Business Brains

Need talented staff? Just buy the entire company

Posting in Technology

Corporate acquisitions have become the latest human resources tool in the tech world.

For decades, the standard practice in the technology industry has been for larger vendors to gobble up smaller vendors or startups. There were usually one of two reasons -- either for the smaller company's technology, or for their customer list.

Many times, employees of the smaller companies adapted well and flourished with their new organizations. There are cases, however, in which employees being gobbled up usually got the short end of the stick, and often either got laid off, or quit on their own accord after a brief stint in a new, often more controlling, corporate culture.

Now, it seems, the employees themselves are the target of acquisitions. The Wall Street Journal's Sarah Needleman points to a recruiting technique some cash-rich tech giants use to get the tech talent they need: just buy a smaller company or startup and get its staff in the process.

The acquisitions -- in which the smaller company itself is disbanded and staff is absorbed -- are called "aqui-hires," Needleman writes. She outlines some classic recent examples:

  • Facebook's acquisition of Glancee, Threadsy, Spool and Lightbox.
  • Google's acquisition of Milk.
  • LinkedIn's acquisition of ChoiceVendor and mSpoke.
  • Twitter's acqusition of RestEngine, HotSpots, and Clutch.lo,

Apparently, corporate acquisitions have become the latest human resources tool. The acquiring company gets a team of engineers who have already been working together. The catch is that the employees sought in the acqui-hires are the software engineers, while the remaining staff gets lost in the dust.

Of course, there's the risk that this rather expensive recruiting tool may backfire. While the engineers interviewed in Needleman's article appear happy in the cocoons of their new, larger employers, it could also breed discontent. The technology folks found at startups are there for the freewheeling entrepreneurial experience, not for a corporate 9-to-5 job.  But then again, this is a spirit that every organization could use a dose of.

(Thumbnail photo: U.S. Department of Commerce.)

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Joe McKendrick

Contributing Editor

Joe McKendrick is an independent analyst who tracks the impact of information technology on management and markets. He is a co-author of the SOA Manifesto and has written for Forbes, ZDNet and Database Trends & Applications. He holds a degree from Temple University. He is based in Pennsylvania. Follow him on Twitter. Disclosure