Can Yahoo Stop AOL's Talent Pool From Leaking So Much?
Gone, Tim Tuttle of Truveo. Gone, the Birches of Bebo. Gone, Dave Morgan of Tacoda. Gone, many Quigos.
One of the more interesting little problems that AOL has had over the last few years, in regards to its acquisition of hot Internet companies, has been that it is situated deep in the bowels of the Time Warner (TWX) behemoth.
So, one wonders, will a possible hook-up with Yahoo (YHOO) change that, giving the also-ran Internet outfit potentially valuable stock in Yahoo to better entice valued employees to stay?
AOL has to hope so, especially since it has had an especially hard time loading up new employees it absorbs from acquisitions. This talent pool typically comes from a start-up culture, and they are used to big slugs of stock, with an attractive package of options in order to entice them to stay.
While all Web companies struggle with the hippity-hopping nature of employees, AOL has suffered more than most, sometimes due to its circumstances, sometimes due to its own efforts.
For example, with Time Warner stock staying in a permanent state of stasis over the years and a reluctance to reload too many new employees without generating the ire of old ones, except for the most desired talent, it is harder to keep anyone at AOL for long.
And that’s without the fact that AOL is not exactly the dream job for ambitious entrepreneurs.
For example, one of the stars AOL has lavishly pointed to as an example of how innovative it can be, Tim Tuttle, the CEO of its deservedly lauded video search engine Truveo, recently left to pursue other projects.
According to an AOL spokesperson, Tuttle will remain a consultant, passing day-to-day management to Pete Kocks. That also happened with Dave Morgan of Tacoda.
And AOL’s generous acceleration of vesting when it acquires other companies also often results in brain drain.
Case in point, two of its biggest accquisitions, Bebo and Quigo, in which the options ALL employees had in the companies were fully accelerated upon completion of the deals.
“I was amazed that they insisted on it,” said one person familiar with the Quigo deal, in which AOL paid $300 million for the online advertising company (news of which we broke here last fall). “It seemed designed to give everyone an escape hatch.”
And, indeed, many key Quigo employees have left since the deal was struck, which might have been the point.
It will be interesting to see what happens at Bebo too, where some have been given generous retention packages, but all have gotten their stock options accelerated.
AOL paid $850 million in cash for the third-place social-networking site recently. The two founders of Bebo–Michael and Xochi Birch–grabbed their large payday and were gone, baby, gone.
A Yahoo deal could certainly help the situation, by making AOL–whose assets would presumably be shoved into Yahoo–into a real live Internet company again and give its employees a true ownership stake.