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Rock You CEO Lance Tokuda has told the New York Times that in regards to his SuperWall application, “If you told me you were going to write me a check for $10 million, Iâd say, âForget it.â” If you valued applications based on adonomics,
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1 year ago
I think you are missing a key point.
Valuation is what a willing buyer and willing seller agree to.
You and I can talk for hours about how silly someone is to pay $57 million for a painting of Irises but that is the valuation because a sale occurred.
In like manner, you may think that Lance is stupid, crazy, naive or arrogant for not selling his app for $10 million but the fact that he is not a willing seller at that price means that the app's valuation is higher. I don't know if we have it right at Adonomics ($11,950,400), but I'm pleased that we didn't value it lower than a price to which he has already said "NO" to in a very public forum.
As I've been writing for some time at http://blog.adonomics.com, developers should not make the mistake of selling their app too early. Lance is smart enough to realize that he is sitting on a gold mine and he shouldn't sell it based on what he is making right now from putting billboards up on his real estate. The real value comes when someone wants to start mining the gold that is represented in 10 million connected users.
Any interactive app that builds enough connected users to represent a sizeable portion of facebook's social graph is going to be worth a lot. In the Adonomics Valuation we provide a premium for these types of apps. The reason is that if facebook's snapshot of the world's social graph (with 43 million users) is worth $10 billion, it just stands to reason that a single app (with 10 million users -- 1/4 of all of facebook) is going to be worth alot -- not 1/4th of $10 billion but certainly more than $10 million.
I hope that helps. The acid test of Adonomics' valautions will be when more apps start selling. Feel free to contact LeeL@altura.com if you are interested in selling your facebook app at a price that is at or near the Adonomics Valuation.
Thanks,
Lee Lorenzen
CEO, Altura Ventures -- the first facebook-only VC
831-595-7501
1 year ago
Stop copying and pasting! Nick is right, because Facebook can develop it's own versions of apps, who in their right mind would buy something that could be essentially worthless overnight?
1 year ago
But to that point, top apps like his are making a decent amount of money from advertising. Into the high 10Ks a month - so far. Doesn't seem like much now, but scale that app to across APIs as they open up, cross promote that app with other apps (and vise versa) and add other ways of monetizing, and he could be right. If it were my app, I wouldn't sell it now for 10MM either - because I wouldn't sell just one app, I'd sell my company for over $100MM or even more down the road. Timing is everything :)
1 year ago