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So Readmill got aqui-hired today… for $8M. App gets shut down. Crunchbase says they have a team of 5. That’s a pretty nice exit… for a fail.

  • The investors most likely have liquidation preferences and they probably raised nearly as much as they were purchased for so no, it’s NOT a good exit!!!

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    • That’s not the point though. The company should’ve been bought for ZERO – maybe a hiring bonus for the folks that get hired, but nothing close to that insane valuation for a product that gets shut down.

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      • That’s what aquihires are all about really, a hiring bonus + paying off investors. That seems to be the case here.

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        • Why should the investors be paid off if the product is going to be discarded (definition of aqua-hire actually). If the product’s IP had value then its not an aqui-hire – its a traditional acquisition.

          Name me any other industry that this happens. I have a feeling aqui-hires only happen between VC funded companies (one successful and one failing) and Silicon Valley is one hell of a cronyistic community.

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      • Do you mean why couldn’t they just quit and go work for Dropbox? Because the founders might wish to start another company in the future, so they will likely need to raise a round of funding again. Investors will not give them money if they screwed their previous investors.

        If what you mean instead is why couldn’t they keep the whole $8 million for themselves rather than giving the investors their share; well they would go to prison if they tried that, as the investors are legally part owners of the company and liquidation preferences guarantee them that they get their investment back before the founders see a dime, then after that they split the remaining amount based on their percentage of ownership.

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        • You obviously missed the point of the OP. The OP was asking why Dropbox even bothered paying anything. The company failed. Dropbox isn’t getting anything other than new employees. The investment is worthless. The founders would be looking for a job. If Dropbox dangled a 250k signing bonus for each of the 5 employees they’d jump on it in a heartbeat. Why bother paying the extra premium?

          How does Dropbox benefit? If you were CEO of Dropbox, would you pay $8M to hire the team?

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          • Supposedly Dropbox purchased them for their technology. If that’s the case then the technology legally belongs to the company, so they have to purchase it or else the investors would sue Dropbox for stealing the technology by stealing the founders.

            So for example of a bunch of Microsoft engineers leave for another company, they can’t take the code for a new Windows with them because that is legally the IP of Microsoft.

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  • Dropbox and Yahoo! is like the teat for failed venture investors. Silicon Valley has such cushy safety nets. No wonder why everyone else in SF hates techies.

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