Hope the holiday season is going well for you and your family. In sociology, there is an effect called the Matthew effect. This effect refers to the accumulated advantage first coined by Nobel Laureate Robert Cox Merton. Malcolm Gladwell explains this effect in his best-selling book -Outliers. In fact, Gladwell opens the book with this effect. (For to him who has will more be given; and from him who has not, even what he has will be taken away)
One can think about this effect from the Talent standpoint. We can call it the Matthew Talent Effect. The companies that already have advanced tech talent like Meta, Apple, and Google continue to take the talent. Though this is mainly true, in 2021, even big tech companies struggled to hire the right talent. In 2021, talent acquisition dominance has become labor market-dependent, and no one company truly enjoys a dominant position. In Indonesia, a company like Gojek is better positioned to take advantage of top talent than Google or Apple in that market. In Chennai, a company like Zoho or Freshworks has a better advantage as they worked on their Recruitment Marketing strategies particular to the market
Regardless of whether you are a global brand or a market-specific strong brand, we realize that companies need to have a “community effect” in the communities they operate. It reminds me of the research done by Stewart Wolfe from the University of Oklahoma. The Roseto effect is the phenomenon by which a close-knit community experiences a reduced rate of heart disease. The effect is named for Roseto, Pennsylvania. The Roseto effect was first noticed in 1961 when the local Roseto doctor encountered Stewart Wolf, then head of Medicine of the University of Oklahoma, and they discussed, over a couple of beers, the unusually low rate of myocardial infarction in the American community of Roseto compared with other locations
Establishing a community effect is essential even in this age of pandemic – whether it is health as in the Roseto effect or in talent acquisition. With Digital, the boundaries and definitions of the community will differ – but building a community effect is important
So what are these community effects that we should strive for? There are many aspects to this, and we will examine this over a series of emails. But one of the critical dimensions is to have the community effect on Startups. The most significant benefit that Enterprises can gain through this effect is the impact of Acquihires. Here are some key insights around acquihire
- Companies value target companies at 500,000 USD per Engineer to 2 Million USD per Engineer. Some companies like Apple have valued even higher than this, but that is usually an outlier
- In places like Latin America and new South East Asian hubs like Indonesia and Vietnam, Eastern Europe, the Middle East, and Africa, you will get better deals as there are more such opportunities
- Clutch, a platform that publishes verified client reviews, identified Wizeline as Mexico’s top app development company. Tapping into places like Mexico and Argentina for Acquihire will be a beneficial reward for Enterprises
- Companies often define golden handcuff clauses to retain the talent in an acquihire way
- If you have a library of low momentum startups, Recruiters can also target on a case-by-case basis – something that we can provide you a complete list for your review customized to your specific needs. Within the Draup app, there is a startup list that can give you a low momentum startup list for Recruiters. We are also enhancing the same.
- Top companies have gained senior leaders through this process. in 2009, Facebook made public its acquisition of FriendFeed for a reported $47 million to hire its co-founder Bret Taylor, who became Facebook’s CTO. Bret is now the Co-CEO of SalesForce. There are many similar examples.
- A few days back, Airtable acquihired Walrus.Ai, a low code/no-code platform. Coinbase acquihired BRD.
- Clearly, this trend is followed more by tech and digital companies. Enterprises should evaluate and have a strategy in place
Such a strategy needs to take into account several aspects. There are several aspects to consider
- Legal aspects of making the acquihire work.
- Workforce Planners should understand the macro startup trends as a critical component of their 2022 talent strategy. Developing a targeted map like this will be helpful
- Specific locations have more density of startups in certain industries. The graph below shows this density distribution.
A targeted list example as shown below for the United States with Skills in Python startups with low business momentum could be a perfect target for Recruiters