Would You Leave Israel for Silicon Valley for $20 Million?

Staff of Pebbles offered bonanza but have to move to California after Facebook buys startup.

Bloomberg

First the bad news for the employees of Pebbles Interfaces, the Israel virtual reality startup that was bought by Facebook two weeks ago.

Twenty of the approximately 35 employees of the Kfar Saba company will have to pack their bags and move to California while another 15 are being let go. Facebook opted not to employ them at its Israel research and development center as it has with some of the other Israeli startups it has acquired.

The good news is that the 20 staff will together get paid $20 million for their troubles.

“Because Oculus’ headquarters is in Menlo Park [California], it was decided that it would be the right thing for the Pebbles team to move there. We are working to ensure it will be a smooth transition for them,” Facebook said, without providing further details.

Pebbles itself declined to comment on the report, but sources said the reason Pebbles’ people are being asked to relocate is because Ocuylus has no R&D center outside the United States and doesn’t want to split up it researchers into two locations.

Pebbles’ technology uses custom optics, sensor systems and algorithms to detect and track hand movement. Most importantly, it lets users see their own hands and fingers in their field of virtual reality. Its interface will be incorporated into the Oculus Rift headset.

Facebook’s Oculus unit, a maker of a helmet used in virtual reality games, also paid less than the $60 million originally reported by TheMarker and other media. Pebbles’ investors, the latest information says, are getting just $20 million, about the same amount they put into the company since it was formed in 2010.

It isn’t the first time that Facebook has demanded that the employees of an Israeli startup it bought relocate to its Silicon Valley headquarters. The staffs of Snaptu and Face.com, the U.S. social media giant’s first two Israeli acquisitions, were asked to make the move, but when Facebook bought Ramat Gan-based Onavo for more than $150 million in 2013, it established a Tel Aviv R&D center.

Today, the center employs 60 engineers and software experts, a number that is expected to grow to 80 by the end of the year, as well as another 20 sales and business development staff.

Pebbles was founded in 2010 by Nadav Grossinger, its chief technology officer. Its CEO is Emil Alon and its development manager, Doron Levit. It counts a wide assortment of global investors, including Chinese electronics company Xiomi; Israeli venture capital fund Giza; Sandisk, the U.S. maker of flash memory drives; Germany’s Robert Bosch Venture Capital; and Hong Kong’s iNetworks 360.