The next wave of mobile startups

By | Mobile | 2 Comments

Mary Meeker has just published her excellent annual roundup of Internet Trends. As always there’s lots of good stuff in there. My biggest takeaway is best explained by this slide:

Screen Shot 2014-05-29 at 14.24.37
Across the whole world mobile data usage continues to grow and take share, yet in the developed world smart phone penetration is approaching saturation levels and growth in device sales has slowed. The opportunity space is shifting from exploiting people have phones and we know where they are, to leveraging newer developments to increase usage.

The first wave of mobile startups mostly took advantage of the fact that people had computers in their pockets to offer them services that are only useful when you are on the move. Uber/Hailo, Foursquare and Waze are good examples. My hunch is that we are largely through this phase now. Enough people have had enough smartphones for long enough that most of the good ideas will have been done already.

However, as we can see from the chart above we are all using our phones more and more, and where there is a change in behaviour like this there is opportunity. From a commerce perspective I’m excited about opportunities that fall into these two buckets:

  • companies that push the boundaries of UX design to make commerce entertaining  – people turn to their smartphones to fill idle moments and compelling product discovery experiences can profit from that. Mary Meeker cites Houzz as an example of a company in this space. Stylect from our portfolio is another.
  • companies that leverage the rising number of sensors in phones and connected to phones to build exciting new products – Fitbit and our portfolio company Big Health fall into this category

The Android vs iOS paradox facing startups

By | Apple, Mobile | 4 Comments

Benedict Evans wrote an interesting yesterday about Android fragmentation (tl:dr 75% of devices that hit the Play Store run Android 4.x meaning Google has reduced the impact of fragmentation, additionally they’ve sidestepped the issue for their own services by moving them out of the OS and into a software layer that can be updated over the air). However, the point I want to bring out is his list of the issues startups should consider as they choose whether to develop first for iOS or for Android:

  • Apple’s homogeneity means things behave in predictable ways reducing development costs
  • Android has a much larger addressable market – people who can afford $50 devices up to $600 rather than just $600
  • Anything on the bleeding edge won’t work predictably on many Android devices
  • There are more early adopters on Android than iOS

As Benedict notes, this leaves developers facing the paradox that the open platform is harder to hack and forces startup CEOs to make the trade off between keeping dev costs and time to market down on the one hand and reaching more early adopters and a larger market on the other.

Most startups we see opt to go iPhone first because that allows them to maximise the speed and efficiency of learning.

I love my Android phone and I’ve always thought that as Android gains market share over iOS more startups would start to develop first for Android and I would stop having to wait months for new apps to come my way. I’m now thinking my wait will continue.

Forget tablets, think big screens and small screens

By | Mobile | No Comments

The idea has been building for a while now that tablets are losing significance as a category of devices and last week Benedict Evans posted data that to my mind makes the case unequivocally.

The main news here is that iPad sales have flattened:

iPad salesEvans also has data showing that Android tablets aren’t having much of an impact.

The other parts of the story are that smartphone sales continue to rocket and PC sales continue their slow decline. Check out Evans’ post for more data and a fuller argument.

From the perspective of the ecommerce companies in which we invest the most important conclusion is that smartphones are going to continue to take an increasing share of transactions and the importance of working well on mobile early in the life of a company continues to grow. Evans’ emerging and more interesting conclusion is that it’s making less sense to think too much about tablets as a separate category. The use cases for tablets are not that different to laptops – they are similarly sized items to carry after all – so keeping things simple by thinking about two primary experiences – small screen (smartphone) and big screen (tablet, laptop, desktop) makes good sense.



Should new companies build an app before a website?

By | Mobile | 5 Comments


As you can see from the chart above time spent accessing the web from mobile apps has now passed time spent accessing the web for PCs. Moreover, the trends are only going one way, which begs the question of when it will become the norm for startups to build an app before they build a website.

Up until now there have been a few ‘mobile first’ startups, but they have been the exception rather than the norm. I see that balance shifting. We are close to backing our first (maybe the first) ‘mobile first’ ecommerce business.

Remember also that the action is increasingly phones now rather than tablets.



Whither tablets?

By | Mobile | 6 Comments

broken heart tabletsAt the moment it seems everyone is talking about a blog post by Andreessen Horrozitz partner Zal Bilimoria titled Our love affair with the tablet is over. First, I love that he used the picture above to illustrate his point, and second, I think he is dead right. Bilmoria was formerly of Netflix. These are the three key paragraphs from his post:

Post-launch, the new [Netflix tablet] app significantly increased retention and streaming hours. It won reviewer praise, barely missing out on winning the Best Tablet App of 2011 at the Crunchies — it was a hit. And then it seemed, as soon as it had arrived, the tablet lost its momentum.

At Netflix, we witnessed a dramatic increase in phone usage for the streaming service — all that binge-watching of “Sons of Anarchy” and “House of Cards.” The reason was obvious: As phone apps improved in terms of quality and speed, users abandoned their tablets for the device in their pocket that could access the Web anywhere and anytime from Wi-Fi or cellular connections. Conversely, only 12 percent of tablets have cellular connections, instantly making them non-mobile devices. And very few people will shell out for a second wireless plan in addition to their phone. Based on the momentum of the phone, Netflix decided to merge the tablet and phone UIs.

Even the awards circuit lost interest in the tablet. The year after our tablet app premiered, the Crunchies ditched the Best Tablet App award. They haven’t brought it back since.

Use of tablets in the Brisbourne family matches this pattern – enthusiastic early adoption and less and less use over time. Two examples:

  • I used to have a Nexus 7 in the bedroom to read news, but I smashed the screen a couple of months ago. I initially thought I would wait until an interesting new tablet was released and buy that as a replacement but I’m now quite at home with reading news on my phone and probably won’t bother.
  • We keep an iPad in the kitchen which is theoretically for the adults in the house but occasionally the kids use it and it isn’t there when Fiona and I want it. That doesn’t seem to matter anymore because our phones are a fine substitute. I wanted the iPad the other morning to buy some new vitamin C, for example, but it wasn’t there, and to my surprise buying from Natures Best on my phone was a breeze. The only thing that we really need the iPad for is Spotify and that’s mostly because it connects easily to our Bluetooth speaker.

When people talk  about Bilimoria’s post they all say the same thing as I’m saying – they are using tablets less and less. This doesn’t mean that tablets are about to disappear, but it does mean that for most new mobile oriented startups the right strategy is to think phone first.



Smartphones are topping out with regard to speed

By | Mobile | No Comments

Techcrunch did a fun test where they placed all versions of the iPhone next to each other and ran a speed test. You can see the video here, the the main takeaway is:

After the 4S, the speed differences for basic day-to-day activities (like loading a page) start to get pretty slim with each next generation. Once you’re on the 5 and later, the difference is hardly noticeable. The differences are obviously going to be more visible for the more intensive things (like 3D gaming), but for general day-to-day stuff like browsing, there’s not really room to make huge strides.

The 4s was released on 4th October 2011 so it is just about two years since iPhones got any faster. Screens and cameras have gotten a bit better since then but if speeds aren’t improving then the competition becomes much more about software (hence the big fuss about iOS 7) and about price. With the exception of the Nexus 4 (which was most likely heavily subsidised by Google) high end Android and iOS smartphones have been consistently priced at £400+. That may now start to fall.

Smartphones will provide the intelligence for other devices

By | Mobile | No Comments

In the last couple of days Samsung have launched their Galaxy Gear Smartwatch and Sony have launched their QX Smart Lens which attaches to smartphones. The watch duplicates a lot of phone functionality whilst the lens pairs with a phone so it doesn’t need it’s own screen.

I think the Sony device shows the way of the future. At the moment it only uses the smartphone screen, but over time it could use its processor, storage and comms. As general purpose processors get cheaper and phone to sensor connectivity gets better this will become the most efficient way of taking photos. This way you can go straight from shooting to processing in Photoshop or organising your albums in Picasa.

The Galaxy Gear and other rumoured smart watches seem to be taking a very different route. They are duplicating a lot of functionality, in order to make it more accessible. The idea is to make it easier to check alerts and simple messages, whilst reverting to the phone for more complex tasks. That’s quite cool, and I got quite excited when I first read about the Galaxy Gear and its phone companion app which automatically takes you to the email you were reading on your watch, but thinking about it some more since I just don’t think it’s that big a deal. Getting the phone out of your pocket isn’t too much of a hardship (lots of people are now choosing not to wear watches at all because they can check the time on their phones) and having a big funny looking watch on your wrist that needs recharging more than once a day is going to be too much of a pain for most people. Plus the duplication of functionality is inefficient (the Galaxy Gear will cost $299).

I’m ignoring the health tracking capabilities in this analysis, but they are available more cheaply in devices from Jawbone, Fitbit and others. I’m much more excited about pure play smartphone add-ons. The one I’m most looking forward to is an Android blood glucose monitor.


Microsoft buys Nokia’s devices division – where’s the excitement?

By | Microsoft, Mobile | No Comments

The big news in the tech world this morning is that Microsoft has bought Nokia’s devices division for $7.2bn or $7.7bn, depending on who you believe. Either way it is a lot of money and these are two iconic brands that dominated the tech landscape in the 1990s. Sadly both have been in decline since then and both need to do something exciting if they are to revive their fortunes. This deal isn’t it.

Screen Shot 2013-09-03 at 12.52.44

Microsoft’s problem is that they haven’t made the transition to mobile. The chart above shows just how important that miss is, and explains why Microsoft has lost 40% of its value over the the thirteen years that Steve Ballmer has been CEO. A superficial analysis might suggest that buying Nokia, the world’s second largest mobile business in 2012 by share of devices sold, is a great solution, but as I suspect most of you know Nokia’s problem is that they have lost the smartphone battle. The chart below shows just how badly.

Screen Shot 2013-09-03 at 13.08.24


Smartphones are the interesting end of the market, and Microsoft isn’t getting much here. Maybe they can bring life to Nokia’s high end phones, but it isn’t easy to see how. Their main asset in this space, Windows Phone, has been running on Nokia devices for a while without making much of an impression and Microsoft’s history in mobile isn’t strong enough that it’s likely they will come up with a bit of magic that sets the world on fire.

I fear that Microsoft is going the way of HP.

Celebrating meritocracy: Happy 5th birthday to the Apple app store

By | Apple, Mobile | 8 Comments

Apple’s app store is five years old today, and it is hard to overstate the impact that it has had on mobile and web services. Apps have replaced URLs as the dominant method for accessing many online services and its dominance is such that people have rushed to apply the app paradigm to other mobile OS’s and other industries.

You knew all that though.

What was new to me is the realisation that Apple’s app store is a boon for meritocracy. Pandodaily put it thus:

Meritocracy. All you have to do to succeed in the App Store is to make something great.

I love that. I wish all the world was more meritocratic. In my utopia all the rewards go to the people who most deserve them based on what they’ve done, not based on who they know or the money they’ve got.

Apple’s record in this regard is not spotless, and when I first read the Pando article I thought ‘meritocratic, really?’, but on reflection they are right. Relationships and marketing muscle still play a part in app store success (witness EA’s dominance of the games charts at Xmas) but startups regularly achieve amazing results and the playing field is now more level than it has been in the past.

Gartner has increased their mobile ad projections, display to grow fastest

By | Advertising, Mobile | No Comments


Gartner have just released revised mobile advertising projections, showing a total market of $11.4bn for 2013, up 19% from last year. The numbers are up from their November forecast due to faster than predicted take up of tablets and smartphones, and the growth has come at the expense of print advertising.

Gartner also noted four interesting trends at the next level of detail:

  • display ads will grow faster than mobile search (including augmented reality and map ads)
  • within display web ads will exceed in-app ads from 2015
  • inventory is growing faster than mobile ad budgets pushing down yields
  • mobile app developers buying ads off each other to drive downloads of their apps might be producing an inflated picture of revenue that may ultimately prove to be a bubble