(Updated with note about Kawasaki’s Law)


Meebo, the company that lets people access their instant messaging programs from America Online, Yahoo, Microsoft and Google from the Meebo Web site without having to download each service’s software to their computers, has raised $3.5 million from big-name Silicon Valley investor Sequoia Capital (release below).

TechCrunch and Om Malik reported this last week, and Om gave ink to a skeptic of Meebo’s business model, Paul Kedrosky, who was a little cranky because of a cold:

You’re not going to charge, so it has to be ads, does it not? Among other issues, how is running ads alongside someone else’s IM service any more acceptable that Google running ads alongside someone else’s news content? Or is Sequoia just funding them — assuming they’re funding Meebo at all, which I still find doubtful — as a pure flip to acquisition exit?

This analogy to Google running ads on someone else’s content is useful, but goes only so far. There are lots of “meta” search engines out there which run their own ads beside other people’s results (granted, in many cases, they share some of the revenue).

Additionally, Om reports it is about a $9 million pre-money valuation. Pretty darn high for a company barely 13 weeks old, and having three people behind it, with only two engineers among those (rudely defying start-up advisor Guy Kawasaki’s rule of thumb; his “Law of Pre-Money Valuation” says for every full-time engineer, add $500,000; for every full-time M.B.A., subtract $250,000 — this was valid circa 2004, but we haven’t seen any updates from him)

However, we are not as cranky as…


The company has been growing pretty rapidly, about 250,000 logins and 7 million messages as of last week.

As Om points out, some of the main potential acquirers of Meebo are likely out of the game, since Meebo aggregates all four major IM networks (one of them buys the company, the others shut down access to their respective networks). So with a quick exit through an acquisition less likely, Meebo might need a more solid business plan.

We met with the Meebo folks several weeks ago, for this story. There, Meebo was our first example of the bubbly nature of the Web 2.0 start-up environment. But in an interview we weren’t able to quote much in that story, co-founder Seth Sternberg at least had an answer to our question of how the company wants to make money. “There are tons of ways we can make money, but we have to choose our priorities carefully,” he started. The company is growing its user base 60 to 80 percent week after week, he said, and so keeping the site on track to manage that growth is important. Second, Meebo wants to introduce other features that the users may want but don’t yet have, he said. Rememer, it has a good part of its screen as real estate to experiment with. Third, Meebo can integrate within other Web sites. He told us the name of a major company that had already approached him, but then asked us to keep the company confidential.

Here is Meebo’s blog about the funding.

UPDATE: We got some email from folks wondering if we are serious about Guy Kawasaki’s valuation formula being “valid.” No, we aren’t. It is a silly formula, but does point to a Silicon Valley truth: In a start-up, engineers are more important than MBAs — especially those MBAs from Harvard, etc, who arrived circa 2000 with little real experience and thought they knew how to run companies. We will probably get in more trouble for this statement. But the point is, Guy’s formula exaggerates a lore, and so while not to be taken seriously, is a fun reference nonetheless. In comments below, we’ve asked Guy whether he cares to update his formula.

Press Release follows:

meebo Secures Financing from Sequoia Capital

Leading web-enabled instant messaging service to use capital to further support expanding user-base

Palo Alto, Calif. • December 19, 2005 • meebo Inc., the first integrated, Ajax-enabled Web instant messaging service, announced that it has secured $3.5 million in a Series “A” round of funding from Sequoia Capital, angel investors and other individuals. This is the company’s first round of institutional financing. It will be used to hire additional engineers and other operations positions, as well as expand on meebo’s infrastructure. Additionally, Sequoia Capital Partner Roelof Botha will join meebo’s board of directors. With 250,000 logins per day and nearly 7 million messages sent per day in just 13 weeks of operations, meebo continues to see unprecedented user-growth.

“Elaine, Sandy and I are incredibly happy with the feedback and testimonials we’ve received from our users,” said Seth Sternberg, co-founder, meebo. “From enabling soldiers in Iraq to communicate with family and friends, to providing an IM service to people who are unable to download IM software, meebo has created a new way for people to connect from anywhere in the world. We are so excited to have Sequoia as a partner as we move forward to build a fantastic team around meebo and continue to add user-requested features.”

meebo’s wide availability on any Web browser page gives Internet users unparalleled, ubiquitous access to their IM networks. By using Ajax technology, meebo can provide people with a software-like experience within a Web browser. People no longer need to download and install software, a boon to IM users who are unable to use traditional IM applications in their office, school, or even at a friend’s house. As a result, meebo has created a new channel of communicating. For example, a US soldier told the meebo team that the service has enabled him to more easily communicate with friends and family than he could before. The company’s web IM service is ideal for people who are using public or multi-user computers, such as at an Internet CafĂ© or a shared home computer.

“Just as Hotmail changed the way consumers used email, meebo is changing the way people use IM,” said Roelof Botha, partner, Sequoia Capital. “meebo enables instant communications from anywhere and anytime. meebo’s rapid growth and vocal community illustrate the large consumer need the company has filled. I am excited to work with such talented entrepreneurs.”

With more than 500 million people worldwide using instant messaging applications, the company is the first to provide people with a simple way to access multiple instant messaging accounts within one Web page. By going to www.meebo.com, people can log into their accounts with any or all of the following IM services; AOL Instant Messenger, Yahoo Messenger, Google Talk, Jabber, MSN Messenger, and/or ICQ. Once logged in screen names of their online buddies from all IM services that users have accounts with are retrieved and displayed in one organized window within a single browser page.

Founded by three co-founders in the spring of 2005, meebo includes female engineering duo Elaine Wherry and Sandy Jen, both Stanford University-trained engineers with degrees in symbolic systems and computer science respectively. The other co-founder, Seth Sternberg, is focused on moving meebo’s business forward. In addition to being a former Stanford Business School student and IBM mergers-and-acquisitions lead, he is also a Yale graduate.

About meebo

meebo is the first all-in-one, Web browser-based instant messaging service. meebo gives users, no matter where they are, a hassle-free way to connect to every major instant messaging service using only a Web browser. With meebo, there is no need to, download and run multiple software products. meebo’s investors include Sequoia Capital and other individual investors. The company is based in Palo Alto, CA, and offers its free service at www.meebo.com.

About Sequoia Capital

Since 1972, Sequoia Capital has provided startup venture capital for very smart people who want to turn ideas into companies. As the “Entrepreneurs Behind the Entrepreneurs,” Sequoia Capital’s Partners have worked with innovators such as Sandy Lerner and Len Bozack of Cisco Systems, Jerry Yang and David Filo of Yahoo!, Gaurav Garg of Redback Networks, Larry Page and Sergey Brin of Google, Dan Warmenhoven of Network Appliance, T.J. Rodgers of Cypress Semiconductor, Lou Tomasetta of Vitesse Semiconductor, Steve Jobs of Apple Computer and Larry Ellison of Oracle. The companies organized by Sequoia Capital now account for about 10% of the value of NASDAQ. To learn more about Sequoia Capital visit www.sequoiacap.com.

Press Contact:
Elizabeth Scheuring
Three-Forty Communications for meebo Inc.
v: 415.519.1744

meebo is a trademark of meebo, Inc. Other company and product names may be trademarks of their respective owners.

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