Last week, we announced that Referly acquired LaunchGram, and that former LaunchGram CEO Andy Sparks has joined our team as our Technology Editor. As many guessed, this was an acquihire where we paid some amount of money for LaunchGram's intellectual property and also offered Andy some cash as part of his employment agreement.

**Scroll to the bottom of this post for sample asset purchase template doc you can download from Scribd.**

Acquiring LaunchGram was a very simple deal, which took just a couple days to put together from start to finish.  We sat down for a coffee and I talked to Andy about buying his site, explained how it fit with our vision, and asked him if he'd like to join us.  I laid out what I thought the IP was worth and why, how we'd use it, and how he would fit into our team.  A lot of what we talked about isn't implemented into Referly yet, or there are just tiny hints of what it come if you look for them.  We shared very little of that vision for the future with TechCrunch because I don't believe in pre-announcing plans and promises and setting expectations when things could still change quite a bit.

I think it is important point out that I've known Andy for over a year, before he even moved to the Bay Area. We've been drunk, played poker, talked about the meaning of life, jumped over fireworks, played epic games of BOOM, hung out as neighbors in our hacker houses in Mountain View... so I didn't need to do any background check.  I also was intimately familiar with the product, technology and market as an advisor to his company and 500 mentor.  You might want to do a bit more background checking if you can't say the same about your potential acquisition target, but for me it was very clearly the right move.

A lot of people have asked me to share deal terms, and while I won't mention any specifics I can say that Andy is hardly in the position to start making angel investments. Some argue that doing a less than six-figures purchase of IP/talent isn't really an acquisition, or perhaps that it isn't newsworthy, but I think what I did might be the start of a trend.  How many early-stage, pre seed companies do you know who aren't going to successfully raise but have built some interesting tech and gathered an email list of thousands of people interested in their product?

There were two components to the deal - the asset purchase (sample doc below) of the website and his employment agreement (and standard agreement plus a hiring bonus is pretty standard).  If we hadn't come to some agreement that day then I was done, there would be no protracted negotiations and no courtship. I had already been advising Andy for almost a year and knew this could quickly go from a great idea to massive distraction.  Fortunately he decided to come on board.

We checked in our first code to the LaunchGram codebase less than 24 hours after signing the docs. Our lawyers helped us save time and money on both sides, and agreed to let us share the template of the docs we used with the public in hopes we can help other founders.

One important thing you should figure out, before you sign any docs, is what you want to do with the IP you'll get in the deal.  In our case, and probably in most acquihires, acquisitions of this kind are 80% about the person you are bringing on board and 20% about the IP.  Of course it's fun to pull someone's code base for the first time and start spelunking.  LaunchGram is built on Python and Django and Referly is PHP so that added even more fun - new language to learn!

But whoa whoa whoa - that's not what we acquired LaunchGram for.  Yeah, we want to improve some things but for the most part the site continues to chug along without much day-to-day engagement from our team because it's a content site.  Last week we did an assessment of some of the biggest gaps and opportunities for it, and with as little new development as possible we've already implemented a couple key fixes, but for now we'll simply let it settle in.

We've gotten a lot of different feedback from doing this "deal" (I put it in quotes because when they talk about it I feel like it sounds much more big and important than it really is) - from investors who want to double down to friends and advisors who caution us to be very careful.  Acquisitions, we're told, are not a growth strategy for a company of our size.  We're listening, and like most startups we're learning as we go.

The vision for Referly, which doesn't change even in the face of massive re-designs and new features, is to be the most popular destination for discussing products on the web.  With LaunchGram we can now address the pre-launch part of the product development lifecycle... but we don't have to make it a huge focus right now.  We're definitely not making some kind of 50/50 split of the resources dedicated to LaunchGram versus Referly.  Andy decided to stop working on LaunchGram for some very valid reasons, and while we are proud to keep it alive for the thousands of passionate product fans who count on LaunchGram to provide product updates each week, we also understand its limitations.

I could say all will be revealed in good time, but then it sounds like I have some master plan for how LaunchGram will fit into Referly.  While the details of how the two will come together are not yet decided, I'm confident that we will figure it out at the right time.  What I do know is that Referly acquired an incredible employee and a large base of new customers on terms that let everybody win, and that's just good business.

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