign new contracts? how does the process look like?
Typically the purchasing company will have an idea of who are must keeps, etc. They'll then put financial incentives in place that would typically exceed free market (golden handcuffs...in a manner similar to startup vesting (X amount of shares or X in cashola vesting / released over Y amount of time))
If you're going to joke around about handcuffs, you can't misuse "free market" at the same time. The offer doesn't exceed "free market", it simply exceeds market.
From the OP of this https://news.ycombinator.com/item?id=6140982, which mentions that "In each instance [of acquisition], Yahoo has locked up engineers with two- to four-year contracts...", it sounds like the employees are given a 2-4 year contract to sign, or they can leave ... which would be a voluntary separation without unemployment etc.
It's an interesting point. Onerous contracts signed under duress are not valid in many jurisdictions. Threat of dismissal, the "sign this or else" ultimatum is considered duress. Also, in some countries this scenario would certainly be considered constructive dismissal. As it is though their jobs at the old company don't exist nor does that company and they have not consented to work for the new company, so this is absolutely not voluntary separation, it is dismissal, and they are absolutely entitled to unemployment.
But is that really a "sign this or be dismissed" threat? It seems more like a "Company X is dismissing you. We (Company Y) are offering you a job. Would you like to accept?" type of situation. Which is a lot better than a "Company X is dismissing you. We (Company Y) are not interested in you either. Good day." type of situation.
RIght; in fact, in my last job, it happened in exactly that way. A 2nd or 3rd rate Beltway Bandit got bought by a big foreign company, and because of the latter any units working in national security had to be acquired by a US company, and before the acquisition. My unit was one of those, and we got a document with a bunch of demands, like the last N years worth of non-competes you'd signed, and then in theory they'd hire you. If you didn't sign it, you'd be laid off (in this case there was a successor organization, that wouldn't be true in these aquihires).
I can't imagine that would work, otherwise every company would do something like that to get out of paying unemployment. Like... "We're not firing you, we are just going to pay you minimum wage now, and if you choose to quit, that's your choice."
That's a constructive termination, and in theory your unemployment office would consider it to be such. I've only collected it twice, and in both cases the company that laid me off made ridiculous claims it was for cause, they seemed to be very savvy about the games some employers play.
But see jack-r-abbit in the other subtread, this will be done as a layoff in a soon to be dead company (which obviously won't care about its increased unemployment insurance payments) and an ... opportunity to join the other company, of course on their terms.
Sure, anyone is free to not be acquired. And there is not usually any guarantee that everyone will be acquired. There is usually going to be some sort of retention bonus offered to people to stick around a few months beyond the acquisition period. But if a team is working well together (regardless if the actual product was a success or not, or the circumstances around their acquisition) and people enjoy having a job and the buyer is not a complete train wreck, many people will go with it (if nothing more than to have a job while you start looking). A good team that is used to working together can have a slight edge over a new team built from scratch.
The OP to this https://news.ycombinator.com/item?id=6140982 mentions that Yahoo is going to some effort to keep them from being "rejected by the host" as previous mobile efforts and their employees have been. See the end of page 2 and beginning of page 3.
According to the article that this comment of mine discusses: https://news.ycombinator.com/item?id=6141238 that's the only way they've found to acquire mobile talent after treating it very badly in times past. Sounds like no matter how energetic the recruiting, people in this field aren't going to jump to them unless they have little or no choice.
Key sentence fragment: "In each instance, Yahoo has locked up engineers with two- to four-year contracts...."
But you always have a choice. Nobody can force you to be acquired... that would be slavery. The seller can require as part of the deal the buyer offer to keep a certain amount of people at a certain pay. Buyer can accept that deal or negotiate. But at the end of the day, every employee has a choice to sign the new contract or not. So anyone who got "locked up" in a 2-4 year contract did so because they felt it was a good move for them (or at least better than not having a job).
Outside of California they might be ... hindered by non-competes. I was once in this position: https://news.ycombinator.com/item?id=6148918 and one of the many reasons I didn't accept the offer was that non-competes were enforceable in my state, the contact had a nasty one, and the acquiring company did business with so many of the area's organizations that I would have been seriously disadvantaged when it came time to separate.
It's a silly "choice;" employees shouldn't be treated with handcuffs. You should be offering them a clear incentive to NOT leave with the cash.
Unfortunately, a lot of developers going to work for a startup have a starry-eyed perspective that the 80hr week is going to pay itself back in droves and without the golden handcuffs. Then reality sets in; the seller doesn't necessarily think much about his employee's outlook -- "dude, you get to work for Yahoo!!!!"
Employees of startups need to be reminded to not take cuts, because the buyout should be gravy; it will likely never come or come with a heavy ball-n-chain.
They could offer good work conditions and autonomy and get best of breed developers for $200,000, but they say that sort of salary is outlandish and they prefer to pay VCs several million per talent acquisition instead, claiming that makes more sense. But does it really.
Having never been in this situation, what stops a developer from signing and doing almost no work for Y! while they ride out their contract? I feel like if they get fired they could just claim that Y! didn't want to pay them, so they fired them instead.
Has Yahoo ever tried to offer $500,000+ to rockstar mobile devs? Until it tries that, it is lame to argue that it must get talent from deadpooled companies.
60-70 Million for talent? Wow. I suppose Yahoo is trying a novel approach to recruiting: target startup founders/employees, give generous equity offers (via acquisition price) as well as a 'win' on the resume (successful exit). I have to say, it's a pretty compelling offer...
Not sure what level of talent is left at Rockmelt other than their founders. It hadn't been doing well for a long time so I imagine the cream of the crop had already left. (I know one such person who had already left for Google)
They can easily get talent for much much less.. just by posting an ad in the "Who's Hiring?" thread. There are many talented people who want to join Yahoo, but feel HR/gatekeepers are too much of an obstacle to even apply.
For those keeping score, this gives another win for Khosla Ventures, SV Angel, a16z, and First Round. Here's the tally for those who invested in companies that have been acquired by Y! since Mayer took over:
CrunchFund - 3 (Stamped, GoPollGo, Tumblr)
True Ventures - 3 (OnTheAir, Snip.It, Lexity)
Khosla Venture - 3 (Snip.It, Xobni, Rockmelt)
SV Angel - 3 (Snip,It, Xobni, Rockmelt)
Google Ventures - 2 (Astrid & Stamped)
Spark Capital - 2 (Tumblr & Lexity)
Jack Herrick - 2 (Qwiki & Astrid)
Greylock - 2 (Tumblr & Qwiki)
First Round Capital - 2 (Xobni & Rockmelt)
Also to note, Lexity & Jybe were founded by former Y! employees.
That doesn't seem totally fair. To say they were on their way down is pretty negative. Sure maybe some of their explosive growth was slowing down but I know more than a few still had some tricks up their sleeves. Outside of Tumblr and Lexity, Astrid and Summly were poised to continue to innovate since the founders/team have products that continue to surprise.
At the end of the day, some of the startups are by founders who are pretty early in their careers (e.g. Summly) and would like to have a win under their belt. Yahoo's shopping spree seems to validate a lot of successful products not just in terms of popularity but also talent and product innovation.
Fair enough. However for what is believed to be an acqui-hire and a team that has some lofty ambitions, I think the founding team and investors must have been happy that the team/product found a nice home.
Playerscale is the one off the top of my mind that was totally self-funded.
In addition, I could not find funding data on a few others when completing my research so not sure if self-funded or not: Alike, Loki Studios, GhostBird Software, Rondee, Ztelic
This acquisition reminds me a lot of Hunch. It's a similar size in terms of team + cost per team member. $2-3M/employee. And, Hunch's core tech seems to have gone into the eBay homepage, which is what Sarah is proposing Yahoo do with Rockmelt.
That's true of Hunch at eBay, though it should also be noted that the new homepage was originally spearheaded by Milo employees, an acquired startup that also is creating new products in eBay (read analyst day reports and look for "eBay Local" for hints).
Does anyone have any real insight into the strategy behind all of these acquisitions? Apart from blasé speculation about acqui-hiring (for what products?) and supposition that Yahoo executives are merely stupid, I'd be interested to understand the broader pattern. It's a real news story, and something is going on.
Rockmelt has (had) a very strong leadership team (founders were very successful in the 90s), and a number of strong engineers.
It seems clear that this is an acquisition for talent, since they're shutting the product down with less than 30 days' notice.
For <$70MM, that could be a relatively cheap acquisition of talent that has proven their ability to make things (if not necessarily proven their ability to make a product that people want to buy - which is where Yahoo's responsibility and vision come into play).
For <$70MM (and for a company that raised $40MM), that could be a relatively cheap acquisition
How much money Rockmelt raised says little about how good of a deal Yahoo received. The reverse may be true: Yahoo may have had to pay way more than the real value simply to ensure a return to the investors, not because it valued the company at the price paid.
Quote from 20 years in the future:
"Many people were very successful in the '10s... It was way too easy, not necessarily an indication of talent or strong leadership."
Yahoo needs talent to succeed. Yahoo, in general, cannot compete with Google, Facebook or smaller startups for talent. They're better off now than they were prior to Marissa but they're still a definite second best. So they are buying talent to stock the shelves with first rate devs and leaders - mostly in mobile. At some point - say in 6 - 18 more months - talent may come to work for them to work with some of these smart people they're acquiring reducing their need to acquire companies at such a frantic pace. It's a smart strategy.
Oh my. Yahoo has lots of problems with execution, we shouldn't be surprised if due diligence is another example, especially when they think they're in the 11th hour.
well considering Yahoo doesn't power their own search engine, maybe they're okay with teams who are adept at creating great UI and UX wrappers around 3rd party licensed technology.
This is actually quite sad considering Yahoo has an excellent research division in Barcelona in information retrieval. Maybe they should start funding them more instead of letting them fund themselves with huge european projects.
No, they take the links from bing and provide a more interactive experience on top of it. I just finished reading a research paper last month where they explain it. The concept made sense but their execution is really terrible. Their web page just looks too cluttered, distracting away from the users search experience.
Bear with me while I ask a dumb question. Why pay $70M to acquire a startup just for their engineering and technical talent? What's the going rate for a really good engineer nowadays, $150K? Why not just offer $180K? That difference adds up to a lot less than $70M.
I must be missing something. So Joe works as an employee at Somethingly earning 150k and won't jump ship to Yahoo for a pay rise. But after Yahoo acquires Somethingly -- and likely shuts down its product -- Joe will choose to keep working at Yahoo because...? Given that Joe presumably didn't have a say in the acquisition, what are the (non-monetary) merits of post-acquisition Yahoo over pre-acquisition Yahoo?
You're missing the effect of inertia. Most people do not continuously re-evaluate whether they would choose to be working at their employer if they were unemployed and seeking a new job. Instead, they continue the current status quo until things are blatantly wrong for them, and only then start looking around. This frees up mental energy to focus on things like actually getting their job done and having a life outside of work.
Yahoo is betting that it wouldn't be able to induce someone to jump ship, but once they have jumped ship, their work environment is "good enough" to keep them. Well, most of them.
It's the same reason why magazines and online services bill by subscription (it's a lot of effort to get someone to subscribe, but much easier to keep them subscribing), and why ISVs bundle a lot of crapware with major platforms (users wouldn't knowingly install their products, but if they're already installed they won't bother to remove them), and why UX designers make the default settings whatever benefits the company most (most users never change the defaults).
When you acqhire a startup, you're not just buying the engineers they hired. You're filtering out all the engineers they didn't hire.
It takes an enormous amount of work to find that good engineer in the pool of unemployed workers. This is why big companies pay for sourcers, recruiters, referrals, interviewers, etc. In a typical company, that 1 good hire resulted from looking through hundreds of resumes that didn't cut it for one reason or another.
When a company does an acqhisition, they short circuit all that work, and get a pool of vetted, battle-hardened engineers who are known to work well together. That's worth a lot more than just the engineers' salaries, because there was a lot more than just their salary that went into convincing them to work for the startup.
If they just offered $180K, a number of the employees would turn it down, because they go to work for the intangibles like having good coworkers or working on interesting products, and the only way that Yahoo can bring them on board are to keep those intangible perks intact until they find a way to assimilate them into the mothership.
It's not fair to your existing employees, so you would end up having to pay all of them more money as well. This gets very expensive very fast. Quite often cheaper just to acquihire and end up paying the engineers (Existing and new) $150K.
This doesn't make any sense since the founders of the company getting acquihired stand to gain a considerable amount of money from the acquisition. They'll still end up getting paid more than existing employees. In fact, they may get a "signing bonus" which exceeds the entire lifetime earnings of the existing employees.
Besides, very few companies are transparent with salaries. If yours is not, that means that salary negotiation is not always fair to existing employees and they don't want you to know that. (It could also mean salary negotiation is unfair to the new hire as well.)
It's important to recognize that there are at least Five (5) parties involved in an acquihire. You have the Acquiring Company, You have the Investors in the Acquired Company, You have the Founders of the acquired Company, You have the employees of the acquired company and, you have the employees of the acquiring company.
All of these parties come into the mix in an acquihire.
The investors have preferred shares, quite often with a liquidation preference, and they will always get something. The founders will often get something, (though in the case of liquidation preferences, it may not be very much - "consulting bonus" is not uncommon here) in an acquhire. The employees of an acquihired may or may not get totally screwed on their common shares depending on the size of the liquidation preference of the investors. They will almost always get a "retention bonus" - that may be on the order of a 50% of their salary, repayable if they don't stick around for 1-2 years.
All companies I've worked with have been pretty good about leveling salaries, and are careful to avoid a situation in which you have two groups of people doing the same job, but one group making 50% more than another. You may have isolated situations in which an employee or two is out of wack on their compensation, but companies like Yahoo! try hard to avoid having systemic disfunction in compensation. The mechanisms for getting new employees in a tight job market come in the form of hiring bonuses and/or acquihires.
Reading your comment carefully, I think you are considering the scenario of an acquhired where most of the employees acquired were founders, whereas I'm thinking of the 30-50 employee company, where only a couple of the employees were founders.
There are two parts to getting good employees: finding them and getting them to work for you. Many startup employees, by themselves, will not work for Yahoo for $200K/year. Many startup employees will work for Yahoo for $150K/year if all their favorite coworkers are working for Yahoo and they get to work on a product they're familiar with. The only way to bring them over is to bring them over as a block.
Many people in the startup world don't understand this, but the vast majority of people in the labor force are not primarily motivated by money. You need to pay them enough to feel like they're not being taken advantage of, but beyond that, they go for work environment, interesting coworkers, challenging projects, and other intangibles. To have any chance at all of hiring them, you need to provide those and not just money.
(Google understands this very well - they explicitly state with their offer that most people who work for Google do not do so for financial gain. They do it because they want to be a part of something great, and have really intelligent coworkers, and be given a flexible and creative work environment. Yahoo has a big challenge matching this, given their current lackluster stable of products, and Marissa's trying to jump-start the virtuous cycle and bring in folks that people would want to work with.)
There are two parts to getting good employees: finding them and getting them to work for you. Many startup employees, by themselves, will not work for Yahoo for $200K/year. Many startup employees will work for Yahoo for $150K/year if all their favorite coworkers are working for Yahoo and they get to work on a product they're familiar with. The only way to bring them over is to bring them over as a block.
Many startup employees will work for Yahoo for $150K/year if all their favorite coworkers are working for Yahoo and they get to work on a product they're familiar with.
That seems at odds with the fact that most of these companies products are immediately shut down when the acquisition is announced.
Shutting down the product is often not part of the deal. Many founders will deliberately choose an acquirer that offers less money but promises to keep the product alive.
It's often a bait-and-switch tactic on the part of the acquirer. Once the deal is complete, the acquirer owns everything, product and all, and has no legal obligation to keep it open and active. If you wait a month or two after the deal closes to announce this, then many of the employees already have large sunk costs in the employer - they've possibly relocated, they've signed up for health insurance again, they don't want to have a tenure of 1-2 months on their resume, they've learned some of the acquirer's systems, they've made contacts in their new employer - and so you can keep them even if it's not a choice they would've made initially.
That's worth a lot more than just the engineers' salaries
I call bs. It's honestly insulting to every Yahoo employee to hear this argument that these guys coming to yahoo via a dying start up are worth several multiples.
Your entire post doesn't even touch upon the fact that most of these companies are failed companies. They aren't exactly companies whose talent created a product that was killing it. Just as you give credit to them being a team, you should also discredit to them failing--not as criticism but to be consistent in trying to value them fairly.
I think that to get on the radar screen for acquihires, you have to have had at least some success executing, i.e. you launched a product that is usable. You may not have launched the right product, you may have failed to find a market, but it shows that you can build something and deliver it to the public.
There are many teams, particularly in big companies, that fail to do even that.
Weren't there a half dozen Facebook acquihires where the company hadn't launched any product at all? A former coworker coined them "fist-bump acquisitions" because the defining characteristic was that one of the founders was always a former roommate of Zuck or other early employee.
It's actually a good question - I have a friend who is a technical recruiter, and she specializes in hiring entire departments from other companies. Her strategy is usually to offer a "leader" (quite often the manager, but sometimes the sr. technical player) who will take a role in convincing the others to come on board. Signing bonuses are usually around $200K-$500K depending on seniority, and vest (or the repayment portion disappears) after 2 years. The person responsible for convincing the others to come on board usually gets an additional $500K or so.
But, this is for departments of 6-10 people.
One reason why offering a higher salary is a non-starter, is that, in order to properly level those new employees, you end up having to pay all of your existing engineers more money as well. So, if you increase your existing engineers salary by $30K * 10,000 engineers, you just paid $300 million/year as opposed to paying a one time fee of $70mm.
My thoughts exactly. I'll broadcast this to Yahoo right now. Im a desirable hire in the Bay Area, who is working at a 200M+/year profitable company and on mobile. Give me a $1 million signing bonus and Ill leave my current team, and deliver those experiences and successes right onto your lap. The real issue here is this is a reward to investors for there failures. There is some other part of this story were just not privy to. It's a VC back deal. Apple only paid for Color's 20 engineers for $5M.
I think Yahoo just needs great engineers and acqui-hiring is a good way to get them quickly. I think that as long as Yahoo can keep the teams together, they have a good shot of building some great tools.
If I was to guess their strategy: Sumly + Tumblr + Rockmelt looks like a new content distribution system.
I did for quite a while actually. I loved the social browser concept, but the fact that I couldn't get extensions like lastpass to work in Rockmelt killed it for me and drove me back to vanilla Chrome.
I still wished them well though, their product was good and their customer support was great. I'm sad to see the brand go away, but I'm pleased for them that they got acquired. Hopefully they go on to do well at Yahoo!
I don't use Rockmelt, but I did use Flickr and delicious. Yahoo is the touch of death for web applications and I've grown to resent their tendency to buy and ruin services I use. This case with Rockmelt is more of the same: I don't use it myself, but the people who do are now less likely to like Yahoo.
I think a lot of this is a side-effect of it being socially unacceptable to have 10x (or more) pay differences between good and bad employees at tech companies. That sort of thing is tolerated on Wall Street, but not SV.
Prediction: SV business leaders will find a way to meaningfully tie pay to performance more than they currently can, and offer the best 3-5x what the average earn.
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[ 4.8 ms ] story [ 168 ms ] threadSomeone please explain.
But see jack-r-abbit in the other subtread, this will be done as a layoff in a soon to be dead company (which obviously won't care about its increased unemployment insurance payments) and an ... opportunity to join the other company, of course on their terms.
Key sentence fragment: "In each instance, Yahoo has locked up engineers with two- to four-year contracts...."
Unfortunately, a lot of developers going to work for a startup have a starry-eyed perspective that the 80hr week is going to pay itself back in droves and without the golden handcuffs. Then reality sets in; the seller doesn't necessarily think much about his employee's outlook -- "dude, you get to work for Yahoo!!!!"
Employees of startups need to be reminded to not take cuts, because the buyout should be gravy; it will likely never come or come with a heavy ball-n-chain.
CrunchFund - 3 (Stamped, GoPollGo, Tumblr)
True Ventures - 3 (OnTheAir, Snip.It, Lexity)
Khosla Venture - 3 (Snip.It, Xobni, Rockmelt)
SV Angel - 3 (Snip,It, Xobni, Rockmelt)
Google Ventures - 2 (Astrid & Stamped)
Spark Capital - 2 (Tumblr & Lexity)
Jack Herrick - 2 (Qwiki & Astrid)
Greylock - 2 (Tumblr & Qwiki)
First Round Capital - 2 (Xobni & Rockmelt)
Also to note, Lexity & Jybe were founded by former Y! employees.
Edit: Also add Lexity to the list with Tumblr.
At the end of the day, some of the startups are by founders who are pretty early in their careers (e.g. Summly) and would like to have a win under their belt. Yahoo's shopping spree seems to validate a lot of successful products not just in terms of popularity but also talent and product innovation.
In addition, I could not find funding data on a few others when completing my research so not sure if self-funded or not: Alike, Loki Studios, GhostBird Software, Rondee, Ztelic
There is a strategy. What is it?
It seems clear that this is an acquisition for talent, since they're shutting the product down with less than 30 days' notice.
For <$70MM, that could be a relatively cheap acquisition of talent that has proven their ability to make things (if not necessarily proven their ability to make a product that people want to buy - which is where Yahoo's responsibility and vision come into play).
How much money Rockmelt raised says little about how good of a deal Yahoo received. The reverse may be true: Yahoo may have had to pay way more than the real value simply to ensure a return to the investors, not because it valued the company at the price paid.
Yahoo Keeps Buying Startups That Don't Make Their Own Apps http://readwrite.com/2013/07/03/yahoo-qwiki-lawsuit-chaotic-...
after all, talents can simply quit their jobs after acquiring
Yahoo is betting that it wouldn't be able to induce someone to jump ship, but once they have jumped ship, their work environment is "good enough" to keep them. Well, most of them.
It's the same reason why magazines and online services bill by subscription (it's a lot of effort to get someone to subscribe, but much easier to keep them subscribing), and why ISVs bundle a lot of crapware with major platforms (users wouldn't knowingly install their products, but if they're already installed they won't bother to remove them), and why UX designers make the default settings whatever benefits the company most (most users never change the defaults).
It takes an enormous amount of work to find that good engineer in the pool of unemployed workers. This is why big companies pay for sourcers, recruiters, referrals, interviewers, etc. In a typical company, that 1 good hire resulted from looking through hundreds of resumes that didn't cut it for one reason or another.
When a company does an acqhisition, they short circuit all that work, and get a pool of vetted, battle-hardened engineers who are known to work well together. That's worth a lot more than just the engineers' salaries, because there was a lot more than just their salary that went into convincing them to work for the startup.
If they just offered $180K, a number of the employees would turn it down, because they go to work for the intangibles like having good coworkers or working on interesting products, and the only way that Yahoo can bring them on board are to keep those intangible perks intact until they find a way to assimilate them into the mothership.
Besides, very few companies are transparent with salaries. If yours is not, that means that salary negotiation is not always fair to existing employees and they don't want you to know that. (It could also mean salary negotiation is unfair to the new hire as well.)
All of these parties come into the mix in an acquihire.
The investors have preferred shares, quite often with a liquidation preference, and they will always get something. The founders will often get something, (though in the case of liquidation preferences, it may not be very much - "consulting bonus" is not uncommon here) in an acquhire. The employees of an acquihired may or may not get totally screwed on their common shares depending on the size of the liquidation preference of the investors. They will almost always get a "retention bonus" - that may be on the order of a 50% of their salary, repayable if they don't stick around for 1-2 years.
All companies I've worked with have been pretty good about leveling salaries, and are careful to avoid a situation in which you have two groups of people doing the same job, but one group making 50% more than another. You may have isolated situations in which an employee or two is out of wack on their compensation, but companies like Yahoo! try hard to avoid having systemic disfunction in compensation. The mechanisms for getting new employees in a tight job market come in the form of hiring bonuses and/or acquihires.
Reading your comment carefully, I think you are considering the scenario of an acquhired where most of the employees acquired were founders, whereas I'm thinking of the 30-50 employee company, where only a couple of the employees were founders.
Many people in the startup world don't understand this, but the vast majority of people in the labor force are not primarily motivated by money. You need to pay them enough to feel like they're not being taken advantage of, but beyond that, they go for work environment, interesting coworkers, challenging projects, and other intangibles. To have any chance at all of hiring them, you need to provide those and not just money.
(Google understands this very well - they explicitly state with their offer that most people who work for Google do not do so for financial gain. They do it because they want to be a part of something great, and have really intelligent coworkers, and be given a flexible and creative work environment. Yahoo has a big challenge matching this, given their current lackluster stable of products, and Marissa's trying to jump-start the virtuous cycle and bring in folks that people would want to work with.)
False dichotomy if there ever was one.
That seems at odds with the fact that most of these companies products are immediately shut down when the acquisition is announced.
It's often a bait-and-switch tactic on the part of the acquirer. Once the deal is complete, the acquirer owns everything, product and all, and has no legal obligation to keep it open and active. If you wait a month or two after the deal closes to announce this, then many of the employees already have large sunk costs in the employer - they've possibly relocated, they've signed up for health insurance again, they don't want to have a tenure of 1-2 months on their resume, they've learned some of the acquirer's systems, they've made contacts in their new employer - and so you can keep them even if it's not a choice they would've made initially.
I call bs. It's honestly insulting to every Yahoo employee to hear this argument that these guys coming to yahoo via a dying start up are worth several multiples.
Your entire post doesn't even touch upon the fact that most of these companies are failed companies. They aren't exactly companies whose talent created a product that was killing it. Just as you give credit to them being a team, you should also discredit to them failing--not as criticism but to be consistent in trying to value them fairly.
There are many teams, particularly in big companies, that fail to do even that.
But, this is for departments of 6-10 people.
One reason why offering a higher salary is a non-starter, is that, in order to properly level those new employees, you end up having to pay all of your existing engineers more money as well. So, if you increase your existing engineers salary by $30K * 10,000 engineers, you just paid $300 million/year as opposed to paying a one time fee of $70mm.
If I was to guess their strategy: Sumly + Tumblr + Rockmelt looks like a new content distribution system.
I still wished them well though, their product was good and their customer support was great. I'm sad to see the brand go away, but I'm pleased for them that they got acquired. Hopefully they go on to do well at Yahoo!
Prediction: SV business leaders will find a way to meaningfully tie pay to performance more than they currently can, and offer the best 3-5x what the average earn.
The current system is just too roundabout.