Comment by rvnx

From the acquirer’s perspective, you’re right. (Bonus: it diminishes your own employees’ ability to leave and fundraise to compete with you.)

From an ecosystem perspective, acquihires trash the funding landscape. And from the employees’ perspective, as an investor, I’d see them being on an early founding team as a risk going forward. But that isn’t relevant if the individual pay-off is big.

You want those people specifically. To get them, you need to hire them for a lot more money than you pay your current folks. That causes a lot of resentment with folks and messes up things like salary bands, etc.

But since they own equity in the current company, you can give them a ton of money by buying out that equity/paying acquisition bonuses that are conditional on staying for specific amounts of time, etc. And your current staff doesn't feel left out because "it's an acquisition" the way they would if you just paid some engineers 10x or 100x what you pay them.

Who should be paying the founders more? The ones that made a deal with the VCs? They would be hired away from the company.

I left out the part that the motivations for the acquirers were not to save money or to be slimy. It was the only way to get around overzealous government regulators making it harder to acquirer companies.