Gawker: valleywag, lance tokuda

RockYou diving deeper into social games

Owen Thomas — Thu, 02 Oct 2008 20:00:00 EDT

Slide and RockYou, the two largest developers of Facebook apps, have long had a serious rivalry over the most frivolous Web software. But the two may be pulling apart. Slide, Max Levchin's SuperPoke machine, signaled yesterday that it's betting on online entertainment, partnering with Hollywood to bring mainstream content to its FunSpace apps. RockYou, meanwhile, seems to be turning into a gamemaker. "We want to be like the Electronic Arts of social networks, and build games for social networks," RockYou CEO Lance Tokuda, shown here, said today at the Startonomics conference in San Francisco, referring to the dominant maker of videogames.

Build, or perhaps buy. In July, RockYou acquired Speed Racing, one of the top games on Facebook. But RockYou, in diverting its attention from its rivalry with Slide, will face well-funded competitors in startups Zynga and SGN. By the time all this becomes a serious business, isn't it just as likely Electronic Arts will be the Electronic Arts of social games?

RockYou's plan: Hope Facebook widget users are in the mood to buy cars

Nicholas Carlson — Tue, 19 Aug 2008 12:00:00 EDT

RockYou CEO and cofounder Lance Tokuda told Silicon Alley Insider the No. 2 Facebook widgetmaker plans start selling ads in traditional verticals, starting with classifieds-like car ads in its SpeedRacer widget. "He was scant on details," reports SAI. We think Tokuda and company will end up going forward with a different plan — maybe one that puts car-company brand advertising in its widgets. Because when's the last time anybody looked for a car to buy inside a racing videogame? (Photo by ninjapoodles)

Did Facebook's developer-unfriendly redesign cost RockYou $150 million?

Nicholas Carlson — Mon, 09 Jun 2008 17:00:00 EDT

Despite the rumors, we all know widgetmaker RockYou isn't really worth $400 million. Not with the way ad buyers feel about spending on social media. We hear RockYou's latest investor, Doll Capital Management — which funded the company with another $35 million today — didn't value the company at $400 million either. "I believe the round was priced at $250 MM, and definitely not higher than $300 million to $325 million," an executive familiar with the deal says.

Why the $150 million drop from March to June? In part, RockYou founders Lance Tokuda and Jia Shen can blame Facebook's spam-killing redesign, which will eliminate some of the tools RockYou used to increase the popularity of its widgets. But our source takes a shot at Tokuda and Shen, too. He tells us:

The reason the round took so much time was because the valuation expectation was inflated. They had unrealistic expectations and "team" really matters when you raise capital.

Not that that's so unfair of a shot, considering Tokuda and Shen's lawsuit-wracked history.

T is for Twitter, which turned blogging small

Owen Thomas — Thu, 15 May 2008 10:20:00 EDT

Twitter, the 140-characters at a time blogging service, was shaped by its founder's dry, understated sense of humor. The company, not to mention the service, seems to be a sort of Silicon Valley inside joke that, improbably, Ev Williams and his fellow Twitterers have managed to play on the rest of the world. For this, Sarah Lacy labels Williams a "nontrepreneur." Fittingly, Sarah Lacy gave his microcompany got a mere four pages in her new book, Once You're Lucky, Twice You're Good:

Previously:

Morgan Stanley trying to get $400 million for RockYou

Owen Thomas — Wed, 19 Mar 2008 00:00:57 EDT

RockYou, the widget maker best known for Facebook's Super Wall application, has hired Morgan Stanley to raise a new financing round at a $400 million valuation, according to a hedge fund manager whom the investment bank solicited for the deal. Slide, a competitor, recently raised a round and is now worth $550 million, at least in its investors' fantasies, which sets a high bar for RockYou. Slide is the biggest reason why RockYou might actually get the financing. After it struck its deal, cofounders Jia Shen and Lance Tokuda could argue for a comparable value. But not all is rosy for Shen and Tokuda.

In Slide, RockYou now faces a very well-financed rival which took $50 million from its new investors. And Slide has real advertisers like McDonald's, AT&T, and BP; RockYou is better known for its plan to charge other Facebook-app makers to advertise their wares. (Does that strike anyone as a pyramid scheme?) Finally, there are RockYou's cofounders themselves — perhaps the biggest reason they won't get $400 million for RockYou.

Last year, they settled with their ex-employer Iconix, which charged them with developing the idea for RockYou while still working there. The episode was messy, and public. One would think RockYou's prospective investors would take it into account before putting their money in Shen and Tokuda's hands.

Facebook applications chase Mark Zuckerberg's shadow

Tim Faulkner — Thu, 04 Oct 2007 12:43:13 EDT

Mark Zuckerberg's strategy of holding out for a Facebook valuation as high as $15 billion is contagious. Developers of the most popular Facebook applications have become mini-Zucks, unwilling to part with their astronomically self-valued creations. If Lance Tokuda, the chief executive of RockYou, sees any difference, it's only one of scale. Speaking about his companies popular Super Wall application, Tokuda, says "If you told me you were going to write me a check for $10 million, I'd say, 'Forget it.'" Why?

What Tokuda didn't mention to the New York Times is that Sequoia Capital, RockYou's venture-capital backer, is rumored to be shopping his entire company for a price between $200 million and $500 million. It's hard to say which is more inflated: Tokuda's price for Super Wall, a minor improvement on Facebook's built-in Wall message board, or Sequoia's price for RockYou's entire collection of "barnacles," as the Times describes its applications.

Tokuda and Sequoia, of course, are only being smart. Of course they should capitalize on the Facebook buzz while they can. (We hear that one large and notoriously gullible buyer may actually be interested.) And he's selling as fast as he can:

This is a completely new channel of delivering content to users and letting them communicate. Owning that over the long stretch can be worth a lot.

In other words, in the Facebook universe, profits don't matter. Heck, revenues don't matter! All that matters is that application developers are brave new pioneers on an untapped frontier. Never mind that that frontier is already filled to bursting with more than 5,000 (mostly useless) applications. And never mind that Facebook, at any point, should you come up with a genuinely useful tool, reserves the right to build that function into the site itself.

And that reality is hitting home for Tokuda. Facebook has already moved to copy some of Super Wall's features. RockYou itself splits its audience with a similar application, FunWall. Over the long stretch, Super Wall is completely irrelevant. Not that the long run matters. If anyone has actually named a price for SuperWall, or for all of RockYou, Tokuda should sell now. We call it making hay while the sun is shining.