The Yo Strategy

In an attempt to understand why some great guys invested $1M in Yo, I finally found the very smart strategy well hidden behind this stupid move.

It’s everywhere, here and there. Yo is getting traction like crazy. People want to try the new mobile application everyone is talking about. “They say” it’s really moronic and useless but at the same, it attracted $1M so it must have something.

Honestly, I didn’t get it when I tried to understand. I read some theories — like Marc Andreessen’s one — saying it’s a 1bit communication tool and others talking about having the “Missed Call Phenomenon” disrupted.

No. It has to be something else, because once the viral peek is reached, there’s a very tiny chance this App could go further as is… and no way it finds a business model on the way. It’s a 1st class one-way ticket to the dead pool.

And then, I’ve found something, the incredibly smart strategy that could be hidden behind all this story.

Imagine you want to create a kind of hybrid messaging app, something in the middle of Snapchat, Whatsapp, the Twitter DM and the brand new Path Talk. Your approach is the essence of the KISS attitude, with super short messages flying very fast to your best friends around the world. You’re mobile only of course, and your UI is the NoMoreDesign style hipsters are fond of.

Great plan, sounds good but… This market is already packed with some very big guys under steroids and their millions of users.

You’re not afraid. You know how critical it is to get your first millions of users as fast as possible and your road map is cristal clear: Go for the big figures or go home.

To do so, you need a very powerful marketing strategy, the kind of strategy you obviously can’t afford.

Doesn’t matter, you have a plan.

First, you need to rise some significant funding — let’s say $1M — with a couple of Silicon Valley rock stars. Of course, this seed round has to stay highly confidential. Then, you code a crappy-but-funny little App with a colorful design, based on the dumbest but simplest messaging idea you can imagine. Hey Yo! You need, let’s say, $15,000 to have it up and running. You keep this app under wraps and start developing the next version, a real amazing cross-platform messaging application which is going to cost you at least half a million of your seed funding round.

Once your second outstanding mobile application is almost ready, you publish the crappy version and start talking about it like the probably next “big thing” (you need to have some decent brand content crowed sourced on the web before launching the smart marketing campaign you have in mind if you really want it to be successful).

Yes, you get some traction because the idea is really unexpected… but nothing huge. Wait a couple of days and unleash your PR dogs to announce you’ve jusy closed a first round with some of the most prominent investors in town, and Yes, it’s at least in the 7 figures.

Downloads in the Stores skyrocket instantly, going from 50,000 to 200,000 apps in 24 / 48 hours.

As usual, the market reaction is homogeneous. You get some “What the hell is this app for?!?!” or “No Bubble? Are you kidding me?” and of course the inevitable “I told you Marc Andreessen was going down. He has lost his mojo and should to stop investing.”. OK, you can thank the experts for their brillant insights.

And then, in 1 week from now, (please try to stay focus, we are making startup History here!), while everyone is laughing, you release the beautiful dead simple lightning fast application and start the real adventure with 300 or 400,000 users without having spent a single buck in marketing… and, of course, you still have another $500,000 to support growth by improving your product.

Now, you get it people.

This is the secret strategy they had in mind to launch from scratch a great startup with a single million dollar (Keep in mind $1M in funding is the new bootstrapping approach in 2014).

EDIT: Yo just passed 1M users after 4 days. Don’t you think the strategy I suggested makes even more sense now? :-)

Obviously, I’ve written this post as an exercise to improve my terrible English and another daily attempt to have a better understanding of our industry. Hopefully some of you may also have smiled at least once while reading this fiction.

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