YouNoodle
Encyclopedia
YouNoodle is a San Francisco-based company providing a networking
website for small businesses. It has received particular attention for its "startup predictor", which aims to use mathematical models to predict the success of a new business based on information about its concept, finances, founders and advisers. The results include an estimate of the company's expected value after three years.
, both former students of the University of Oxford
. Goodson had studied medieval English literature before moving from Oxford to California when Max Levchin
, the co-founder of Paypal
, invited him to join a start-up there. Makharinsky's degree was in applied mathematics
, and he was also encouraged to pursue opportunities in the United States by Levchin. Other significant employees include Rebecca Hwang, a Stanford University
doctoral student whose research is into social network
theory.
The company was established in San Francisco. In the 11 months before February 2008, it worked to help universities organise competitions for business plans. Among its financial backers are Max Levchin and Paypal's other co-founder Peter Thiel
, and the venture capital
firm The Founders Fund
in which Thiel is a partner.
, Tradespaces and Smarta.
The company's founders have declined to explain the algorithm in detail, but state that it takes into account the entrepreneurs' experience, networks and mutual relations. Information provided by companies which use the site's networking features is used to improve the algorithm. As of August 2008, the algorithm was based on data from 3,000 startups. In the same month the company had four patent
s pending on the technology.
In August 2008, YouNoodle predicted that its own value in 2010 would be $96 million.
, "If their tool did such a good job, they'd raise a fund themselves and beat the tar out of us." When co-founder Bob Goodson argued that "industries of comparable size have utilized artificial intelligence to inform decision-making", Duncan Riley
of TechCrunch
cited the poor track record of systems intended to predict the results of horse racing
. Michael Arrington
, also of TechCrunch
, dismissed the idea as "hype and nonsense" and wrote that he would not even have covered it if not for the project's notable backers. Goodson responded to criticisms by stating that the process did not aim to "predict all the factors" affecting a company's success but to bring greater mathematical rigor to the type of assessment that investors were already making.
When the predictor launched in August, Michael Arrington tested it using historical data about developed businesses. He found it underestimated the value of Google
, Facebook
, Slide.com
and RockYou! but correctly predicted major success in all four cases. For example, Slide.com, worth $550 million, was predicted to be worth $124 million. The site gave a much more accurate estimate for Powerset
($104 million compared to an actual $100 million), and Arrington suspected its estimate for Twitter
was "probably close to accurate". Arrington concluded that the predictions were "both interesting and accurate enough to be useful"; he was "still skeptical" and expressed concern that an algorithm based on past data might become outdated, but thought that if the system convinced others "it could become part of Silicon Valley culture". John Cook used available data and some guesses to acquire an estimated valuation of $152 million for Zillow.com
in October 2008, compared this with an independent estimate of a $225 million value in April 2008, and concluded that YouNoodle's estimate was "in the ballpark".
Scott D. Anthony, president of the consulting and investment company Innosight, argued that if YouNoodle were to succeed ("and that remains a big if") it might lead to "substantial change in the venture capital industry", comparable to the way credit score
s affected the work of loan officers. Anthony Ha, a journalist writing for VentureBeat, concluded based on the imprecise valuations in Arrington's tests that the scores out of 1,000 might be more useful for ranking the relative potential of different companies. Michelle Rodger gave the predictor a basically favorable assessment but noted the difficulty of quantifying "intellectual assets". Liz Gunnison described it as "fun" but doubted its long-term potential.
Richard Tyler, Enterprise Editor at The Daily Telegraph
, noted that most coverage had focused on the service's value to potential investigators. He suggested that while it could support an investment decision "ultimately determined by an experienced and well connected investor", it would be more useful in allowing the founders of a company to examine how changes in their team affected predicted outcomes.
s.
The Telegraph
Nurturing the Entrepreneurial X-Factor
San Francisco Chronicle
YouNoodle Helps Startups Connect
Real Business
Startup Lessons from the States
BBC World News
YouNoodle, The Next Google?
Puget Sound Business Journal
YouNoodle and the TechFlash 100
BBC Online
Investing in the Next Big Thing
San Jose Mercury News
Magical "OO" Factor Boosts Startups
Washington Post
What Startups Can Learn From Wars
Inc Magazine
What's Your Company Worth?
The Telegraph
YouNoodle Launches an Early Warning System to Discover the Next Big Business Venture
VentureBeat
YouNoodle Scores the Buzz
BusinessWeek
YouNoodle Says it Knows the Value of Your Startup
The New York Times
A Startup Says it Can Predict Others' Fate
The Telegraph
YouNoodle Takes Its Own Test
Marketplace/DowJones
Portfolio Magazine
A Crystal Ball for Startups
ABC News
Startup Predicts Potential Success or Failure
The Wall Street Journal
Noodling Around on Startup Valuations
TechCrunch
The Highly Controversial YouNoodle Startup Predictor
Seattle Post Intelligencer
Figuring Startup Valuations
Harvard Business School
YouNoodle Innovation
Wired
Think Your Startup Has What It Takes?
Technology Review (Published by MIT)
Popularity Poll Ranks Startups
TechCrunch
YouNoodle Scores: What Startups Can Learn from Wars
Business networking
Business networking is a socioeconomic activity by which groups of like-minded businesspeople recognize, create, or act upon business opportunities. A business network is a type of social network whose reason for existing is business activity...
website for small businesses. It has received particular attention for its "startup predictor", which aims to use mathematical models to predict the success of a new business based on information about its concept, finances, founders and advisers. The results include an estimate of the company's expected value after three years.
History and structure
The founders of YouNoodle are Bob Goodson and Kirill MakharinskyKirill Makharinsky
Kirill Makharinsky is an internet entrepreneur. His work has been featured in The New York Times Inc., The Daily Telegraph and BBC World News....
, both former students of the University of Oxford
University of Oxford
The University of Oxford is a university located in Oxford, United Kingdom. It is the second-oldest surviving university in the world and the oldest in the English-speaking world. Although its exact date of foundation is unclear, there is evidence of teaching as far back as 1096...
. Goodson had studied medieval English literature before moving from Oxford to California when Max Levchin
Max Levchin
Max Rafael Levchin is a Ukrainian-born American computer scientist and internet entrepreneur widely known as one of the co-founders and for his role as the former chief technology officer of PayPal....
, the co-founder of Paypal
PayPal
PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....
, invited him to join a start-up there. Makharinsky's degree was in applied mathematics
Applied mathematics
Applied mathematics is a branch of mathematics that concerns itself with mathematical methods that are typically used in science, engineering, business, and industry. Thus, "applied mathematics" is a mathematical science with specialized knowledge...
, and he was also encouraged to pursue opportunities in the United States by Levchin. Other significant employees include Rebecca Hwang, a Stanford University
Stanford University
The Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university on an campus located near Palo Alto, California. It is situated in the northwestern Santa Clara Valley on the San Francisco Peninsula, approximately northwest of San...
doctoral student whose research is into social network
Social network
A social network is a social structure made up of individuals called "nodes", which are tied by one or more specific types of interdependency, such as friendship, kinship, common interest, financial exchange, dislike, sexual relationships, or relationships of beliefs, knowledge or prestige.Social...
theory.
The company was established in San Francisco. In the 11 months before February 2008, it worked to help universities organise competitions for business plans. Among its financial backers are Max Levchin and Paypal's other co-founder Peter Thiel
Peter Thiel
Peter Andreas Thiel is an American business magnate, venture capitalist, and hedge fund manager. With Elon Musk and Max Levchin, Thiel co-founded PayPal and was its CEO...
, and the venture capital
Venture capital
Venture capital is financial capital provided to early-stage, high-potential, high risk, growth startup companies. The venture capital fund makes money by owning equity in the companies it invests in, which usually have a novel technology or business model in high technology industries, such as...
firm The Founders Fund
The Founders Fund
Founders Fund is a San Francisco based venture capital firm which invests at all stages in companies with revolutionary technologies. The firm’s six partners, Peter Thiel, Sean Parker, Ken Howery, Luke Nosek, Bruce Gibney, and Brian Singerman have been founders of or early investors in numerous...
in which Thiel is a partner.
Business networking
The site's provision of networking features for small businesses places it in a similar field to LinkedInLinkedIn
LinkedIn is a business-related social networking site. Founded in December 2002 and launched in May 2003, it is mainly used for professional networking. , LinkedIn reports more than 120 million registered users in more than 200 countries and territories. The site is available in English, French,...
, Tradespaces and Smarta.
Startup predictor
YouNoodle's "Startup predictor", developed by Makharinsky and Hwang, uses mathematical models to predict the success of new businesses. The user fills in a questionnaire, which takes about half an hour to complete and concentrates on the business' concept, finances, founders and advisers. Because the procedure is designed for very new companies, questions on revenue and traffic are not included. The site then provides an estimate of what the company's value will be after three years and a score from 1 to 1000 representing its value as an investment. The service is free for the startups themselves, but YouNoodle intends to charge third parties for access to the results. (The level of detail required by the questionnaire makes it difficult for people without inside knowledge of a company to provide the data for a prediction on their own.)The company's founders have declined to explain the algorithm in detail, but state that it takes into account the entrepreneurs' experience, networks and mutual relations. Information provided by companies which use the site's networking features is used to improve the algorithm. As of August 2008, the algorithm was based on data from 3,000 startups. In the same month the company had four patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
s pending on the technology.
In August 2008, YouNoodle predicted that its own value in 2010 would be $96 million.
Independent analyses
Preliminary reports on the service in February 2008 led to some skeptical reactions. Venture capitalist Paul S. Kedrosky told The New York TimesThe New York Times
The New York Times is an American daily newspaper founded and continuously published in New York City since 1851. The New York Times has won 106 Pulitzer Prizes, the most of any news organization...
, "If their tool did such a good job, they'd raise a fund themselves and beat the tar out of us." When co-founder Bob Goodson argued that "industries of comparable size have utilized artificial intelligence to inform decision-making", Duncan Riley
Duncan Riley
Duncan Riley is a blogger and a co-founder of b5media. He lives in Melbourne, Australia.-Biography:...
of TechCrunch
TechCrunch
TechCrunch is a web publication that offers technology news and analysis, as well as profiling of startup companies, products, and websites. It was founded by Michael Arrington in 2005, and was first published on June 11, 2005....
cited the poor track record of systems intended to predict the results of horse racing
Horse racing
Horse racing is an equestrian sport that has a long history. Archaeological records indicate that horse racing occurred in ancient Babylon, Syria, and Egypt. Both chariot and mounted horse racing were events in the ancient Greek Olympics by 648 BC...
. Michael Arrington
Michael Arrington
J. Michael Arrington is the founder and former co-editor of TechCrunch, a blog covering the Silicon Valley technology start-up communities and the wider technology field in USA and elsewhere...
, also of TechCrunch
TechCrunch
TechCrunch is a web publication that offers technology news and analysis, as well as profiling of startup companies, products, and websites. It was founded by Michael Arrington in 2005, and was first published on June 11, 2005....
, dismissed the idea as "hype and nonsense" and wrote that he would not even have covered it if not for the project's notable backers. Goodson responded to criticisms by stating that the process did not aim to "predict all the factors" affecting a company's success but to bring greater mathematical rigor to the type of assessment that investors were already making.
When the predictor launched in August, Michael Arrington tested it using historical data about developed businesses. He found it underestimated the value of Google
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
, Slide.com
Slide.com
Slide, Inc., operator of the Slide.com website, is a Web 2.0 company founded by Max Levchin and based in San Francisco, California. Originally formed to make photo sharing software for social networking services such as MySpace, the company achieved its greatest success as the largest developer of...
and RockYou! but correctly predicted major success in all four cases. For example, Slide.com, worth $550 million, was predicted to be worth $124 million. The site gave a much more accurate estimate for Powerset
Powerset (company)
Powerset is a Microsoft owned company based in San Francisco, California that, in 2006, was developing a natural language search engine for the Internet....
($104 million compared to an actual $100 million), and Arrington suspected its estimate for Twitter
Twitter
Twitter is an online social networking and microblogging service that enables its users to send and read text-based posts of up to 140 characters, informally known as "tweets".Twitter was created in March 2006 by Jack Dorsey and launched that July...
was "probably close to accurate". Arrington concluded that the predictions were "both interesting and accurate enough to be useful"; he was "still skeptical" and expressed concern that an algorithm based on past data might become outdated, but thought that if the system convinced others "it could become part of Silicon Valley culture". John Cook used available data and some guesses to acquire an estimated valuation of $152 million for Zillow.com
Zillow.com
Zillow is an online real estate database that was founded in 2005 by Rich Barton and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia. The website uses a proprietary algorithm called the "Zestimate" to appraise property values based on undisclosed factors...
in October 2008, compared this with an independent estimate of a $225 million value in April 2008, and concluded that YouNoodle's estimate was "in the ballpark".
Scott D. Anthony, president of the consulting and investment company Innosight, argued that if YouNoodle were to succeed ("and that remains a big if") it might lead to "substantial change in the venture capital industry", comparable to the way credit score
Credit score
A credit score is a numerical expression based on a statistical analysis of a person's credit files, to represent the creditworthiness of that person...
s affected the work of loan officers. Anthony Ha, a journalist writing for VentureBeat, concluded based on the imprecise valuations in Arrington's tests that the scores out of 1,000 might be more useful for ranking the relative potential of different companies. Michelle Rodger gave the predictor a basically favorable assessment but noted the difficulty of quantifying "intellectual assets". Liz Gunnison described it as "fun" but doubted its long-term potential.
Richard Tyler, Enterprise Editor at The Daily Telegraph
The Daily Telegraph
The Daily Telegraph is a daily morning broadsheet newspaper distributed throughout the United Kingdom and internationally. The newspaper was founded by Arthur B...
, noted that most coverage had focused on the service's value to potential investigators. He suggested that while it could support an investment decision "ultimately determined by an experienced and well connected investor", it would be more useful in allowing the founders of a company to examine how changes in their team affected predicted outcomes.
Future plans
YouNoodle intends to launch a tool that will measure the independent attention received by a company, taking into account data which include comments on blogBlog
A blog is a type of website or part of a website supposed to be updated with new content from time to time. Blogs are usually maintained by an individual with regular entries of commentary, descriptions of events, or other material such as graphics or video. Entries are commonly displayed in...
s.
External links
The Telegraph
Nurturing the Entrepreneurial X-Factor
San Francisco Chronicle
YouNoodle Helps Startups Connect
Real Business
Startup Lessons from the States
- http://www.realbusiness.co.uk/news/startups/5605751/mark-prisk-startup-lessons-from-the-states.thtml
BBC World News
YouNoodle, The Next Google?
Puget Sound Business Journal
YouNoodle and the TechFlash 100
BBC Online
Investing in the Next Big Thing
San Jose Mercury News
Magical "OO" Factor Boosts Startups
Washington Post
What Startups Can Learn From Wars
Inc Magazine
What's Your Company Worth?
The Telegraph
YouNoodle Launches an Early Warning System to Discover the Next Big Business Venture
VentureBeat
YouNoodle Scores the Buzz
BusinessWeek
YouNoodle Says it Knows the Value of Your Startup
The New York Times
A Startup Says it Can Predict Others' Fate
The Telegraph
YouNoodle Takes Its Own Test
Marketplace/DowJones
Portfolio Magazine
A Crystal Ball for Startups
ABC News
Startup Predicts Potential Success or Failure
The Wall Street Journal
Noodling Around on Startup Valuations
TechCrunch
The Highly Controversial YouNoodle Startup Predictor
- http://www.techcrunch.com/2008/08/05/the-highly-controversial-younoodle-startup-predictor-is-coming/
Seattle Post Intelligencer
Figuring Startup Valuations
Harvard Business School
YouNoodle Innovation
Wired
Think Your Startup Has What It Takes?
Technology Review (Published by MIT)
Popularity Poll Ranks Startups
TechCrunch
YouNoodle Scores: What Startups Can Learn from Wars