“Yo” is absurdly simple. And that’s the problem.

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“The single biggest problem in communication is the illusion that it has taken place.” –George Bernard Shaw

Many tools exist today to enhance our communication. A lot of tools exist under the pretense that they enhance our communication. Not many in the latter category get $1.2 million in seed funding. Welcome to the world of Or Abel. Meet Yo.

“Yo” is a new app that’s gained exponential levels of popularity recently, despite having one singular function. That is, it allows you to ping the word “yo” to those whom you’re connected to. As someone who helps run a startup accelerator and grills teams on their value proposition, I’m confounded as to where this app adds value. It’s functionality amounts to essentially nothing more than a marginally more eloquent push notification.

This speaks to a larger problem at hand about the tech startup sphere. Valuations are ballooning out of control. Take as example Uber, the ride-sharing platform. It’s a great service, and has the potential to be very disruptive, but it isn’t worth its $17 billion valuation ($1.2 billion in funding). In fact, Ashwath Damodaran, a finance professor at NYU, has a brilliant piece on FiveThirtyEight about why Uber is probably being overvalued by close to a factor of 3x. The difference between $5.9 billion and $17 billion is astronomical. Not only Uber, but is Pinterest really worth $5 billion? Was WhatsApp seriously worth its outside-this-stratosphere price tag of $19 billion?

Which brings us back to Yo. I don’t know if this is signaling a bubble, but I do know that this trend can’t keep up. The problem is that such a high seed funding round for an app as bare and minimally useful as Yo devalues the entire industry and hurts the products and companies that are developing truly unique solutions to distinct problems. Big money is blinding investors from looking at the fundamentals like value-added, revenue streams, etc. Sometimes a shiny new fad is just that, a fad. Not only are valuations are outpacing the available money, but this will inevitably have a negative trickle down effect on other startups.

All of which is just a long way of saying: Yo, this is getting ridiculous.

 

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4 thoughts on ““Yo” is absurdly simple. And that’s the problem.

  1. People are dumb. Overvaluation is dumb. But I must say, since people are writing articles about this app, it just pumps up their name even more by providing them with more press. It is unfortunate-it’s like awful celebrities hehe

  2. One common argument I’ve heard for large valuations is that, “the idea may not be worth that money but the talent behind the idea is worth it.” I fail to understand how some 30 or so Instagram employees are worth $1B. That puts each individual person in the company at around $30M each which is absolutely absurd. There is no single person who is so indispensable that they should be worth that much for acqui-talent…

  3. Dude yo actually has insane potential. They just released an API. Its like push notifications for anything you can imagine. Yo isn’t actually that dumb when you get past the initial ridiculousness. But yah we’re definitely in a bubble. Nice article though!

    • Thanks! And yes, the bubble is definitely real. I still don’t quite see the value of something that amounts to fancier push notifications. But you being a techie and coder may be able to appreciate this more than I can.

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