February 27, 2012 8:01 pm

File-share group Dropbox acquires start-up Cove

Dropbox, the digital file-sharing company that raised $250m in financing last year, has made its first acquisition, taking over Cove, a start-up founded by three former, and highly regarded, Facebook engineers.

Cove, a collaboration and communication product for organisations, never launched publicly, so the buy-out underlines Dropbox’s strong interest in the founders’ technical skills and experience building Facebook into the dominant social networking company.

“There aren’t too many people who have not only worked on something that hundreds of millions of people use, but have also seen that in the very early days, all the way to maturity,” said Drew Houston, Dropbox chief executive and co-founder. “That perspective was really valuable.”

Dropbox has been growing rapidly since Mr Houston and Arash Ferdowsi founded it in 2007, allowing people to access documents, music and videos from any of their computer and mobile devices by storing files in the cloud. The company was valued at $4bn last October when it raised $250m from venture capital groups.

The San Francisco-based start-up faces stiff competition from Silicon Valley giants such as Apple and Google, both of which are making moves in similar cloud-based storage and synching services.

Financial terms of the Cove acquisition were not disclosed.

Cove was founded in January 2011 by husband and wife team Aditya Agarwal and Ruchi Sanghvi. Both joined Facebook in 2005, in the early days of the social network, where they were recognised as highly skilled and valuable engineers.

Ms Sanghvi, the first female engineer at Facebook, led the development of the Facebook news feed, which quickly became the key feature of the network. Mr Agarwal was Facebook’s director of engineering, and worked on several key projects, including the news feed and Facebook’s search tool.

The couple left Facebook in 2010 to start Cove with $2.1m in seed funding from fellow Facebook employees Dustin Moskovitz and Adam D’Angelo, as well as Peter Thiel, an early Facebook investor, Ron Conway, a well-known angel investor, and others.

Cove’s technical infrastructure will be integrated at Dropbox, but the team will stop development of its communication and collaboration tools, Ms Sanghvi said.

Joining another start-up before formally launching their own could be seen as an unusual move for such highly regarded engineers, but Mr Agarwal said the technical challenges at Dropbox and the company’s proven early success, made for an appealing opportunity.

“We’ve been in the space for a long time. We truly believe this is the tech company where you want to be and has the potential to be the next big tech company,” Ms Sanghvi said.

Cove’s four-person team will join the Dropbox staff, including Akhil Wable, another early Facebook engineer who worked with Mr Agarwal on search, and Joshua Jenkins, a former technical consultant for Hewlett-Packard. Mr Agarwal will run Dropbox’s engineering team and Ms Sanghvi will lead recruitment and other operations.

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