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Yo compared to our Battery Watch app – Why Investors Value Yo At $10 Million – and – if Yo = $10m then Battery Watch = $20+m

2014-08-13, on 10:10 | In startups | 4 Comments | Dieser Artikel in Deutsch

I’m still baffled by the bold move of Silicon Valley investors valuing the company behind the Yo app at $10,000,000 USD. According to themselves Yo is:

The simplest & most efficient communication tool in the world.
Yo is a single-tap zero-character communication tool.
Yo is everything and anything, it all depends on you, the recipient and the time of the Yo.

To an ordinary mind like mine the app does not sound very interesting and from a targeting point of view too general than you could actually define a specific target audience for it. Yet, I was intrigued by the simplicity and most importantly by the buzz around it. About a month or so ago, I decided to download Yo. Right after it launched publicly, actually. I have 6 contacts on there and in the beginning it was kind of fun to Yo people just for the heck of it. Nowadays I only Yo ‘back’ if someone Yos me first.

The Wall Street Journal apparently has made a very compelling case that Yo might become a communications and marketing platform to allow people and brands to communicate with each other in a more simplified yet sophisticated way. For example, adding a link (that opens a website) to a Yo notification. To be honest, the real key word here is platform. That is what gets investors all nervous to throw money at you. To them, there is no benefit in funding just another app. It’s the platform behind the app that makes all the difference. Based on the anticipation of creating a simple and very direct marketing platform to bring brands closer to consumers makes check books open magically and throw money at an app that actually is absurd. In fact, Michael Santoli of Yahoo! Finance said: “When almost everyone immediately agrees that something is absurd – how can it possibly fail?”

So let’s look at the plain numbers thus far. According to the Yahoo! Finance article, Yo has “been downloaded 1 million times and has around 50,000 active users.” Based on a per active user valuation (which is how many tech and especially social media companies are valued by) that makes a staggering $200 per active user valuation. Compared to the $19bn WhatsApp takeover by Facebook which valued each of their 450 million active users at $42 per such user. The Yo valuation at 5 fold seems a little high. Anyway, another interesting aspect to look at, is the “stickiness” of an app. We at S4BB Limited look at a metric called “Retention” to determine the stickiness. In very simple terms, that’s the ratio between total downloads and active users. So at 50k active users and 1m total downloads, Yo has a retention of 5%. Common industry standard for a good / sticky app is something around the 20-25% retention mark.

Just to compare this to our recently re-launched Battery Watch app on Android: 193k total users, 103k active users, 58% retention. Here is a screen shot taken this morning in our Flurry app analytics console:

Based on the number of active users our valuation for Battery Watch should be twice the Yo valuation so we’d end up at $20 million. Based on the retention rate our Battery Watch should be valued at 11.6 times the Yo valuation. That would be an outrageous $116 million. Plus, compared to Yo, Battery Watch is even profitable already. Yo, b***!

Sure, Yo has all the publicity, the advantage of being located in Silicon Valley and the platform (hope) story behind it. While we don’t have the first and second point, our platform is currently being designed as well and will be launched in select markets very soon.

It remains to be seen how successful Yo can be in the long run. Right now it seems to be hip – at least on the investor and media side – but to build a long-term sustainable business model on top of that will be challenging. I wish the Yo team all the best in their endeavors.


More about Battery Watch: Battery Watch is a very simple, useful and yet fun battery monitoring tool. It combines essential battery information, useful TSA / UK DfT-compliant battery warnings with funny voices that make such a usually “boring / ordinary” utility app really fun to use. Try it for free through Google Play: http://bit.ly/BWatchA or BlackBerry World: http://bit.ly/GetBatteryWatch

About the author: Patrick is co-founder and CEO of S4BB Limited. An independent, boot-strapped mobile app company that has published over 48,000 apps for Android, BlackBerry and iOS. He is based in S4BB’s global headquarter in Hong Kong. Patrick has also co-founded and invested into other startups like Sky Drone, Toshi, TreeCrunch Limited, Skylab Mobilesystems Limited and Slate Takes Limited. You can find his full bio at www.patrick-kosiol.de or connect with him on LinkedIn, Xing or AngelList.

4 Comments »

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  1. Dear Patrick, first of all congratulations to the success of Battery Watch. But you are comparing apples with oranges.

    In general YO is for sure a risk for its investors and one could call it crazy but they are onto something and people been crazy about. YO got a lot of attention form the Media as well and Generated a BUZZ. The 1 Million YO raised is roughly the capital you need for around 8-10 employees in SV for a year. This will give them the chance to built what they have in mind or the world has in mind about them. YO’s valuation is 100% not based on active users or any retention rate based on which you try to define the valuation of Battery Watch by setting your numbers in relation to them. It’s simply
    foolish to do so.The same is when setting an early stage company (YO) in relation to (WhatsAPP Acquisition). YO’s active user valuation if they should be sold once will not be 200 USD and this is simply a result it’s actual valuation is and at that stage can not be based on this metric.

    So what are they selling to their investors, maybe something like this:
    YO could be the service which is used by your hairdresser or restaurant from next-door, to confirm your open booking, or used by Amazon to confirm shipping out your goods. Many more possibilities which for they need to become a Platform something like Facebook offers where third-party developers can than easily create their own applications on top or implement YO into an existing infrastructure.

    I would say let us see where they go from where they are now and have a look at them in a year or so, and yes SV Startup Valuations even can get more crazy just take a look at those companies who are raising Millions based on simple powerpoint slides (ok this time maybe over now but still happens).

    Comment by Juergen Hoebarth — 2014-08-13 #

  2. You are absolutely right Juergen and you’re awesome because you were brave enough to leave the first comment here 🙂

    By the way, I am not complaining. I really wanna see how Yo turns out and what it evolves into in a year’s time.

    Comment by kozen — 2014-08-13 #

  3. Great, i am myself asking recently constantly #WTF if i see valuations. It started for me with companies like Groupon, and AirBNB and is comming with Uber to an “extraordinary” level in my perspective in the meantime. Having myself once worked in the online travel industry i am aware what for example hotels in maijor european cities where spending for being position one in Google. As Airbnb launched it was extraordinar as they basicaly overbade and bid against all and everyone on multible sectors. There cost for customeraquisition must been at this time in an area far beyoned any normal company or business needing to operate on revenue ever could afford. They even overbid simply all the booking.com, expedias and lastminutes out there.

    It’s simply Colonialisma 2.0, in a new form with massiv “free capital” which generates unqual conditions on the market. It seems companies in the ITC sector and those like Groupon, AirBnb and especialy Uber act like this. Extending control over markets by simply not having to make profits and can just occupy a space and force others out by simple economics (I have the money to sit this through, you not). Power, Advantage and Sills in this way can be purely described having money 🙂

    There target they follow is simply absorbing and assimilating markets into their own imperialistic structure by trying to aquire any remnant that might threaten the imperium overall in the end. Uber gets the whole thing for me to another extream with its 1.5 Billion.

    But hey i guess i may be to “naive” to understand economics and big business played with “Big Numbers Game”. Even my own country of origion (Austria) bails out a local bank with 15 Billion. Just imagine they would have alocated that capital to finance 10 Ubers, maybe less stupid than bailing out an already demaged bank. (thought on the side)

    In the end Groupon, Airbnb and Uber are simply acting like empires or imperialists and we all can simply watch and hope as we know all empires once fail. But in that worst case of failour it is already payed by the market (investors). In the long run ans most likely they all go IPO even by being non profitable and all cashed out at least partly latest pre lockup time of IPOing. Fun Fact on the side uber’s total valuation at its recent funding round (Series D) has roughly the same size now as those of the MTR’s total market cap.

    Comment by Juergen Hoebarth — 2014-08-14 #

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