Yo (app): Monetizing the Ridiculous

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


2 Comments

  1. leoebrown

    Yo Dominique, Thank you for this post. It really made me rethink Yo, which I too had previously dismissed as "useless." Not that I wouldn't use Yo–"useless" things can be very fun, due precisely to their whimsy–but paying for whimsy is another question, and can in fact suck the fun out of it altogether.

    Your idea of monetizing Yo through emergency situations goes right to the question of when it makes sense to pay for a service; but it also raises tough questions. Indeed, people might be more willing to pay for the "useful," or highly valued, or perhaps even critically important, parts of Yo. But is it ethically defensible (or more cynically, palatable to the general public) for Yo to charge for use in emergency situations?

    On one hand, we are accustomed to communications systems that are not free; so why shouldn't Yo be allowed to charge for its services in certain situations? On the other hand, it feels wrong to apply "surge" pricing when people "really need" to use Yo. By now, you may have gathered that I'm thinking of PR scandals like Uber had in Australia. http://www.businessinsider.com/uber-shouldnt-surg

    I don't think it is impossible or wrong for Yo to monetize in this way. But I am interested in your thoughts on the ethical and public relations aspects of that approach, because I think especially given how the court of public (Internet) opinion tends to operate, the issue requires careful consideration before rollout.

    Personally, I think this could work if Yo brands its emergency service as more serious arm of the company, explicitly acknowledging that Yo can be both fun and silly ("useless") as well as important and valuable. It would also help to improve the quality of Yo Emergency so that it is rock solid, including in < 3G areas; and to communicate this unique value proposition as a justification for its differential cost.

    Thank you for a great and entertaining post!

    Leo

  2. Roma Patel

    Dominque – Thank you for posting about Yo! After overcoming the initial perceived irrelevancy of this application, I realize that its emergency impact and potential as a social service could be profound. The emergency situation use is convincing and viable, as the issues related blocked messaging during a period of high cellular traffic needs to be resolved. This simple one-bit communication application is a modern reinterpretation of the widely used morse code as a messaging tool, both are binary in nature with endless sequencing possibilities. The relationship with athletic leagues and multinationals could be Yo!’s path to monetization, but there is a social impact that should not be overlooked, and which I believe should be a free service. In order to prevent the messaging to overwhelm cellular traffic, the free messages could be limited to quantity every month, but fixed allowances are important. In addition to the emergency uses, one-bit communication would create a technological connectedness that one can argue is necessary in this day and age, given that technology itself is creating a greater socio-economic divide. Given that over half of the world’s population is in densely populated and technology reliant urban areas (54% to be exact, growing to 66% by 2050) the need for a reliable and free communication line is necessary. The anecdote about missed calls in Bangladesh highlights the importance of free and reliable messaging services, especially in these urban environments where easy and free communication is essential to bridge social and economic classes. Mobile communication and banking are quickly being adopted across populations in both urban and rural areas, and these individuals have often skipped the computer stage altogether. Assuming that this technology does not stress cellular traffic and can be used on all phones, it could be a powerful tool to increase global connectedness. If this one-bit application, and others like it, could be used to create a free line of communication, populations across the world could benefit from the access it enables.