Leap Motion's Talent-Based Acquisition

Shaan Puri shares a story about how tech companies with specialized expertise can be valuable acquisition targets even without product-market fit.

"I remember when I was in San Francisco, this company called Leap Motion got bought by Facebook. What they were doing was this thing you wore on your wrist that let you just move your hands and do hand gestures to control a computer essentially. They never really found product market fit because not a lot of people want to sit in front of their desktop and hand gesture like in Minority Report - replacing the mouse and keyboard wasn't super sick.

But the team working on it was cutting edge at gesture control. They got bought for I think a hundred million plus. Another company that got bought for a hundred million plus that never hit product market fit was working on face masks - before Snapchat came out with those face filters like the dog face filter. It was called Masquerade.

Being at the leading edge of just the tech gives you two shots to win. If you make the breakthrough app that actually gets product market fit, then you win in the billions. If you're just the most hardcore tech team building good functionality and working on these new platforms, your floor becomes like a 50 to 100 million dollar company. I don't think most people realize this.

If you were working on the Meta Ray Bans platform right now, which today has no app store, but will definitely exist with apps built for it - and if you were a hardcore tech team, the smartest thing you could do is spin out with your five smartest friends. The floor of this company is 50 to 100 million dollars and the ceiling is a billion or two billion. All you need to do is live at the cutting edge and survive five years. You just need time in market to work out all the kinks about spatial recognition, gesture control, and all these little tech problems. Either you'll crack the app yourself, or they'll buy you because you've solved a bunch of gnarly problems."