Acqui-hire: Why Facebook & Twitter Are Doing It

This is a post I wrote for the BNOTIONS blog a few weeks back. This seems to be all the rage right now in the tech industry, but we forget that it is something that has been happening in business since the days of true pimps.

“Zynga adds 50 people through talent acquisition of Video game maker Buzz Monkey” reads Monday’s headline earlier this month on TechCrunch (Kim-Mai Cutler). The public company acquired Oregon based Buzz monkey, not to make ‘video games’ (implying a move from social games) but rather to expand and bring on talent. A move that is not so foreign to companies in the Valley as talent becomes a more scarce resource than ever before.

Talent acquisition (or talent M&A, as it could also be termed) is not a new concept. In the tech industry, it rose exponentially during the internet boom in the late 90s and early 2000s and it is certainly happening after. As technical talent becomes more scarce in Silicon Valley (the global tech hub), finding smaller fish to eat in order to acquire talent seems like a logical play in the game. It is even rumored that companies are paying up to $1M per engineer!

‘Acqui-hiring’ is in fact a very strategic move (acquisition and hiring, yes, a combined word). Companies do not only do it to strengthen their existing team or bring on more talent, they do it to expand as well as to innovate.

Three reasons to think about strategic acqui-hiring for your company:

1. Acquire a foreign version of yourself to expand in new markets with local talent.

ex. Groupon acquiring copycats all over Europe for global expansion into the European market.

2. Acquire a company strictly for talent, no relation to product.

ex. Facebook purchasing Friend.ly.

It may seem like a seedy play to acquire only because you have your eye on their top engineer with the entire intention to scrap their product. But at the same time, we are seeing a massive shift into products that do not adhere to the       commonplace that “the innovation must make business sense,” (The Design of Business, Roger Martin). In Roger Martin’s book, he quotes Michael Dell in saying that, “still today in our industry, if you go to a trade show, you walk around     and you will find a lot of technology for which there is no problem that exists.”

3. Acquire in a new vertical or area of the market that  you are trying to lead. Places where you do not have the talent or resources to build this in a timely fashion or you are looking to expand where someone else leads.

ex. Facebook buying Instagram to grab the mobile photo market that Facebook needed to expand to. After all, photos is part of Facebook’s core business and they were in no way leading in mobile photo sharing.

Jenna Hannon | Director of Marketing | @JennaHannon

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