Three-person Meebo just got funded by Sequoia Capital at a $10mm pre-money valuation. From what I see, it’s a site that gives a web interface to IM. I think this an of itself is a really cool idea, but if I apply some very simple tests to it, it fails miserably:
1. No barrier to entry. If 3 ppl can create this, a small army of India programmers can too. Cheap.
2. No lock-in. If/when GYM (Google/Yahoo/Microsoft) launches something similar, what’s to keep the customer at Meebo?
3. No money. I didn’t see any apparent revenue model (other than perhaps seeing some ads) on their site.
Clearly, Sequoia is not stupid and they obviously see something I don’t. It will be fun to find out what that is. Right now, I can’t see how I would value this at $10M other than because they have 250k subscribers and delicious with 300k subscribers just sold for probably $30m. And if that’s the case, this is a case of more hot air inflating a bubble, meaning that one no-revenue company’s valuation is pushing up another no-revenue company’s valuation.
When you start seeing zero revenue companies getting $10m A round valuations, you can’t help but yell “Bubble!”.