The New Kingmakers

Chapter 2. The New Kingmakers

Buy the Company to Hire the People

Imagine a labor market so tight that recruiting is done via acquisition. This is the reality that the technology industry faces today.

Historically, motivations for merger and acquisition activity in the technology sector have been comparable to that of other industries. Acquisitions typically centered around products, with employees an afterthought. Between January 2002 and January 2012, for example, Oracle acquired 68 companies. The acquisition logic varied, but none were driven purely by talent acquisition. To the contrary: many of these transactions involved acquiring the technology and shedding a majority of the staff.

But this more-rational talent market was the product of an industry dominated by slower-moving enterprise technology vendors. Oracle and other businesses that cater primarily to enterprise buyers are constrained in ways that consumer technology vendors are not. While new services and devices can never arrive quickly enough for consumers, there are upper bounds to the amount and velocity of innovation that enterprises can absorb.

The end result of the rising power and stature of consumer technology vendors is ever higher premiums placed on technical talent. The inevitable byproduct of this greater demand is elevated scarcity. Amidst the worst economic recession since the Great Depression, the talent market for developers has remained historically tight. With the demand for programmers far outstripping ...