Don't Blame Silicon Valley for the Stupid Yo App. Blame Israel

Source: Amelia Hennighausen/Bloomberg

The free application, Yo, from the Apple Store. Close

The free application, Yo, from the Apple Store.

Close
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Source: Amelia Hennighausen/Bloomberg

The free application, Yo, from the Apple Store.

An app called Yo is being pegged as the latest example of a technology bubble forming in Silicon Valley. Yo, which lets users send and receive messages that contain only the word "yo," says it has funding commitments of $1 million from investors.

But the San Francisco-based Yo is not another dumb startup idea from a Stanford grad. The app was made in Tel Aviv and became a viral sensation in Israel before anywhere else.

The global ascent of Yo has only happened in the last week or so since its creator Or Arbel moved to San Francisco. Yo is currently the No. 1 iPhone app in Israel, and it's rising fast elsewhere, according to research firm App Annie. It's in the top 10 in more than a dozen countries. The app has over a half-million users, and it's growing by about 200,000 a day, according to Moshe Hogeg, an Israeli who has agreed to invest in Yo.

Not everyone is eagerly joining the Yo movement. In addition to many pairs of eyes rolling at the app's frivolity, hackers are claiming to have poked holes in Yo's security, uncovering users' phone numbers. Arbel didn't respond to a request for comment. Yo posted a message on Twitter saying it's working on the security issue.

Yo was born while Arbel was working at Mobli, which develops a photo-sharing app in Tel Aviv. His boss Hogeg commissioned the programmer for a one-off project. Hogeg, Mobli's chief executive officer, wanted Arbel to build a specialized app that would allow him to summon his assistant with a single button. Arbel came up with the magic word.

Arbel built the app, and its plain purple icon, in 8 hours, Hogeg says. Apple initially refused to host Yo in the App Store because the company assumed it was unfinished. Unsure of how Yo would be received by the public, they published it under a fake corporate moniker: Life Before Us LLC, an homage to a book with the same name written by French author Romain Gary. "We are serious people, and this is a stupid app," Hogeg says.

The Mobli crew shared Yo with friends, and it quickly took off. Hogeg says he sends a "yo" to his wife around 8 p.m. when he leaves the office, and she sends him a "yo" from the kitchen when dinner is ready. His friends' kids use the app to alert their parents when they're ready to be picked up from school. Anyone can add WORLDCUP to their friends list to receive a nudge each time a goal is scored.

"A lot of the time, you don't need anything more than 'yo' to explain what you want or need," Hogeg says. "My wife complained all the time that I'm not calling her enough during the day. I tell her that every time I send you this thing, I'm thinking about you. My wife is very happy right now because I 'yo' her ten times a day."

A $1 million financing round for Yo is expected to close next week, Hogeg says. Part of Yo's fundraising prowess can be attributed to Hogeg, says Roi Carthy, a managing partner at venture firm Initial Capital in Israel. The Mobli CEO has a reputation for effectively drumming up excitement from investors — including for his own startup, which counts Mexican billionaire Carlos Slim and Leonardo DiCaprio among its backers.

"I'm not surprised they were able to secure funding," Carthy says. "This was spun out of Mobli, whose CEO is fairly talented in raising capital."

Hogeg declines to say how Arbel plans to turn this into a business or to name the investors besides himself, which the company plans to announce next week. Hogeg says only that the others are well-known Silicon Valley types. That's probably the least surprising part of the story.

"There's absolutely no question that the market is super frothy, and if you have a pulse, you can raise money," says Qualtrics CEO Ryan Smith, who has raised $70 million from Valley VCs for his Utah-based online survey company. "If you're looking for fundraising, Silicon Valley is where you should go. It’s a magical, crazy place. It's like Vegas."

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