Twitter has sort-of acquired another startup, Clutch.io, which makes software tools for building iPhone and iPad apps.We say “sort of” because here’s what Clutch.io’s Eric Florenzano and Eric Maguire wrote:
We are incredibly excited to announce that we’ve joined the flock at Twitter! Twitter has acquired the IP of Clutch.io and today is our first day with the company.
We asked Twitter to explain what that means. Here’s what a company spokesperson said:
The Clutch.io team has joined Twitter and we acquired their IP.
OK! So we’re left trying to interpret that.
While it sounds like one event, those are actually legally two separate things. Intellectual property is an asset that one company can sell to another. And people who work at one company can get hired by another company.
Twitter, Facebook, Google, and others do a lot of deals that sound like acquisitions, but may or may not be actual transactions where one company purchases another. People call them talent acquisitions, acquire-hires, acqui-hires, or, even manquisitions.
In Twitter’s defence, we’d point out that the statement it provided is a vast improvement over past practice, when Twitter would actually call these transactions “talent acquisitions”—industry shorthand for something that legally can’t really happen.
Whatever you call them, these deals usually involve some mechanism for paying off investors while getting what the acquiring company really wants—the talent that works there. Sometimes that’s done through an actual acquisition of the company, albeit for a low price. Sometimes money is spent to acquire intellectual property. And sometimes the acquiring company pays the startup for agreeing not to sue for hiring away its employees.
A recent study by law professors at UNC shows that there are a number of reasons for companies to do these deals. But the biggest ones come down to reputation. It’s more prestigious to say you sold your startup to a big company than to say you’re closing your startup down and taking a corporate job.
And if you get to say that the acquiring company bought your startup’s intellectual property, that sounds even better. (It may or may not actually get used by the acquirer. Clutch.io is shutting down its service later this year.)
Florenzano and Maguire started working on Clutch.io earlier this year under the umbrella of their startup Boilerplate. They previously cofounded Convore, a group-messaging startup which shut down earlier this year.