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!
Upcoming companies we look at on Vator Box include Vivaty and Adap.tv.
Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.
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Startup/Business
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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.
With one message from the computer or mobile phone, the service has the ability to reach thousands of people, instantaneously. Initially built as a service to help fraternities communicate via text messaging, Tatango has grown to a leader in the industry, with groups ranging from the generic organization to fortune 500 businesses.
The Tatango service doesn’t require any special phone or its users to download any software to use the service.
Tatango is the redesign of networkText, a website that grew to over 260,000 users and 30 million text messages sent following their launch in October of 2007.
Startup/Business
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Vivaty Scenes is a web based virtual community where users can personalize their own virtual scene and avatar and socialize with their friends.
Vivaty's vision is to make the Immersive Web a reality by transforming the flat web into a more visually rich and expressive experience that amplifies socialization and engagement. The company's end-to-end web platform is designed to enable distributed virtual experiences anywhere on the web. Founded in 2007, Vivaty is led by a team of web, gaming, and graphics experts, and is backed by venture capitalists Kleiner Perkins Caufield & Byers (KPCB), and Mohr Davidow Ventures (MDV).
Acquired by Microsoft.
Startup/Business
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Adap.tv: Leadership and Innovation for the New World of Online Video Advertising
Adap.tv helps publishers capitalize on the soaring popularity of online video among viewers and advertisers. Our flagship offering, Adap.tv OneSource, provides a single point of control to serve and manage ads from in-house and third party sources, in all major video formats, using your existing display ad server. OneSource streamlines ad operations, supporting efficient scalability for any online video business, from startups to major media companies.
As the first open and universal video ad sourcing and management platform, the powerful yet simple to use OneSource system has already gained broad industry support. More than 300 publishers in 71 countries use OneSource to monetize hundreds of millions of video streams each month. Whether an already established leader in video publishing—or a publisher determined to become one—Adap.tv provides the tools they need to achieve their online video goals.
Startup/Business
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Since founding bpCentral, our focus has been on increasing each user's competitive advantage each and every time they interact with one of our applications. Naturally, this involves more than simply enabling complex calculations to be performed accurately. In fact, during the first 12 months of developing our new technologies and applications, we put an inordinate amount of resources into discovering how to transform the relationships between idiosyncratic decision-makers and financial information. Our premise was that if that human to data relationship could be elevated to a new standard, then the relationships of those professionals with the entities and individuals they interact with could be more efficient and therefore more valuable.
In response, we developed CIMPA, the Carver Import Algorithm, a system that allows any electronic financial information, data or reports to be interpreted by a receiving system without the need for XML, XBRL, tagging approaches or extensive manual data entry. As a result of this technology, the Company's systems for private equity and venture capital professionals are able to import data in a matter of seconds, instead of a matter of hours.
Similarly, the Company noted that when users attempted to calculate the outcomes of complex liquidation preferences, anti-dilution provisions and other complex terms that are common to VC/PE transactions, any output was virtually impossible to verify without a costly audit of the formulas. Since the formulas were generally based in excel, this meant that few if any partners or other key investment professionals could afford to expend the effort to verify how amounts were arrived at. Upon further consideration, the Company realized that, to a certain extent, this was true of all financial reports. For traditional financial statements, this point is evidenced in the fact that notes to financial statements typically occupy several times more pages than the actual financial reports do. This realization inspired the Company to develop a system it calls OferX, which presents all financial information in a manner that allows any user to audit and see how amounts were calculated (in an easy to understand, quantifiable manner) without the need for extensive textual descriptions.
Together these unique tools form the foundation for the Company's offerings, which are backed by over 29 patent pending technologies.
Startup/Business
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Tapulous is a Palo Alto, CA based startup building a family of fun and social apps for the iPhone. We are angel funded and have released two apps for the iPhone (as of early August, 2008): Tap Tap Revenge (a music game) and Twinkle (the app that lets you connect with people nearby and your friends on Twitter).
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Joined Vator on
