Xconomy Forum Speakers: Exciting But Tricky Times for Mobile Entrepreneurs
A standing-room-only crowd gathered yesterday for Xconomy’s Forum on the Future of Mobile Innovation in New England, hosted by Microsoft at its gorgeous new New England Research and Development Center (or NERD, as Microsoft’s Reed Sturtevant called it). Google’s Rich Miner, MIT’s Sandy Pentland, and two panels’ worth of mobile entrepreneurs were on hand to share their latest thinking about the best ways for startups to gain and maintain a foothold in the mobile industry.
If there was a single takeaway message from the event, I’d say it was this: It’s a time of great ferment in the mobile industry, with carrier restrictions on the distribution of consumer-oriented mobile applications finally breaking down. But it’s very difficult to build a sustainable business around a single application or a single mobile platform—so companies need to think flexibly about the audiences and platforms they develop for, the amount of capital they really need (and the sources from which they’ll raise it), and the combinations of revenue opportunities they’ll pursue.
Next week we plan to post some video outtakes from the event, but today we’ll round up some of the highlights:
—Xconomist Mark Lowenstein, the managing director at consulting firm Mobile Ecosystem, set the scene with a few statistics and observations. Mobile companies raised $500 million from New England venture investors last year, and have raised $5 billion cumulatively, he noted. The traditional barriers to entry in the mobile industry—the wireless carriers’ traditional protectiveness about giving access to cell phone “decks” or top-level menus to third-party application developers, for example—are falling fast. New England companies, with their longtime focus on good user interface design, are well positioned to take advantage of this change, Lowenstein said.
—Ted Morgan, CEO of Skyhook Wireless, said his company has just added the 100 millionth access point to its global database of Wi-Fi network locations, part of its WPS location finding system. He said getting WPS onto the Apple iPhone and iPod Touch platforms was the key moment in Skyhook’s progress—but that, ironically, he dismissed Apple CEO Steve Jobs’ first call about the deal back in 2007 as a prank.
—Jamie Hall, the president of MocoSpace, said the mobile social network has grown to 6 million members, who view 2 billion pages every month. The key to MocoSpace’s success in mobile social networking—a business in which several other companies have dabbled without much success—was circumventing the carriers by doing everything “off-deck,” creating room for constant innovation and upgrades.
—Mort Rosenthal, CEO of Enterprise Mobile, said that even though Microsoft is the mobile device provisioning company’s sole investor, “If it’s a debate between Microsoft and the customer, the customer wins.” While the company specializes in deploying Windows Mobile devices into enterprises, it also works with other platforms, because customers demand it. And while the fragmentation of mobile technology across dozens of major devices from several large carriers is a bugaboo for most mobile companies, it’s actually what Enterprise Mobile thrives on. “An enterprise does not want a free-for-all,” Rosenthal said. “We [give them] one throat to choke.”
—Dave Grannan, CEO of vlingo, said his company realized early on that the mobile ecosystem wasn’t yet open enough to get vlingo’s mobile speech recognition system out to lots of users without a major strategic partner with existing carrier relationships. That partner turned out to be Yahoo—and while Grannan called landing the deal to get vlingo’s voice-driven interface built into Yahoo’s mobile platform “luck,” he also said it took persistence. It wasn’t until the fourth meeting with Yahoo that vlingo was able to convince the company to take a look at its technology. (And then Yahoo suddenly wanted to buy vlingo—but the startup was “not for sale,” Grannan said.)
—Jason Jacobs, CEO of FitnessKeeper, said there have been 300,000 downloads of his startup’s RunKeeper GPS fitness application for the iPhone 3G, with a surprisingly high percentage of users (he intimated 4 or 5 percent or more) of the free app converting to the paid “RunKeeper Pro” app. That’s creating enough revenue to cover the company’s current burn rate—which is low, because many of the FitnessKeeper team members are being paid in equity and the only full-time employee is Jacobs himself. The trick for FitnessKeeper, Jacobs said, will be to do more than just “inch along;” the company has plans for a much larger set of applications and services around mobile fitness, and would like to add them without having to raise venture capital. “The early revenues from the application have given us the runway to get reasonably far down the path, potentially all the way, without going to the capital markets at all,” Jacobs said.
—Eswar Priyadarshan, CTO at mobile advertising network Quattro Wireless, said his team recognized that if it wanted to sell mobile ads, it was going to have to help content owners create mobile-friendly websites where those ads were legible and effective. So a big part of Quattro’s business has been providing software that rapidly adapts existing Web content for consumption on mobile devices. Even given the advent of full mobile browsers like Safari on the iPhone, which allows users to zoom in on particular sections of a Web page using pinch-and-spread gestures, most big brands still want to create mobile-optimized versions of their sites that allow one-handed navigation, and that make ads big enough to see and click, Priyadarshan said.
—Chuck Goldman, CEO of Apperian, said there are three keys to launching a successful iPhone app. First, it has to be “transformative,” taking real advantage of the core capabilities of the iPhone, such as its accelerometer and its built-in location-finding capabilities. Second, developers have to promote their apps heavily—it wouldn’t be unusual to spend $200,000 creating an app and then another $300,000 to $500,000 on advertising, with much of that spent immediately after the app appears in the iTunes App Store. (Anecdotally, Goldman said, it takes 25,000 downloads per day to get into the list of top 100 apps. And the ads should be mobile ads, purchased through networks like Quattro’s or AdMob’s—“The best platform to promote iPhone apps is the iPhone,” he said.) Third, it helps to know somebody inside Apple.
—Murali Aravamudan, CEO of mobile video search company Veveo, said that when he moved to New England around 2000 and was starting his previous company, Winphoria, it took a long time to find and hire engineers who understood wireless protocols. Eventually the company outsourced much of its work to developers in India. With Veveo, that was the strategy from day one—but the company has kept all of its research operations in New England.
—Rich Miner, former co-leader of the Android effort within Google and newly appointed managing partner at the new Google Ventures, said his brief as a venture capitalist will be to look for great companies across a range of industries, including mobile. Many investors are jaded about the mobile industry, he noted, considering that there have been so few big wins over the past several years. But things are changing now, especially with the advent of always-on broadband connectivity and the ability to get applications out to consumers through app stores without going through the carriers.
I asked Miner whether Google Ventures will look to invest specifically in companies developing Android applications. He replied that he’d be careful, as an investor, about backing companies built around any single operating system or platform. “It’s hard to build a very strong business around even a successful app,” he said, whether it’s an app for Android, the iPhone, or some other system. “As an investor I’m not biased toward Android any more than any other platform…If I was talking to somebody I might encourage them to take a look at the Android Market as a place to quickly test out capabilities that you probably can’t on some of the other platforms, but you’d probably want to think about supporting other devices as well.”
—Sandy Pentland, the Toshiba Professor of Media, Arts, and Sciences at the MIT Media Lab, talked briefly about his new book Honest Signals, which contains what he called “a revolutionary view of what it means to be a consumer and what it means to be embedded in a social network, and about the tools for quantifying and using those things…my intent is that it will be a foundational bit of research that will enable a lot of spinoff ideas.” Pentland also described his research group’s work using mobile platforms to collect information about behavioral patterns and his involvement with Sense Networks, a startup employing data from mobile devices to make better predictions about what consumers will want.
Pentland spoke as well about his efforts to promote mobile entrepreneurship in developing countries through the Next Billion Network, which has spent the last seven or eight years spinning out about two mobile technology companies per year in places like South Asia, Africa, and Latin America. Recently, Pentland said, the organization has decided to launch businesses in underserved communities in the United States as well. “Instead of just doing it in Bangladesh, we are going to do it in Roxbury and New Orleans,” he said. To set up successful mobile businesses in underserved communities, Pentland said, companies need elements like common interfaces (so that applications can run across many devices), fixed deals (so companies can count on a certain amount of revenue from operations), and established practices around data privacy.
—Harvey Tuch from VMware demonstrated the company’s Mobile Virtualization Platform (MVP), a groundbreaking new “hypervisor” program that allows mobile devices to run multiple operating systems simultaneously (see photo). He showed how MVP can be used to run Windows CE and Android concurrently on a Nokia mini-tablet device.
—To highlight technologies from many of the exciting local mobile companies that we couldn’t squeeze into the Tuesday program, we’ve set up the Xconomy Mobile Showcase as a permanent online resource.
—About a dozen attendees, including myself, posted Twitter updates from the event. The hash tag for the event was #xconmobile; click here for a list of the 160-plus tweets labeled with that tag.
—Blog coverage of the event:
George McQuilken, Smart Phones, Technology, and Business Apps, Report from the Mobile Innovation Forum
Des Pieri, Change Agent, Google’s Rich Miner Has The Play Of The Day At Today’s Xconomy Forum
Eric Lundquist, Computerworld, Five trends in mobile computing
Mok Oh, Inside Everyscape, Mok goes to Xconomy’s Forum on Mobile Innovation
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