By | Ganesh Chella | Co-founder and Managing Director – CFI
In recent weeks I have been hearing the term acqui-hiring (the practice of buying out a company essentially for its skilled manpower) being used by many of my clients and friends in the entrepreneurial eco-system.
There seems to be a lot of excitement around the discovery of this cool new way of acquiring talent as a package deal so to speak. Whether this will be used tactically or will become an integral part of the talent acquisition strategy of organisations is hard to predict right now. What we can do is to reflect about its efficacy.
Interestingly, the practice of buying out a company for its skills is not new and cannot be credited to the ingenuity of new age technology companies. Companies in the design, engineering, projects, EPC or other professional services space have often resorted to the practice of acquiring a company which has employees with hard to find skills to ensure effective project completion. The process of acquisition was no different from any M&A process as far as the employees were concerned. The ones who did this successfully ensured that they used the skills but also retained the autonomy of the founder by keeping it arm’s length and even encouraging him to do work for others. Such acqui-hiring deals often took the form of exclusivity agreements or JV partnerships or equity investments. Even when it was fully merged, it did not impact employees in any real way.
However, today’s concept of acqui-hiring seems to be somewhat different.
Many of the acqui-hiring targets of today are the entrepreneurial team itself. In other words, many are trying to acquire the entrepreneurs and make them employees. That is where I see trouble.
I would like to share my person example to explain this. I became an entrepreneur and started my consulting practice back in 2000 to honour my need for autonomy and creativity and to give expression to an idea that I was passionate about. It was not the money or the security that I was looking for. A few years later, I was approached by the founders of two larger consulting firms with proposals to “acqui-hire” me. It did not take me too long to say NO. The whole idea of “going on my own” was to “be on my own” and not “be owned by someone else”!
Having worked with dozens of entrepreneurs over years, I can say with conviction that most of them went on their own for pretty much the same reason – to be on their own.
So, how would they like being acqui-hired? I can say for sure that if someone is truly entrepreneurial, they would certainly not like it.
A true entrepreneur would rather be in charge and in control than become rich. He would rather struggle to build something he is passionate about than sell out and become an employee and squelch his entrepreneurial spirit. He would detest the very idea of becoming an employee, reporting to a manager, complying with company policies, worrying about performance ratings, career progressions and so on.
That is if he is truly an entrepreneur at heart.
So, how do we explain the current popularity of acqui-hiring? How do we explain the fact that many of today’s young entrepreneurs are willing to be acqui-hired?
Well, the answer to that question can be somewhat discomforting.
In my personal view, a good number of today’s entrepreneurs, especially in the technology space perhaps see entrepreneurship as a means of becoming rich very quickly, carried away by the runaway success stories of a handful of billionaire entrepreneurs in the Bay Area or Bangalore. Given the easy access to funding and the strong prospect of being acquired, they may view entrepreneurship the same way they view a campus job – how much money will I make?
For such entrepreneurs, being acqui-hired might sit very well with their needs and preferences. For real entrepreneurs however, being acqui-hired means giving up their dreams to create, to act autonomously and find meaning and purpose. So, even if they do get acqui-hired, they may struggle to fit in and may perhaps bide their time until they can go back “on their own”.