Advertisements

Why ‘Yo’ Is Not a Complete Joke

Jun 20, 2014

Why ‘Yo’ Is Not a Complete Joke

EVELYN M. RUSLI

When news broke this week of a $1 million investment in Yo — an app that simply lets people send “yo” to friends” – it appeared to be a bad joke.

To some, the tech scene has come to resemble a parody of itself, one even stranger than the spoofs on television. Not even Pied Piper, the fictional startup on the HBO show “Silicon Valley” was able to raise $1 million—instead, settling for $200,000 despite its sophisticated software. Yo, meanwhile, was built in eight hours by an entrepreneur who wanted to create a basic notification service for his friend.

The news – and the subsequent half-million downloads followed by a hack attack — sparked wisecracks throughout Twitter and tech blogs. More mindless dollars going into mindless apps.

But “Yo” is more than simply a Stephen Colbert punchline. The app highlights a specific phenomenon happening in Silicon Valley and beyond: Entrepreneurs and investors are clamoring to find the next mode of communication on mobile phones. And no one is quite sure of the answer.

“A lot of investors think of it (Yo’s investment) as a lottery ticket,” said Mike Volpi, a general partner at Index Ventures. “People are buying these lottery tickets because there have been enough big outcomes.”

Facebook FB +0.25% earlier this year spent $19 billion to buy a mobile messaging service called WhatsApp, despite technically already offering such a service. Before that, it tried to buy Snapchat, an ephemeral messaging app, for billions of dollars. Meanwhile, several other international apps have taken off, though all seem to offer the same basic functionality: the ability to send mobile messages to friends.

An app’s value, or the lack thereof, is in the tiny ways it interacts with users and how it prompts sharing. Such factors, like the number of seconds a message is available, determines whether an app takes off or falls by the wayside. The challenge is that entrepreneurs and users are still discovering smartphone users’ behavior.

“The details matter because we’re dealing with an infinite amount of choices, in a finite amount of time,” said Larry Rosen, a psychologist and professor at the California State University, Dominguez Hills. “We are starting to break our time into micro-bites, so these micro-communication apps have a certain appeal,” when they save us time or make it easier to share, he added.

This week alone saw a flurry of app releases and announcements related to messaging. Facebook, the social network giant, released Slingshot, which lets users send each other ephemeral messages like on Snapchat. The twist with Slingshot is that a user can only read a message after sending one to a friend. Path launched a new messaging app called Path Talk in which messages disappear from the server after 24 hours and sends location information to friends. And Snapchat introduced “Our Story,” a new feature that lets people at events share messages with each other.

On Apple’s app store, of the top 35 free apps, almost a third are messaging and photo-sharing apps. Currently, Yo is ranked as the fourth most popular app as of Friday afternoon.

Created by Or Arbel, an Israeli entrepreneur who recently moved to San Francisco, the app only lets users send the message “yo,” via notification alerts (messages that automatically populate the front screen), to friends. It isn’t possible to respond with anything else except another “yo.” Mr. Arbel says its value is in its simplicity, the idea that the notification is itself the “whole message.” He imagines a future where brands, like media organizations, send “yo” to fans to alert them about new content. “The time it took to make this app is not relevant to the impact it could have on the way we interact,” he said in an interview on Friday.

Many have derided the app as a shallow service that doesn’t add value to people’s lives. But others, including a few prominent venture capitalists, have come to its defense, arguing that it could be scratching the surface of a novel, lightweight way to communicate, for moments when a text is too much. On Twitter, Marc Andreessen wrote, “Yo is an instance of “one-bit communication” — a message with no content other than the fact that it exists. Yes or no. Yo or no yo.” He likened it to a notification of a missed call, which has been used in many emerging markets as a clever way to get someone’s attention for free.

Naveen Selvadurai, a co-founder and former executive of Foursquare (which also recently unveiled a new messaging service) says that while “Yo” is not for him, he is fascinated by the use of notifications to quickly send lightweight messages. He portends a new breed of apps centered around notifications.

But even Mr. Selvadurai, who  regularly uses nine messaging apps, says it’s difficult to predict success or measure consumer tolerance. “Yo is an interesting experiment, but when the next shiny thing comes along, it will lose attention,” he says.

 

Advertisements

About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: