'Stupid' Yo App Said to Be Valued at Less Than $10 Million

Source: App Store

Source: App Store

Even in frenzied Silicon Valley, apps that go viral have their valuation limits. Yo, which lets users send each other messages that contain only the word "yo," was valued at less than $10 million in a recent funding round, according to people familiar with the deal who requested not to be named because the terms are private.

Anything in the millions is a solid valuation for a company with no revenue and one described by co-founder Moshe Hogeg as "stupid." But it's far from the red-hot numbers that have been flying around the Valley these days. Let's not forget Facebook is paying $19 billion for WhatsApp, which lets users communicate using other words besides "yo," and Clinkle raised $25 million last year for an app no one had seen and still has yet to be made available.

The Israelis behind Yo raised $1.5 million from financiers in a round that closed this month, Hogeg says. He declined to name the investors, though he previously told Bloomberg News that they include the usual Valley dealmakers. The valuation was "very modest," says Hogeg, given that the app now has about 2 million users.

"Due to the success, we could have asked for crazy valuations, and we would have got it," says Hogeg. "But we are very humble and fairly down to earth."

The product's origins are less than humble. Hogeg, who also runs a Tel Aviv-based photo-sharing app backed by Leonardo DiCaprio, asked one of his programmers to develop a way for him to summon his assistant with a single button. The coder, named Or Arbel, developed Yo in eight hours and watched it take off in Israel. Last month, he moved to San Francisco, partly to start raising money. The initial financing goal was $1 million, but the company decided to exceed that amount when it attracted interest from high-profile backers.

"Smart people wanted to chip in, and we really wanted them with us," Hogeg says. "Yo has many use cases. It's very broad."

Yo grabbed the attention of Silicon Valley last month after it jumped into the top 10 on Apple's App Store in more than a dozen countries, according to research firm App Annie. As of yesterday, the app has fallen out of the top 10 everywhere, although it's among the 100 most-downloaded in five countries, according to App Annie data.

Software developers are implementing clever and useful ways to interact with Yo. For example, Israelis can receive an alert when deadly missiles are detected in the country. A cafe can send patrons a "yo" when there's a sale on cappuccinos. An appropriately stupid feature flags users when a Kickstarter campaign raising money to make potato salad adds an additional 50 backers. (Currently, it has more than 5,000 contributing some $72,000.) About 2,000 programmers have accessed Yo's development tools, according to Hogeg. He says the interest from developers could one day lead to a viable business model.

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