The past couple years have seen a few high-profile examples: Recently Kevin Rose's Milk app development team was bought by Google (who outbid Facebook). Google killed Milk's projects and then put the team promptly to work on Google+. It was later learned that Google kept only the design team because it had plenty of engineers.
Earlier this year, Twitter purchased a startup as part of a strategy to grab its developer talent. Whisper Systems was bought in part to get Whisper founder Moxie Marlinspike, an expert in secure sockets layer (SSL) and Whisper Systems' roboticist Stuart Anderson.
Another example includes Facebook's acquisition of Gowala, a social networking site akin to Foursquare. Shortly thereafter Gowala shut down it services leaving only an emotional note saying goodbye. Other acqui-hire targets include Hot potato and Drop.io.
Even as far back as 2010, it was a clear plan for Facebook, as evidenced by Mark Zuckerberg's comments at a Y Combinator Startup School, "Facebook has not once bought a company for the company itself. We buy companies to get excellent people."
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Where Is the Acqui-Hire Going?
In the long term, no one can be sure, perhaps the teams acquired using this method will go on to create new and amazing innovations. In the short-term, it seems that end-users are the ones who lose. Many customers come to love programs, apps and websites--many times becoming dependent and engaged in them, only to have the carpet pulled out from underneath them when their services are killed or watered down after an acquisition.
Currently, Hagen says, there is a certain cachet attached to this. While it seems more like an HR method, what happens when people start thinking that these startups that are being bought up are, in fact, failing businesses? If that type of stigma is attached to the acqui-hire method, entrepreneurs and venture capitalists may think twice.
