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YouNoodle Scores: What Startups Can Learn from Wars

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2740154815_2c5ebef089Venture capital has long been heralded as an apprentice-style business where success only comes with ten years of experience and a gut that can predict the future. That was fine when it was a clubby industry making modest bets on companies within a 30 minute drive of Sand Hill Road. But as more money has flooded into the industry and tech has matured, finding the big home runs has become exponentially harder. Simply put: When you’re investing halfway around the world or trying to find the next Google amid a sea of me-too companies, let’s put the machismo aside and admit the industry needs some metrics, some methodology and some help. Check out the latest returns if you think I’m being too harsh.

This is why I thought YouNoodle’s Startup Predictor was a great idea pretty much the first second I heard about it. There was a lot of derision early on about the idea that a company could create an algorithm to predict how much a startup could be worth. (Ahem, not by me of course. YouNoodle predicted my book writing, blogging, column writing and TV show hosting mini-empire would be worth $21 million in three years. We’re still working on that.) But the algorithm takes the same variables that VCs weigh, like how long a team has worked together, what the goals for success are and metrics like Web traffic and buzz.

On Thursday, the company is releasing a new product called YouNoodle Scores that quantifies the buzz further. Unlike a vanity Twitter app that ranks the value of Tweets based on surface details like how many people follow you, there’s some serious methodology here, thanks to a partnership with Sean Gourley. Gourley is a Rhodes Scholar who’s studied how collective intelligence works, specifically how different cultural patterns, news reports and buzz lead up to break outs of terror attacks and wars. He found that you could predict the nature, size and timing of outbreaks by looking at all these factors. YouNoodle hired him to apply the same thing in the startup world: Analyzing traditional media, blog posts, Twitters, Alexa traffic patterns and other metrics over time to predict when and how a startup would, well, break out.

Conceptually, figuring out what all these patterns and metrics really mean will be even more important as we trudge deeper into this muck of a recession. Web 2.0 has become way too reliant on surface metrics with all of us thinking page views, unique visitors, Facebook friends and Twitter followers implies value in an age when we all know how to goose these metrics. If the algorithm works right, my guess is you see sites with fewer gaudy statistics actually scoring higher in meaningful buzz.

YouNoodle CEO Bob Goodson cites a company called Viikii.com, that jumped onto YouNoodle’s radar out of nowhere in October thanks to the algorithm. It was started by two Stanford kids, but I’d certainly never heard of it. Viikii makes subtitling software for Korean videos and despite its MIA status in the Valley echo chamber, the site has been taking off—it’s just been taking off in Korea. I can’t help but wonder what the scoring engine might have made of a site like Pownce that launched to wide hype and fanfare, but quickly tailed off in user activity and adoption.

It’s possible the new scoring engine may help YouNoodle inch towards a business model—the biggest area where I’ve had my doubts about the company. I don’t think VCs are a great market to buy any premium YouNoodle analytics, because there’s going to be natural skepticism that an algorithm can be any kind of substitute for their experience and judgment. But governments charged with investing in startups are a natural fit. After all, they are trying to act like VCs without the training or experience. Even if YouNoodle’s algorithm is right 30% of the time, it’d be a huge upgrade over funding companies in the dark. One of the company’s launch partners is the UK’s Department of Trade and Investment, which is currently charged with disbursing some one billion pounds into the London scene. (Full disclosure: CrunchBase is another launch partner.)

Of course for any of this to happen, the site has to work and, to be clear, I haven’t gotten a chance to play with it yet. (Yes, we all remember Cuil.) But as someone who’s covered this industry for ten years, I’m hoping that YouNoodle’s start up engine works well enough to give the venture capital industry just the kind of healthy kick in the pants it sorely needs. It’s only fair. Venture capitalists have certainly profited off of the Internet disrupting every one else’s businesses.

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