RockYou: The $400 Million Widget?
RockYou, widget maker, is the latest example of a sane valuation heartbreaker, as it is undertaking efforts to secure an investment from mainstream financing firms that would value the company at between $300 million and $400 million.
First reported by Valleywag last night, the start-up, said one source, “is being squired around Wall Street” by investment behemoth Morgan Stanley (MS), in search of the same kind of deal its rival Slide got in January.
BoomTown broke the news of that deal, which nabbed Slide $50 million and a $550 million valuation with investments from blue-chip investors T. Rowe Price (TROW) and Fidelity.
Thus, RockYou’s motto: Anything Slide can do, we can do slightly smaller!
And, indeed, not to be SuperPoked by Slide CEO and Founder Max Levchin, sources said RockYou Co-Founders Jai Shen (also CTO) and Lance Tokuda (CEO) were quickly on the march for their own payday.
It is, in fact, a quest that a lot of Web 2.0 companies seem to be on, since the sector’s fearless leader–Facebook–got its $240 million and $15 billion valuation from Microsoft (MSFT) last year.
All of this frantic funding activity is, of course, this bubble’s version of going public–grab big cash investments from investment firms and hedge funds, desperate for a good bet on the sector, without the pain of public scrutiny of questionable business prospects that did in Web 1.0 shooting stars.
It’s that or get bought for an ungodly sum by equally desperate Web 1.0 companies (See: AOL+Bebo).
Sources close to RockYou, which has had acquisition feelers put out to it from larger companies in the past, said the company has had several strong offers of funding, but it is trying to select the right partners for the latest round of funding.
“We want our investors to be strategic and helpful to the company,” said one person close to RockYou.
RockYou has so far been funded by Sequoia Capital, Lightspeed Venture Partners and Partech International.
(Interestingly, Sequoia backs another instant messaging and chat widget maker, Meebo, which is reportedly seeking a $250 million valuation, which I posted about here yesterday).
To be fair, makers of highly distributed third-party apps like RockYou are garnering immense traffic and their widgets are syndicated everywhere. RockYou’s Super Wall, which lets you turbocharge your digital wall, for example, is one of the most popular on Facebook.
Other RockYou apps include: X Me, a communications tool that allows you to “Hug Her, Slap Him, Tickle Them!”; and Likeness, where you can “compare yourself with friends and movie stars like Angelina Jolie, Jessica Alba, Keira Knightley and many more.”
The company has been trying to monetize all this traffic and popularity and distribution, as well as knowledge of user behavior, by offering advertisers new forms of engagement.
But the jury is still out on these interesting but unproven efforts by all the social-networking players.
In any case, the money is apparently still flowing into these start-ups, taking a chance on them being the next big media play.
Here are two videos I made when I visited RockYou’s offices in San Mateo, Calif., last October, after I had called the widget market juvenile and faddish.
The first is my tour of the office, where I was playfully accosted by an infant–oops, a RockYou engineer–in a suit. The second is my interview with Shen and Tokuda.