📱 Backing Yubo Again

Overlooked #45

Hi, it’s Alexandre from Idinvest. Overlooked is a weekly newsletter about underrated trends in the European tech industry. Today, with Nicolas, we are sharing some insights on our investment into Yubo which is a social network for Gen. Z built around livestreams. Idinvest co-led the series B less than a year ago and Yubo announced last week an outstanding $47.5m series C.

By mixing many digital trends (mobile-first, live, video, vertical social networks, social without advertising, putting people over content, etc.), Yubo is building a new category in the social app landscape

With a new $47.5m round just announced, we believe that Yubo has the potential to become a global leader in social. Idinvest is proud to have backed this company since the B round, and here is why we are even more excited by the next phase.

What is Yubo?

  • Yubo is a youth mobile app to socialize online through direct lives to watch or stream with other people.

  • The company was created in October 2015 and was initially built on a Snapchat hack to help its users make new friends. For two years, Yubo iterated its primitive product around the live video and audio chat.

  • The new branding was decided in November 2017, and the company became Yubo (it was called Yellow before). Since then, the startup has scaled its product, its user base, and has monetized.

  • Livestreams are at the core of the product. Users can create and join live rooms to participate through video, audio, and chat in real-time. Rooms are open to anyone to push teenagers to join and hang out with like-minded people as they would do in real life. Beyond live streams, you also have a chat to continue your conversations with your new friends and there’s a profile discovery feature. Everything in the app is bringing down the barriers to socialize.

What is unique about Yubo?

1/ Reinventing Social Putting People First Over Content

  • Yubo is part of this second wave of social networks with players like Reddit, Twitch, Discord, and Fortnite. All these players believe that the most popular social networks are broken and build experiences in consequence.

  • People are not building meaningful social relationships on Instagram, Facebook, LinkedIn, Snap, or Twitter. On these platforms, you don't have friends but followers, content is put over people, and performance drives behaviors. The first wave of social networks are everything but social. They’re media monetized by performance advertising, which has created a substantial misalignment between its users.

  • Yubo offers teenagers a meaningful way to express themselves and be themselves thanks to a primitive live through which people can interact in real-time. Yubo is based on a real identity enriched with detailed profiles with pictures, videos, stories, biographies, and social handles. Everything in the app is done to reduce the barriers to interact in realtime with groups of people. The ephemeral live dimension of the application is critical to ensuring that interactions are people-centric and not content-centric.

2/ Targeting Gen. Z

  • Yubo specifically targets Generation Z: the generation of young people born between 1995 and 2010. It’s the first generation which has always lived with smartphones meaning that they are natively familiar with mobile devices and are willing to engage into much more complex behaviors on mobile than other generations.

  • Contrary to previous generations, Gen. Z is willing to build new relationships online engaging with social third places like Fornite, Discord or Yubo. These are places where they spend time with their old friends, they meet new people and share original online experiences (cf. the Travis Scott’s concert on Fortnite).

  • Yubo is one of the best social products targeting Gen. Z. We are impressed with their understanding of the generation. Yubo brings down the barriers to make new online friends and creates the perfect sandbox to generate memorable online experiences.

3/ Creating a Safe Environment

The vast majority of Yubo's user base is teenagers. Dealing with teenagers is an important matter. To socialize, you want to be in a safe environment where you don't see violence, bullying, and the likes. Yubo has always and will continue to invest a lot to protect its users: age verification, banned terms in text messages, moderations from the crowd and professional safety specialists, banning users... The company has developed a wide variety of teen safety tools and works with local and global child protection associations.

4/ Being Successful at Monetizing a Social Network Without Advertising

  • Yubo is also unique because it has decided to monetize its user-base at an early stage and did not build a model dependent on advertising. The first wave of social networks drives its revenues from advertising. We are convinced that this is the wrong model to monetize a social network. These platforms have moved from a phase where they align themselves with their users and third parties players to attract them, to a second phase in which a big misalignment is created because the platform starts extracting value from them. Historically, social networks have done it by relying on advertising as a business model, significantly deteriorating users’ experience on the platform.

  • Yubo is still trying to find the perfect business model but has experimented, from in-app purchases to subscriptions. In the long run, we are convinced that people - specifically Generation Z before any other generations - will be willing to pay a monthly $5-10 subscription to increase their social interactions.

The X Factor: an Amazing Team

Building a social app is complicated, with a lot of trial and error. To create a global mobile app, you need an ambitious product-oriented, and resilient team. You can go through several phases of high growth where you need to scale your whole platform. The Yubo team has always shown an outstanding ability to test, launch, measure, and iterate. With less than 30 people, they managed to create an app used daily by millions of users. It is always difficult to judge a team, but here is what we like about them:

  • A product-first team: they know the product and the metrics in every detail (live dashboards, lots of releases...)

  • Transparent: they have always been transparent regarding their data metrics. Existing investors and even potential investors have access to the raw data of the company. Sacha (Yubo’s CEO) is as transparent and open when things go well than when it deteriates.

  • Ambition: when you go for a B2C mobile app, your market is usually global. Yubo has users on all continents. Even if the company is based in Paris, France has never been a top country on the app.

  • Sacha is a humble founder: he has remained the same from the day we first met him in a tiny basement until now, managing a company with millions of users every day on its platform.

  • Resilient: Yubo already faced some tough challenges even during fundraising processes, but the team has always adapted to the situation without panicking. This kind of character is rare.

  • Last but not least, Yubo is also another example of a world-class French team building mobile applications and social networks (Zenly, Capitaine Train, Voodoo, MWM, etc.).

What's next for Yubo?

  • With this $47.5 series C, Yubo will have the funding to scale its team, product, and user-base to become a dominant social platform for Gen. Z and the next generation.

  • Yubo has built a mobile social app used by over 40m people worldwide, and that will generate $20m in revenues in 2020 with a team of less than 30 people. Yubo is expanding its team and is hiring across multiple positions in tech, product, and marketing. If you want to join them, don't hesitate to drop us an email, and we will make the intro.

  • We are super excited about the roadmap for the next 12-18 months on the product side. Yubo will release numerous features to improve engagement and reduce the friction to socialize online. Yubo is currently integrating the Snap's Camera Kit into the product to let users play with Snap's famous AR lenses. They have also launched several mini social games and will keep adding new games into the app. Yubo is also working on native integrations with other 3P applications like Youtube to watch videos within Yubo rooms.

  • Yubo has established a strong foothold in English-speaking countries, including the US, which is the most competitive market for social apps. The company will double down on these key geographies and keep growing in emerging markets like Latin America and South East Asia.

  • Yubo will also reinforce its safety measures. Since day 1, Yubo has been committed to building the safest social platform for Gen. Z with world-class safety standards. The funding will also be used to grow the safety team and strengthen product innovations to protect users (e.g., age verification, real-time intervention, educational tools etc.).

As we told you, we are proud to be on board and excited to support Yubo in building a category defining social product for Gen. Z in the coming years.

Thanks to Julia (🦒❤) and Sacha for the feedback! Thanks for reading! See you next week for another issue! 👋 If you want to talk about this topic or want more resources, don’t hesitate to send me an email at ade@idinvest.com.