The Mobile Downturn (continued)

I wrote this “mobile downturn” post 18 months ago. It rings more true today than when I wrote it.

Some friends emailed me about investing in a mobile consumer startup last week and my reply to them included this line:

doing anything in the consumer mobile space these days is super hard. i can’t think of many consumer facing mobile apps that have gained massive traction and sustained it in the past three years. can you?
I saw this post this morning in my news feed. It goes over all the reasons why it is so hard to break out in mobile. We’ve been through all of these reasons ad nauseam here for years and years. This is not a new thing. But this chart from that post certainly sums up the challenge:
power law curve

So if you want to launch a new consumer mobile app, what do you do? The best answer I have heard to that question came at breakfast yesterday with an entrepreneur. He said he plans to build mobile web experiences that can go viral and build adoption of his product and use that as a funnel to drive adoption, over time, to his native apps. I’ve seen that work.

But even so, it’s not an easy time to build consumer facing mobile companies. It is not an easy time to invest in them either.

In our first fund that we invested from 2004 to 2007, 57% of our investments were in broad horizontal consumer facing companies. This was pre-mobile so many did not have a mobile app when we invested. But all of them that are still around are predominantly mobile companies today. That percentage declined to 45% in the fund we invested from 2008 to 2011, and further declined to 30% in the fund we invested from 2012 to 2014. In the fund we are investing now, which is about 75% invested, that percentage stands at 35%, a bit of an uptick, largely because we’ve gone a bit later in our consumer facing strategy and have largely limited our investments in consumer facing businesses to ones that have strong product market fit.

The funny thing about all of this is that I don’t see any shortage of entrepreneurs walking into our offices with plans to build and launch consumer facing mobile apps. While the odds are increasingly against them, hope springs eternal it seems.

#mobile

Comments (Archived):

  1. JimHirshfield

    Mobile seems like a necessity for a company/product to live up to the USV thesis of a large connected network. So…yer done?

    1. LIAD

      full frontal attack on launching a mobile app is a busted flush. need to come at things from the flanks. second level thinking style

      1. Anne Libby

        Like Buzzfeed.

        1. laurie kalmanson

          a lot of what i’ve seen pitched as mobile apps are too small to be standalones — should be part of something else. i worked on an a sponsored campaign to use hashtags to integrate into existing shelter dog adoption sites, sponsored by a pet food brand. it was a small, smart piece added to an existing infrastructure.

    2. Matt Zagaja

      I think there is a difference between when an idea is a mobile app versus an idea that later happens to grow a mobile app. For example Meetup.com exists independently of its mobile app, but it does have a nice mobile app that I use.Then there is the twitter approach of actively hindering the development of third party apps like Tweetbot.

    3. ShanaC

      Nah. There are all sorts of passively connected networksCounsyl actually is a good example of this. Thier core tech stack in theory should get better the more tests they do because of how genetic work- its an connected network, but passive one.Same with why a lot of researchers are angry at Myriad Genetics

  2. jason wright

    https://medium.com/swlh/mob…”…the top 20 app publishers, representing less than %0.005 of all apps, earn 60% of all app store revenue.”the creative energy of the 99.995 %will now be directed elsewhere, unless they’re obsessive masochists?

    1. Matt Zagaja

      Keep in mind there are other revenue models for mobile apps besides paying money for them directly.

  3. LIAD

    Interesting how for producers/investors it’s seen as a downturn, yet for consumers it’s a golden-age. diametrically opposed perspectives.overabundance of supply. structurally broken discovery. famine of attention.Casino mentality prevails though- that’s what Powerlaws can do to entrepreneurs and investors.Ironic how the much feted democratisation of access/information/publishing/software/capital etc etc returns to bite entrepreneurs and investors on the ass.last Western World breakout – probably snapchat, sept 2011?

    1. fredwilson

      snapchat is the last one i can think of

      1. pointsnfigures

        What about Periscope? Not enough of a break out? (but a lot of “heat” on Twitter etc)

      2. Richard

        Tinder, Swarm

  4. jason wright

    wasn’t the strategy to have a “constellation” of apps to crack this problem, or is this approach better?;http://www.theguardian.com/

    1. fredwilson

      constellations work if you are in the head of curve

  5. Jorge M. Torres

    The percentage of investments in mobile consumer fell across the first three funds. Was that the plan all along when you raised those funds or did it result from decisions you made in real time as the firm deployed capital? A little of both?

    1. fredwilson

      real time decision making looks like a strategy in the rear view mirror 🙂

  6. Barry Nolan

    Comscore confirms this thesis.Mobile-web for discovery. Mobile-apps for engagement.

  7. David Semeria

    We saw this coming about three or four years ago, which is why we abandoned the idea of building a consumer facing app right from the start, deciding instead to focus on a widget that can be embedded into any app.We call this strategy “going horizontal” and, even if what we do is unrelated to bitcoin, I believe if bitcoin or the blockchain ever do take off, it will be by using a smilar approach….

    1. awaldstein

      Interesting choice of words.Been obsessed about this idea of the horizontal connections that emotions drive cross communities and marketplaces.

    2. jason wright

      so the atomic unit of the app ecosystem is the widget?

      1. David Semeria

        I don’t know about that. But it’s much easier to convince existing app makers to use a widget than it is to convince hundreds of millions of users to place your app on their home screens.

        1. Kirsten Lambertsen

          That’s super interesting. It’s working out well, then?

          1. David Semeria

            It’s going ok thanks. We’re still in the “doing things that don’t scale” phase so it’s too early to say whether we can convince app makers to embed us without any human intervention from our side.

          2. pointsnfigures

            I think a lot of times, we think about things in terms of vertical silos. That frames market references to “finance” or “health care”. Instead, we might frame in terms of occupational function, or something like that.

    3. Richard

      Who did you target first ?

      1. David Semeria

        Large companies via warm intros.

    4. James Ferguson @kWIQly

      Seems to me that a very modular widget (surrounded in on all sides by good API) coupled with another that complements and offers orthogonal functionality forms a “compound” that is non-redundant and is surrounded by good API.In essence the goal is to find value-adding orthogonal functionalities that play well with complementary functionalities.A completing framework is needed but it need not be yours, and need not be definable as a product.

    5. James Ferguson @kWIQly

      Veespo – function guessed from the Italian “Real time event management ?” (my Italian doesnt even know how to suck yet). Are you beachheading the italian market first (if so I am interested to know why – am up the road in Switzerland)

      1. David Semeria

        Sort of. Our product can be used in multiple verticals. The idea is to have one flagship implementation in each major vertical in Italy before going cross border.

        1. James Ferguson @kWIQly

          Interesting – I was at European Utility Week in Vienna last week, talking to a very big Italian Engineering group.There is a huge shift on BI / Analytics to recognition that it only provides a toolset and that the actual analytics have to be very clearly delineated & vertically oriented to cover deep domain knowedge – eg Billing, Energy use, grid anyalytics, client behaviour etc.This suggests to me that startups are going to have to learn to collaborate to cover large eco-systems – which fits your observations nicely.It also means that for big companies “buying in” analytics (or I suppose any horizontal layer) becomes more challenging because they are increasingly not for sale as layers but as verticals.From that you see very big industries contracting out large sections of functionality (thereby an oligopoly supports faster response, through a vertical abstraction layer and a new industry is born ).

  8. Steve Weiner

    competition and the ability to be noticed in a crowded App Store. barrier to entry (capital) is pretty low to enter mobile app ecosystem despite Apple’s still fairly strict policies to be approved. agree with comscore comment earlier as the “time in app” data bears this out. being noticed is the hardest thing and competing for mobile screen time just continues to get harder.

    1. Dan Moore

      Are we still waiting for the Google of app stores? That is, the company that will surface the best in apps as Google did for web pages a decade or so ago?Or are apps just fundamentally different than websites, in terms of intimacy, ux, engagement and installation commitment?I lean towards the latter, which, bundled with the fact that app store/Google play data is centralized, means we won’t see a Google of app discovery.

      1. Steve Weiner

        just follow the money. Google did its part to make the Internet free (paid for by ads) and gave us a window to discover in the search bar. mobile ads don’t seem like they’ll survive long term and companies are already starting to adjust to an ad free mobile experience. Button (via its marketplace) could be the Google for mobile discovery.

    2. Matt Zagaja

      I wonder how much of the issue is that software developers think if they make something great it’ll just take off and they don’t need to market it. In the early days you didn’t need to get through the noise because you might have been the first “read it later” app like Instapaper.

  9. Joe Neiman

    Fred, How does this compare with B2B mobile platforms? We launched ACV Auctions for car dealers 5 months ago and are getting great traction from uses. We are the company that just won $1mm at 43North.

    1. Jess Bachman

      Congrats, and enjoy your stay in Buffalo.

    2. Richard

      If feels like there is a subset of “desk” oriented apps where the UX should stay laptop / tablet ?

      1. laurie kalmanson

        i see increasingly little difference between laptop and tablet; laptops are adding touch, and tablets are getting bigger. ux needs to be clear workflows and affordances / indicators … which is no different from what it should always have been.phones are still small for some tasks but just right for others; summary view works. details, maybe not so much. simple transactions; buy a ticket, book a meal.

    3. fredwilson

      much better place to be right now

      1. Twain Twain

        Ok, someone should have said, “Terrific post, really useful data points and are you seeing similar disinterest in consumer mobile amongst peer VCs?”Also, you blogged before about how you can’t wait for the next wave of innovation and how this particular cycle (social, mobile) seems to have out-lasted its utility (in investment terms because maybe it becomes diminishing returns?).So … apart from Blockchain … and AI which are leaving the labs and being commercialized … are there any TECHNICAL innovations (as different from business model innovation) which are fractals at the edges, in your view?Thanks.

    4. pointsnfigures

      100% agree on B2B. Some knowledge is specialized. Target market can be well defined, and will pay for solutions.

  10. John Revay

    So not mobile first per se…..But web first (w/ a great mobile web experience)

    1. Matt A. Myers

      It’s interesting how if you had really followed that “Mobile First” advice early on, your odds of being successful were perhaps lower, e.g. what becomes obvious at times is only obvious because that is what the trend is currently showing, even though the opening and opportunity presented itself earlier, and people were already building and preparing for that.

      1. Richard

        Sometime there is a split between business and consumer. Look at mindbody, consumer mobile, business laptop

  11. Kirsten Lambertsen

    This post lit up a circuit for me.As I read it, I was thinking, “Why is the medium the important part? Isn’t *everything* mobile now? Isn’t the message, what the app *does*, the important part? How can you not invest in mobile any more when everything has to be mobile?”Of course, I answered my own question, I think. Everything is mobile now. VC investments need that element that allows the startup to be breakout, to be a first mover or dominator somehow. What this post tells me is most of the time that element is in fact the medium (aka the technology). It’s lower friction to be riding a new medium vs a new message. If you make enough new medium investments, your chances of having winners is improved. New message is riskier.It was a bit of a lightbulb for me, because I think I’m more of a new message thinker/doer than a new medium one.

    1. laurie kalmanson

      i’m not convinced i need to be able to control my stove with my phone.

      1. Kirsten Lambertsen

        Ha! Somehow I have a feeling we’ll be doing something like that, eventually, though. Your robot will do it for you 😉

        1. laurie kalmanson

          when will my robot be here? waiting.

      2. Jess Bachman

        Well how the hell is your stove supposed to talk to your toaster then?

        1. laurie kalmanson

          I WELCOME MY TOASTER OVERLORD

          1. Jess Bachman

            I’m convinced IoT is being pushed by already sentient appliances who are using humans as a tool to leapfrog their non-sentient brethren into a future where “all appliances talk to each other”. Pretty soon our appliances will live more interesting lives than ourselves. I think in my case, this has already happened.

          2. laurie kalmanson

            updated children’s book: the appliances in the kitchenone day, little tammy toaster and little billy blender had a party with their friends carla convection oven and aggie the gas range. what a lovely time they had.i loled over the intelligent egg holder thing that tells you to get more eggs when it was promoted as a feature.

          3. Girish Mehta

            A chicken is an egg’s way of making another egg.

          4. Twain Twain

            Darn it!

          5. Jess Bachman

            Luke, I am your founder…

          6. Twain Twain

            Gah, I’m obsessing about whether Luke’s gone over to the Dark Side and if Kylo Ren means “Sons of Padmé” using Vigenère Cipher (much more fun use of Cryptographics than Blockchain, haha).That and THIS wins Mobile, Internet, Intergalactic Space.Cute cat + BB8 = $$$ moneyshot !!!* https://www.youtube.com/wat

          7. Stephen Voris

            Based on my less-than-perfect recollection of the cipher in question, and the number of characters in the names you mention (note: have not yet actually played the video; give it a couple hours best when one can actually hear the audio; soundtrack is well-chosen), I’m going to go with “no, but maybe through other entertaining morphological contortions”.

          8. ShanaC

            I wonder what the toasters are thinking…Seriously though, one of the biggest questions I have about iot is what exactly are they tracking and are they doing it well.Eg: sensors for plants. I’ve yet to hear of an amazing one primarily because of that question

        2. laurie kalmanson

          actually, you hit a nerve: i broke my butter crock and spent way too much time paging thru really not good search results. search is broken. too much junk. fix that, then display better data on mobile and desktop/laptop/tablet of immense proportions/headsup display/just get the implant already, whatever

          1. Kirsten Lambertsen

            Pinterest is the new search 😉

          2. LE

            Yeah ever try to get a Doctor’s real website address or reverse a phone number? Amazing the junk that is there.Likewise try going on open table and switching the area that you want to find a restaurant in. You can’t. You have to go to google and google “open table ‘town name'” to find the right page.Best part never anybody to complain to or comment to. If something doesn’t work right (google or most websites typically). I guess the corporate types think they have that covered with those feedback pop-ups. Or figuring someone will email “[email protected]

          3. laurie kalmanson

            so many opportunities.

          4. pointsnfigures

            YES!

          5. ProductArchitect

            Product search is shockingly bad, including at Amazon. Even going to a company’s website to help decide between a few models is rarely worth the time. I have lots of thoughts on how to solve the problem — incrementally, one market at a time. Anyone can ping me to discuss.

        3. James Ferguson @kWIQly

          either could get burned !

      3. LE

        “Men” (let’s go with that) would be quite willing to spend a ton of time building an app to let the “little lady” control her washer or dryer because it’s cool and fun to do that and to them it appears it would be helpful (because they don’t use those – she does – and they don’t know) but would never think of getting the little lady an extra washer or dryer to be able to handle more loads at the same time. Now that’s efficiency. Tech people (men or women and I have been guilty of this) are good at finding solutions to real problems but also good at developing solutions to problems that don’t exist or exist only for them or a small niche. Because it’s cool, fun and challenging to do. Reason why google abandons and neglects legacy products while thinking up the new thing that nobody has asked for or needs.

      4. falicon

        But you would want to be alerted if you’re stove has been left on for a very long time…or if it was left on and the house security system was activated (leading to the assumption no one is now home)…It can only do those sorts of things if it’s “connected”.The IoT is about more than just controlling physical stuff (though that’s certainly a big part of it)…it’s also largely about knowledge collection (which can than power more intelligent decisions, communication, and eventually action)

        1. laurie kalmanson

          all good points

        2. Twain Twain

          I’m with you on this: “The IoT is about more than just controlling physical stuff (though that’s certainly a big part of it)…it’s also largely about knowledge collection (which can than power more intelligent decisions, communication, and eventually action).”However, I think the current approaches in IoT are a bit … dull.It’s mostly about monitoring, e.g., GE has shown examples of how they instrument and track every bit of their 747 engines and then obviously there are the likes of Nest.Wondering if there are much more interesting use cases you’ve seen / are thinking of?

          1. falicon

            I haven’t seen great implementations yet either…but I think that’s because we’re still mostly in the “geeks in garages” phase…the people that care deeply about things like UI/UX haven’t really gotten to the party yet…once they do, I believe both the hardware & the knowledge/focus of these things will start to drastically improve.Honestly I haven’t spent that much time thinking about the IoT or hacking on stuff related to it yet (though I did back the C.H.I.P. project on Kickstarter for that very reason; and I have been hacking a tiny bit on some Alexa voice stuff with the IoT in the back of my mind throughout)…always so many exciting and fascinating things to learn, think about, and play with… 🙂

          2. laurie kalmanson

            pipelines, pressure

        3. Stephen Voris

          Control also ends up with regulatory and hacking issues (the former often in response to/fear of the latter), but the primary issue when it comes to not-originally-electronic Things in the IoT is, I think, retrofitting. It’s not too big a deal to add a sensor to an otherwise inert water main; quite another to add a valve or attach a motor to one to allow it to be controlled remotely.

          1. ShanaC

            In civil engineering this is going to be a nightmare. Computer stuff, from sensors to programming languages, aren’t speced for 10 years usually, let alone 100 years. Adding remote controls and monitoring to an aqueduct…oy

          2. laurie kalmanson

            three mile island is relevant to all of that

    2. Richard

      While consumer is mobile, is business? Zenefits etc

    3. James Ferguson @kWIQly

      Not in the B2B world – If I am working on a spreadsheet or say a dashboard or analytics platform I want a window not a porthole

      1. laurie kalmanson

        might you want a summary view on the go? also, tablets can show a lot of data.

        1. James Ferguson @kWIQly

          I can honestly say I do not “work” on any portable device, though I do use for a heads up and discussions1) face-to-face,2) telephone3) email – best messaging for general, spoken and written communication.>> tablets can show a lot of data.If the form factor sucks (limited parallel interface or the serial transmission rate is slow, it takes longer or is at lower resolution.This is why smoke signals and morse code can also “show a lot of data”But why choose suckiness if you dont have to?

      2. Kirsten Lambertsen

        I hear that. Not everything is mobile, but most have a mobile facet of one kind or another (not all).Companies are becoming increasingly distributed with no office at all. Many people use the opportunity to work on the go, from anywhere/everywhere. I work with a LOT of people who work like this (the younger they are, they more likely they are to work on the move). They love being able to execute their more common, rudimentary, repetitive tasks via their mobile device. And since communication in these companies is primarily in chat apps like Slack, it’s great to be able to do that from the phone.Sure you wouldn’t want to build or, say, approve a truly complicated spreadsheet from your phone. But you may want to submit a number or update a number from your phone, or just check certain summary views (“Oh, let me get that number for you” at a lunch.)But your point is fair in that we’re talking consumer apps here. And I while I use lots of enterprise tools during the day, I wouldn’t want to make one 🙂

        1. James Ferguson @kWIQly

          I definiely agree the “quick look up function” etc is a use case (as often or not contact names / details).However we do have a completely distrtibuted office (CH / UK / DE) and no office space . Key to us is not apps but “owning problems” and “trust”Trust is a great alternative to imperfeact communication.. – but it takes time to develop

  12. Mac

    Could someone please define “consumer facing mobile app”.I thought that was essential for building a mobile startup, having a minimum viable product and gaining traction and the attention of investors. Confused. But, it’s early Monday.

    1. Matt Zagaja

      I think some examples would be OmniFocus, 1Password, and LetterPress.

      1. Mac

        Thanks, Matt. I’ll check it out.

  13. Brandon Burns

    I’m recalling the 145x upvoted comment I made on this post 3 years ago: http://avc.com/2012/12/reth…Tl;dr: Mobile is not a product strategy. It is one of many channels through which you can distribute your product.It was right three years ago, and it is still right today — and it will be right forever.Build a good product first. Focus on the user’s problem, and the best possible solution for that user — and then place the solution in the channel that makes the most sense for an interaction. It could be in an app, on a watch, in a daily email, or on a TV or in a physical book. Self-help books sell better than self-help apps, so if your product is self-help advice, write a book! Fuck the VC telling you tech is eating the world, because its not eating *your* world! Tune out the hype.I ended the previous comment with the notion that its better to “think like an experience designer, not like a VC.” Also true then, still true now — and will likely be true forever.

    1. David Semeria

      I feel uncomfortable with broad statements, and will likely feel that way forever….

      1. James Ferguson @kWIQly

        Broad statements have exceptions – ohhh shit – self-contradiction

      2. andyswan

        I don’t hold grudges. My dad did that and I’ve hated him for it ever since.

        1. LIAD

          you should never name-drop. the queen told me that.

        2. Rob Larson

          Tolerance is my north star. I can’t stand intolerant people.

        3. LE

          Examples please.

          1. andyswan

            it’s a joke. my dad is very cool

          2. LE

            Sorry. My corky. [1][1] It’s a joke. You know, the TV show with that character.

        4. kenberger

          there are 2 kinds of people in this world: those that categorize folks, and those that don’t.

          1. Mark Essel

            “If the world were perfect, it wouldn’t be.”Yogi Berra

        5. fl1nty

          Stop it Pierce!

      3. sigmaalgebra

        With self-referencing statements, can get juicy examples likeA = { x | x is not an element of x }Then A is an element of A if and only if it is not.Then math ruled out self-referencing statements. Ah, to catch up with math, the rest of the world should rule out self-referencing statements!

    2. Richard

      VCs don’t invest in books, it doesn’t mean that one can’t make a living (a top 5% living, Tony Robbins), the issue is scale. There are thousands of 100 M revenue businesses scattered across the country, but they typically take a lifetime to get there

      1. Brandon Burns

        Good things scale. Period. Worrying about scale is the single most destructive habit of the so-called tech community.Worry, instead, about making good stuff.https://medium.com/@dhh/rec

        1. LE

          Is it really about making good stuff? Or selling honey that automatically attracts a million flies and the quality actually doesn’t really matter at all (they can fix that part later in rev b or with an easily downloadable patch).Fact is the best product that doesn’t have an inherent attraction to a great deal of users won’t go far typically in the hype VC and angel world.Problem is there is a group of young people out there that think that starting a business is only cool if you get VC or angel money and get into YC. Disciples of the new order let’s call it.Interestingly enough the other day, to this credit, Paul Graham admitted that he doesn’t know much about entrepreneurship:An entrepreneur is someone who starts their own business. But only a tiny fraction of new businesses are startups. I don’t know much about entrepreneurship generally, but I know about startup founders.http://paulgraham.com/int15

          1. Brandon Burns

            “Problem is there is a group of young people out there that think that starting a business is only cool if you get VC or angel money and get into YC. Disciples of the new order let’s call it.”There are great entrepreneurs and investors out their who don’t follow the hype. The problems are the hype-focused media, VCs and startup founders who are selling the Silicon Valley Gold Rush fantasy, unicorns and all. It’s like crack; it’s a product that attracts a lot of people, and many of them get hooked on the dream, but its ultimately an unfulfilling, shitty product.”Is it really about making good stuff? Or selling honey that automatically attracts a million flies and the quality actually doesn’t really matter at all.”Depends on how you look at it. I’d rather not sell people crack.

    3. LE

      Mobile is not a product strategy. It is one of many channels through which you can distribute your product.Not a product strategy but perhaps a startup business strategy.Where does that thinking stop then? Someone could wake up in the morning and decide they want to zero in on “tech” as a way to narrow down [1] starting a business rather than having the entire world of ideas to be their cherry. Why not open a Chinese restaurant? It’s not “tech” and doesn’t involve “computers”. How is it any different to say “I want to design a mobile app”. Then think of something that can be done as a mobile app.That said, I don’t like the idea of people waking up and thinking of ideas. I don’t think it works. What works is when someone is motivated to solve a problem because they are inspired. The other case it’s an assignment. Reason SNL is never funny when a major event occurs. (Or Trump hosts.) The writers then have an assignment, the comedy doesn’t spring up from emotion and inspiration.[1] Like baby naming. “Need a name that begins with ‘N'”. Simply a great way of narrowing down (let’s go with 1/26th even though some letters are less equal than others) the possibilities.

      1. James Ferguson @kWIQly

        In the !Xhosa language this game could really get challenginghttps://en.wikipedia.org/wi…Imagine a name that starts like this

      2. Brandon Burns

        My whole point is that no one should ever wake up and say “I want to design a mobile app.”Why? Channel-first thinking is limiting.Let’s say you start with “I want to make a mobile app” and, to keep with your example, you decide that you know making Chinese food best so you want to sell it on your app. When you’re a “mobile” company, you forget that your real product is the food, which can be sold in-app, on a website, in a restaurant, via grocery stores, catering, etc. And all of the channels have different benefits; catering can build relationships with influencers, grocery stores force customers to see your product and branding as they walk down the aisle, and a mobile app can make it easy for the masses to order your food on demand.Current real world example: Amazon Books opening physical book stores. Why? Because Amazon Books’ product is books! And people who buy lots of books like to buy them in brick and mortar stores! You can either be stupid and say, “We’re a tech company, so we’ll only sell online,” or you can be smart and open the physical store because that’s where your most ravenous customers go shopping. Amazon chose to be smart. Good for them.Skate to where the puck is going; the puck being the customer who, ultimately, is always going lots of places, so it would behoove you to distribute your product in as many of those places as possible.

        1. Jess Bachman

          Like my gal Lauryn Hill says, “everything is everything” Mobile is a channel, it’s also an endpoint, a piece of hardware, an interaction layer, etc, etc, etc, ….

          1. ShanaC

            I think that song predates her

        2. LE

          Current real world example: Amazon Books opening physical book stores. Why? Because Amazon Books’ product is books!I will go on record (as if it matters) in saying that Amazon opening “bookstores” has nothing to do with selling more books. It has to do almost certainly with getting a toehold and experience in the organization with traditional retail and then using that to get into doing the same with the rest of their products (which you will say proves your point I guess). Or maybe something to do with product pickup points (lockers or whatever) something like that. If book selling physically was still relevant enough to invest in I would still buy books at B&N. I haven’t done that for years and it has nothing to do with buying books online (I don’t do that either) and B&N would have a higher market cap than just 1b dollars and other sucky metrics. [1]Why don’t I buy books at stores anymore? Because there is to much to read on the web now and most of it gives multiple perspectives instead of a single perspective.[1] http://finance.yahoo.com/q/

          1. Brandon Burns

            It doesn’t matter that you don’t go to bookstores, because you don’t buy lots of physical books. But people who do buy lots of physical books (sales of which, by the way, continue to go up), they go to bookstores to buy them. And that truth is made no less true just because you have opposing personal habits.It is not the place of the entrepreneur to question that, or change that, or impose their own habits and opinions on that. It is the place of the (good) entrepreneur to simply recognize it, and provide the solution that the customer wants, whether its what you would do or not.

          2. LE

            Attached is a screen grab showing “retail” revenue as declining every year since 2011. I think more people are like me than you are wanting to believe.Book sales may be increasing however are you sure that they are through the retail channel? Eh?Now you could argue that Amazon will somehow magically be able to attract readers and book buyers by the secret sauce that B&N doesn’t have. Sure anything is possible. However I say that they have another agenda. It’s a laboratory for something else up the sleeve….

          3. Brandon Burns

            No, the screen grab is representative of B&N revenues. Not “retail” as a whole.But, okay, sure. Let me agree with you for a second, that software is eating the world and everything will be online. Soon, there will be no stores on the street, because no one will like shopping in stores; SoHo, 5th Avenue — they’ll be desserts! Nor will there be kiosks in airports, providing products to entertain people, so folks will just sit there and twiddle thumbs because no entrepreneur will be able to make money off selling anything to that captive of an audience. Folks will get their food online only, because no one will want to fondle the produce in person before choosing which piece to buy — they only do that now for shits and giggles. We won’t send snail mail, because everyone will have forgotten how to write. There goes pens and pencils, too! No longer necessary in our online only world!You and Elon Musk can have fun on Mars, because that’s about the only place where this sort of future has a chance of happening. Meanwhile, I’ll be back down here on earth, where human beings will keep doing human things. Like go shopping in a store. 😛

          4. LE

            You and Elon Musk can have fun on MarsThere you go with that angry tone again. And you haven’t been reading my comments or you would know that I am very realistic and not pie in the sky. I specifically have made comments about both google and musk tilt at windmill stupid ideas (like totally self driving cars).By the way there will always be a need for things it’s a matter of when critical mass gets to the point where businesses that supply certain items can’t afford to service a market cost effectively anymore and/or investors flea for lack of opportunity.

          5. Brandon Burns

            Angry? No. Snarky? Maybe. Over the Silicon Valley conversation, and its spinoffs like the mobile conversation? Absolutely.And, nope, I haven’t been reading your comments. I still appreciate AVC and the community, and usually at least skim the daily blog post, but the times I’m compelled take a dip into the comments section are fewer and further between. I’m weary of the echo chamber.That said, I’ve enjoyed today’s convo!

          6. Stephen Voris

            Dunno, I don’t read that as angry. Dismissive, sure; hyperbolic, carrying over from the previous paragraph; but angry? Eh. Brandon speaks for himself perfectly well.Just seems like you’re both agreeing on the poles of the debate and just disagreeing over where exactly in the middle things are.

          7. Twain Twain

            Not to be in your echo chamber (snark) but I agree with you on “Mobile is not a product strategy. It is one of many channels through which you can distribute your product.”Also agree with “place the solution in the channel that makes the most sense for an interaction.”Here’s the whole picture for Retail to 2018. eComm is projected to be less than 10% of sales.People love the bricks&mortar experience and Amazon’s strategy team will be aware of this analysis and more.In particular, all retailers are focusing on [email protected]:disqus – sorry, I’m in the queue before you to be on Mars with Elon Musk. Haha, just kidding.The problem with “shooting for the moon” and “tilting at windmills” is if the technology being invented is designed to solve the problems of an elite and some narrow worldviews rather than really solving problems for the masses.

        3. Adam Sher

          Agreed. Building a phone app seems like mobile 1.0. When phones were relatively under-powered, developers were forced to develop resource lite apps, which would be delivered via an app store. You then had to port that app to another phone platform, and develop a website, etc… Now, building 1 “program” that scales the experience/presentation to the type of device is mobile 2.0. As someone else mentioned, just have your “app” be a bookmark to your one-stop site, which will scale to your device and contain all of the information required.Porting to brick & mortar seems like a niche strategy. What other products have its most ravenous customers IRL, where you’d be incentivized to build a brick store?

    4. Pete Griffiths

      I remember those posts of yours well. I agreed then and I agree now 🙂

    5. Dave Pinsen

      What’s the latest with Wander & Trade?

    6. Ernest

      People appear to be forgetting that building a business is not cloud, an app or a website. It’s Vision, Mission and Strategy. Mobile is the How. Start with Why.

  14. laurie kalmanson

    mobile is on the way to being like electricity — it’s just therewhen color tv happened, shows came on with the announcer proclaiming, “in color,” until it became part of what’s expected and the intro went awaynow, with mobile: expected, usualgreat leaps forward — data, data, data, the closer to real time the better.

    1. PhilipSugar

      Exactly. First people focus on the technology, but after it is adopted its not the technology it’s the ideas.

      1. laurie kalmanson

        solve a problem; it has channels

      2. laurie kalmanson

        “nbc presentation in rca color”https://uploads.disquscdn.c…

      3. laurie kalmanson

        htis porgram is being televised in color and black and whitehttps://uploads.disquscdn.c…

  15. William Mougayar

    Success in a mobile consumer startup is harder than a new website that wants to break into top 100 in rankings after 2-3 years of operations. It’s possible, but hard.

  16. ErikSchwartz

    The importance of app store ranking is very dependent on your business model.Selling your app – Very importantSelling your app + in app purchases – Less importantSelling ads – Pretty important (although repeated usage is much more important)Selling subscriptions – App store ranking doesn’t really matter.

  17. aneela

    I recently read that part of the technical reason for going native is that this move the burden of data storage to phone’s disk space, rather than the company’s servers. The article hypothesized that as server costs decline, the trend would shift to web apps. Has anyone come across any companies that have made this shift yet?

    1. Rob Larson

      My take is that such considerations are small potatoes compared to the difficulty of scaling up user adoption (and likewise compared to the benefit of creating a user experience compelling enough to scale up)

  18. Mike Porath

    Yes to this sentence: “He said he plans to build mobile web experiences that can go viral and build adoption of his product and use that as a funnel to drive adoption, over time, to his native apps. I’ve seen that work.” And building a real brand, which takes more time than many founders and VCs would like.

  19. pointsnfigures

    Easy ideas+the mobile platform to be trendy=money lost

    1. Jess Bachman

      Therefore:Easy ideas = Money lost – mobile platform.Now we can add “money gained” to both sides:Easy ideas + Money gained = Money gained + Money lost – mobile platform.Now we can cancel out money lost and gained and we get:Easy ideas + money gained = mobile platformWhich is a much more bubblistic way of looking at it!

      1. JLM

        .Excellent math.JLMwww.themusingsofthebigredca…

        1. Jess Bachman

          I’ve got a career in politics!

  20. Oren Sheffy

    What do you think about independently developed “features” that are integrated into existing apps?

  21. Karl Klept

    App deep linking with dns gives apps the magic discoverability sauce of the web combined with universal rendering via mobile browser and app store links. The mobile web as an app platform is a miserable hack – for devs and users. On the app side, granted the Apple app store is an arbitrarily restrictive abomination though Android’s works quite well.

  22. JamesHRH

    If FB is #1 & Skype is #10, it would be interesting to know 2-9.

  23. sigmaalgebra

    In Fred’s analysis today, maybe there’s a fallacy.Background.IIRC, Andreessen has asserted that each year there are only about 15 startups worthy of a Series A. In support, the graph shows that there are only about a dozen important apps.Lesson: Both entrepreneur and investor are looking for something exceptional.The FallacyLooking among and analyzing the ordinary with its thinking and examples to find the exceptional.A Probability FallacyYes, the probability of a successful app is low, next to zero. But, as is common in probability, that fact is next to irrelevant and, instead, the conditional probability, given appropriate additional information, might be high.Lesson: Want appropriate additional information.Low Risk ExceptionalQ. Is it possible to get the exceptional at low risk?A. Sure. Some examples?(1) Clarence Leonard “Kelly” Johnsonhttps://en.wikipedia.org/wi…who did or contributed to the P-38 Lightening, L-1649 Starliner, P-80 Shooting Star, F-104 Starfighter, U-2, and SR-71 — pictures below.Q. For Kelly Johnson, what was the sufficiently good additional information?A. As was clear early on, he very much knew just what the heck he was doing. Isoroku Yamamoto learned this lesson the hard way.(2) On knowing just what the heck they were doing, Bach, Mozart, Beethoven, Wagner, Richard Strauss, the 16 year old Jascha Heifetz, Leo Szilard, Robert Oppenheimer, Edward Teller, John von Neumann, Stanislaw Ulam, etc.The Heifetz story goes that, at 16, recently from Europe via the Far East, on October 27, 1917, in Carnegie Hall, Heifetz opened with the Vitali Chaconne,https://www.youtube.com/wat…and violinist Mischa Elman in the audience asked “Do you think it’s hot in here?” and pianist Leopold Godowsky, in the next seat, replied, “Not for pianists.”The Vitali Chaconne is popular among violinists, but it is rarely played as well as in the YouTube URL above. Such a dramatic opening is rare and not easy.Heifetz knew just what the heck he was doing.For Wagner’s Parsifal, about the last thing he wrote, was, he very much knew what he was doing.Babe Ruth pointed at the stands, “Whack!”, and that’s where the next ball went.Pluto? Never been there before. How ’bout going there, and get it right, the first time? Sure: Newton’s second law, the law of gravity, may some solar wind corrections. Presto. Bingo. Right on target. Right at launch, no question about the navigation.GPS? Same story except it is so delicate that some relativistic corrections are needed. Still, no doubt. Similarly for the early version for the US Navy. Worked just as the guys at the JHU/APL predicted — some math, physics, and computing, and, presto, bingo, could navigate the JHU/APL to one foot.Yup, Saddam had a lot of anti-aircraft radar, missiles, and artillery. Yup, and the US had Lockheed’s F-117 stealth fighter-bomber that flew through all Saddam could send up and never got even a scratch. Worked just as originally planned.Business StartupsQ. How to apply the above to business startups?A. Sure. Should know, quite early on, just what the heck are doing. For the technology, as in the military examples, use those to get the first good or a much better solution and a technological barrier to entry.Still need a big problem, in a big market, and, then, the first good or much better solution, etc.For Mobile?That the project is mobile and knowing no more says that the probability is next to zero. So, need some good, additional information so that the conditional probability, given that information, is high.So, start with the problem, the market, the solution, why customers/users will find the problem important and the solution the first good or much better and a must have, etc.Q. Is that the only way?A. Nope. Lots of money has been made by other means, even playing a lottery.But, given that there are only about a dozen biggie mobile apps, want some additional information to get a high conditional probability.Another way? Okay. Wait until read about the app in VentureBeat, see traction significant and growing rapidly, contact the COB and CEO, and mention that some funding could increase the rate of growth enough to more than make up for the dilution. So, let the market, VentureBeat, etc. do the first cut filtering.Then use a Markov assumption: The ROI of the investment is conditionally independent of the past of the company given the current traction. A rather severe assumption, but, okay. E.g., for a way to get the traction, sell $1 for $0.75.Kelly’s AirplanesP-38 Lightening,http://www.aviation-history…L-1649 Starliner,https://upload.wikimedia.or…P-80 Shooting Star,https://upload.wikimedia.or…F-104 Starfighter,http://fas.org/nuke/guide/u…U-2,http://nomorecocktails.com/…SR-71.http://iliketowastemytime.c

  24. OurielOhayon

    i think the right graph would be one without Facebook. Facebook usage is so high it dwarfs any other apps. i Don t think it s appropriate to say that because you re not even close to Facebook you don t manage to build a mobile business.

  25. Pete Griffiths

    We only have so much real estate on our phones.We have less on our home screen.We only have so much time.We have less time available for attention.To be successful at scale requires replacing existing app time.To do that it seems you must offer:a) a more productive (or cheaper) way of leveraging existing life activities e.g. Uberb) a more compelling or engaging version of a familiar category e.g. a better gamec) a completely new experience that turns out to be compellingAs an investor you pretty much must recognize c) when you see it.a) and b) are possible but harder than ever.

    1. george

      I like your thoughts here – I think creating new solutions to existing problems is important as well…maybe this falls under c)

      1. Pete Griffiths

        thanksI was thinking of that more under a)

  26. Twain Twain

    @wmoug:disqus – Do you think Nakamoto might be at Ethereum Devcon in cognito?He’s been nominated for 2016 Nobel Prize in Economics!!! Maybe this will make him reveal who he is…* https://bitcoinmagazine.com…Genius is an over-used word but he is a genius, imo.

  27. Pat Ryan

    fred – given these dynamics, would you say that it is becoming contrarian to start up or fund new consumer facing companies today?

  28. george

    There’s something to be said about being first to market and the competitive advantages that creates for a mobile app, or just in general. I’m sure there is a strong correlation between rising app penetration rates by segment and the decline in app segment investments.But then again, great user centered design joined with solution based experiences tend to breakthrough and scale quickly, Snapchat comes to mind – that’s real scale in a crowded space.

  29. Jeff Cohn

    Building a mobile web experience is a fraction of the cost and easier to maintain in the long-run. See SyndicatedMaps.com examples.

  30. Brook Shepard

    oh it’s nuts.As an agency, we’re lucky enough to have people in all the time… but the % of them that think they’ll be making an app and going gangbusters is depressing.I had a high end umbrella mfg. in three weeks ago. Told me his whole 2016 strategy was an app. This guy sells like 5 umbrella lines, that’s it.He would not listen to reason.

  31. creative group

    Can anyone imagine if Jerry Yang and David Filo didn’t think out the box and challengethe “don’t do that” thinking? They were electrical engineering graduate students or Larry Page and Sergey Brin thinking that Yahoo was already started and they shouldn’t follow theStanford alumni because people would think the model was much too similar.Thinking out the box and making things people use and are comfortable with betterthan they think they could be. That requires not listening to anyone saying it can’t be done and its dumb to even consider it.The name of Jerry and David’s Guide to the World Wide Web does sound dumbbut the idea with a different name was amazing. ($33.68 close)Think out your box your put yourself in. (General statement not directed at anycontributor)

  32. Douglas Crets

    I think the future of mobile is Offline to online, back to offline. The purpose of mobile is not to be in mobile doing a thing. The purpose in mobile is to get information that is out of reach, bring it closer to you and then use that information in work with other people. That won’t happen online. I think we are moving on to Herd gathering. Or, bringing people together physically, not virtually.

  33. George Johnson

    I wonder if part of the problem around mobile app adoption is a conflation of app-first and mobile-first. And in a rush to be app-first–to take advantage of the channel to deliver a broad array of applications just because people are on their phones more–we’ve lost sight of the essential set of behaviors people want to perform on their phones enough to install and frequently use an app.Maybe there’s a reason other than habit that despite their processing power, sensors, and rich operating systems, we still call these things “phones”. Super-phones, but phones nonetheless. App-first has become a shotgun distribution strategy when maybe its application should be determined by whether the engagement involves a set of actions we fundamentally want to use our “phones” for: communicating, scheduling, capturing video or photos, navigation, listening to music and watching video however we want–the types of engagements best supported by dedicated apps. These seem to be the ones we seek out more and use with greater frequency.Since a lot of users still don’t think of these things in our hands primarily as computers (yet?), maybe apps that deliver broader types of engagements are less likely to be and stay top-of-mind.

  34. ShanaC

    It’s not a mobile thing. It’s an anything thing, especially an anything consumer thing.Marketing to the point of recall, let alone get people to do things, is getting very expensive because the market is very saturated. Plus pricing for action often causes negative returns in this level of saturation. Buyer beware.

  35. Alessandro Prioni

    “He said he plans to build mobile web experiences that can go viral and build adoption of his product and use that as a funnel to drive adoption, over time, to his native apps. I’ve seen that work.”@fredwilson:disqus this is interesting but I’m not sure I fully understand what he meant: could you share a real example that worked? Thanks!

  36. Henry Thornton

    It is reminiscent of when Microsoft went from extraordinary to unbelievable growth after the introduction of Office. Strong individual product leaders such as Lotus 1-2-3 and WordPerfect started a rapid decline and Microsoft never looked back. It was literally game over. Facebook, WeChat and Line are operating with the same playbook – put all the key needs into one app.

  37. guyAtHockeyBiasDotCom

    Spot on.

  38. Pankaj Garg

    Idea of app is to do something niche and make solve the problem at a much finer level rather than one size fits all approach on web..It handles the long tail case..I believe this is a threat to models of Amazon.. In india, many hyper local delivery startups are coming up and i believe that too is intermediate stuff till all stores have their own app..They will be really on the right most part of the extended plot above. But put together, they will be catering to a huge chunk of consumers..

  39. Jess Bachman

    What’s #7 got to do with anything?

  40. Jess Bachman

    Oh ok. Just curious as to why Whatsapp and not something else. US penetration of Whatsapp is pretty low.