[yuppiepuppie]

So is the business model of these projects - 1. build a popular dev tool 2. aquire funding 3. hire great talent 4. pray for an aqui-hire that justifies the initial funding amount

I wonder how the initial investors feel about the aqui-hire path... Must be a pretty nice sum for them to agree to it, or they saw that the path to any revenue was near impossible/non-existant

[drewda]

In many cases the acquiring company shares investors or board members with the acqui-hired entity.

To put it neutrally, VC partners are treating these are parts of their same portfolios, so if one team doesn't pan out on its own, it can be merged into another with somewhat similar overall goals or markets.

To put it more pointedly, it's perhaps all about who one knows and making sure that everyone gets to tell a story of successful exits.

[JumpCrisscross]

> In many cases the acquiring company shares investors or board members with the acqui-hired entity

I’m seeing zero significant investor overlap between VoidZero and Cloudflare.

> VC partners are treating these are parts of their same portfolios

Very few VCs do this. Andreessen stands out as the exception.

[thethimble]

> it's perhaps all about who one knows and making sure that everyone gets to tell a story of successful exits.

No. It's all about building a great product that people love. Vite is a foundational tool in the JS ecosystem.

Acquihiring the tool/team is entirely downstream from creating a foundational product.

[seanclayton]

Vite isn't a product. It's a tool. It will be succeeded if necessary. It happened to Webpack after Microsoft hired the creator, and the JS community pivoted hard. Bundlers and compilers in the JS world happen once a decade it appears.

[sophacles]

I was at the hardware store this morning. I bought a hammer. It sure seemed like a product... with the whole "being displayed on store shelves" and "available for purchase" thing.

There were several different hammers there, bearing different branding and having different manufacturers.

I don't quite get the distinction...

[pjmlp]

Did you pay for the hammer with a pull request?

[senordevnyc]

You paid for the hammer. Did you pay for Vite?

[Shorn]

they will soon

[sofixa]

> No. It's all about building a great product that people love. Vite is a foundational tool in the JS ecosystem.

A foundational tool in an open ecosystem doesn't mean a monetisable product. I struggle to think of even a single example of a foundational tool with a business model.

And of course, not everything needs a business model. But if you're getting VC funding, you kind of need one.

[benoau]

This is the kind of problem I think only UBI solves because there is no apparent business model that can sustain ~20 employees working on software like this, they need to make at least a couple million a year to pay those people!

[overfeed]

> Must be a pretty nice sum for them to agree to it

Not necessarily: if the investors don't agree to a reasonable amount, the wanna-be acquirer will simply hire the entire team with generous sign-on bonuses, and the investors will be left with a shell of a company.

In this case, the core product is MIT-licensed, the team can quit on a Friday and pick up exactly where they left off under a new org on Monday.

[bix6]

Not necessarily. There are likely key person clauses in the prior round docs.

[overfeed]

It has happened in the recent past (2-4 years ago?); I can't remember both the acquirer and the hollowed-out startup, and searches are returning chaff, but it got to the HN frontpage.

IANAL, but at-will employment cuts both ways- thr best an employer can do on behalf of investors, are golden handcuffs - and people can be bought out of those.

[borski]

That’s not quite actually true and it is a bit more nuanced than that. For example, while non-competes and non-solicits are unenforceable in CA for employment agreements, they absolutely are enforceable for mergers and acquisitions.

The laws governing employment are a subset of the laws governing M&A.

[overfeed]

VC funding rounds don't quality as an acquisition, AFAIK.

[borski]

I agree, but I'm not sure how that's relevant?

[misterinfo]

In M&A's you usually sign non-competes.

[overfeed]

The husk of a company would still be bound by whatever contacts were signed by its officers. However, non-compete enforcement against individuals have been declawed in California, where VoidZero is headquartered, and (I assume) where its investors are, and whose courts they've likely agreed to adjudicate disagreements.

This is an extreme measure not usually taken, but it's a nuclear option that sets a ceiling on how much investors may play hardball.

[borski]

> However, non-compete enforcement against individuals have been declawed in California, where VoidZero is headquartered

Not in M&A.

https://www.freshfields.com/en/our-thinking/blogs/a-fresh-ta...

[overfeed]

Thanks - I wasn't aware about the M&A carve-out, which makes sense. It reads to me like clause (c) is the most relevant:

(c) all of the ownership interest of any subsidiary, may agree with the buyer to refrain from carrying on a similar business within a specified geographic area in which the business so sold... has been carried on, so long as the buyer... carries on a like business therein.

and it prohibits competition "on a similar business". The Vite team would be blocked from competing against VoidZero, but Cloudfare isn't a similar business IMO, and they would be free to work on a private "Pronto" fork within Cloudflare (which is unlike the real-life Cloudflare/Vite scenario where they will continue public releases)

[borski]

Maybe. It would require courts and nuance; cloudflare is in a lot of businesses nowadays. It rarely comes into effect regardless because people rarely spend less than a couple years at the acquirer, but regardless.

[debarshri]

Acquisition happen for 3 reasons.

1. Product 2. Talent 3. Business/growth

In the AI era, some of acquisition happening in the space is for talent and product.

In this case, it looks like it was that. Vite is a great product they were able to build a great team.

You would be surprised how much of a premium companies can pay for talent.

[bflesch]

Your listing is not exhaustive - startups can also be acquired for politics, for marketing purposes, whatever. There is a lot of meat space things going on in the upper echelons of the US tech industry.

Recent history shows that an idealized view only focusing on fiduciary duty does not capture the whole picture of business in the USA.

[sophacles]

Rarely does one acquire dollars for the sake of having dollars. Dollars are power tokens, and the acquisition of them beyond a certain point is almost always accompanied by a motive.

[stackskipton]

My guess is investors are getting a good return on investment so they are probably pretty happy.

[yuppiepuppie]

They've raised over $16 million [0]. For a decent 3-5x return for that, they would need to have been acquired for around ~$50 million. For a team of 19 [1], thats around $2.5 million per employee for Cloudflare. Worth it? no idea

[0] https://voidzero.dev/posts/announcing-series-a [1] https://voidzero.dev/about

[stackskipton]

I could see Cloudflare wanting them for 50 Million. Cloudflare recent acquisitions have clearly been "buy tools with heavy lock in" and companies shipping on Void are likely heavily locked in.

[benoau]

Isn't their revenue just sponsorships and donations? This seems like a company destined to scrape by despite their popularity, like Tailwind. You don't get $50 million for that.

[stackskipton]

They have a cloud they already built on Cloudflare. Cloudflare probably thinks they can quickly launch that and that's locked in, steady revenue source.

[ameliaquining]

void.cloud was their revenue plan, but it was still in private beta at this point.

[bluelightning2k]

Your linked post shows they raised 12.5 million?

But it's also possible they haven't spent much of that money.

The investors don't need to be happy. They just need to be made whole (assuming they have a minority control).

It could literally be that only $2m ever got spent and that's been paid back.

It could also be that when literally nobody said they would pay for Vite+ the investors and team in general lost confidence and were actually very happy just to get their money back and pivot into this acquisition.

[yuppiepuppie]

Series A was 12.5. Linked in that post was a Seed announcement which was another 4.5 million

[bluelightning2k]

Thanks for clarifying

[bix6]

Presumably that $12M A was around $50M Val so they need to sell for substantially more to give investors a multiple return.

[throwup238]

Unless the investors have liquidation preference where they see their multiple before anyone else sees a dime.

[bix6]

Prefs are so bogus.

[leros]

Presumably being able to influence their roadmap is worth it

[try-working]

if it helps Cloudflare make it so that 20% of applications are built on their platform then that is definitely worth it

[arjie]

They will easily have exceeded $50m.

[bredren]

Liquidity at some multiplier is easy to measure.

The value to the investors also includes the outcome of dealflow resulting from the relationships and network built up along the way.

[embedding-shape]

> So is the business model of these projects - 1. build a popular dev tool 2. aquire funding 3. hire great talent 4. pray for an aqui-hire that justifies the initial funding amount

Indeed, so as a library/framework/engine/runtime user, for the last decade or so, I've basically avoided anything that touched VC-investments, as eventually the tool will either degrade, get too expensive or straight up disappear, and I got so tired of having to refactor and move stuff around just because new owner did something shitty.

[AdeCodechise]

Hey there embedding-shape -- my name is Adrian Bridgwater and I'm a technology journalist that has enjoyed the realism of your comment here, can I contact you for a follow up comment? I'm here at LinkedIn to start with https://www.linkedin.com/in/adrianbridgwater/

[embedding-shape]

Sure, reach out via my email that's in my profile, I don't have LinkedIn :)

[rconti]

I mean, the alternative is a whole bunch of BS dealing with funding, global compliance and sales, public markets, etc.

It's more fun to just build the fun bits, get acquired, walk away with a lot of money, and start over again doing the fun bits (if you want to keep working).

[tdrz]

If you get acquihired, you don't get to walk away.

[dbbk]

No their business model was a Vercel-like deployment platform that wrapped Cloudflare to make it simpler.