Is SuperWall Worth $10 Million?

Rock You CEO Lance Tokuda has told the New York Times that in regards to his SuperWall application, “If you told me you were going to write me a check for $10 million, I’d say, ‘Forget it.’” If you valued applications based on adonomics, who values the application at close to $12 million, that may not sound like a bad idea. Unfortunately though, the risk exposure for SuperWall is insanely high. For an application which is not extremely complicated, this valuation might seem a little ridiculous.

Can we say “Facebook Bubble?” Facebook has slowly added some of the features of the SuperWall application and there is nothing stopping them from adding more. On the other hand, Facebook will have a few big enemies if they decide to screw over some of the most valuable application developers. Facebook has already integrated a few features that other applications have delivered but none of the changes have eliminated large applications yet.

Facebook may be forced into a position where they acquire applications or face a serious PR disaster. Right now, the SuperWall application could be generating millions of dollars annually but risk exposure is the primary factor that would reduce future projected cash flows (something that Henry Blodget likes to use when valuing companies).

If I was Lance, I’d sell the app for that price. Good luck finding an investor who will give you that much money though for this application. Would you sell the app?