How much is a SuperPoke worth?

Update:

Holy crap. Numerous sources — including the Bits blog at the NYT, as well as Mashable and Business Week — are reporting that Slide has raised $50-million, giving the company a valuation of $500-million. This seems almost unbelievable to me. Maybe I’m missing something, but I just don’t see how even a popular Facebook widget can be worth the kind of money we’re talking about here, unless Slide has a more extended strategy that I’m not seeing. For their sake, I hope so.

Original post:

Kara Swisher of All Things D says she’s hearing talk that Slide, the widget company founded by Max Levchin, is close to getting a bunch of funding that will value the company at “many times” its most recent $60-million to $80-million valuation. If that happens, it would be a pretty big boost for makers of Facebook apps. But is a company whose products consist of widgets such as SuperPoke and a slideshow really worth $100-million, or $200-million, or (God forbid) $300-million?

At the moment, Slide and another app-maker called RockYou are the Coke and Pepsi of the Facebook widget game, with several spots in the list of top widgets each. Over the past six months or so they have jockeyed for top spot, with RockYou claiming those honours just before Christmas. Slide has SuperPoke, RockYou has X Me; Slide has FunWall, RockYou has SuperWall; Slide has Top Friends and RockYou has Zombies. Each one has millions of “users.” But what are they worth?

In a recent post, I looked at the numbers put out by Adonomics — a Facebook app consulting company — which argues that apps like FunWall are worth $30-million based on an ad model that the company has come up with. As I noted in that post, however, much of what goes into those numbers is just guesswork, and maybe a little wishful thinking as well. Can something like FunWall produce enough actual value that we can say (in any real sense) it is “worth” $30-million?

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Tagged as: Facebook, funding, Slide

Adam Ostrow

I recently came to the conclusion that an installed user is worth about $1.40, based on the earnings of the only pure-play FB app company that is publicly traded (that I know of) - http://mashable.com/2008/01/16/snap-interactive/

Of course, that numbers can change a lot based on the biz model of the app.

mathewi

Thanks, Adam -- that's interesting. So according to that math, an app
like Top Friends alone would be worth $35-million. Doesn't that seem
a little high to you? It does to me.

Adam Ostrow

I didn't say it was fair value, but that's what the supposedly rational open market is valuing them at ;-)

mathewi

Well, the real determining factor of value is what someone is willing
to pay for it, of course :-) So I guess we'll have to see who is
willing to pay $30-million or so for each of Slide's apps.

Corvida

I highly doubt it would rake in that much money or generate more than 30-million and grow exponentially or even at all to that amount or beyond that amount. I think it's totally unrealistic for ANY ad model they put into these applications. It would have to be several apps generating that much. Not just one.

antje

this is seriously starting to piss me off - excuse my french - I talk to companies who are doing great things all the time, much more sophisticated and interesting than an embedded photo displayer (I like Slide but come on), and a widget company getting this kind of money at that valuation is asinine.

Lee Lorenzen

Matthew,

Both Slide and RockYou have over 100 million facebook installs for their apps and over 30 million unique facebook users that interact with those apps and with whom these app aggregators can communicate via Facebook's messaging system. That means that each of these companies can sample detailed user profile data from about 50% of Facebook's entire population.

If you had a company that had the right to interact with half of Amazon's install base or half of eBay's installs base, a potential competitor to Amazon or eBay (or these companies themselves) might be very interested in acquiring these companies. The reason is that they represent a strategic threat to Facebook if they were in the hands of either Google or Yahoo or LinkIn or Bebo, etc. So, one reason for the higher valuations for these apps is their overall reach. The Adonoimics valuation takes this into account.

WRT antje's comment above about how other companies doing more interesting things are getting lower valuations, I'm going to bet these other companies don't have 30+ million unique users.

Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first Facebook-only VC

antje

hmm, 30 M unique users. Active users? Based on the backbone of another company (who could theoretically cut them access at any time)? and most don't have much revenue other than advertising? Not so sure I'd base an entire investment firm on "Facebook-only" but WTH do I know....

leigh

I would add on to Antje's point - all this great data everyone keeps speaking about...i work in marketing communications - companies have got nothing but data (customer data, market research, website, yada yada yada) and they do, well, pretty much nothing with it. So why is everyone so damn hot over the data? Particularly on a closed network, that to Antje's point, other people own?

And great marketing isn't based on demographics anymore. So really, what are you all investing in? If the app somehow supplied info about unmet customer needs in a particular verticle, maybe then someone should care.....

I'm sorry but this is the 1.0 equivalent in my mind of investing millions of dollars in a destination site for people who own dogs.

drBaher

Whether this valuation makes sense or not is up to facebook's future, You can check my post about it http://technozzle.com/?p=51

I guess that similar deals/valuations will take place this year because of the "Facebook effect".

Mark Evans

Truly amazing! I wonder what kind of fundamentals, if any, are used to come up with this kind of valuation?

mathewi

As far as I can tell, it's just pick a number and then multiply it by the
number of installs -- and the number is based on assumptions about ad
revenue per app.

Lee Lorenzen

The Adonomics Valuation methodology is described here:

http://blog.adonomics.com/2007/09/24/an-adonomi...

antje

I'm looking at this while trying to find past articles about valuations of pets.com and bluelight and webvan in the day. At least they SOLD something. They had product, they had something tangible. This just blows my mind. Companies making biomedical devices can't get $5m and Slide gets $50M. For what?!! Please someone elighten me. I am either a total idiot or I don't get something major here. And - in a saturated market (photo sharing)?