It has been a while since the last time I had a guest post on VentureBlog. But it seems only natural for Howard Hartenbaum, my partner at August Capital, to be posting here. Howard and I do a podcast together called VentureCast that is really fun (at least fun to do -- I'll let you be the judge of how much fun it is to listen to). He is a consumer Web superstar (among other things, he was the first investor in Skype and played a major role in the emergence of Skype as a powerhouse). In any event, Howard has been doing a lot of thinking about the mobile space, so he decided to share his thoughts on the "emerging" mobile space. Without any further ado, some thoughts on the mobile space by Howard Hartenbaum:
“Do VCs find mobile interesting?” I know that I do. And so do the partners at August Capital. Every VentureBlog reader must have a location aware smartphone in their pockets by now. Mobile is a game changer. It enables new business models, new consumer and enterprise services, and a better life with more fun. While mobile, I regularly pay bills, get caught up on Facebook and check on the status of my family without having to disturb them. I find my smartphone to be the most useful consumer device I have ever owned and it is hard to conceive leaving the house without it.
Here are a few classes of “mobile” that VCs get excited about:
- Companies that provide tools and services needed to make mobile applications and their business models work. These include Flurry (mobile analytics), AdMob (mobile advertising) and Urban Airship (mobile push messaging) to name a few. These are solutions for mobile application developers and these companies have straightforward business models that make sense for a venture investor.
- Mobile applications that use your device’s location to enable new services. Uber and Lyft/Sidecar (ordering a ride when you need it), HotelTonight and Airbnb (find a place to stay overnight). There’s also Wrapp (mobile gift card gifting with in-store redemption) and Gigwalk (provides a mobile workforce of more than 100,000 across the US that can perform paid tasks for enterprise customers). These businesses take a percentage of a transaction, again a straightforward business. Another interesting service based on device location is Life360 (enables you to track the location of your family/friends in real time without disturbing them with a text or call).
- Mobile applications that control non-mobile products and services such as Nest (mobile control of building thermostats) or eSecure (mobile control of building alarm systems). The mobile application to control my Dish Network recording also falls into this camp. These mobile applications make other services much more useful and are reason enough to convince me to buy those services, even if no money is generated directly from the mobile application. Turo, a peer-to-peer car rental service, has a mobile application that allows me to open a GM OnStar rental car’s door without a key. These types of mobile applications make a solution more useful because they provide on-the-go access.
- Mobile payments such as Square take a transaction fee, and they can also provide loyalty programs and couponing. There are many mobile payments related companies with their own twist, but they all have a strong value proposition for all parties involved.
- Mobile games – Angry Birds, Minecraft, most of the top applications in the app store are games. Though it is a hit driven business, the winners generate hundreds of millions of dollars in sales.
- Photo applications include Instagram, Cinemagram and Snapchat. Mobile messaging applications include WhatsApp, Voxer, Tango and Kik. These companies typically don’t have early proven business models, but the winners at scale can figure it out. These types of products are often the most useful and engaging on a smartphone.
The wildcard – As a venture investor, the most interesting part of mobile is what hasn’t been proposed yet. Undoubtedly there are visionary entrepreneurs who are designing mobile products right now that don’t fit in any of the above categories. The next big thing may be a service that comes across as a bit unusual at first, but these are the kind of “brave new world” business proposals that we want to see. The best part about being a venture investor is meeting these entrepreneurs and hearing these proposals.
Note – August Capital is an investor in Gigwalk, Urban Airship and Turo. Howard is an investor in Flurry.