“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.