…The smart companies will do what universities aren’t doing very well yet - offer maximum flexibility to their innovative employees while retaining a minority stake in the offshoots. If google really wants to keep talent in-house, it might need more than google stock options and free food. It might need to create a new turn-key subsidiary framework - a kind of reverse M&A where employees can apply to start internal divsions using company capital in exchange for partial ownership of the future revenue stream.
More analysis by economist Tim Kane…
There are some excellent comments to Tim’s post also, e.g., I liked the first one:
Reverse M&A - a company being a venture capitalist for its employees who don’t want to be tied to the corporation, who want to explore new technologies or businesses. Then the corporation gets the payback (potentially), and it also acts like a VC, making connections and business ties to make the new “company” (their own offshoot) succeed. And in the process the mother company gets more exposure to other start-ups, expanded insight into the market. Mother company reaps some of the rewards of success. If there’s a failure (80% failure rate is the normal assumption) then mother can re-integrate the people back into the company, probably gets the technology and know-how, and may be able to apply that later.
I like it.
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