MBA Mondays: Revenue Models - Mobile

The last two categories in the revenue model hackpad (mobile and gaming) are not really revenue models, they are sectors that have interesting revenue models worth discussing in this series. Today we will discuss mobile and next week we will discuss gaming.

Here is what we filled out for mobile in the revenue model hackpad:

View Mobile on Hackpad.

Mobile offers revenue opportunities that the web does not for a few reasons. First, the downloadable app/app store model makes selling your software much easier on mobile than it is on the web. In 2012, almost $7bn of apps were sold in the iOS and Android app stores. Most of these purchases are being made as in app upgrades instead of initial purchases.

In app percentage

But as huge as app sales are, including in app purchases, I believe this will be the smallest of the big three mobile revenue models over time (app purchases, advertising, and transactions).

The mobile advertising market was estimated at around $3bn in 2012 but it is growing twice as fast as app purchases and is projected by Gartner to be over $20bn by 2015, a 90% annual compound growth rate (that compares to app purchases which are growing at about 30% per year).

I do not believe that we have yet cracked the code on mobile advertising. Mobile native approaches like Twitter's promoted tweets show the way. Interruption and "display" models aren't likely to work in mobile so we will need ad formats and solutions that are truly native in the mobile app and browser. The market is quickly innovating and I believe we will see a number of interesting models emerge this year which will cause the mobile ad market to grow quickly.

But as attractive as selling apps and running ads on them is, I believe the biggest and most attractive model in mobile is the transaction. Slowly but surely, our phone is becoming our wallet. And I don't mean wallet in the way that Google and PayPal think. I don't think we will necessarily have a mobile wallet. I think the apps on the phones will just have native transaction capability in them.

I have a friend who recently moved from NYC to SF and was back in NYC for a week of meetings. He told me he kept accidentally getting out of cabs without paying while he was in NYC. Using Uber in SF had trained him that once he had booked the ride on his phone, that was all he needed to do. Soon hopefully we will all be doing that with our Hailo app in NYC.

But that is just an example. Imagine if you could both checkin and checkout on your Foursquare app? Imagine if you could just walk into a movie or an airplane just using your phone (you can!). All of these things are possible without mobile wallets. The phone is our mobile wallet.

So I think transactions will be the biggest and most native form of monetization on mobile over time. That doesn't mean that you can't build a good business doing in app upgrades and mobile advertising. But it does mean that transactional networks on mobile is the biggest opportuntity in mobile that I see.

Next week, we will talk about gaming and then we will wrap this series on revenue models.

#MBA Mondays

Comments (Archived):

  1. Carl Rahn Griffith

    Mobile is synonymous with impulse purchases and/or event-driven instances – this is very powerful and whoever ‘owns’ (ie, is the trusted authority) the rights to executing the transaction (ie, billing, in whatever form) rights on the user’s phone will have immense potential – akin to iTunes. This is why I believe Hailo to be so significant – it’s a segue to many other transaction types.

    1. JimHirshfield

      I’m not sure it’s impulse as much as convenience and ubiquity.

    2. JamesHRH

      Hailo looks trerrifc and the team has clearly got it together.But, the only thing I have seen them say that is a little off is ‘we will do all kinds of transactions.’ No, they won’t. They will hail a ton of cabs though.

      1. Richard

        That was a little unsupported leap. There are innovations that could help HAilo pull that off , sponsored rides by destination / purchase. You are pretty captive while in the cab.

  2. LIAD

    Such a shame our collective ingenuity in this space ultimately props up and profits the bastians of the status-quo that are goliath incumbent credit card companies.

    1. fredwilson

      dwolla is one bet we’ve made to try to change that

    2. JamesHRH

      Giant incumbents with happy customers are hard to displace.

      1. LIAD

        Startups, especially their developers and compliance teams are not happy customers of visa/amex/paypal and the like

    3. kidmercury

      only a matter of time before the right virtual currency business comes along and renders incumbents’ assets useless and obsolete. amazon could do it through amazon coins, though i think this endeavor favors a true startup.

    4. fredwilson

      We have an investment that would like to change that

  3. Avi Deitcher

    My issue with ad-driven models, as lucrative as they have been for some (Google, FB, etc.), is that they are ultimately about being a middleman for something else that has value.At some point, you have to actually transact to create value, either by buying the digital service (app model) or buying a connecting product/service (tx model). Advertising is just being a middleman, bringing buyers of real value-add products/services to their sellers.

    1. JamesHRH

      Ads will have little impact in phone, but will have big impact in tablets.Tablets are about media consumption & that will work.Phone ads will be coupons.

      1. awaldstein

        Right on.Coupons a mid sized old biz even on the web will be huge.

      2. ShanaC

        not sold on that idea.

        1. JamesHRH

          Back it up sista!hehe

          1. ShanaC

            Hey, didn’t you see my big comment above?

          2. JamesHRH

            Yes, but your pitch is ads in media. Media will be consumer, roughly ratio, 20% on phones. IMO

    2. Donna Brewington White

      But don’t you think that the middleman has served a vital role in the economy? I too have sometimes been down on advertising but I believe this has more to do with how its been done not what it does. I have a growing appreciation for “advertising as content” and native advertising which seems more authentic –or at least more contextual.

      1. Avi Deitcher

        Sure they do. I guess my skepticism is because so many business plans seem built around “we will make it free and support with advertising.” At some point, not everyone can be a middleman. Someone has to sell real products and services!

        1. Donna Brewington White

          In that case you have to wonder who really is the middleman. Perhaps the advertising is the real product.

          1. Avi Deitcher

            That is very interesting. But if it is, shouldn’t you be able to sell it directly?

  4. William Mougayar

    It is interesting that the 2 upcoming innovations you mentioned- many wallets & new Ad formats are software & infrastructure solutions.Each app can already implement its own wallet. I have a movie & Starbucks wallet already in my iPhone, in addition to Uber & Hailo, and airline checkin.We have barely scratched the potential of the mobile devices.

    1. JamesHRH

      Some of these apps are relatively high touch, to maintain. Airline checkin is also a pain, I find I am constantly pocket-deleting open bar code boarding pass emails or text messages.

    2. awaldstein

      The fact that you need a different wallet for every app and a different app for every application is cave dweller days.The right solution will put the person in the center on our phone not the app tied to the specific transaction.

      1. fredwilson

        i am not sure that is in the best interests of the app developer arnold. if each developer gets to pick the transaction system of their choice, they have more power over it. if there is one single one that rules them all, that’s not going to be good

        1. Barry Nolan

          The metaphor of one wallet for the device will fail. VISA and Mastercard tried that for the online world. #failwhale. Rather one touch payments across multiple applications will likely succeed. Venmo from braintree looks interesting here

      2. William Mougayar

        I agree with Fred on this. Typically, it’s the App that drives the transaction, not the wallet itself.But if you are thinking of a universal wallet that is app-agnostic, then that’s a different tact that has its own dynamics and issues.It’s becoming easier and easier to embed a purchase function inside the App, so I would suspect that route will get more traction.

        1. awaldstein

          The most important thing is not to think of it from a developer’s point of view but from the users.They want ease of use, cross application usage and easy records to review spending.I’m a developer so I care about this. But if you don’t think of the user you will loose.

        2. Cam MacRae

          I don’t agree with your final point. In app upgrades work well because they’re basically frictionless. Ain’t no way I’m whipping the card out for each and every app. There’s room for a few trusted universal wallets, but that’s all.

          1. William Mougayar

            You lost me. Why would have to whip up the card each time? We’re assuming that payment methods are embedded in the app, no?

          2. Cam MacRae

            For each app, not for each transaction, vs. once when I buy the device.Re-reading, we might be on the same page.

        3. ShanaC

          so it is the behavior the app drives, not the app itself – because then there would be a lot more app transactions

      3. JamesHRH

        There is significant consumer risk aversion to one wallet keeper.

      4. Cam MacRae

        I’m with you on this. I’m not interested in creating an account etc. for every transaction or application. If I can’t push a button to check out with one of AMZN or Paypal or <insert 3rd service I might learn to trust here> I’m probably not a buyer.

        1. awaldstein

          The idea of an uber wallet that let’s you connect cross vendor and that couples into multiple online POS systems is aspirational.I know that the idea of one account is problematic conceptually in an open world. I’m there and understand thatBut as a consumer people just want it.

          1. Cam MacRae

            I don’t see it as a single uber wallet but device/ecosystem specific. That probably caps us at two for the foreseeable future, but doesn’t preclude the rise of others in the future.

    3. Richard

      Wifi powered GEO will change how we use and the mobile / brick and mortar transaction.

    4. Barry Nolan

      So my analogue for mobile (and apps) is the online world. Look at the evolution of the web. The first wave was we have a website which was nothing more than a pdf online, “we have a website!” – and they gradually evolved to being self-service and transactional The same cry today from Enterprises “we have an app”. They too will transition to being self-service, transactional and conversational (computer-to-customer) in time.

  5. Tom Labus

    The home run model for mobile hasn’t been discovered yet. Everything to date is testing but the phone itself as wallet is intriguing.

  6. Russell

    Was hoping this discussion would include any updated thoughts on app vs broswer on the phone. In your opinion (and fellow AVCers chip in) Are either of these better suited for monetisation?

    1. fredwilson

      app monetizes better because transactions are native in the app whereas browser doesn’t offer that. i do think we will see some mobile web advertising innovation this year which will make monetizing web easier

      1. Barry Nolan

        Was at a Walmart presentation last week. HTML for the catalog, Native for the checkout.

        1. Elia Freedman

          We are doing a lot of work on hybrid apps right now. Very happy with the results so far.

          1. Russell

            Sorry for my ignorance, but what do you mean by hybrid apps?

          2. Elia Freedman

            I wondered if that would be understood. Hybrid apps are part HTML and part native code.

      2. ShanaC

        what do you think of the iab mobile rising star units

      3. Russell

        Yes – my data and events have v high price points $1k+. We’ve built trust over 10 years, but seems a lot of money to ask via itunes, plus no interest in sharing 30% love with Apple. Seems best to confirm interest, give instant access and send invoice in the mail. Have you seen any other apps or mobile transactions at high price points?

    2. kidmercury

      depends on the business. apps are great, but often you need loyalty to get the install in the first place.

      1. Russell

        Amen – Trust is key for the whole process. I have a strong memory of one of the guys from salesforce saying that none of their clients book direct – customers always want some degree of reassurance. Either from the brand, the experience, or in the case of enterprise most likely talking to a person.

  7. Richard

    There is another table pounding rev opportity waiting to be cracked, personal mobile health. And it also will look nothing like what google or others have tried.

    1. ShanaC

      i think personal health is a communal thing. And first we need to crack the insurance problem

      1. Alexander Ainslie (@AAinslie)

        “first we need to crack the insurance problem” +1 …and the first step is to use #SmallerBigData to dynamically price policies where the healthy and responsible factions of our community are not subsidizing irresponsible factions. Foursquare checking + cell location data indicating that you are eating too often at McDonalds and many evenings at your neighborhood bar = higher insurance premiums et al.

        1. Matt A. Myers

          Unfortunately/fortunately punishment isn’t the most effective method of teaching new behaviour.

        2. Avi Deitcher

          The issue is that it has become a large-society problem, i.e. political. Like it or not, agree or not, it is rapidly becoming illegal to do things like that.

          1. Alexander Ainslie (@AAinslie)

            You are thinking top down. The govt. will have no control over it. We will take control of our health outcomes and self organize to fund it.

          2. Avi Deitcher

            I sure hope so. But the govt operates top down, and has a monopoly on regulations. And it is quite jealous of those prerogatives.

          3. Matt A. Myers

            Right. You can’t prevent businesses from offering their services, you can however subsidize things that are healthy which will cause those subsidized businesses to become more successful, more prevalent, and take money away from the unhealthy options / force them to adapt.

          4. Avi Deitcher

            You can’t? Sure you can. I want to sell you catastrophic only insurance in NYC for you and your family, for $250/ month. Can I do it? Forget ACA; nys regs don’t allow it.Not just small companies. Walmart tried for years to offer minimal efficient banking services. Not a chance.Every single day federal, state and local statutes and regs tell you that you cannot sell X, or only the way they say. There are always reasons. Sometimes they are good, sometimes not. But enough years in business, you learn there is lots you cannot buy or sell.

          5. Matt A. Myers

            Ah I wasn’t thinking that deeply …

          6. Avi Deitcher

            My blessing and my curse: I always think that deeply. It is a blessing in business analysis, but sometimes in life it is nice to be able to just let it slide. Hockey helps….

        3. fredwilson

          then you get adverse selection and the whole insurance model breaks down. my partner albert had a great post about that last week…

          1. ShanaC

            so we need to change funding of basic care and figure out how to make “emergency” care mandatory (sorry, we’re all likely to get cancer if we live long enough). Considering what counts as basic care for different people can be very very different

          2. fredwilson

            Yup. I wrote a post about that a few years ago. I think the post is called Patient Centered Healthcare

          3. Alexander Ainslie (@AAinslie)

            As a rational, compassionate capitalist, I agree with Brad’s view Fred, but we are still thinking #topdown. Yes, it does break down if looked at from that perspective and in its current form. However, if we think #bottomup #VRM as discussed by @dsearls, we can clearly see a future where we self-organize using our stats, lifestyle(s) and genetic data into captive insured groups, where not only does the insured receive treatment when things go wrong (or when one has an accident), but also ‘invests’ in the insured (over their lifetime) with a whole body protocol to help prevent things going wrong and improve the insured total state of health. I’m looking into setting up a captive in another sector (addressing a sub-sector within gambling industry) so I’ve been studying how they work and I can tell you that it has promise if structured properly for the personal healthcare sector. If I were to do another pharma or healthcare related business, this is what I would do, #SmallerBigData driven #CaptiveHealthInsurance.

          4. Alexander Ainslie (@AAinslie)

            just saw this over on FastCompany:…MOST INNOVATIVE COMPANIES 201320_SEECHANGE HEALTHFOR MAKING HEALTH — NOT HEALTH CARE COSTS — ITS TOP PRIORITY.The simplest way to lower health care costs is also the hardest: encourage healthy behavior. That’s the premise behind the insurance policies of SeeChange Health, which serves small employers and *offers customers many discounts–depending on how healthy any one person works to be*. “We know that can save a lot of money,” says CEO Martin Watson. Before selling its own policies in 2010, it managed plans for larger insurers (which it still does). In one case, it incentivized 45% of diabetics to drop an average of 9 pounds, which led to a 19% drop in costs over two years. The company is now adding 2,200 members per month. In 2012, it says revenue increased sevenfold, to $54.2 million. That’s healthy growth.

          5. fredwilson

            I dont see how vrm addresses the adverse selection problem

      2. LE

        “i think personal health is a communal thing.”What do you mean?

        1. ShanaC

          in the sense that my health habits are probably established by the people in my secondary network. Like the fact that only some of my close friends exercise, but most of their friends do.So as a result I am likely to exercise (and I do). It is a communal thing

          1. Matt A. Myers

            Is that a peer pressure behaviour (fitting in) or learning new / better habits from them via access to people to bring you into an activity, answer questions, making it social etc? Or are those really one in the same … role modeling of sorts.

          2. ShanaC

            I don’t know those people, so no. There something about their friends (who I mostly don’t know) that are affecting my health choices (or my extended community.) And these are things being studied intesively for all sorts of behavior, especially since it seems to be one of the ways to unlock critical health behavior that leans towards healthiness.http://www.scientificameric

          3. Matt A. Myers

            Well people learn from others and want to be like their peers, so if you get more people being healthy then there will be a trickle effect. The issue then is getting people access to health as efficiently / cost effectively as possible.

      3. Matt A. Myers

        In the sense it takes a community to raise a child?

    2. Matt A. Myers

      Working on it. Lots to do – very big holistic problem, big ecosystem, big market and markets to be disrupted.

    3. fredwilson

      what will it look like?

      1. Richard

        If you have an iPhone udid, I can show you what I have in mind.

        1. fredwilson

          I don’t have a. iPhone so i don’t have a udid. Thankfully you can side loan on android so all that test flight and udid nonsense doesn’t exist on android

          1. Richard

            Built with objective C. Is there a wrapper application for an android install?

          2. fredwilson


          3. LE

            “I don’t have a. iPhone so i don’t have a udid.”If just to keep a pulse and direct exposure on what is happening there (not the same as reading about it) I would think it makes sense to have an iphone since the cost is trivial. That assumes you have the time to fool with another device of course.I don’t enjoy sports at all but I will watch some things a bitjust so I can know what’s going on in the mind of people that watch and really like sports (like you and Kid Mercury). I’ve noticed from watching how the camera shots are setup and the production values that make the game much more interesting from the way it was when I was growing up with the static camera shots. I can see what is appealing about sports even though it doesn’t appeal to me (my father never watched sports and we didn’t play games other than business games). I can listen to the people in the Starbucks talk about “the game” and understand the social value of that and apply it in other cases.

          4. fredwilson

            Its a political statement. I care about many things more than money and financial success. One if them is the ability to control the most personal device in my life.

          5. LE

            I think things are much trickier since you are a quasi public person and what you do is open to scrutiny and criticism.An anonymous person has much more freedom generally. To me being you would be stressful which is why I’d much rather be a behind the scenes person. [1] I don’t even like it when I get attention from store clerks who remember me or when the waitress is to friendly. The only attention I like is attention I’ve gotten specifically for something I’ve done. [1] (That said if the money was good I’d streak through times square…)

        2. Alexander Ainslie (@AAinslie)

          I would love to have a look Rich, pls find me on LinkedIN.

  8. Richard

    How reliable are Gartner et al. Numbers?

    1. Barry Nolan

      crap IMHO. The most reliable data comes from Flurry

      1. ShanaC

        second. Also Admobs type groups for types of phones

    2. fredwilson

      poor. but i needed something.

  9. Barry Nolan

    +1 on the “most attractive model in mobile is the transaction.”One-click shopping and smartphones have made media online an impulse purchase, like the candy or gum by the cash register. The same will happen to the ‘physical’ world. The apps I spend most of my mobile money one are Hailo, Hotel Tonight and Uber. They signal where the rest of physical (retail, travel, etc.) world will evolve. Want to pre-order wifi for $5 on your flight to SFO – yes/no. Stripe and Braintree are best placed in mobile ‘one-tap’ card payments.

  10. Richard

    On a unrelated note: I purchased my first 3d printed product, a great pair of prescription sunglass frames. (Made in Germany)

    1. ShanaC

      pictures? cost? Because I think in the coming weeks I am going to go to the eye doctor and replace the lenses in my glasses (as I feel squinty) If they are cheap, and they can be sized to my face, it might be cool to get a second 3d printed pair. Maybe if I am really lucky they will come in red 🙂

    2. fredwilson

      where did you buy them?

      1. Richard

        Georgetown Optical (DC), I was really impressed with the look and feel of the polymer. It has a very woody feel to it. I thought of my first entrepreneurial job trying to develop a three structure of sorts using something called Langmuier blodget films where we layered films one monolayer at a time trying to build an integrated circuit. I remember sitting in that clean room thinking that there really was no limit to what we could construct monolayer by monolayer. Any feel for the manufacturing time / material costs ?

        1. fredwilson


  11. ShanaC

    1) One morning temper tantrum: No checkin/checkout on foursquare. I don’t want any potential stalkers knowing my schedule THAT well. It pushes my boundaries just too far.2) On a second note, I’m not totally sold that display on mobile is a failure. the 480×32 that I see most definitely is, but I like the full screen ads I see (usually by fidelity) that sometimes appear in my nytimes app. Even though I am not a huge starbucks fan (burnt taste) I still think it would be kind of amazing if they used that format to advertise to me on my morning commute while reading the paper.3) I think the question of “what behaviors for both mobile and semi-mobile (aka tablets) are going to change?” is the question of the next big revenue model on mobile. Unfortunately, I can’t tell you what it is, only that if I probably could help you change it :DPS: I feel bad for your friend. Poor timing, first massive snowstorm then cold rain :/ Should have stayed in SF.

  12. Richard

    Lots of awesome colors. Not cheap, $ 600 without lenses! Will post picture when I pick the up.

    1. ShanaC

      was this comment via email to me? If it was, it didn’t post correctly(and $600 before lenses, that is sort of insane for 3d printing considering glasses are a relatively simple object)

      1. William Wagner

        I made a pair of ultra-hip glasses for myselfTotal cost: ~$15 for the frames (from Shapeways), $10 for the lenses (from china), and $0.20 for the screws (from McMaster)Heres a pic, still working on the design for the ear pieces and the colorsSo $600 is a bit overpriced for 3D printed glasses, unless they are solid titaniumIf you have some lenses that you want frames for, let me know, I want to do a pair for the lady’s next

        1. ShanaC

          I’d be open to that if you told me where to get the lenses. though mine would have to be smaller 🙂

  13. Drew Meyers

    In the old days, everything was paid for in cash. My grandpa always had hundred dollar bills stowed away in his wallet. My dad still does. I think it’s a proven fact people spend more money when paying with credit cards than they do using cash/check. Why? Because when paying with cash/check – it’s immediately known that they have less cash than they did prior to that purchase. As everyone knows, it rings particularly true when it comes to cash – “I had $100 in my wallet yesterday. Now I have $5. Where did it all go?” That dynamic makes you think about where you are spending your money.Don’t get me wrong, I’m totally in favor of the shift to paying with my mobile device; I just believe people should be aware of the downsides that go with making it drop-dead easy to spend money without thinking. For the financially well off & those religious about their finances, it’s not an issue at all. They aren’t going to spend money they don’t have. For transactions focused on life essentials such as groceries, again not an issue since those will be bought one way or another. But for the majority of the population – if it’s possible to spend money they don’t have for gratification now rather than later, they will do it. Mobile payments, particularly if hooked to credit cards and not directly to bank accounts (in the US, we all know that will be the norm), means they are going to be spending money without having to think about where it’s going. They already do this with credit cards, and it’s not a good trend to speed up (since mobile payments are generally less friction than a CC) in my mind.Just something to think about.

    1. LE

      I agree. But keep in mind that the whole world of business is setup to get you to part with money you don’t have and certainly eat what you shouldn’t eat because it tastes so good. Even your example of “life essentials such as groceries” well just walk into a supermarket and see how much money people spend on buying things and eating things that aren’t essential. People are way to fixated on food and dining and most don’t have the self control to avoid the pitfalls of consuming that way.When I was growing up it wasn’t about enjoying what you ate. My mom made the type of food that was “ok” but you never wanted any more than you needed to fill your stomach. Boiled potatoes, a piece of meat and steamed string beans. When she made eggs there was no butter or anything. They didn’t taste that good actually. This wasn’t for health reasons it was just the way it was..On the upside the economy has benefited in general from the fact that people spend money they don’t have and the credit card bump that you have noted. The same way mortgages have benefited homeowners.One of the ways I like to think about credit is like this.It’s ok to pay for over time something that you use over time. But something that you use in real time you should pay for with current dollars not over time. But even within this philosophy I could point out exceptions in my own behavior (I’ve never understood people who buy furniture on credit even though you could argue that with my thinking it’s ok to do I guess because I see furniture purchases as non-essential so if you can’t afford the sofa with money in the bank don’t buy it. Etc.)

      1. ShanaC

        i bet those greenbeans now cost more 🙂

      2. Drew Meyers

        Totally understand the business dynamic. I was raised by a single mother who managed to put both my sister and me through college,so extravagant meals and eating out was never a part of life for me growing up. Likely, that’s part of the reason I still don’t really put much weight on huge fancy meals like some people do — I know they are not necessary and certainly have nothing to do with being happy in life. We were by no means in poverty, but certainly were not well off. There were very few things that my mom paid for with credit…I think her car was the only one. My dad is the opposite of that in terms of his use of credit – so I’ve seen both sides of the equation firsthand.Credit is good for economy, sure. But good for the individual spending that money and living their life in debt as a result? That’s debatable.Just playing devil’s advocate 🙂

        1. LE

          “Likely, that’s part of the reason I still don’t really put much weight on huge fancy meals like some people do — I know they are not necessary and certainly have nothing to do with being happy in life.”People sometimes go with emulating what they grow up with but also doing the exact opposite. In other words I’ve seen cases where people grew up with very little and need very little and live simply. And I’ve seen cases where people grow up with little and want everything and to live opulently. This even differs within siblings in the same family.In other words:Parents Drive nice cars – you want nice carsParents Drive nice cars – you drive crappy carsParents Drive crappy cars – you want nice carsParents Drive crappy cars – you drive crappy cars(Where money is constant you can afford a nice car in all cases).Food is a little different though. Food is addictive to a much larger degree then simple material possessions.

          1. Drew Meyers

            Yup agree. I’m in a peculiar spot because my mom and dad were on such extremes on this credit issue. Which I would guess is the reason both my sister and I are both so balanced with our finances. We just have different priorities…she has a house and 2 new kids while I spend all my money traveling.

    2. kidmercury

      absolutely…..i’m a big fan of paper cash for a number of reasons, including the spending issue…..

    3. awaldstein


      1. Drew Meyers

        Not sure what happened to our other comments?

      2. Drew Meyers

        I’m saying more people are in debt now than before credit cards went mainstream. And I can see some cases where making it even easier to pay than it already is will accelerate debt for some people.Like I said, I’m in favor of it overall. But I’m not one of the millions of people in the USA buried in debt (though the last couple months I have some due to self funding a startup and a year of my own living expenses). The tech community often forgets were the minority and don’t live the same lives most of America lives.

        1. awaldstein

          Fair enough and well said.

        2. Avi Deitcher

          I don’t doubt it, but I wouldn’t mind seeing hard data. Are there figures for per capita personal debt, adjusted for inflation (i.e. real and not nominal terms), comparing, say, 1970 to 2000? What would also be interesting is seeing the absolute real terms; as a percentage of per capita GDP (after all, if I am $1,000 in debt now vs $500 10 years ago, but I am making 2x, not much has changed).Another interesting one would be current debt vs long-term. If I am $500 in debt, but I have a credit card with a 30-day window, and I always pay it off each month, does that count?

          1. Avi Deitcher

            Thanks for those. But they don’t fully answer. If debt has risen 6x in thirty years, are those nominal figures? What are the numbers adjusted for inflation? Then adjust for GDP growth. Then adjust per capita since the US population has grown significantly in 30 years. That’s the number that would tell the story: household debt per capita as a percentage of GDP.

          2. Drew Meyers

            We need a reporter to dig through this and report the real story 🙂

          3. Avi Deitcher

            Ha! Wish I had the time…

    4. Donna Brewington White

      I think about this, Drew. My husband and I are taking a financial management class together and spending physical cash is one option that has come up. I am resistant to this but I’m also pretty good at doing accounting in my head and, besides, handling cash has the opposite effect on me! But I understand the value of the concept.Seems like there could be an app that simulates some of the effects of spending cash…i.e., the instant realization of diminishing funds…some sort of visual and/or audio…a graphic that pops up…?

      1. LE

        This is all psychology an app might be good or might not.I’m pretty good with determining the value of money.For example in some cases spending money might be considered wasteful for some people but in other cases, depending on the circumstances it might make sense.People are judgmental (not everyone of course) and they rely on what you own to determine your value and pay attention to you. If you are a member of a country club and meet people that can give you business that can be a reason to pay extra for a nice car. (And I can think of 1000’s of examples either way.)I tend to drive nice cars (which I buy for cash btw want to make that clear) and it’s helped me in a few ways that are counter intuitive. That said if I sold life insurance (I don’t) I could justify buying the same nice car and leasing it (which I would never do for me I don’t lease). Why?Because on a regular basis guys come up to me to ask me about my car or to make a comment of admiration. So if I sold life insurance there is no doubt that I could sell some of them insurance because they are receptive and think I am successful or just like what I have and want it. And that alone (as well as the people they would refer me to) would easily pay for the difference between a Honda and a really nice car. Actually I would even buy a flashier car that would create even more attention and get me more leads and business.On the other hand I tend to dress down simply because I can and I feel comfortable that way and always have. This is way before it was popular to do so. That said if I was trying to sell insurance with the fancy car I would probably do some a/b testing of dress to see which approach gave me more business and if dressing fancy worked I would do that (as much as I hate to get dressed up). My feeling is that people might be less inclined to approach me if I was dressed up though. Just a hunch.

      2. Drew Meyers

        “Seems like there could be an app that simulates some of the effects of spending cash…the instant realization if diminishing funds…some sort of visual and/or audio…a graphic that pops up…?”That gets me thinking. Someone could do something really cool with this. A super simple way to visual my finances. WAY simpler than MINT. That someone will just have to be someone else…since I have my own company to build already 🙂

  14. Jackie Modeste

    Good thoughts here. Agreed, we have not “cracked the code on mobile advertising.” Good example, re: Uber. Got on M34 bus the other day and didn’t need Metrocard, paid at a nearby kiosk instead (like in EU). Progress. Thinking and re-thinking mobile use and its possibilities. Good food for thought to begin the week. Thanks.http://www.theglobalroundho…@GlobalJackie

  15. Dave Hendricks

    LiveIntent has cracked (actually ‘fracked’) the buying and selling of mobile advertising within email newsletters, alerts and notifications. 30+% of all email is being read on mobile/tablet devices now. This is a highly engaged audience and contrary to web display models, users click more on email ads on mobile devices than they do on desktop. iPad is the best in this respect, altho that is dubiously mobile.Mobile will probably overtake desktop email consumption sometime in the next 18 months, if this pace continues (2x growth in % of email consumed on mobile in 2012). In the meantime, the much-maligned email (address) has some things going for it: it spans devices and services, and it lives for years.So all that data that exists about you and your various personas (work vs personal accts) can be used to very accurately target ads to you when you open up a newsletter, whether it’s a 1st party transactional email (i just bought something) or a 3rd party newsletter (Washington Post or WSJ alert). And not pop ups, but nice clean IABs.The email address trumps the cookie as a targeting tool. It has a long life, and it spans devices and services. And unlike pop ups on apps, the email ad is native and similar to the ad that you already see and scan within newspapers, magazines, on TV and on the web.With billions on email users and billions of emails being sent to them, the amount of inventory is large and varied, providing scale not available anywhere else. Oh, and it’s not a platform so besides Can-spam there is no TOS to worry about.You wrote last year that email is the secret weapon of social media. Well, email is also the secret weapon for mobile monetization via ad deployment and targeting. We all have it, we all use it.

    1. fredwilson

      yup. but at some point it will reach diminishing returns.

      1. Dave Hendricks

        You would think that email effectiveness would fall off based upon higher volume, but funny enough higher volume often has the effect of driving more engagement. Not with each and every message, but on a per user basis. Mostly because you can’t time sending, so by sending more mail you are more likely to end up ‘above the fold’ in the inbox. And then you get clicked on. Annoying, but anecdotally true. Higher frequency means higher likelihood of engagement. But yes there is a diminishing return/reductio ad absurdum argument to be made.

  16. Michael Brill

    Seems like there’s a good chance that mobile redefines what advertising is. Under the credo of “the futures of ads is value-add,” what if the merchants and brands that today bombard us with generic messages are able to inject themselves into our retail buying processes in a genuinely useful way. Globally we spend around $16 trillion at retail. How much of this is based on *great* buying decisions? There just aren’t enough hours in the day for us to assemble and analyze information to make the best, great or often even good decisions.Advertising does almost nothing to improve the situation. However, for every buying decision we make there are counter/third parties that have the expertise and economic or other motivation to materially improve the quality of our decisions. So what if instead of focusing on cramming advertising into boxes and message streams, “advertisers” could cram us with recommendations, alerts and other content that have historically been the domain of venture-backed apps companies. Perhaps advertising is a better vector for this functionality.(Edit: I guess one more point is that the distance between this new form of advertising and transaction is so short, it’s even feasible that advertisers could recoup some of their ad spend by capturing part of that transaction).

    1. Matt A. Myers

      Do you know where you saw the $16 trillion figure?

      1. Michael Brill

        i calculated it as a conservative estimate based on % of US economy and estimates for ROW. If you want me to dig up the calcs, send me an email at michael at botnik dot com. But some quick googling and here’s a link that estimates it at $20 trillion:

  17. LE

    But that is just an example. Imagine if you could both checkin and checkout on your Foursquare app? Imagine if you could just walk into a movie or an airplane just using your phone (you can!). All of these things are possible without mobile wallets. The phone is our mobile wallet.What you are really talking about is an “ezpass” type thing.If you use ezpass you know that it’s a huge time saver but keep in mind that ezpass also photographs your license plate and that goes a long way to insure that the right thing happens with the transaction in the motorists mind. (Except when it doesn’t and they bill you for the longest toll in the road because they missed a scan (has happened to me several times and it’s the perfect crime since if you do auto fill you don’t know exactly what the charges are for you just see reloads on your credit card)).Ideally if people could get over their privacy concerns (and they won’t) the same thing could happen possibly with some transactions but not all.For example ezpass (tolls) as well as the examples that you gave (movie, airline) are transactions where you know exactly what you are paying or should be paying for as they are discrete purchases. If you see you were charged $186 for a flight you can more or less know that is correct and of course there is other verification that you were on the flight as well.But compare that with a restaurant or a bar or even Starbucks. In those cases you really do need to “approve” each charge by some review process. Starbucks has this in their app and it works well. It’s actually a great app since you always have your phone in hand when in line and don’t have to pull your card and give it to the barista either. And refiling is pretty easy as well as long as you remember your password.Added: My point is how do you get people to be able to walk in and order at a restaurant and be able to walk out and make it as easy as possible with tipping and all. It’s not an impossible problem to solve it will just take some creativity and sensitivity to behavioral issues.

    1. fredwilson

      i think it will take time. everything does.

  18. LukeG

    The mobile ad market and mobile transactions are pretty tightly coupled, too. The mobile ad market is gated not only by CTR-performance, but by final (purchase) conversion rates and transaction values. The other two pieces in that puzzle are experience-based performance in mobile transactions (both web and native) – i.e. how smooth is your mobile checkout flow? – and also the link/gap between the original mobile ad and the mobile transaction experience.So how do I go from seeing an ad on my mobile to actually buying the thing? Do I land on a mobile-optimized checkout form? Is the link smart enough to detect that I have the corresponding native app already downloaded/active?The more effectively we can bridge the gap and improve mobile transaction experience, the greater the unit value of mobile advertising.

    1. fredwilson


  19. John Revay

    Side Note – What do people here at AVC think about the new mailbox app – iOS and Gmail client.I signed up the other day and there are 323,138 people in front of me and 420,199 people in que behind me. Is this real or just a hyped marketing ploy?

    1. fredwilson

      won’t matter to me if they aren’t on android. iOS is mars to me.

  20. markslater

    i agree. but its a platform not a point play that wins the transaction on mobile.thats a whole seperate discussion.

    1. fredwilson

      i am curious to learn more

      1. markslater

        i’ll email you

  21. Darren Herman

    What happens when you are the transaction. Actually, you probably already are. Within the advertising category, there is the data business. The more a publisher can learn about you, either explicitly or implicitly, you become more valuable. Publishers do not necessarily need to run advertisements in your mobile but could sell your data (i.e. mobile equivalent to cookies, files, etc) and you can be monetized elsewhere. You, the browser, who have read or viewed the mobile content “paid” for it (transacted) by your browser session and data exhaust.The downside here is that most publishers don’t tell you they are doing it. But they are.

    1. fredwilson

      selling transaction data?

  22. ShanaC

    Also, PSA: If you have been having trouble in Disqus with your posts being eaten or not posting from email, they know and are working on it (since a number of very different people have been having issues)

    1. jason wright

      “a number of very different people”we’re all unique 🙂

      1. Matt A. Myers

        Like snowflakes

    2. fredwilson

      thanks Shana for being on top of this.

      1. ShanaC

        you’re welcome

  23. William Wagner

    Cant wait for big box retailers to replace waiting in line at a cashier OR using the self-checkout, with self-checkout on your mobile. Scan barcodes with the camera and pay over a transaction app provided by the retailer. No more waiting in lines to check-out and retail can be competitive with the web againBTW your recommended content is getting me hot and bothered, Heidi Klum in a bikini? Hows that for a revenue model

    1. ShanaC

      :/ i feel awkward reading about heidi klum that way

    2. fredwilson

      disqus is working on the targeting. i expect the links to get much better over time.

  24. Dave Pinsen

    As of a few minutes ago, Portfolio Armor was the 65th highest-grossing iPhone app in the finance category. That’s with no upgrades/in-app subscriptions available. Curious to see how it ranks once the 2.0 version of the app is released, which will include a new capability available via in-app subscription.

    1. ShanaC

      mazel tov

      1. Dave Pinsen

        Thanks. Would like to get back in top 5 with the release of v. 2.0.BTW, haven’t seen you on Fitocracy recently. Still exercising?

        1. ShanaC

          I quit my gym in favor of some vidoes. I also don’t know the names of basic lifts, so using it when I was lifting complicated things didn’t help me.It seems also very male oriented for the things they do. So I generally feel lost/without a community

          1. Brian Wang

            Hi Shana, this is Brian, one of the founders at Fitocracy. This feedback is very valuable, so thanks for taking the time to write it!For what it’s worth, we’re currently working on solving the “how do I get started” and “what’s the name of this exercise” problems by:1. Introducing workout programs targeted toward particular backgrounds, experience levels, and goals.2. Providing photo/video demonstration of different exercises3. Making exercise search/navigation smarterWith regards to the community, we’ve found that many users cite Fitocracy’s community as the #1 reason they enjoy using the product. It may be the case that you haven’t found yourself inside the “gravity” of a particular group of people yet. There are many groups on Fitocracy and clusters of users that women tend to find very appealing and supportive. Examples: the “Welcome to Fitocracy” group (…, “Lady Lifters” (…, “Girls Gone Strong” (…, and “Fit Angels” (…Let me know how else I can help :)-Brian

          2. ShanaC

            I’m no longer lifting as actively (though I did buy myself a kettlebell recently) I’ve started to do more videos and independent classes (see: barre methods, things like flywheel, bootcamp, indie yoga studios)I find between the videos and indie classes, gravity seems to be hard to find. I also suspect that I am more typical now (I found when I was lifting I would be the only (or one of two) women on the floor at my old gym, but that if I went downstairs to where cardio machines were, there were tons of women)I really think you need to start reaching out to more indie gyms/indie studios to see how students there are connecting and how these indie studios are connecting with their students (since it seems to me that the move away from comprehensive gym to ala carte classes is going to have a big effect on the types of exercises/knowledge level people will have as well as how people will use fitocracy)

          3. Brian Wang

            Thanks Shana! I think there’s a huge opportunity at the long tail here. There’s currently nothing tying these instructors/trainers and students together online right now, but things could get interesting if they start to get interconnected and more easily discovered in a single place 🙂

    2. fredwilson

      it will do much better. in app upgrades is the way to go. it is freemium executed perfectly.

      1. Dave Pinsen

        You might be right. I’ll let you know.

  25. Abdallah Al-Hakim

    I am all for technology and do agree with you Fred that mobile payments are definitely due for a big disruption. As a consumer, I would love to see some of these apps make guarantees that our purchasing history will not be shared. I would be glad to pay a small transactional fee to keep my information private. Otherwise, all my affairs are no longer private and that is a bit too much even for an early adopter such as myself.

    1. fredwilson

      do you think your purchase history is being shared?

      1. Abdallah Al-Hakim

        my default state is to believe that and the onus is on the transactional app to clarify this matter.

        1. fredwilson

          I would think they would be obligated to state that in their privacy policy

          1. Abdallah Al-Hakim

            I agree and the wording of these privacy policy will be important. No body wants an instagram type of PR disaster 🙂

  26. Saad Fazil

    “Imagine if you could just walk into a movie or an airplane just using your phone (you can!). All of these things are possible without mobile wallets.”Check-in via an airline app (as opposed to Passbook for example), is that what you mean? I imagine though “mobile wallets” (similar to Passbook) will continue to pay an important role. I might not have the mobile app for a transaction (say I initiated the transaction elsewhere), but wallet could still aggregate all such transactions (think discount coupons for several stores/items stored digitally in a single place aka wallet)



    1. fredwilson