Sources: Square is in talks to “acquihire” Yik Yak's team, with one source saying another firm is also interested; founders likely won't join new company
Casey Newton / The Verge :
Context & Ripple Effects
Yik Yak spent early 2017 searching for a second act: its lead mobile developer shipped a group messaging app called Hive in February, a possible pivot signal for a company that had raised roughly $74M on anonymous local chat. The pivot never materialized as a product save — instead, per this report, Square is in talks to acquire just the engineering team, with an unnamed rival firm also circling.
The structure matters more than the buyer: the founders are reportedly unlikely to join the new company, which points to a deal for people and possibly IP rather than for the app itself — the classic quasi-exit shape where a once-hyped consumer startup ends as a hiring transaction.
First-order effects
- Yik Yak's engineers gain a landing spot at Square while the founders face winding down the product they built, since the deal as reported excludes them from joining the acquirer.
- The unnamed second interested firm gives Yik Yak's board a live alternative bidder, however modest the eventual price turns out to be against ~$74M raised.
Second-order effects
- Yik Yak's investors absorb near-total loss on a top-tier raise if the team sells for a fraction of capital in — the outcome later filings bore out, with Square paying $1M for employees plus a non-exclusive IP license.
- Square gets a proven mobile engineering bench in Atlanta without taking on a consumer brand or its moderation liabilities, a template other acquirers watching this deal can copy.
Third-order effects
- If acquihires become the standard endgame for overfunded consumer social apps, venture math shifts: returns concentrate in a few breakout winners while the rest of the portfolio exits at talent prices, not product prices.
- Founders' equity being wiped out while engineers get hired signals to future teams that late-stage consumer startups may be worth more dismantled than pivoted.
The trend: Failed consumer social apps increasingly exit through acquihire — selling the team and a sliver of IP while the product shuts down — turning once-hyped raises into quasi-exits for their investors.