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Can Tapulous avoid the fate of Dexys Midnight Runners? And, why Tatango may be worth investing in
In this segment, our sponsor Liquid Scenarios estimates the pre-money valuations and exit scenarios for Tapulous and Tatango. The startups under the microscope this week are Tapulous, the creator of Tap Tap Revenge - one of the leading Apple iPhone applications with 1 million users in three weeks, and Tatango, a creator of group SMS. Tatango has attracted 400,000 users and 25 million text messages, according to CEO/founder Derek Johnson.
Technorati CEO Richard Jalichandra helps us out once again as we discuss the novelty of the ideas/services and the challenges these companies may face. We also provide some feedback. Ezra Roizen, Vator Box regular and digital media investment banker, is always good for coming up with interesting suggestions.
We started with Tapulous. First off, great video pitch from Bart Decrem, Tapulous founder and CEO, who also founded Flock the social browser. It's not surprising that Bart can give a good pitch, given his experience.
Along with a lot of good advice, both Richard and Ezra agree that Tapulous should consider selling itself now while it's red hot. After all, the games busines is a "hits" business, and unless Tapulous can launch hit after hit, it'll be tough to sustain its reputation. Both Richard and Ezra don't think Tapulous founder/CEO Bart Decrem's ambitions to be the iPhone social network will be achieved. "Apple wants to be the social network for the iPhone," said Richard.
And, the two are lukewarm about the subscription model for the games. I disagree on this point. If you can have a subscription model - then go for it! If Apple's app makers are making $1 million a day due to consumers paying for games, then it's clear there is a willingness to pay.
Finally, Ezra points out that Tapulous - however amazing it is today - runs the risk of becoming another Dexys Midnight Runners, a British pop band mainly known for one hit single "Come on Eileen." This comparison is actually a good one. Many startups would die to ever have a hit.
(See more stories about Tapulous below.)
For Tatango, Richard didn't think there was much novelty in the idea around groups. Both Richard and Ezra believed that other companies, namely Yahoo Groups, could turn on a mobile application.
"Groups are already in a lot of places," said Ezra. "So how hard is it to add in a text-message option?"
On the upside, we all liked the presentation and believe Derek could raise money just on the fact that he appears confident and passionate. Both Ezra and Richard advise Tatango not to take money and get a big distribution partner first.
Guess who Richard and Ezra chose to bet on? You'll have to watch the end of the segment to see. And, don't forget to catch the Liquid Scenarios Minute, in which we explore valuations and exit strategies based on comparables and market trends.
We're not experts, so if you have any objections or insights you'd like to share, please do. And to Tapulous and Tatango - if Liquid Scenarios is way off on the analysis, we'd love to know that too!
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Founded by Derek Johnson in his parent’s basement at the age of 22, Tatango is a group text messaging service that allows any group to communicate through group SMS.
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The Tatango service doesn’t require any special phone or its users to download any software to use the service.
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