For instance, sources tell Valleywag that three cofounders from the relationship app Couple—a former Y Combinator darling, with $4.2 million in funding from Ashton Kutcher, Dave Morin, Michael Arrington, and 17 others—are now employed by Dropbox, Y Combinator's most dependable recycling machine.
The fourth remaining cofounder, Oleg Kostour, seems to still be working as Couple's CEO. But the startup hasn't even bothered to make sure their app works with Apple's latest software. Is the company winding down or is Kostour going solo?
If this reshuffling were a sign that the "social network for two" has been acqui-hired, i.e. purchased for the talent potential and not the product, it will be at least the fifth Y Combinator startup acquired by Dropbox. Airbnb, the other Y Combinator alum on track for an IPO, has subsumed at least one Y Combinator startup as well.
"Investors win because they get shares of a big company, Dropbox gets good engineers."
"Investors win because they get shares of a big company, Dropbox gets good engineers, and the small founders get a simple exit/job security," one source told Valleywag, stressing the difficulties of finding good developers who know how to work together: "When an iOS YC startup struggles, if they're small enough, it's no surprise when Dropbox or Airbnb picks them up." Of course, with that many investors, no one's swimming in Dropbox stock, no matter what the deal is.
I've reached out to Dropbox, Kostour, his cofounders, Couple, and some of its investors and will update the post if I hear back.
The Dropbox conversion came to light because of LinkedIn's hyperactive email disorder. Last month or so, people connected to Couple cofounder Aswinkumar Rajendiran were notified to "Say Congrats" on his new job as "Engineer at Dropbox." He quickly switched his profile back.
Rajendiran's Facebook pages says he left Couple in August.
In late August Kostur, the CEO, emailed the Y Combinator list-serv to try to find a job for his quality assurance engineer and office manager—not the kind of message you'd expect from a company trying to stay in business. Kostur is not an iOS developer like his three cofounders.
Neither Dropbox nor Couple have said a word about this publicly. One source mentioned rumors about disagreements between the founders. Apparently Kostour also made a LinkedIn change last year, from CEO to Product designer.
The same source mentioned that Couple has been trying to use its investor network to sell the company, but potential acquirers bowed out because "the team was a mess."
This was not the expected outcome when Couple, then called Pair, launched in 2012. Pair's concept had been done before. The app got attention for a feature that let users send a vibrating "thumbkiss" from smartphone to smartphone, but mainly because of its many financiers.
[Morin] told Pair's team that Facebook has created social networking's "cities," Path is building its "houses," and Pair is like its "bedroom."
Two months later, the seed round was up to $4.2 million. In addition to Ashton & Co., investors include: PR maven Brandee Barker (formerly a top flack at Facebook), Betaworks, Lerer Ventures, Tencent (the Chinese Internet powerhouse), Susan Wu (a founding partner of Obvious Corp), and a bunch of Y Combinator partners and insiders: Paul Buchheit, Reddit cofounder Alexis Ohanian, Garry Tan, Harjeet Taggar, and Sam Altman, who was named Y Combinator president this February.
— ashton kutcher (@aplusk) February 14, 2014
Lindsay Lohan (was probably paid) to tweet about this app.
— Lindsay Lohan (@lindsaylohan) February 14, 2014
Other investors chimed in.
— Dave Morin (@davemorin) May 21, 2014
"Now, three million people who bought the hype have intimate moments with their significant other sitting in limbo."
When management structure is crumbling, a "party round" of investors aren't a big help. The practice seemed to reach a crescendo in 2012. In fact, a year later Altman, the president of Y Combinator, chastised the same kind of festive financial arrangement that he participated in:
In a typical party round, no single investor cares enough to think about the company multiple times a day. Each investor assumes that at least 1 of the N other investors will be closely involved, but in fact no one is, and the companies sometimes wander off into a very unfocused wilderness.
Altman also tightened the rules about funding from Y Combinator partners because of "signaling issues." Since Altman doesn't spell out the signals, I will. If a startup is backed by YC partners, that means their own mentors "buy the dream." And if the dream comes up empty, at least the landing will be soft.
Six months ago, Dropbox acquired two YC alums: Loom and Hackpad. In 2012, Dropbox acquired another two Y Combinator grads: TapEngage in July, 2012 and Snapjoy in December 2012. In June, Dropbox CEO Drew Houston was named to Y Combinator's Board of Overseers.
What Silicon Valley does better than anyone is create exits. They know how to get people who they have made money for to turn over a lot of that money to buy the companies they have invested in.
Cuban also advised cities aspiring to be the next Silicon Valley to: "Brag about the exits and how there is capital waiting for amazing entrepreneurs to reach their goals."
Market cap will make no difference to Couple's users if the app that promised to be your digital bedroom "forever," sputters out. The last blog post (about a digital teddy bear sticker) was in July; its last tweet in August. According to iTunes, it hasn't been updated since mid-June.
Kostour said that in the last few months, dozens of couples have reached out to the Couple app via email, asking for a data file of their timeline history because they want to include it with their green card petitions. One man who reached out was looking to bring his fiancé to live with him in the U.S. Data experts were able to help him by providing him with the data file of the digital timeline that he and his fiancé share through the app.
That kind of bedroom data needs more than an emoticon:
— Andy Bakh (@andybakh) October 2, 2014
@CoupleApp Are you planing on releasing an update for iOS 8 and compatibility for iPhone 6 Plus's screen size?
— Matt Perkins (@xMattPerkins) October 2, 2014
@CoupleApp any news about an iOS 8 update? Since the iOS update the app hasn't worked very well.
— ViviX (@vivix26) October 7, 2014
— Christain Billings (@cbillins) October 8, 2014
— Couple (@CoupleApp) August 14, 2014
[Image via Shutterstock]