Posts from Mobile application development

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:

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.

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.

I wrote a post a few weeks ago asking when and if we would have a mobile web that acts and feels like the desktop web. The discussion was fantastic and I have a lot of takeaways and to dos from it.

In the environment we are in today, I see the mobile OS as the foundational app and I see the third party apps as features in that OS. This view comes from Tim O'Reilly's Internet Operating System construct adapted to the mobile environment. In effect, the mobile OS has assumed the role that the browser plays in the desktop web.

The cool thing about the Internet OS with web apps as features is that the features are interoperable. I post a picture to Instagram and push it to Twitter and it comes through as a picture (or it did until the kids started fighting). I find something I want to buy on Etsy and I check out on Paypal. You get the idea. Web apps pass data and users back and forth easily.

That is not true on mobile today. Even on Android where sharing is baked into the OS. It is a lot worse on iOS. But its bad all over the place.

If you post an Etsy item to Facebook and I want to buy it, I click on the link in Facrbook mobile and am taken to Etsy's mobile web app where I am not logged in and its a pain to buy. I want to go app to app to Etsy's mobile app where I am logged in and its one click to buy.

This morning I was at the gym listening to the Django Unchained Soundtrack on my phone in the SoundCloud android app. I decided I wanted to make Trinity my song of the day on Tumblr. I hit the share icon, up came a list of apps, I selected Tumblr, and I was taken to the Tumblr app but as a link share. I wanted an audio share.

Maybe all of this app to app handshaking will be solved one by one by the third party apps. I already have an email out to SoundCloud and Tumblr to let them know about that last thing.

But a better approach would be for the mobile OS vendors to build really great data and user handshaking into the OS so third party developers can implement it without having to talk to each other each time they want their apps to work together intelligently.

We have two options. We can make the app centric mobile environment work more like the web or we can make the mobile web more like apps. I suspect we will do both. As a user I can't wait for both to happen.

I wrote the Mobile First Web Second blog post a few years ago. In that post, I talked about apps that were designed to be used on mobile primarily with the web as a companion.

There have been a number of startups that have taken that approach and done well with it. Most notably Instagram, and also our portfolio company Foursquare. It has become a bit of a orthodoxy among the consumer social startup crowd to do mobile first and web second.

But is it the right thing to do? Vibhu Norby, co-founder of Everyme and Origami, wrote one of the most thought provoking posts of the past month arguing that mobile first is a recipe for failure for most, if not all, startups.

Vibhu makes some excellent points:

All in all, mobile service apps turn out to be a horrible place to close viral loops and win at the retention game. Only a handful of apps have succeeded mobile-first: Instagram, Tango, Shazam, maybe 2 or 3 others.

and

You have an entirely different onboarding story on the web. You can test easily, cheaply, and fast enough to make a difference on the web. You can fix a critical bug that crashes your app on load 15 minutes after discovery (See Circa). You can show 10 different landing pages and decide in real-time which one is working the best for a particular user. You can also close a viral loop: A user can click an email and immediately be using your app with you. You can’t put parameters on a download link and people don’t download apps from their computer to their phone. Without the barrier of a download + opening the app to try your product, you can prove value to the user immediately upon their first impression, as is with Google. In addition, the experience of signing up for a service is superior in every way. Typing is easier. Sign-up with OAuth is faster. Tab to the next field. Provide marketing alongside sign-up as encouragement. Auto-fill information is a feature in every browser. The open eco-system of the web and 20 years of innovation has solved many of the most difficult parts of onboarding. With mobile, that kind of innovation is lagging significantly behind because we create apps at the leisure of two companies, neither of which have a great incentive to help free app makers succeed.

and

I use my phone more than anything else. I just don’t think that an entrepreneur who wants a real shot at success should start their business there. The Android and iOS platform set us up to fail by attracting us with the veneer of users, but in reality you are going to fight harder for them than is worthwhile to your business. You certainly need a mobile app to serve your customers and compete, but it should only be part of your strategy and not the whole thing.

Vibhu also takes a stance against the ad-supported, privacy challenged, free consumer app world. I respect that stance and every time I upgrade from a free ad supported app to a premium version (advertising free) via the in app upgrade on mobile, I express my solidarity with him on that one. But as a business person, I have and will continue to advocate for a free tier with a premium upgrade (or just entirely free) because as I have written many times on this blog, I think that is the value maximizing approach and it also allows the greatest number of users to access your product or service.

But I don't want to focus on business model in this post. We are at the start of what will be a long MBA Mondays series on business models and will be talking a lot about that.

What I want to focus on is the paradox that mobile is where the growth is right now and that mobile is very very hard to build a large user base on. Everything that Vibhu says in his post is right. Building an audience on mobile is a bitch. I talked about that in my what has changed post:

distribution is much harder on mobile than web and we see a lot of mobile first startups getting stuck in the transition from successful product to large user base. strong product market fit is no longer enough to get to a large user base. you need to master the "download app, use app, keep using app, put it on your home screen" flow and that is a hard one to master

But just because something is hard doesn't mean you shouldn't try to do it. I am convinced the next set of large and valuable consumer facing services will be built with mobile as the primary user interface. You can see it in the success of Uber and Etsy this holiday season. That's where you users are most of the time. And if you don't design your products and services for what is rapidly becoming the dominant UI, you will not maximize the success of your business in the long run.

So do I disagree with Vibhu? Not at all. I think he makes some great points on why you might not want to go mobile only unless you are in the games business. But I differ in two important areas. First, I think you can't abandon mobile. It is the future like it or not. And second, I think it is critical to design for mobile first and then build a web companion. If you design for the web and then port to mobile, you will find that it is really hard to fit your UI onto the small screen. Better to design for mobile first and then build a web companion. Mobile first, web second. But as Vibhu points out, the web can't and should not be ignored. It is valuable in many many ways.

Related articles

Beware the Mobile-First Strategy

Some things that make mobile user acquisition difficult

Why We're Pivoting from Mobile-first to Web-first

Why Mobile First Is Not The Right Strategy

The Biggest Problem in Mobile: Retention

Consumer Mobile Riches – Come back in 5 years?

Last night the Gotham Gal and I went to one of our favorite local spots, sat at the bar, had a glass of wine and a nicely cooked mediterranean seabass. As we sat down, I checked in on foursquare and was alerted that there was a special. Spend $10 or more and get $5 off. So I clicked on the special, loaded it to my card with one click, and when we paid our bill, we got the $5 discount on our credit card bill.

It was simple.

Mobile commerce is simple. Because you have your payment credentials stored in the web service (in this case foursquare). But the same thing could have happened with a direct checkout in the Etsy mobile app. Or in the eBay mobile app.

According to this post on AllThingsD, both eBay and PayPal will transact over $10bn this year on mobile devices. That's a 100% increase over last year.

I've been talking a lot about mobile here at AVC lately. That's because I am seeing the same kinds of things in our portfolio companies that eBay is seeing. Mobile is exploding. And that doesn't just mean mobile browsing, mobile gaming, mobile social networking. It also means mobile commerce.

If you are a transaction driven company, a marketplace, a retailer, or some other transaction oriented business, you had better be investing big time in mobile. Because if you aren't, your competitors surely will be.

I know its supposed to be Fun Friday, but this is going to be a Fun Feature Friday.

Yesterday our portfolio company Kik launched a new mobile app/platform called Clik.

Clik is really just one simple feature, implemented as a mobile platform that any developer will be able to leverage via a set of tools that are coming soon. And that feature is “point your smartphone at a browser that is showing a QR code and take control of the screen with your phone.” Sounds strange the first time you hear it, but give it a try and you’ll see what I mean. It’s really powerful.

There’s one more aspect of this feature which makes it even more fun. If your friends also have the Clik app on their phones (iPhone and Android to start), they can also take control of the screen and you can play games, play videos, play music, show pictures, etc with each other using your phones as controllers. It’s fun to imagine the new kinds of games that can be built with this platform.

So do me a favor, download Clik onto your smartphone, fire up a web browser, point it to clickthis.com, and then take over your computer with your phone. You’ll see the power of the platform right away.

If you are a developer and want to build something on top of the Clik platform, its really simple. No mobile development required. All web development and pretty easy to boot. If you are interested in learning more, email the Clik Platform team and they will be happy to explain how it works.

Related articles

• Control any screen with a browser: Clik turns your smartphone into the world’s best remote (venturebeat.com)
• Hands on With Clik, YouTube’s New Remote (mashable.com)
• Clik for iPhone and Android: Magically Control Any Web Browser from Your Phone [Apps] (gizmodo.com)
• Clik Smart TV Platform turns your smartphone into the only remote control you’ll ever need (thenextweb.com)
• New platform Clik promises to seamlessly sync screens (lostremote.com)
• Clik turns your phone into a remote for YouTube parties (hands-on) (theverge.com)
• With Clik, Your Smartphone Can Control Screens Everywhere – Anthony Ha via Techcrunch (stoweboyd.com)
• Clik™ – Clik Interactive Inc (itunes.apple.com)
• Clik (thegongshow.tumblr.com)