Tag Archives: Uber

The Third Wave Opportunity on Mobile

19 Aug

There’s really two sets of major players on mobile.  The first is historically desktop-focused companies where their pageviews started on the desktop and are now shifting rapidly to mobile as the share of time spent by users switches from the desktop to smartphones and tablets.  This includes services like Groupon, Google Maps, Yelp, Dropbox, Facebook, Twitter, eBay, Fab, Digg, Huffington Post, Gmail, Linkedin, Amazon, Skype, Salesforce, Kayak, TripAdvisor, and a whole host of others.  The second group is companies who started on mobile and don’t make sense without it.  Evernote, Uber, Prezi, WhatsApp, most mobile games, Roambi in the enterprise, and others are in this category.   

What’s interesting is that in terms of pure reach, the traditional desktop companies are really dominating.  The first wave of adoption of mobile apps has benefited strong desktop brands whose services make as much sense or are stronger even on mobile.   Check any smartphone n the US and you’re likely to see some mix of Facebook, Yelp, Google Maps, and Twitter apps to name a few.  Perhaps this shouldn’t be surprising since these are some of the most popular services globally.  And as mobile increases as a percentage of online time spent and as total hours spent online increases because of mobile, you’d expect these services to benefit.   

The next wave of adoption is of mobile-first services.  For some companies like Evernote and Whatsapp, the boat has already sailed in this regard.  For others, there’s huge headroom for adoption.  I’d also argue that there should be a whole slew of services built from the ground up for mobile that we haven’t seen yet.  This is the “third wave opportunity” for mobile apps.  

Gaming and Messaging have been the two killer apps on the smartphone, the former in terms of total time spent and the latter in terms of frequency.  After these, your traditional desktop services like Gmail and Facebook consume a ton of time.  And then you have your set of mobile-first services like Uber that aren’t in the Gaming or Messaging categories.  That last category is growing rapidly and should see many new players emerge.  

There are new ways of re-imagining everything we do on the Web, but for mobile.  For instance, Prezi is re-imagining how you create and view PowerPoint-like presentations on the iPad, and Roambi is reimagining Business Intelligence for mobile. 

In particular, I think there’s a whole host of enterprise applications that can be rebuilt from the ground up for smartphones and/or tablets.  CRM, corporate chat clients, time sheeting, meeting management, conference dial in, and Excel/spreadsheeting are a few examples of generalized apps that need to be rebuilt for smartphones and tablets.  

I also think there’s a whole slew of vertical-specific apps that are ripe for the taking.  Hospital management, big law firms, personal financial advising, hotel management, auto dealers, financial traders, and many other areas have a need for specialized mobile apps.  

In some cases, the incumbent, traditional desktop players will get their act together when it comes to mobile and continue to dominate.  In other areas, these players will either be too late to the opportunity or might lack the ability to, whether because of organization issues, a lack of talent, or something else.  

If I was investing in or looking to start  a company, I’d be looking for these third wave opportunities, especially in areas where the incumbents aren’t equipped to capitalize on the opportunity.  

Advertisements

How High Private Valuations are Contributing to the Decline in IPOs

11 Jul

I just read this piece from March written by Scott Kupor, a partner at VC firm Andreessen Horowitz.  I broadly agree with most of his argument (though I think he overstates the importance of the IPO market to strengthening the American middle class).  Taking a company public today is a bigger regulatory and financial burden than it needs to be.  The more onerous parts of Sarbanes-Oxley should be amended and reverting back to a higher minimum tick size should be changed as well.

Also, Kupor doesn’t point this out, but the pressure created by the quarterly earnings cycle is as intense as ever (see declining CEO tenure)  Simply put, with late-stage private financing opportunities abundantly available for the best companies, why should founders/management opt for the IPO route?

Companies are staying private longer in favor of a “private IPO.”  That’s to say that they’re both issuing new shares and offering secondary share sales to large institutional investors to achieve investor, founder, and early employee liquidity.  Only in these “IPOs” there is no public participation.

I think one of the more subtle factors at work here isn’t simply that companies are choosing to stay private longer through late stage financings, but also that these rounds are being done at extremely high valuations.

From a public markets perspective, the current financials of many of these companies wouldn’t support the valuation they’re getting in the private market.  I’m not going to get into whether public market investor are applying a more rigorous standard or are simply naive (i.e., they don’t get the story behind tech), though I tend to think they’re pretty rationale and that investors understand consumer web, SaaS, and other types of businesses than they have in the past.

Late-stage, private investors are clamoring to get into the “hottest” companies – EvernoteUberFab, etc. and once private companies like FacebookZynga, and Groupon.  The excess supply of capital and fear of missing out on the next homerun are driving some valuations above where they would trade if public today.    Some of these companies have to delay an IPO because they don’t have the financials to support the valuation they require to earn an appropriate return for the last round investors.

Twitter is a good example.  It’s only in the last year that its advertising efforts and revenue trajectory have really taken off.  The late stage bets being taken in 2009-10 were being taken on the site’s awesome user growth and assumption that monetization would eventually catch up.  Financials at the time wouldn’t have supported the valuations these rounds were being done at.  As the valuations being to support the valuation, the main beneficiaries will be the private investors, not the public guys.

Gigaom

Technology news, trends and analysis covering mobile, big data, cloud, science, energy and media

You Do The Dishes.

Just remember that the things you put into your head are there forever

Regarding Work

Thoughts on productivity, collaboration and maximizing talent

juggaloforbooks

...readin' books, watchin' movies, and drinkin' Faygo

50 Marathon Quest

Running 50 Marathons By The Time I'm 50

ex post facto

by tom tunguz of redpoint ventures

Taylor Bollman

Just another WordPress.com site

Simpletom

Explorations of simplicity and simple living

Haystack

@semil's blog, building a community around technology

Lightspeed Venture Partners Blog

Lightspeed is a leading global VC firm focused on partnering with exceptional entrepreneurs to build high-growth market-leading companies globally.

Steve Blank

Entrepreneurship and Innovation

VentureBeat

News About Tech, Money and Innovation

%d bloggers like this: