I wonder if talented, experienced, and coveted engineers and designers in the Valley right now (read: talent frenzy) can start their own stealth companies and reasonably plan towards a relatively early stage acquisition, be it for talent, technology integration, or both. But it seems to be a growing trend that wouldn't be as possible in a downturn or when talent isn't so scarce.
If they work on a technology and business they want to be working on anyways that will integrate with several potential buyers, it seems like it hedges start up risk and offers more upside (impact, financial, and otherwise) than merely jumping from one company to a more senior role at some other company where you have a little more say in what you work on and can negotiate 10-20% more compensation, excluding equity, when you jump jobs. These sort of jumps have a completely different cost-benefit profile than starting your own company. It seems like potential benefit is uniquely outsized nowadays.
Choosing to not raise seed capital seems like an option if you plan to exit in less than a year and have the savings to do so. And by not raising capital, an acquisition this quickly seems far more aligned with everyone's interests and cannot be slowed or prevented by any investors holding out for a larger exit.
I find it interesting that Dustin Moskovitz was an investor in Cove, if only because I know that Aditya is an investor in Asana.
I don't know how common it is to cross-invest in eachothers companies, but I am sure it is fairly common.
From the language used in that article - it sounds like Cove was an attempt to make "Asana for group management" -- I also find it odd for a product to do an alpha launch, gain "thousands" of alpha users then tell them they have 6-9 months to find another platform :)
Sure, it's understandable - but that has to be a weird conversation to have with your users "Check out our new app! It's just what you need to do X! Yay - thanks for being in our alpha launch, now you have 6-9 months to find a different platform! WOOT"
I'm surprised this was (according to the TC article, so grain of sand) Dropbox's first acquisition — for their valuation and size it seems like they'd have started that ball rolling a year ago or so.
Why? Having money doesn't mean you should buy other companies, especially if you're DropBox and are kicking ass in your niche and not trying to branch out in a million directions.
I've seen SO many acquisitions go wrong for both parties.
I was also surprised, there's a few possible explanations/related observations:
1) It doesn't seem like players in this space make very many acquisitions. Has Box?
2) Dropbox appears to do a lot with not very many people. Recently I remember them being just 70 people. Now their about page suggests around 103 (https://www.dropbox.com/about) not including the Cove's team of about 5.
3) Emphasis on keeping the culture a certain way. I don't know much about Drew/Arash's leadership but maybe they're hyper focused on maintaining certain cultural elements that most acquisitions would probably dilute.
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I wonder if talented, experienced, and coveted engineers and designers in the Valley right now (read: talent frenzy) can start their own stealth companies and reasonably plan towards a relatively early stage acquisition, be it for talent, technology integration, or both. But it seems to be a growing trend that wouldn't be as possible in a downturn or when talent isn't so scarce.
If they work on a technology and business they want to be working on anyways that will integrate with several potential buyers, it seems like it hedges start up risk and offers more upside (impact, financial, and otherwise) than merely jumping from one company to a more senior role at some other company where you have a little more say in what you work on and can negotiate 10-20% more compensation, excluding equity, when you jump jobs. These sort of jumps have a completely different cost-benefit profile than starting your own company. It seems like potential benefit is uniquely outsized nowadays.
Choosing to not raise seed capital seems like an option if you plan to exit in less than a year and have the savings to do so. And by not raising capital, an acquisition this quickly seems far more aligned with everyone's interests and cannot be slowed or prevented by any investors holding out for a larger exit.