Back in January Slide pulled off a whopper of a financing for an effectively pre-revenue startup: $50 million, valuing the company at a cool half billion dollars. Not bad.
No one was surprised to hear that arch-rival RockYou would soon close a big round of their own. And we have not been dissapointed. Today RockYou is announcing a $35 million Series C round, led by DCM. Previous investors include Sequoia Capital, Lightspeed Ventures, and First Round Capital—none of which are mentioned as participating in the current round. The company had raised just $16.5 million over two previous rounds, bringing their total to $51.5 million.
RockYou is the second-most popular creator of applications on Facebook (after Slide), and says that its widgets are seen by 87.5 million people a month across the Web (compared to Slide’s 63.7 million). The company also offers OpenSocial applications that have been installed 10 million times. RockYou sells social-networking ads against the audience for its widgets. At 2.7 billion pageviews a month, that’s a lot of advertising inventory.
Now it just has to figure out how to get more people to click on them.
The stress between these two similar startups to compete is brutal. Sarah Lacy explained in her book how when either company would release a new feature or application, the other would race to duplicate it within hours:
This has all been building to a nasty war between Slide and RockYou, with each maintaining it is larger, each ripping off the other’s products. Having an enemy has helped focus Slide, and for now, it beats RockYou on every count.
Ridiculous!
The more the competition, better will be service and customer orientation. This is what makes Net a true democracy.
Michael Arrington, it looks like that dot.com 2 is just around the corner. These ridiculous multi-million funding for something useless as what Slide & Rock You is beyond belief. What are they being used for? I’ve never used those services, but it is sure that is to target the vain, naive and stupid people who live on the internet.
If I am an investor in those VCs that dish out millions for unproductive tools like these, I would take my money out now, because the dot.com 2 is not far off. Most of the tools that are covered here at TechCrunch are targeting the advertisement industry but not many are targeting to sell the software (subscription-based perhaps) to the end user.
I attended a lecture by Prof. Michael A. Cusumano from MIT management school recently here in New Zealand about developing software as a product compared to targeting it as a service exactly as those which target the paid online advertisement industry. He had studied software companies in detail over the last decade, and he said that when the going gets tough, the vendor with a software product tend to survive in the long run. The software service based vendors are the ones that get folded very quickly when the climate is not going well.
Beware every one. Dot.com 2 is coming.
Since these two are neck and neck, what are the chances that Rockyou will declare NO MORE Facebook apps as did Slide today?
Michael:
Only way I could get your attention. Your forums section on TechCrunch has been hacked by a user called Al3ade. He is changing peoples posts and has linked to a SPAM site.
I hear that they didn’t announce their valuation because it was sub $300 million post money…
@Falafulu: Wow, real insightful. Never heard that before. Nobody but you has yet talked about “bubble 2″ or “dotcom 2″….
It doesn’t matter b/c the only people that will lose is VCs. There aren’t any public markets wrapped up in these investments. Risk is primary to the world of venture capital, they are prepared.
Mike, you misspelled disappointed “dissapointed.” Just thought I would let you know.
Phil, I assume that VCs are high worth private individuals that pooled together their financial resources, so in that sense that’s probably OK because they’re millionaires and if each of them lose a few millions, it is still peanuts to them.
I am making an educated guess about the Bubble-2 since the tell-tale sign of Bubble-1, is starting to emerg now, ie, multi-million funding of useless internet startups. No one has been to the future to witness that Bubble-2 is coming, but one can only infer information from the past and this is how human reason everyday. It might be wrong inference, but it can’t be impossibly wrong 100%.
By the way Phil, do you know any of the so called Web 2.0 startups making any profits yet? I don’t count a startup that has been acquired, since some are being acquired for their perceived value, rather than a healthy profit & returns. So, if you know any profitable Web-2.xxx startups then I am keen to know about those ones.
DOT COM 2.0 HAS OFFICIALLY ARRIVED.
HIDE! TAKE COVER!
@Falafulu: You don’t get it>> IT DOES NOT MATTER! What’s your point? It certainly is original.
If I had a dime for every “here comes the bubble”(there was even a video) comment I’d be making more than all current startups put together
FWIW, SmugMug and 37signals claim profits.
If you want to talk about rat holes, I would merely point you toward US spending in Iraq.
Are these the only ones , SmugMug and 37signals, that are making profits? What about the thousand others ?
Software is the most hyped industry compared to others. There have been numerous applications developed to be so called Web 2.0 compliant that have been hyped like, that they are the discovery of the century, labeled with terms such as cutting-edge, state-of-the-art, world-beater, and so forth. I’ve yet to see a cutting-edge, state-of-the-art, world-beater Web 2.0. Most of the web startups that are frequently covered here at techcrunch are not cutting-edge in any form and also I have a pretty good idea of what the technology behind these web-application that are labeled state-of-the-art, world-beater. Websites is just websites, regardless of what hyping terms that are used to describe them.
I would merely point you toward US spending in Iraq
Sorry, I am not a US citizen to comment on the US foreign policies. I do have an opinion, but this is not a right forum to discuss it.
@Phil and @Falafulu - please post all future comments as video. I want to see you two duke it out in video!
“Software is the most hyped industry compared to others. There have been numerous applications developed to be so called Web 2.0 compliant that have been hyped like, that they are the discovery of the century, labeled with terms such as cutting-edge, state-of-the-art, world-beater, and so forth. I’ve yet to see a cutting-edge, state-of-the-art, world-beater Web 2.0″
Couldn’t agree more.
Most of the case, it’s always old dog , new tricks.
It’s the idea that kick’s ass
Slide beating RockYou on all counts? What is that like winning a farting contest? No one cares. These are both useless companies. It’s sad to see someone who helped create such a useful company (Paypal) now focusing on such a useless one (Slide). It’s the Web 2.0/Y-combinatorization of the world - creating useless companies and praying they can sell ads.
DCM = Dumb Capital Management..errr Doll
RockYou took $ from them, because no one else was stupid enough to give a company like RY a $300M valuation, especially since they are <$3M in revs…last time I checked, a P/E of 100 for a company in the useless widget space was a bit overboard.
@Lame - RockYou is working on a fart on your friend widget…should bump the multiple to at least 200
RokYou PR should be fired!
What were they thinking releasing this on the day of Iphone 3G release?
Seriously, fire the person or the company who manged their PR, what a dumb mistake!
I agree that it does seem like a lot of money. However, I think they know that the whole widget advertising bit is really an area for a lot of potential profit and they’re taking advantage of it.
You should see this post on widget advertising:
http://textrapolate.com/2008/ 06/the-widget-is-dead- sort-of/