Startupedia: What Does Acqhire Mean?

What does acqhire mean?

Acqhire, or acquhire, or acqui-hire (however you choose to spell it) is a portmanteau of “acquire” and “hire” most frequently used in the techie-blogosphere. And it means exactly what you'd think. In short, an acqhire is a talent acquisition. What is talent acquisition? It is the action or process of one company acquiring another smaller company with no intention of using their product, services, or technology. Instead, they absorb them for the value of their human capital.[bctt tweet="Acqhire, acqui-hire, or acquhire... however you spell it, it's about bringing in the best."]

The term was coined by blogger Rex Hammock in 2005, as he sassed:

Google acquires(?) But really… when a public company with a market cap of $64.1 billion “acquires” a two-person company, isn’t that more like a “hire” with a signing bonus?

Other tech bloggers seem to agree that Hammock had a point. It took some time to gain traction, but acqhire is now well-understood among business buzzwords in the tech ecosystem, though not very far beyond.

Why acqhire when you could just hire?

Giants like Facebook, Google, Yahoo!, Zynga, and Twitter are famous for this recruiting strategy. In a competitive market with a colossal talent gap, these superpowers are willing to drop bank (for them, a relatively minor investment) to lure the best the innovation economy has to offer. They buy startups to get their founders and software engineers, typically paying a price per head and deep-sixing the product at the same time. Deals are often made in stock, primarily, promising these companies that their prized acqhirees will stick around for a year or more before they can sell their shares. In some cases, acquiring is used as a defense strategy to squash and absorb potential rising competitors.

For the founders whose companies get absorbed, the acqhire might not represent an entrepreneur’s dream, but they’ve hardly drawn the short straw. The numbers show that most startups are destined to fail, but it’s a much sexier exit for your startup to be “sold.”

Examples of acqhires:

Goal-driven development:

In 2012, the devs at Lightbox had been focused on Android development and HTML5, fitting perfectly into Facebook’s goals and direction at the time. Facebook (the king of acqhiring) acqhired Lightbox’s seven-person team to strengthen their own mobile performance.

Bringing in the big guns:

CEO Marissa Mayer’s plan to buy Yahoo!’s way to mobile dominance wasn’t about acquiring new products, but great talent. In acqhiring video platform OnTheAir, Yahoo!’s team gained a few ex-Googlers and former Apple employees.

Two teams are Twice as nice:

Startup company Twice, an online marketplace to buy and sell secondhand clothing, saw an opportunity in the acqhire trend and decided that the little guys could play this game, too. Twice recognized that plenty of failed businesses are backed by all-star teams, and created a “Restart Fund” to celebrate the talented people who go through top-tier accelerator programs but fail to secure the funding they need to scale. Twice set their sights on acqhiring a team from a failed startup coming out of Techstars, Y-Combinator, or 500 Startups to give their own startup and this team of rockstars another chance at success.