Technology Archives

A Podcasting Revival

 

If you’re in tech and been following twitter over the past few months, you may have noticed a sudden surge in podcasts. Yes, podcasts, those uncool pieces of media that were dead years ago, even before Odeo tried to revive them. So, why are they cool all of a sudden? I was thinking about this until I saw Dave Winer‘s tweet above, and he, as usual, made this point cleanly and neatly. Podcasting has arrived because, as Winer points out, the infrastructure for blogging has solidified (and expanded with new platforms), and RSS provides the rails by which information travels (or Twitter, if you’d like).

I’d add one more vector to Winer’s statement — mobile.

With mobile phones now, podcasts can not only be recorded on the go (the microphone on the iPhone 5+ models are excellent), there are great apps for folks to listen to and discover new podcasts. If you search the iTunes store for podcasts, there are many results. Of course, I work at Swell (download it here! www.swell.am on iOS, and in Beta for Android) and we were betting on this kind of shift happening. For instance, anyone with a tablet or smartphone can create a SoundCloud account and use the device’s mic to create a podcast, and networks like SoundCloud, Twitter, iTunes, and even Swell will distribute it to the right audiences.

What makes podcasts exciting right now, in 2014, is that while the battle for consumer attention and eyeballs is fierce on the web and on mobile, the fight for our ears is more manageable. In the car, for instance, audio apps compete for attention from conference calls, terrestrial or satellite radio, or music apps like Pandora, iTunes, Spotify, and others. In the tech world, as people have figured out content market across social networks actually works (if done well), the battle is now extending into new frontiers. Video will be a frontier. I wouldn’t be surprised to see a VC firm, for instance, start producing real videos beyond interviews. And, there’s audio, in podcasts. To date, we see new podcasts from Andreessen Horowitz (who has invested in Swell) with Benedict Evans, from Nabeel and Bijan at Spark Capital with Hallway Chat, from Ryan Hoover with Product Hunt, from Ben Thompson who now podcasts at Stratechery.fm, from Jason Calacanis and his prolific output through Twist. (We used to have the VoiceBunny actors reading Fred Wilson’s AVC daily on Swell, but VoiceBunny unfortunately stopped in March.) Just today, in fact, Tim Ferris launched his new podcast. We are happy to provide all of these inside Swell so you can listen to great audio on the go.

Videos. Podcasts. Those are the frontiers for great long-tail content and getting in front of customers, consumers, and the like. The competition in text and online is just too fierce. There are tricks people use to get people to click on text, and then to share them across networks. On video and audio, the consumer needs to invest time and attention, and there is an element of sunk cost. Therefore, videos and audio need to be highly-produced, with good images and audio quality. The content needs to be framed, and it needs to be digested in a set period of time. It has to potential to create the feel of a radio show or television program, but also be entirely different at the same time. I think that’s what we’re seeing with these new tech podcasts, and to me, that development is very, very exciting. As someone who learns primarily through audio experiences, all of these new podcasts help me learn more stuff when I’m not at a desk, and often times, the content is more immersive than what I get on the web.

In Digital Health, Does Nike Have A Path To Victory After Fuelband?

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This past week, conflicting reports about Nike leaked, suggesting either big changes or outright abandonment of its high-profile Fuelband line. For those focused on the intersection of digital health, wellness, mobile startups, and wearable technologies, a move by Nike, one of the world’s most iconic brands and visible companies, will be examined under the microscope.

With the news swirling about the future of Fuelband, chatter has focused on the prospects for wearable hardware moving forward and what moves Nike makes as a result. Will they acquire a new team to rethink Fuelband? Will Nike instead attempt to connect items that they already sell? Will they just focus on mobile software, and if so, how will they get the data and distribution? The answers to these questions may help us all sort through how technology startups in this space may best position themselves moving forward.

As reports conflict with company statements so far, I’ll lay out their two scenarios and briefly discuss what options could make sense:

Keep The Fuelband, Change The Team: To Nike, having user data is important, so there’s a decent rationale here. Well, good luck. There are very few teams in the world that can build fully-integrated hardware and software products, and this is in part why Google shelled out over $3Bn for Nest and wired about $1Bn of that directly to Tony Fadell, who had learned his craft under Steve Jobs at Apple. Companies like Jawbone have now reached an orbit and breadth of offerings which would make an acquisition difficult to swallow for Nike. Smartwatch makers, like Pebble, likely have too much upside ahead of them to concede at this moment.

Abandon The Fuelband, Focus On Software And Services: Makes sense on the surface, but I’ll contend again that Nike needs to access user data in order to provide these services. The Fuelband was their data capture vehicle, so without that device, Nike could either (A) build out its own branded software-focused products across iOS and Android, focused on the application layer, but there they’d be competing with (B) a number of health and fitness apps which already have distribution, consumer attention, communities, and data. (For more on this and the startups in this space, click here to see a great Twitter conversation I had this morning with Barry Graubert and Arjun Ram.)

These aren’t the only scenarios for Nike, a $65Bn company. Back in December 2012, Nike announced a partnership with TechStars to leverage the company’s existing technologies. It’s very possible Nike had already considered these scenarios years ago in inking such deals, and those relationships likely provided the insights to eventually plan for a mobile software-focused strategy. If eventually Nike moves away from hardware (which I think they will), it will have started out with an Apple-like strategy of being vertically-integrated between its own hardware and software offering and potentially will end up with a Google-like approach focused on mobile software and services.

Additionally here, Nike can take advantage of the onslaught of off-the-shelf sensors hitting the market and mobile hardware advancements (like Apple’s M7 motion sensor in the iPhone) to create the next great mobile health and wellness service. Or, maybe Nike will elect to eventually take a Facebook-like portfolio approach and focus on buying products to access user data? It’s no longer a crazy idea.

While all of this is easy to chart out on the whiteboard or a blog post, an ominous storm looms over the horizon for Nike and their desire to crack this space. While they were figuring out Fuelband and investing in the startup ecosystem via TechStars, a handful of small, scrappy, focused startups (isn’t this always the case?) have been aggressively building health and wellness mobile products and communities for the mass consumer market. in the context of user data and graphs, startups like FitBitJawboneRunkeeperFitocracy, and others have a terrific chance to own the space inbetween the consumer and his/her data.

For instance, Runkeeper, a startup focused entirely on building software products for the running community, has been one of the first teams to take advantage of the M7 sensor in the iPhone and deliver more value to its loyal base — and this week, they announced yet another app to their suite, Breeze, which tracks a user’s steps. It sounds cliche, but small, dedicated, driven teams focused on these seemingly narrow challenges and opportunities are more likely to find the speck of white space to leverage current technologies and build incremental value for their users.

And, if that is an immutable law of small teams versus big corporations, in the world of consumer health and wellness, Nike is presented with a complex challenge in order to preserve its self-proclaimed association with victory.

Photo Credit: Vernon Chan / Flickr Creative Commons

The Story Behind My Investment In DoorDash

After investing in Instacart, I started hearing about many other food-related startups. I will admit that I wasn’t interested in learning more about this category, and even when I first came across DoorDash (as they were starting to raise their seed round), I used the service (and was very happy with it), but didn’t think it would be a suitable investment for me. I kind of dismissed it.

But, that was quite short-sighted of me. There was something going on that I didn’t understand on the surface, and because I didn’t stop to think about just how they were doing this, I let my biases take over the rational part of my brain. Luckily, one of the company’s seed investors is a friend, and we hadn’t caught up in a while — about 9 months earlier, I had a kid, and then he had his second kid. During that conversation, he mentioned that there was some room for individuals in DoorDash (which he invested in), and that I should meet the team..

I met with Evan and Tony, two of DoorDash’s founders (the other two founders are Stanley Tang and Andy Fang), and told them what I’ve already written in this post. They then shared more about the genesis of the business, and how they set it up all the processes and operations. It was very impressive, and I felt like an idiot for not using my imagination earlier. The imaginative piece I was missing was how DoorDash was building three different types of software products (for delivery people, for consumers, and for the restaurants), and then tying them all to their own custom back-end systems. Or, I didn’t think about how they could actually use data to estimate demand and help restaurants get more business. I slept on it, and then asked for permission to invest. They said yes.

Since then, DoorDash has been growing like a weed from its Palo Alto HQ, expanding in a more southwardly direction and operating on all cylinders to keep up with demand. The team has definitely figured out an operational model which works well for lunches and dinners — and now the even harder work awaits about how and where the company will expand its model. Tony, Evan, Stanley, and Andy most certainly have the potential the guide the company to a huge outcome, and I’m lucky to get a little seat to watch it unfold.

Some other interesting notes about this deal. One of the lead seed investors who broached the idea of me investing did not have to invite me. As venture capital resources increase, it triggers competition and more pressure for firms to take as much as they can in certain rounds. In this case, the investor and founders kept a small piece open for someone like me. That is an opportunity and responsibility that I do not take for granted.

The Story Behind My Investment in BOND

This one is both personal and random, and also not neat and clean. Before I got involved in helping found a life sciences company in Boston (circa 2009), I had an idea around a startup in the gifting space. Mobile had just emerged, but we were thinking web. I didn’t know what I was doing, and after a while, it didn’t really go anywhere. Yet, I thought about the kernel of the idea for a long time. You could say I was passionate about it (and still am), but didn’t have the product sense to articulate how it would live in the real world.

Fast-forward five years later, and I got one of Eric Kuhn’s weekly emails about new products he’s seen, and there was BOND. I read the description. Damn! That was the idea, but this guy actually did it. I asked Eric for an intro, and found out that one of the early employees worked with a close friend of mine. I started a conversation with them while at the same time conducting some light “people diligence.” Many of these early-stage deals often require this as the most important piece of diligence.

Even though my gut wanted to invest, I held back a bit. Something wasn’t quite right. I wanted to make sure I was on the same page as the founder about a few things. But, it was kind of a hectic process, he was in NYC, and I was in the Bay Area. I almost decided not to do it, but then I got over the hump and joined the round. Since then, the company has had to go through one critical stage where the market forced it to focus in a way it hadn’t before.

Some people at the company had to go. The team got smaller. They had to turn away some business and focus on specific lines of business. There weren’t many email updates, so when I got one that kind of concerned me, I called him up. It wasn’t an easy phone call. Luckily, since formally working with the company, I had gotten to meet Sonny (the founder) and hang out. What impresses me most about him, as a person, is his willingness to have hard, frank conversations. I told him I wasn’t thrilled that he didn’t ping me sooner as he and the product were starting to feel pressure. But, I can understand. I wanted him to know that even short, weekly updates about vitals are helpful to maintain an environment of “no alarms, and no surprises.” That’s from a Radiohead song.

In about a week, Sonny turned it all around. He had a new plan. It wasn’t a pretty plan, and he was patient with me, and now looking back on it, he made the right move given the circumstances. And, the plan is constantly getting better, as if he’s hit his second wind, though we’re not out of the danger zone quite yet.

When I originally invested in BOND, it was selling a product to both consumers and companies. Now, it has to focus on the company and API side, and it is, and I think Sonny has the right disposition and passion to guide the product and business in creative ways.

It’s been a great learning experience for me, and I hope, for him. The root of the product — to help make gift-giving easier — will always be the driver, and I believe it is a both a B2B and mobile commerce opportunity that has huge, mass consumer appeal. The root is to build technology that helps people make their relationships better-strengthen their bonds.

Just like individuals want to tap an app and get a car or taxi, we believe they’ll want to send gifts to clients, coworkers, and loved ones in this manner, too. That’s the goal. It’s early for Bond. The road has already been bumpy, and in the seed stage, there is no lead investor. Sonny is a single founder, a husband, a dad. It’s a lonely world out there for a solo founder, but I believe Bond will make it less so, and that’s a worthy enough mission to aim for in my book

The Story Behind My Investment In Sidebar

In 2013, a particular twitter account started popping up in my feed more. This user was crafting tweets and linking to blog posts about mobile, and they were really good. As someone who thinks about mobile every day, in work and for writing and investing, I was intrigued. And, it turns out he was in Palo Alto. Interesting.

He wrote a short post on push notifications that motivated me to write an entire weekend column on the topic. I think he started reading my blog, and we started going back and forth on twitter about mobile. (Now as I’m writing this, it sounds like we were courting each other! LOL.)

Anyway, we met up a few times and I told him my interests, and he started talking about his new company. As a second-time founder and someone maniacally focused on mobile, he shared a great vision for his next company, but he didn’t have a product yet, and it was really early. I didn’t care. I wanted to invest.

The reason I was comfortable making a bet on a person and an idea is that Ariel Seidman, the founder of Sidebar, appeared to know a lot about something that most other people didn’t know. First, everyone was trying to go after consumer mobile. Ariel wasn’t. Those who weren’t focused on consumer focused on enterprise, in the traditional sense. Ariel didn’t. Instead, he wanted to leverage an insight he had from his first company to guide him as he built a product for the second. The result is a focus area that I have yet to see in mobile, and I’m damn excited about that!

Ariel and the team are working quietly with customers and building. I know he’s intensely focused on this company and his family. That’s it. He’s so particular about every decision he makes, I always know that any decision is thought through, fully — including this draconian decision to unfollow everyone on Twitter (including me!) and instead following only 4 or 5 accounts, like Duke basketball coach Mike Krzyzewski.

Back in the fall, we were both invited to speak on a panel at a small mobile event in SF, so we drove up together (my car was in the shop), and we just started talking about our paths through the Valley. He’d been here for a long time, and I, pretty new. He told me all about this first company, and how he selects investors. I told him about my interest in investing, in quite a bit of detail. He listened closely. I’d describe it as mutual trust and respect, not built over years, but pretty quickly given our interests and goals, forged over Twitter and blogs.

The Story Behind My Investment In Coin

In September 2013, I was at an event and ran into one of the best pure technology investors in the Bay Area. We started talking about mobile, specifically advancements in phone hardware that were coming with the iPhone. I must’ve started talking about my excitement about BTLE, when the investor said, “Oh, you have to see this other company then.” He opened his iPhone, opened YouTube, and showed me a grainy homemade demo for Coin.

“I’d love to invest,” I said, right on the spot. I sent him a follow-up email right as we were speaking, so it would be sitting in his inbox. The investor kindly followed-up, the founder responded right away, and within a few days I was slated to meet the founder up in SOMA.

I walked in, shook hands, and we hung out in the conference/game room and just started shooting the breeze. I wanted to explain what I do, and specifically my interest in mobile, as well as why I’m doing this fund. At the end of the meeting, the founder said, “I’d love to have you. Any recommendation from Manu is like gold. I looked you up. I know you can help. I’ll send you docs.”

That was it. First, that was extremely kind of Manu to extend such a strong recommendation. And, second, the founder – Kanishk – put me right to work, helping on some parts of the app for QA, design, and strategy about announcing his news. Kanishk put me to work immediately, and it was fun to meet his team, learn about the robots they were building, discuss and refine consumer positioning, and more.

Months later, when Coin was unveiled to the world (for pre-orders), I was blown away by the reaction. I knew Coin was cool, but the excitement was over the top. I don’t know the specific numbers, but I know they fielded way more orders than they had anticipated — and that’s putting it lightly.

Now, the folks at Coin have a exciting, tough, complex road ahead of them. Sometime this summer, they’ll be shipping the first Coin credit cards to fulfill those pre-orders. And, with the increased attention (and expectations) donned upon them last fall, there’s little margin for error. Kanishk would probably say there’s zero margin, and he’d be right.

So, when people ask me about Coin, I say something like this: “I am extremely lucky to be involved. Essentially, someone recommended me, and I got a small chance to help out. For the team, I’d imagine they’re both thrilled and under-the-gun to meet the demand, so they’re on the hook to deliver.” That’s all I know for now. I shared this post with Kanishk before posting this, but he didn’t want to share any other information. Stay tuned for the summer. I know Kanishk will lead his team to pull this off.

The Story Behind My Investment In Refresh

About a year ago, right around the time when it seemed like every new day brought a new mobile calendar app, I wrote my weekly column on the intersection of calendars and how that data could jumpstart a third-party approach to anticipatory computing on mobile. It’s worth revisiting that piece, now that time has passed, Calendar Frenzy, Google Now, and Apple’s Anticipatory Computing Problem.

One of my conclusions was that Apple would have to bake such a solution into they OS to offer something that’s either comparable to or orthogonal to Google Now. Since this piece, Apple purchased Cue (formerly Greplin), and it’s become evident trying to build a Google Now-like experience without the access to what Google has will produce suboptimal results.

Enter Refresh, which is kind of like a “Google Now, for People.” Luckily when I wrote this column, a friend of mine  told me about a stealth company he’d invested in, and that I should meet the founder. They were housed downtown, very close to me, so I met the CEO, Bhavin, for a coffee and he told me about the motivation for the product. I still didn’t realize what it was, but I liked Bhavin a lot, so we met again quickly and I saw the product in alpha. Right there and then, I blurted out, “I would love to invest.”

That was in March 2013. It took a long time for that deal to coalesce and I just started helping out where I could. As a courtesy, Bhavin made me an advisor first. That was a classy move. Bhavin had a very clear vision for the product and how he wanted to get it from alpha to beta to prime time. While there’s always room for perfection, I noticed early that Refresh had one of the best push notifications of any app, one that I nearly always opened given that Refresh gets you up to speed on anyone that you’re meeting. That’s still the case today. Even for someone like me that takes notes and remembers follow-ups as second nature, Refresh was a huge boost to my knowledge and EQ in meetings. I couldn’t imagine not having it on my phone.

Now, about a year later, the product is finding its groove. There’s still work to do, but some of the new power features on the Refresh profiles are amazing. My favorite is the “intro” email. With Refresh, an intro email is now just a few taps. It works perfectly. I’ve seen 4-5 other startups just try to productize that flow, but it was Refresh that did it. It’s that kind of precision and execution that get me excited. Refresh is a product that reminds me of one of my favorite lines from Marcus Aurelius: “The secret to all victory lies in the organization of the obvious.” That, in a nutshell, is the opportunity that lies ahead of Refresh, and that is pretty darn exciting.

New Series: Blogging On The Business Within The Bitcoin Blockchain

In the back of my head, I’ve been wanting to write a series on the blockchain. Every Sunday, I write a weekly column on mobile for TechCrunch. I’ll continue to do this, and mobile is so big and so mainstream (and moving so fast), that this cadence helps me stay on top of it all. Or, at least try to. For Bitcoin, the motivation is both personal and a bit different. I’ll write the series here, on my blog (Haywire), and I won’t be on any schedule, so that will be nice. I’d mentioned to friends in NYC this week that I wanted to do this, and with many of them also invested in the BTC ecosystem and close to the financial services world, the response was very positive, more than I thought it would be.

At a high-level, the goal of doing this is mostly selfish — I’m fortunate to be exposed to some very sharp BTC founders and engineers, and have been monitoring the space actively for over a year now. That said, there are true limitations on what a non-technical person like me can come to understand about the intricacies of the network. I won’t go into that territory. Rather, I will try to look at the business implications and opportunities presented by the blockchain. This is something I can both understand and will be of use (I believe) to the tech community more broadly. I’ll explain why.

Almost over a year ago now, when I started my fund. I made my first investment in what is now Hired. For investment #2, I was interested in Bitcoin, but not for reasons you’d assume. At that time, I started buying individual Bitcoins, and one of the Haystack LPs even suggested that I take a portion of the total fund and invest it directly in BTC. I elected not to do that (potentially reckless), but the LP was right…I would’ve returned the fund and more in a few months and then been playing with house money. Additionally, I thought of BTC as a currency, and I asked for an intro to a specific company based on those grounds and I should’ve been more prepared and aggressive about investing in them, but I was blind to the opportunity. My mistake. With history in the rearview mirror, it turns out I was on the right track, I was just facing the wrong direction. Underneath the currency of Bitcoin was something more powerful, and I had to make this mistake in order to understand it.

After my mistake and short-sightedness, I began reading about BTC and investing in companies in the space, in part as a way to expose myself to such interesting people and technologies. I’ve read so much on Bitcoin, but it isn’t clearly mapped in my head, so that means I need to write about it. I need to write to bring some order to the disorganized chaos that is the BTC world that swirls around my head. Because I have access to some interesting companies in the ecosystem as a small investor, like Gyft, Gliph, Vaurum Labs, and most recently, BlockScore, I’m going to try to combine my ability to put some of this in plain(er) language with their collective insights into the blockchain.

What I’ve noticed is that there are quite a few people who are technical by background and in the business of being on top of technology trends who don’t yet fully grasp the transformative power of what this protocol and blockchain can do. While nothing is certain in this world, the most basic way to think about the protocol and corresponding blockchain is that it presents yet another way for computers to communicate with the Internet, with the caveat that newer systems (if built correctly) on the blockchain could survive (and thrive) without a central authority, which in turn opens the window to an entire Pandora’s box of possibilities. It is precisely these possibilities, from the POV of a founder, investor, business, and startup, that I will seek to decipher and then share with you all in the simplest way I can. Thanks in advance for your ideas and guidance. Again, I want to underscore that this effort is mainly for me to finally internalize this complex new opportunity. There will be mistakes and corrections needed, so if you felt compelled to share those as we go along, I’d be most grateful.

UberRUSH Raises Three Critical Questions For The Future Of Mobile On-Demand Services

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Last week, my column discussed how on-demand mobile services — Tap Your Phone, Get Stuff — are ripe for venture capital investment. In the seven days that have passed, more startups in this category have been handsomely funded by some of the best investors in the world. And, to cap off the week, the leader in this category, Uber, announced UberRUSH, its local courier service. After years of savvy, brilliant PR campaigns to deliver ice cream via old-school ice cream trucks, Christmas trees, kittens and cupcakes, and most recently, the ability for Silicon Valley entrepreneurs to hail a black car and directly pitch some of the partners at Google Ventures for possible investment, Uber has finally signaled (publicly) that it’s a company that its ambitions are much broader than just transportation. For a mobile company on a roll like Uber, it is a captivating move, yet also raises critical questions related to other on-demand startups, their specific business and operational models, and ultimately, how consumers may behave in the future.

There is huge potential locked inside the “Uber” brand. Just like Google wants us to visit its home page, enter a term, and then leave, Uber wants people around the world to open its app, tap a few buttons, and then leave the app, get in a car, and go on with life. While the Bay Area, New York, and other select cities around the country host a slew of mobile on-demand service startups, Uber is the one mobile consumer brand which has painstakingly carved out great geographical penetration. On top of this, Uber’s daily active use case means people are using the times multiple times per week, if not per day, meaning they could leverage that consumer attention for other offerings. With RUSH, smartly, they elected for a more business-focused solution, extending their expertise into a naturally adjacent use case which occurs in every city worldwide and is often, like cabs, run by smaller companies with outdated networks.

Let us see how RUSH evolves. It will take time. And while I wouldn’t bet against Uber on anything, there may some underestimation of just how hard this kind of horizontal expansion can be. While we can certainly envision opening the Uber mobile app in five years and seeing a menu of choices beyond cars, making those additional services a reality is excruciating work and could take years to form. Lucky for Uber, it has time, money, and the brand to make it happen.

In the meantime, the introduction of RUSH raises large questions. It’s too early to what will happen and know what the answers will be, so in the meantime, we can debate what path other local service models powered by mobile may do to keep things competitive. Here are the three big questions triggered by Uber’s expansion into RUSH:

First, from the perspective of business and operations, should various mobile on-demand services remain verticalized and standalone, or does it make more sense to consolidate? It might be seductive to assume, in the name of efficiency, that it will make the most sense to consolidate these mobile on-demand services, but the reality is that each of the growing services — for grocery, for deliveries, and so forth — run on different business and operational models.

Second, are all mobile on-demand services created equally? After Uber, what do the gross margins of other mobile on-demand services look like, and given those other offerings, how does one think about ranking the opportunity ahead of each one? RUSH makes a great deal of sense to me because it already happens ad-hoc in every city and extends Uber’s offering to a clear business use case, but it’s unclear what they’d offer next.

And, third, perhaps the most critical question: Will the consumer masses prefer to have all of these types of services under one umbrella, or would consumers prefer more choice within verticals? All the strategy whiteboarding in the world won’t be able to predict the answer to this question, and that, combined with the ripe funding environment for such businesses, is a very good thing for consumers, for those looking for jobs, and the entrepreneurs who may just uncover the next great mobile on-demand service.

Photo Credit: Francisco Anzola “Hermes” / Creative Commons Flickr

The Precise Location Of The Downturn In Mobile

Like many of you, I read every blog written by Chris Dixon and Fred Wilson. In the last 24 hours, they’ve both written posts which nicely summarize the problem in investing in consumer mobile apps, and also discuss the implications associated with them. Given my interest in mobile (both in work and investing), I wanted to unpack their arguments a bit, and also suggest a slightly modified definition of *what* is in a downturn mode in mobile.

Chris Dixon, implications are serious for investors. [post] Dixon asserts “new mobile incumbents” will have outsized power, making distribution — which is already hard — even harder for upstarts, that the mobile gatekeepers show little incentive to loosen their grip, and it could even result in blocking new frontiers like Bitcoin-related apps. To take it a step further, Fred Wilson dubs it “The Mobile Downturn.” [post]

From an investment perspective, it’s important to keep in mind that these statements are very valid in the context of venture capital and returns. What I’ve observed in mobile technology is that “mobile” can mean different things to different people, and it’s important to define the terms up front so as to limit any confusion. Dixon and Wilson are likely referring to consumer mobile applications in their critiques, which are valid — even most of the larger funds have elected to sit back and wait to see what breaks out on consumer mobile and they paying up to invest into growth versus trying to predict what will be the signal in a noisy app market. I have been trying to write here and on my Sunday column that for consumer mobile, it’s usually one of four categories that has a chance to win — games, apps leveraging the camera, network effect products, and online-offline services.

So, I think Wilson is right about a “downturn” in early-stage consumer mobile apps. The scale possible (as exemplified by Whatsapp) is real, yet achieving that scale or anything close to it — which is a requirement of institutional venture capital — is getting harder for all the reasons Dixon rightly pointed out. The end result in the market is that there are lots of mobile startups that end up as acqui-hires or small cap exits and then a few in the billion-dollar+ plus range, and some out of orbit. The grass can be so green on the other side that people (and investors) have flooded the market with both money and apps — a trend Facebook (and soon Twitter) is capitalizing on all the way to the bank.

All this said, there are, of course, many other areas of mobile that aren’t effected in this way. Think of middleware companies which help mobile developers optimize integration processes, or development cycles, or streamline SDKs. Or, think of items that can extend from the phone (usually through hardware) that may become a new wave, though requires a lot of money to compete in. Down to the hardware level, just think about how much innovation Apple is cramming into their next generation of iPhones with M7, TouchID, and Beacons…we are literally in the first inning of this specific game around these new sensors.

The business model of venture capital is to time investments ahead of the market such that at least one (or hopefully more than one) deliver the outsized return to create that grand slam and/or to return the fund with high performance. In this context, a “downturn” in consumer mobile could be perceived as something where some investors view the space as “mature” in the sense that breakout opportunities are potentially constricted. In those instances, as he writes, venture capital will seek higher beta outcomes, especially in places that don’t have gatekeepers like Google and Apple. However, this is not to say that mobile on the whole is in a “downturn” — it’s just the consumer application side, specifically those apps which are not in one of those four categories listed above. Of course, consumer mobile apps get a LOT of attention, so maybe this is the beginning of the correction the market needs in order to improve its vision about both the possibilities and the challenges ahead. While Apple and Google control so much of this right now, things could change in the future (I don’t know how), and distribution channels for consumer apps may open up again.

Haywire is written by Semil Shah, and is published under a Creative Commons BY-NC-SA license. Copyright © 2014 Semil Shah.

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