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