When a lifestyle business is bought-out, assuming the employees are also significant equity stakeholders, do they typically get compensated for the loss of expected lifetime earnings - and/or a contractual right to buy back their IP from Apple, given that an acqui-hire is not guaranteed to be in the employees’ best-interests - or be long-lasting?

Just asking - because if my company were to be acqui-hired I have serious doubts about my ability to stay at Apple specifically - given (for example) their prohibition on most of their FTE SWEs having a personal GitHub account or doing any kind of moonlighting. What does Apple do when they really want to acqui-hire a company but the people they want don’t want to work at Apple without special-exemptions from the normal rules?

They wouldn't extend an offer to you in this case. Acqui-hires have no upside for employees and barely any for founders. Some small return to investors to sign off on the acquihire. Usually most people still have to interview for their jobs.

Acquihires do often have employee upside, in the form of large stock-based compensation grants or bonus payouts, typically spread over a vesting period of several years. There's no point in the acquihire if you don't retain the employees, and relative to the cost to acquire the company these payouts aren't huge.

You're right that often people do have to interview to remain employed (and thus to receive these benefits).

> do have to interview to remain employed

Would that be a full-on interview as if they were applying for a job, or just some kind of "cultural fit" screening?

It seems contradictory to me: if the hire is important enough to spend a lot of money on (even via an earn-out) then why alienate them with uncertainty about the offer?

I guess the assumption is they don't have a better offer?

But if a few key employees get together then don't they have the ability to scuttle the whole deal? "Keep doing this thing that Apple was willing to buy, but on better terms, and look for a new buyer" sounds like a pretty good alternative to "take Apple's earn-out on Apple's terms with nonzero risk of getting nothing."

It varies between no interview at all, and a full interview exactly like a new hire. Both are done. Interviews are more common these days, because if they're skipped, existing employees may resent the acquihire folks for not having to jump through the same hoops.

This is another reason for the vesting payouts for employees. If there wasn't some reward, and you had to do a full interview, why not just interview somewhere else?

Regarding your last question, it is true that a cabal of disgruntled employees could cause problems for an acquihire. I have seen cases where the acquisition was contingent on a certain number of engineers passing the interviews. Another good reason for a big financial incentive.

I don't think that would lead to better terms in a new deal. The next buyer is likely to learn that the company's employees boned the interviews, which is going to look bad.

> existing employees may resent the acquihire folks for not having to jump through the same hoops

I guess that makes sense, but it’s also a reason to view the hoops as less of tech screen and more of a hazing ritual.

I appreciate that having to whiteboard a recursive permutation generator is a rite-of-passage for most of us, it gets old, quick. One's ability to do well in a whiteboard interview is not the best indicator of one's ability to deliver value to the organisation. If I were a hiring-manager I'd prefer to go-over the candidate's portfolio of work rather than grill them over the computational complexity of a logic puzzle.

If some new people from an acquired company were to join and I heard they skipped the third-year CS undergrad oral finals simulation step I'd be glad that there's some progress being made - I wouldn't feel resentful at all.

"I had it bad when I was younger, therefore you should too" is amongst the worst our instinctive behavioral tropes.

In my experience with most acquihires, your “upside” is basically a new hire package at the mid-high end (sometimes I see low) of external offers + a potentially expedited interview process.

The hypothetical case I was describing was when the employees (say, 1-5 people) are also the sole shareholders.

Supposing I write a _killer app_ with a friend and get a patent for it - and it ends up with tens of millions of users quickly - and Apple really wants it for themselves at short notice (too short a notice for them to try to recreate the software code, sic their legal team to invalidate the patent and market it to get enough users) - how far would Apple bend to accommodate my _think different_ attitude?

You’re describing an acquisition including IP and not an acquihire. I’m not sure how much Apple cares about idiosyncrasies of founders for potential full acquisitions but I imagine they matter quite a bit for a run of the mill acquihire.

It's mostly about talent but nobody wants to embarrass the entrepreneurs?

Why is it embarrassing?

They obviously did well enough to be worth acquiring.

An acqui-hire is typically considered a failure for VC-backed startups. (Not that one should necessarily be embarrassed for “failing” in this way, but that’s just the reality).

I think, from reading the back and forth here, that there seem to be a number of different types of acqui-hires and as such we can't really be sure to what extent the acqui-hire represents a failure.

I could think of worse things than getting acqui-hired by a FAANG and made a Director or something in the company. Not sure that's much of a failure honestly!

It's certainly better than going insolvent, but it also implies that you company has failed to reach the usual hockey-stick growth targets and that your IP is "worthless" enough to be bought as overhead for hiring someone. So, while not a total failure, it's really not a compliment.

Success to you. Failure to the investors.

It entirely depends on the company.

- Turi became TuriCreate/CoreML

- Faceshift became Memoji

- Workflow became Shortcuts

- FoundationDB is unchanged and underpins iCloud

- Shazam is unchanged

Many of the acquired companies can be directly seen in shipping products (https://en.wikipedia.org/wiki/List_of_mergers_and_acquisitio...)

Worfklow is maybe one of my favorite acquisitions by them because it's far easier to run something like this as an OS-level daemon with OS-level permissions than a third-party app. Funnily enough, the Workflow team was folded into Proactive Intelligence, i.e. the old Cue team, another startup that was essentially acquihired for the same reason. Cue was trying to extract all kinds of information from your email, but it turns out you need more than email, which is possible when you run as an OS-level daemon.

Yeah - I mean I guess you can make it sound bad.

But a ‘pivot’ is essentially the same thing - in terms of what gets scrapped.

I see an acquihire as the market actually validating your company value even if you haven’t pivoted into a hockey stick product.

How is it validating? In an acquihire situation the company gets bought and then everything but the people is flushed down the toilet.

You used to be working on AI powered eye glasses that could tell when fruit is perfectly ripe but now you work on an in house travel expense system the Apple sales people use to log their Uber bills.

> You used to be working on AI powered eye glasses that could tell when fruit is perfectly ripe but now you work on an in house travel expense system the Apple sales people use to log their Uber bills.

Is it that realistic? Why would anyone take such a deal? Why would Apple expect those employees to stay, and given this why would they pay a premium?

My sense was that generally teams are hired because they have proven that they are competent in something specific that Apple wants to do, even if the actual code isn’t used directly.

Sometimes aquihires are just execs at big companies helping their VC or angel friends save face and keep the deal pipeline open.

Typo "for the IP or talent"