Category Archives: Mobile

What We’re Curious About at Homebrew…

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Every day we meet amazing founders sharing their ideas for how the future will evolve. In fact, we see about 150 new companies each month. Where do these teams originate from? Roughly 65% are referred to us by other founders or people we know. 25% are introductions via investors – either angels or VCs. The remaining 10% are a combination of cold inbound/outbound sourcing, often based upon a specific area we’re investigating. So recently we asked ourselves a question “is there strategic value in keeping our list of interests to ourselves?” That didn’t seem like a very good idea if our goal is to connect with thoughtful founders or inspire conversation. And thus http://bit.ly/HomebrewWhatIfs

What Ifs will be an dynamic list of ideas, questions and technologies that we are curious about and specifically want to connect with entrepreneurs to discuss and learn. We’ll edit, add and remove items as appropriate and link to our longer blog posts when it makes sense.

If you’re a founder in one of these areas or someone with domain expertise, we hope you’ll reach out. Do we hope to find new investments this way? Sure, but we’re also happy to just learn and hopefully help.

Better isn’t good enough

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I previously wrote about what I think is required for a successful mobile product.  With all of the activity in the social messaging/communications/networking category (Whisper, Confide, Secret and Wut being the latest buzzed about apps), I thought I’d dig into one of the key points I made, which I believe is even more true in this category.  It’s not good enough to be better, you have to be different ─ in a way that helps address an entirely different use or possibly a similar use case dramatically differently.

In the case of messaging, it’s not enough to innovate along an existing dimension.  You need to create an entirely new product dimension.  It’s clear when you look at the breakout messaging apps that they clearly did something different relative to the apps that came before them, and in most cases that helped those apps address different user needs.  Facebook popularized status updates within a private network.  Twitter made status updates public (changing who sees the update).  Instagram made status updates visual (changing the format of the update).  WhatsApp made status updates (via SMS) free.  Snapchat made status updates ephemeral (changing the permanence of updates).  And what of the apps that were hyped and have seemingly gone away?  What new dimensions did Path, Frontback and MessageMe introduce?

Of the “hot” new apps, it remains to be seen which will pass the test of time.  Whisper makes public status updates anonymous (changing who sent the update).  Confide has made text status updates private and ephemeral.  Secret has made the anonymous status update visible only to a semi-private group.  Wut has anonymous, private and ephemeral status updates(?).  Are any of these apps introducing new dimensions that address different use cases or needs?  Fortunately, or possibly unfortunately, social messaging companies doesn’t typically fit our Bottom Up Economy thesis.  So we don’t have to bet which of these products will become the next Facebook, Twitter or Instagram.  But if I had to bet, I’d pick the one that does the most different thing best.  Because better just isn’t good enough when launching a product.

Four truths about mobile products, user mindset and achieving scale

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Like many others, I’m spending more and more time on my phone, and I’m not making more calls.  I’m getting information, buying stuff, collaborating with others and much more.  There are a handful of mobile apps that I use religiously to do these things.  Why do I use these specific apps as regularly as I do?  I suspect that the answer for me and for many others who have the same behavior (a few select apps used frequently) boils down to a few simple things.

Scale is the outgrowth of doing just one thing really well.  WhatsApp, Instagram and Shazam are great examples of products and companies that expertly address a single, well-defined need in a simple way that satisfies a large number of people.  They haven’t added tons of new features to address additional use cases or at least they didn’t begin to do that until they had already significant user scale.  A single-purpose app makes it easier for a user to remember why she should use that app at the moment that she has a specific need.

Users inherently have a tendency towards mental inertia.  Once a user begins thinking of an app as addressing a particular need, it’s really hard to get him to think about it or use it differently.  An app developer who adds lots of features to an app risks confusing users and detracting from the core use case that the app is meant to address.  Unlike the desktop web, where tabs, menus, filters, etc. can be used to add features, it’s likely that in the mobile world the only successful way to add features will be to build entirely separate apps (see Twitter’s Vine and Facebook’s Messenger), often under separate brands.  Can you think of a single app that you use that does many different things well?

Better isn’t good enough.  Once a user begins to think of an app as addressing a need well, it’s really hard to get him to switch to another app to address the same need, even if it does it “better” (see Facebook’s Poke vs. SnapChat).  It’s not enough to be better in mobile, you need to be first to get to scale or you need to be different to fight inertia (not to mention switching costs, network effects, etc.).  WhatsApp continues to thrive in the face of increasing competition because it was first to address a specific need well.  SnapChat and Instagram succeeded not only because they did only one thing extremely well, but also because they did something different from Facebook and Twitter.  They addressed entirely new use cases and didn’t settle for competing via marginal feature innovation (which seems often to be the case in the messaging category, as one example).

Great products unlock user acquisition.  How did Uber grow virally?  The challenges of mobile app discovery and distribution have been well documented. App store distribution, pay-per-install ads, incentivized referral programs, etc. all face obstacles in mobile.  If you don’t have a product that requires users to invite others to benefit from the app (i.e., Facebook), there is only one true answer to the distribution problem.  The best distribution strategy is to build a killer product that generates tremendous word-of-mouth.  Uber, HotelTonight and Mailbox are examples of mobile apps that delivered amazing user experiences that in turn led to viral growth via word-of-mouth.  More than ever before, being the first to deliver an elegant solution to a user problem can be the key to dominating distribution and hence an entire market.

Surprisingly, when I thought about the points above, it seemed that what is true in mobile has largely been true on the web as well.  While technology changes, human behavior is pretty ingrained.  The mind craves simplicity and consistency and resists complexity and change.  Mobile app developers who want to achieve scale will be well served by satisfying the mind.

Mobile advertising’s day is yet to come

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The hullabaloo over mobile advertising continues with news of Nokia’s acquisition of Enpocket a couple of weeks ago. But if you talk to the people who control the ad budgets, there isn’t much to get excited about. In fact, my recent conversations with several major agencies all suggest that the market shouldn’t expect anything beyond the continuation of test budgets in 2008 and likely in 2009. 

 

Advertising on the web thrived because advertisers could leverage the same creatives in large volumes across multiple websites and measure the performance in a consistent way. As long as the mobile carriers continue to act as individual gatekeepers, mobile advertising will struggle to grow as fast as many in the industry project. Carriers continue to inhibit access to off-deck websites and content, limiting the volume of mobile web traffic and ad inventory. They have also refused to work with each other, making it impossible for advertisers to deliver and measure ads on the same publisher across their networks. Lastly, carriers own the data that is most useful for targeting advertising in a mobile context and have been unwilling to make that data available, even for a fee. Unless mobile advertising is deemed highly relevant by consumers, very few consumers are going to be willing to tolerate the “intrusive” delivery of ads during their mobile experience.  Carriers hold the key to this relevancy because they own the needed data.

 

The carriers control the destinies of all of the players in the US mobile advertising market.  We can only hope that they look to models in markets such as Japan to see that that collectively opening their doors can help create a larger mobile advertising pie for them and everyone else.