Last week, I attended a friend’s house warming in Boston. As most attendees were MBAs, vigorous debate about business trends was inevitable. This time, the debate was about the commercial viability of the “Yo” application. With a whiskey (neat) in hand, I sat back and listened to the arguments being made.

For context, Yo is an iOS, Android and Windows Phone mobile application that, at least initially, only allowed users to send the word “yo” (in text or audio format) to friends. In one corner was a Harvard Business School student, who thought the Yo app was useless and had no commercial value. His argument was: there is no way to monetize such a useless service. I saw where he was coming from. After all, 47% of app developers either make no money or less than $100 per month, per app.[1] The top 2% of app developers claim 54% of all app revenues.[1] So, how could such a seemingly useless service hope to make money in a competitive app market?

In the opposing corner was an MIT Sloan student, who also thought the Yo app was useless. However, she believes that the Yo app has credible commercial value because of its user base (represented by 2.7 million registered users, 1.2 million active).[2] She believes that, despite the uselessness of the service, the user base is a captive audience. I thought her point was valid. It seems users are active on the platform – a peak of 100 million “Yo’s” sent in one day – which has attracted partnerships with big brands, like the NBA, SoundCloud, and even presidential candidate Donald Trump.[2][3] To add, Yo did manage to raise $1.5MM in seed funding from credible investors, like the Mashable founder Pete Cashmore, among others.[4] There must be something we are not seeing.

Who is right?

Well, both parties are wrong. After some digging of my own, I conclude that the Yo app, if the business model is tweaked correctly, creates value. There is emerging demand for condensed communication (i.e., Twitter, SnapChat) and, more recently, one-bit communication (i.e., messages that signal intent and not thought). Further, I believe that the Yo app does have commercial significance. Before I continue my argument, let’s understand Yo a bit better.

The Making of Yo

Or Arbel, Yo’s founder, founded Yo serendipitously. The CEO of Mobli, Moshe Hogeg, Arbel’s then boss, asked Arbel to create a single-button app that will allow him (Hogeg) to call the office assistant quickly. Arbel created the app in eight hours.[6] Arbel saw some potential in the application and left Mobli to work on Yo full-time. Yo was released to the public in April 2014.

Initially, Yo only had one feature, which allowed users to send “yo” (in text or audio) to friends. Since, Yo has added three more features: Yo Link, Yo Location and Yo API. [3] Yo Link and Yo Location allows users to send friends links (articles, web sites) and current location, respectively. Yo API allows organizations to connect to Yo users via an application protocol interface (API). For example, if users subscribe to the World Cup, users will receive a “yo” every time a goal is scored.[7] Yo has a “store”, which allows users to subscribe to similar brand based events. Over 50 global brands are using the Yo API in order to connect with the Yo user base.[3]

Image of Yo Store

Yo app screen shot

Source: Yo app/ MobileMediaExchange.com

How Yo Creates Value

Yo is at the forefront of an important, emerging trend – one-bit communication. One-bit communication is a message with no content other than the fact that it exists.[5] For example, People in Bangladesh, and other frontier markets, use missed calls (or a deliberate hang-up of calls) as a way to communicate a pre-agreed message.[5] To illustrate, friends may agree that two successive missed calls means “I am not coming to hang out.” People in frontier markets do this in order to avoid charges on pre-paid call minutes and other telecom fees. This type of missed call, one-bit communication consumes over 70% Bangladesh cellular traffic.[5]

Yo has significant value as a cost-efficient, time-efficient way to communicate intent. With the cost of smart phones declining significantly, one could see how the Yo app could be adopted in a variety of markets. If Yo developers are able to make “yo” notifications compatible between smart phones and non-smart phones (which I believe it is, but I cannot confirm), there is explosive potential for Yo adoption in frontier markets.

Yo also represents significant value to brands (i.e., NBA). The Yo API/store is a great way to engage the consumer. Prior the Yo API/store, brands had ineffective means of consistently connecting with consumers. For example, DVRs allow people to skip TV ads and consumers are trained to ignore online or mobile ads. The Yo API/store is an unobtrusive way for a brand to consistently connect with consumers.

Monetization

To the best of my knowledge, Yo does not generate any revenue.

It is important to note that, to the best of my understanding, Yo developers do not intend to sell more words (i.e., “Yo man”) as a monetization strategy. However, some sources suggest that the Yo developers are considering the audio “yo” in different celebrity voices as a monetization strategy. Regardless, Yo will have to lean on a revenue model that starts and stops with “yo”.

Also, I assume that people in Bangladesh, and other frontier markets, will not download Yo just to have a cooler option for one-bit communication. However, the trend is there – both in frontier markets and in established markets (i.e., demand for reduced communication services like Twitter, SnapChat).

Further, I assume that in-app ads are not a viable monetization strategy. Consumers tend to be annoyed by in-app ads and have learned how to ignore them.

Since Yo has garnered a credible user base (1.2 million active users) – with potential for significant user base growth – there are some options for monetization. I suggest this option:

Yo Emergency

Yo, as a one-bit communication tool, would be valuable in emergency situations. With 30 types of “yo” already, “yo” for emergencies makes sense.[7] Yo founder, Arbel, an Israeli, is exploring ways Yo can be used to alert Israeli citizens of pending attacks on its home land.[8] Yo would be very valuable in other emergency situations. Imagine a school shooting, terrorist attack or natural disaster where a simple “yo” can communicate “shelter in place”. A follow-up “yo” from users can communicate to family and friends that, “I am ok” without congesting cellular traffic. I beleive governments and other institutions would pay a per “yo” fee to facilitate emergency one-bit messages during a crisis. Further, in this context, adoption of the Yo app would be naturally viral – since family and friends would encourage each other to download the app in case of emergency. Yo as a safety application – for governments and other institutions – makes Yo very useful and bankable.

End Notes

[1] Vision Mobile, “Developer Economics: State of the Nation Q3 2014”, http://www.visionmobile.com/product/.

[2] Mashable, “Yo App Users Have Sent More Than 100 Million Yos”, http://mashable.com/2014/09/05/yo-100-million/#OUtMNEcVIskH.

[3] Yo App Download for Android

[4] Business Insider, “An App That Just Says ‘Yo’ Has Raised $1.5 Million At A $5–10 Million Valuation”, http://www.businessinsider.com/yo-raises-15-million-at-a-5-10-million-valuation-2014-7.

[5] Business Insider, “ANDREESSEN: People Dismissing Yo Are Missing A Social Trend That Consumes 70% Of Bangladesh Cellular Traffic” , http://www.businessinsider.com/marc-andreessen-defends-yo-app-2014-6.

[6] RT.com, “Money for nothing? $1mn for app that says ‘Yo’ to your friends”, http://www.rt.com/news/167092-two-tap-app-yo/.

[7] Business Insider, “The Brilliantly Simple ‘Yo’ App Is Going Viral — Here Are 30 Types Of Yos”, http://www.businessinsider.com/the-yo-app-is-going-viral–here-are-30-types-of-yos-2014-6.

[8] IT ProPortal, “Yo! You’re about to be hit by a rocket”, http://www.itproportal.com/2014/07/10/israelis-use-yo-app-to-warn-of-rocket-attacks-from-gaza-hamas-israel/.

By: Dominique St-Fleur


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