Note that -- in a not untypical for Re/Code demonstration of a near-complete absence of journalistic standards -- the assertion that Google's hiring of (some of) the Homejoy team is about moving into home services is not even attributed to any source or set of sources. The only sourced facts are:
(1) Google is hiring a portion of Homejoy's staff (sourced to Google)
(2) Homejoy's current platform will be shuttered (sourced to completely unspecific "sources", but this is pretty explicit in Homejoy's own public shutdown announcement.)
(3) Google "had set out to enter" the home services space "earlier this year" (sourced to a Buzzfeed article, which actually claimed that Google was in the process of readying an offering in the space, that doesn't indicate the timing of the planned launch, so really doesn't support the past-intention characterization given in the Re/Code article.)
So, Homejoy is shutting down (which we knew), Google has hired some of Homejoy's technical staff, and there were reports a few months back that Google might be readying some product in a space related to (but not identical to) what Homejoy was doing.
Note that Kara Swisher (executive editor of Re/Code) was married to Megan Smith [1]. Megan is now CTO of the United States, but previously was at Google for over a decade and a VP at Google X.
It's not unreasonable that Kara, and by extension her team, would therefore have made a number of high-level contacts inside Google.
That said, if they are speaking to sources then they should reference them (even if anonymously.) Otherwise, as you noted, we can only consider it an opinion piece masquerading as journalism.
All excellent points, but even given the earlier reports, we don't know for sure that Google is moving into a related space. They didn't pay any money for the company. Maybe they simply wanted some good, proven engineers.
Yeah, when I first heard the news I pretty much assumed Homejoy investor Google Ventures simply assisted some of the employees in getting jobs at Google so it wasn't a total loss. Home services doesn't strike me as making much sense for Google unless it was some sort of marketplace, comparison shopping or match-making service.
This is an interesting move, it seems like an acqui-hire without all the upfront money to actually do the acquiring. I wonder what someone who owned equity in Homejoy would think of this.
If the only valuable asset of the company is the talent, and the talent is composed of at will employees, then the company doesn't have a valuable asset.
The extent to which the equity-holders can reasonably expect money is the extent to which the company-held IP is valuable in and of itself (or, to a lesser extent, valuable when combined with the expertise you get by hiring the team).
Is there anything legally preventing a startup from folding regardless of their VC's demands and going to work for someone else if an offer is extended?
EDIT: Hand remaining money back to VC, say "We've received better job offers", turn off the lights and move on.
> Is there anything legally preventing a startup from folding regardless of their VC's demands and going to work for someone else if an offer is extended?
The principals might have enforceable contracts which they would be breaking by doing so; most employees -- and this is about a subset of the technical staff -- would, however, be free to leave at any time.
> The principals might have enforceable contracts which they would be breaking by doing so
Can you truly force someone to work for you though, legally? I don't believe so, other than preventing the principal from receiving some sort of future-promised compensation (bonus, etc) or having a compensation clawback (which, I would think, would be extremely difficult to enforce).
> Can you truly force someone to work for you though, legally?
Can you force them? Generally, no.
Can they be substantially penalized for failing to honor contract terms, potentially beyond merely returning any unused leftovers of what they received in exchange for their promises? Yes.
> Can they be substantially penalized for failing to honor contract terms, potentially beyond merely returning any unused leftovers of what they received in exchange for their promises? Yes.
That's what I'm interested in. What could these consequences be?
Through non compete agreements specified in the contract maybe? That person is not literally forced to work for you but can't work for a competitor where his/her skills will be the most valuable.
Nothing and some market players are known to make generous offers to the critical people they're interested in. For the entrepreneur "raise some angel money to help build a resume" strategy works only once though.
Maybe issues with intellectual property? VC's lawyers could be ready to pounce if the former employees do things very close to what they were doing. (IANAL).
> I wonder what someone who owned equity in Homejoy would think of this.
If this was a contributing factor to Homejoy going belly-up, rather than a consequence of the shutdown decision, they'd probably be unhappy with it, not that there is anything they could likely do. The technical staff aren't property which belongs to the company or its VC investors.
That doesn't resolve my concern. It actually makes things even shadier in my mind since Google Ventures was just one of many backers. A cynical mind might view this move as simultaneously acquiring the tech talent behind a startup, laying off any non-essential staff that wouldn't be attractive to acquire, freezing out all the other investors who had money in the company, and ducking the lawsuits that the previous company was involved in.
I've always been skeptical of corporate/strategic VCs for exactly this reason. At the end of the day, no matter what kind of Chinese wall you put in there, people are people and corporate agenda is a corporate agenda and it's perhaps naive to think you can separate the two.
Corporate VCs are effectively a way for cash rich corporations to buy call options on promising and/or potentially disruptive teams and technologies and keep close tabs on what is happening and how things are progressing. I can't think of a situation where corporate VC was a markedly better outcome for a startup or entrepreneur than a traditional financial VC.
What's wrong with hiring someone? I've never understood why investors, sales/idea people, and various other hangers-on should be rewarded during the acquisition of a technical team.
>I wonder what someone who owned equity in Homejoy would think of this.
Perhaps they should have done more due diligence? When you invest in a company there is always a risk something like this will happen. The question is: why would you invest in a company that can't survive without constant funding injections? It seems like a house of cards that suddenly fell down when the investors stopped propping it up.
Google didn't do anything wrong. The company folded and they hired some of the employees. It sucks for the investors, but that's life.
Maybe there is something to do with taking on the liability of possible legal action? From what I understand reclassification suits are retroactive. I'm not sure how that works with an acquisition, but I wonder if that had something to do with it.
I'm shocked by how quickly Homejoy seems to have folded. It was viewed as a baby Unicorn around Silicon Valley. Hopefully a more detailed post mortum will come out in the press in the next couple weeks.
Is there no money being returned to the investors via a sell? 40M is a lot of dough... GV can write it off with the acqui-hiring, but what about the others, specially First Round?
I feel like the story behind Homejoy would make a great series of blogposts
Come on, it was mobile, and on demand services. So hot right now. I'm just surprised they didn't get a late stage round at a $1 billion+ valuation by the sophisticated investing folks at Fidelity etc.
I guess if they could get $1 from investors why not a $100 million. I would have loved to see what was in their pitch deck as I can’t imagine a worse industry to try and build a unicorn.
Great idea. Hire a bunch of law and regulation flouting failures? I get the whole "you will fail far more than not" but it's not like they were doing something new, they couldn't even manage to take over something as simple as dispatching of cleaning services, let alone set up a cleaning service that didn't abuse its "independent contractors" aka employees.
It's kind of annoying, but hell, Google failed at "Home Services" at least once before, why not hire a couple people who failed at exactly that just a few days ago. It sounds like a winning only-makes-sense-to-google kind of strategy.
You know when you watch movies like Total Recall, or Blade Runner, or play a sci-fi game, and there's that pervasive company that seems bigger than any political super power? That's what I think of when one of the Four Horsemen (especially Google) looks like expanding territory blatantly outside their core offering.
In this case, I'm hoping they're just hiring technical people and not looking at cleaning houses, but it always brings that fictional megacorp to mind and makes me uncomfortable.
If Google is actually going to make a move here, I'm all for it. Homejoy was a horrible experience. Housekeepers leaving an hour early (their QA team confirmed this for me) and one stole my medication from the bathroom countertop... If they go under it's their own fault.
Why would Google hire only the tech team? Home services seems like the sort of thing that absolutely demands a solid customer service and sales organization.
Maybe because they are proven capable to deliver technology team, which Google has many ways to employ, that was about to be unemployed en masse given that Homejoy was suspending operations and thus likely wasn't going to have much for them to do, or anything with which to pay them.
> Home services seems like the sort of thing that absolutely demands a solid customer service and sales organization.
If Google, as was reported months ago, is well on its way to offering its own product in this market than, whether or not Homejoy's tech team was (as is claimed, without any stated basis or source, in the Re/Code article) hired to work on it, its likely that the customer service and sales structure for it is already decided. If the model isn't fundamentally what Homejoy was doing, there's not necessarily any reason to think that Homejoy's team in that area would be of any use to Google's product.
OTOH, whether on a home services product or otherwise, Google probably can find lots of uses for engineering talent.
It's not at all clear they had a solid support and sales setup. The company folded for a reason - why would you buy a company and run it the same way it was run before, if it was about to fold under those same processes?
I don't really know. I worked for a startup once that was acqui-hired by Google and they hired all technical staff and other than the executives they made all the non-technical stuff redundant.
Perhaps they are paying a little premium on hiring themselves to get a single team started and working on something very quickly?
> "Type in a search query for a cleaner to come to your house; rather than send you to third-party sites, Google would bake the options directly into the top of results."
I remember hearing that Google can't aggressively promote their own services in search results. (Example: When I google "search", the top 4 hits are Yahoo, search.com, AOL, & DuckDuckGo.)
Is this a proactive measure on their part to keep anti-trust regulation at bay, or an established prohibited practice? In the latter case, is there any guidance around where 'the line' is regarding this behavior?
(1) Google is hiring a portion of Homejoy's staff (sourced to Google)
(2) Homejoy's current platform will be shuttered (sourced to completely unspecific "sources", but this is pretty explicit in Homejoy's own public shutdown announcement.)
(3) Google "had set out to enter" the home services space "earlier this year" (sourced to a Buzzfeed article, which actually claimed that Google was in the process of readying an offering in the space, that doesn't indicate the timing of the planned launch, so really doesn't support the past-intention characterization given in the Re/Code article.)
So, Homejoy is shutting down (which we knew), Google has hired some of Homejoy's technical staff, and there were reports a few months back that Google might be readying some product in a space related to (but not identical to) what Homejoy was doing.