Silicon Valley trend ‘SPIN IN’, its not new and it doesn’t work
In the early 2010's the trend was to grow an engineering team by acquiring just the team. The term was called “Acqui-hire”, its purpose was to build an engineering team that could scale up quickly without having any outside help. Google and Facebook were some of the first companies to use this strategy, very successfully. If you look at the job postings on LinkedIn, so many companies are hiring engineers, they are a hot commodity. Companies are looking for people who can bring their skills to the table and make them successful. They want someone with a strong background in technology, or who has experience building products.
Another idea to grow a team is called a ‘Spin-In’. A “Spin-In” is a form of R&D in which a company is the sole investor in a startup. It essentially, hires this team of employees to build an experimental product and then it buys that startup for a predetermined and usually very healthy price. Jayshree Ullal, CEO of Arista Networks, famously described spin-ins to Forbes like this: “It’s a nightmare when the guy in the next cubicle is a multimillionaire and you aren’t, because you weren’t chosen.”
Every large company now has a development lab in Silicon Valley. The idea is to have a place where developers can come together and work on projects that will be useful to the and disrupt. Companies, rightly so, believe the Silicon Valley startup ecosystem helps create a differential, identify future trends and technology which can grow rapidly. The problem is that there isn’t enough talent with a scrappy mindset to fuel these labs. So, companies are turning to small start-up, less than 10 employees, and asking them to hire additional engineers. Then, hire these engineers to work as consultants, with the hope of recruiting them for their skills. This is not an easy way to attract talent, but it’s an effective way to get more people into key tech jobs. In 2015, Cisco another Silicon Valley giant tried and then killed ‘Spin In’ for talent instead of using staffing agencies.
From the days of my first start-up in Silicon Valley, I’ve met people from all around the world. Frequently on business trips, giving talks, teaching or “Silicon Valley expedition’’. Trips that are intended to encourage people about our society in Silicon Valley and share the innovation approach which helped make Silicon Valley what it is today. Spin-In doesn’t work because what makes Silicon Valley a hot bed of disruptive people, is the people. It’s the team and the culture that makes it so great. When you think about how many startups fail, most people think about the founders who have been through it before. By encouraging a small start-up to become a talent sources, you are deceiving the en masse of talented people who will be able to help you succeed. This is where spin-in comes into as a failure. In the end, what attracted talented engineers to join a startup is not necessarily the same experience as working for a large company. For the small team, it’s demoralizing and in the end, very expensive. It’s also important to note that the best companies don’t just hire great people, they create them. Spin-in a desperate move, unless all you need is headcount!
But I believe that if you look at the top 10 companies in Silicon Valley, they are not just a bunch of people with a lot of money. The best entrepreneurs are those who have built something that has changed the world, with a team. A start-up and ultimately, its success are all about team.
