11 Thoughts For A Thursday: Density, Bitcoin, Female VCs, Raising Money, Google Dependence

Categories
11 Thoughts for a Thursday

About 11 Thoughts For A Thursday: With an endless firehose of opinions, comments, blog posts, articles, tweets, etc., I felt there was a lot of great insight being drowned out. I plan to surface insight that interests me, both new and old. I’ll also be working to extract perspective from some great minds that aren’t very vocal in public print. I am always looking for great insight, so hit me up on Twitter @popo if you spot any.

1. Jessica Livingston (Y Combinator) says this could be the tipping point year for female founders. Y Combinator is already at 25% female founders in the current batch of startups. That led me to wonder what percentage of VCs were female: 14% (I compiled data from the top 10 most active venture capital firms in 2013). This seems correlated to founders — the more successful female entrepreneurs there are in coming years, the more female VCs there will be in years to come. Another profound stat from Y Combinator: 1/3 of all startups with female co-founders were started with their significant other.

2. I met a local startup called Density (from digital agency Rounded out of Syracuse, NY). They recently won the ‘best enterprise hardware’ award at Launch. They have a customized Raspberry Pi device that plugs into a wall and will tell you how many people are in the room. That seems an amazing feat. How it works is that if you’re a restaurant owner (or any venue), you plug it in, and use their app to tell it which of the wifi networks is yours — that’s it, setup is done. Then, you know how all our mobile phones are always looking to see what available wifi networks there are? The Density device is a wifi router itself and thus is signaling it’s own network, which your mobile phone sees and essentially pings. The Density device registers your mobile phone’s unique device ID (like a MAC address) and anonymously keeps track of how many people there are, which is reported in real-time and in trending charts to the restaurant owner via their app.

The Density team said they plugged the device into a venue of 20k people and saw 14k people, thus 71% of people had a mobile device that was looking for wifi networks. It’s not 100% accurate obviously, but wow, this is pretty amazing. Foursquare is able to see where people go, but that’s only on their 25(?) million users. I see Density as a prime Foursquare (or Yelp) acquisition. I’d then send a device to every restaurant (or any venue) that requested one for free, provide basic stats and maybe charge monthly for better stats — or maybe not. Imagine anonymously tracking users as they go from venue to venue around the world, via their device’s MAC address. Again, Foursquare has this data, but on a very self-selecting audience.

3. Related to #2: a study out of the University of Cambridge used location data from Foursquare users to see if they could build a recommendation algorithm to predict what sporting events, concerts and conferences you would want to attend in the future based on what you have attended in the past. This study takes some mental stamina to read through, but being an avid concert-goer, I’d love to know what shows I should be attending that I don’t even know I should be attending (because likely I’m not familiar with the band/artist performing).

I love the future.

4. Yesterday, Google Ventures teamed up with Uber to do UberPITCH. Basically, you requested an UberPITCH vehicle and an investor from Google Ventures would show up in an Uber and you’d get 7 minutes to pitch them, then 7 minutes for Q&A. Essentially, mobile office hours. I think this is a great marketing idea for Uber and Google Ventures, but could also be a TV show — Cash Cab is awesome entertainment. This isn’t the first time someone has pitched a VC in a car ride — Dave McClure (500 Startups) asked via Twitter if someone would give him a ride and they could pitch, which Alex Moore did and Dave joined the seed round of Baydin for $100K in that 40min car ride.

5. Great gem from Goldman Sach’s report on Bitcoin mentioned in the 15-minute podcast from Andreessen Horowitz’s about the state of Bitcoin Ecosystem with Chris Dixon and Balaji Srinivasan: $210 billion in fee savings for payments going through bitcoin in the space of e-commerce and retail. That’s disruption.

6. Seth Goldstein (Turntable.fm and Fred Wilson’s first EIR) has an e-book he co-authored with Michael Simpson out called ‘The Secrets of Raising Money‘, which there are different tiered packages of the ebook — the highest tier includes 8 video interviews with the likes of Fred Wilson. Here’s a few 4-minute previews (including the Fred Wilson interview). They tease me enough to likely buy.

7. Josh Constine (TechCrunch) wrote a great post a couple months ago called ‘A Facebook Life‘. At the beginning I almost stopped reading, but I’m glad I didn’t. The post is ready for a movie studio to option. Hypothetically if it were optioned, I wonder if he owns the rights or if it’s AOL/TechCrunch. Presumably AOL/TechCrunch, but I’d be curious. Well done for summing up the digital life today, Josh.

8. Chris Dixon (Andreessen Horowitz) blogs about the data coming out of Flurry last week showing that the mobile web is losing vs apps, and how this is bad for innovation. Highlight quote from his post, which is scary:

Apps are heavily controlled by the dominant app stores owners, Apple and Google. Google and Apple control what apps are allowed to exist, how apps are built, what apps get promoted, and charge a 30% tax on revenues.

Most worrisome: they reject entire classes of apps without stated reasons or allowing for recourse (e.g. Apple has rejected all apps related to Bitcoin). The open architecture of the web led to an incredible era of experimentation. Many startups were controversial when they were first founded.  What if AOL or some other central gatekeeper had controlled the web, and developers had to ask permission to create Google, Youtube, eBay, Paypal, Wikipedia, Twitter, Facebook, etc. Sadly, this is where we’re headed on mobile.

But, I truly believe this is a temporary state of mobile as it evolves (which I somewhat allude to in my post last week). Commenter Zach Weinberg states it well,

Reminds me of how the internet evolved on the desktop. Seems temporary. Fully integrated won first (i.e. AOL) which ultimately got replaced by open web (Browser) as the web caught up in terms of technology (just as fast, easier to browse, find content etc.). Same will happen on mobile. Fully integrated / native apps will win first until the mobile browser technology catches up to be just as fast and fully featured as the native apps.

9. Love this mission from Charlie O’Donnell (Brooklyn Bridge Investments) writes in a blog post this week about how he often invests pre-product and pre-deck:

Personally, I’d rather write that check than wait for tons of traction.  It’s fun for me and particularly rewarding if you can help a company get off the ground at the way too early stage.  Does it scale?  Not at all.  Who cares?  I’m not playing that firm building game and don’t care to.

Incubators and accelerators have become the pre-product money rounds these days, but Charlie is holding down the fort of being a seed capital fund as another option for entrepreneurs. Keep up the enthusiasm Charlie, entrepreneurs need as many options as possible. The timing, location, (etc) of incubators and accelerators doesn’t always align with entrepreneurs.

10. Naval Ravikant (AngelList) sums up the “Series A Crunch” well in a video interview (preview) with Seth Goldstein, saying that these days there is seed capital and growth capital.  Naval says:

If you’re in between — you’ve already raised your money on hope and you haven’t yet clearly reached a break-out inflection point — it’s actually extremely difficult to raise money.

Adam Besvick (Lowercase Capital) blogged this week about how he believes “it’ll be a trend that consumer apps will take longer to “officially” launch as they seek to mitigate as much risk as possible before showing up in the App Store.”

If you are trying to build a VC-backed startup (aka a grand slam, because that’s what VC firms want in terms of financial returns), you need to nail product/market fit in your first raise. If you don’t and your numbers flatline, you’re SOL.

11. Good post outlining the coupon codes industry online and how much $1.8b public company RetailMeNot ($SALE) relies on Google (63% of their traffic). It’s amazing the number of public companies that rely on Google — Demand Media ($DMD) and Synacor ($SYNC) are a couple off the top of my head. Demand Media knows first-hand the consequences when Google changes their algorithms and traffic drops — 40% instant drop in traffic back in 2011. With the big shift of consumers from desktop to mobile, from websites to apps, Google’s dominance as the middle man to consumer intent isn’t going to last and there’s going to be a ripple effect of consequence to those companies that continue to depend on Google. The bright side is that this disruption opens new opportunities for entrepreneurs.    (h/t @ericnagel)

About the Author: Steve Poland is working to bring asynchronous charades to mobile with Act Away (currently fundraising). Follow him on Twitter @popo or reach-out steve@vestedventures.comIf you’d like to receive this weekly column via email, input your email address here (I promise to only send this column weekly and you can unsubscribe at anytime): http://tinyletter.com/popo

Waitin’ On A Dream: The Demise Of Native Apps

Categories
analysis

Last week marked the two-year anniversary of the sale of Draw Something (OMGPOP) to Zynga. Draw Something’s explosive 7-week ride in early 2012 culminated into a worldwide brand and was then acquired by Zynga for a rumored $183 million. In the past two years since that acquisition, QuizUp has been the next biggest asynchronous game to garner such attention, but not nearly to the degree that Draw Something did.

Draw Something was able to achieve 50 million installs in 50 days vs QuizUp’s 5 million users in 50 days¹. Based on smartphone growth over the past two years, if Draw Something launched today it may have been double what it was — 100 million installs in 50 days. That’s 20x what QuizUp did.

Draw Something was able to shatter what QuizUp did for three main reasons:

  1. The kids appeal of Draw Something vs non-kids appeal of QuizUp. Draw Something was able to appeal to all demographics and locales, particularly the kids. QuizUp on the other hand is a trivia game, so younger kids are left out. Kids are a large audience for mobile games.
  2. Draw Something released both a free and a paid “pro” app. These apps were identical, but the pro version removed ads and gave you additional coins to spend. In the metrics above, Draw Something’s numbers are based on “installs” vs QuizUp reporting “users”. There was likely overlap of some Draw Something users installing both the free and paid app, so this isn’t an equal comparison, but I can’t imagine it’s too far off.
  3. Draw Something simultaneously launched on both Android and iOS from the start. QuizUp did not — they only launched their game on iOS. Herein lies the problem that QuizUp ran into: the word-of-mouth viral loop stopped at every single Android user — which now is a larger market share than iOS.

In my opinion, that last point is the biggest reason Draw Something became a worldwide brand overnight vs QuizUp.

Every instance that I spoke about QuizUp to friends, if they had an Android phone, they didn’t care about the game, because they couldn’t have it — and the message of QuizUp never carried to their circles of friends. Whereas when I spoke about Draw Something to friends, both my iPhone and Android friends would install the game, then tell their circles of friends about the game, who would tell their circles of friends, (etc) and the brand continued spreading like a weed through the world via talk, text, Twitter, Instagram, and other forms of social communication.

Now this isn’t to say that QuizUp messed up. How QuizUp launched is actually the norm these days for mobile startups — Draw Something was an anomaly. Without going into all the gory technical details, the fact is that simultaneously developing a native app for both iOS and Android essentially takes twice the amount of time and effort, which typically means twice the cost.

The technology that’s supposedly going to break down this walled garden of native app development is HTML5. Four years ago, Facebook was all-in on HTML5. A year and a half later they reversed course when Mark Zuckerberg said Facebook had relied too much on HTML5, rather than on native applications. Why? Three years ago, MG Seigler wrote a post outlining the HTML5 vs native applications debate and essentially concluded HTML5-based mobile apps were a joke to their native counterparts. HTML5-based mobile apps were always inferior to native apps. I emailed Dan Porter (former CEO of OMGPOP) and asked if they had considered HTML5 when they developed Draw Something two years ago:

 “We never considered HTML5 as it’s solid for a news site, but at that time not for the real experience of a game — including drawing and drawing playback.”

As I asserted in my column two weeks ago, I believe there’s ample opportunity for mobile entrepreneurs to carve up the web — there are 600+ million websites and a mere 1+ million (unique) apps. If HTML5-based (hybrid) apps can live up to the hype, the floodgates will open as apps will be faster to code (less code to write), beginner and intermediate programmers will have better accessibility to building apps (JavaScript/CSS/HTML is easier to code than Java or Objective-C), and users will win by having access to all apps regardless of their own device or operating system.

Clearly an opportunity for QuizUp to gain many more users and revenue was missed by not launching on Android alongside iOS from the start when the media and user frenzy was at its’ peak. Due to the costly, time intensive and irritating process of building a native app on both iOS and Android, most app startups will continue to lean towards selecting and building for just one of these main mobile operating systems — particularly at the beginning when cash is king, time is of the essence, and you don’t even know if you have a hit on your hands (read: product-market fit). And if that’s the case, chances are that the next app startup to reach QuizUp stardom won’t reach Draw Something super-stardom.

Until an HTML5-based (hybrid) mobile app comes out that interfaces with a device’s native features (i.e. camera, accelerometer, etc.), functions and performs at the same level as a counterpart native app, AND blows the minds of the development community, companies will continue defaulting their mentality to building native apps. Despite the headaches and time it takes to build-out simultaneous native apps, developers are 100% confident they can make them do whatever they very well please. The same hasn’t been said for HTML5 over the years. With all the advances in the past four years, I think the pump is primed for someone to build a mind-blowing HTML5-based (hybrid) mobile app that will make us all think it’s a native app. 

So who is going to be the superhero and show the world that it can be done?

About the Author: Steve Poland is working to bring asynchronous charades to mobile with Act Away (currently fundraising). Follow him on Twitter @popo.

¹Seven weeks after launch (November 7, 2013) QuizUp had 5-million users (December 26, 2013). Six weeks later they released on the iPad (February 6, 2014) and claimed 10 million users. That’s 10 million users in 90 days.

photo credit: @atomicgoofball

11 Thoughts For A Thursday: Mobile Web Is Dead, Tweet-diarrhea, 43North, Founder Visa, Uber

Categories
11 Thoughts for a Thursday

For my early readership, Fred Wilson warned me that it’d be difficult to write posts as long and thoughtful as my original post for this series — he was right and I missed last week. Therefore, I’m going to try altering the format to just provide the 11 item curation.

About 11 Thoughts For A Thursday: With an endless firehose of opinions, comments, blog posts, articles, tweets, etc., I felt there was a lot of great insight being drowned out. I plan to surface insight that interests me, both new and old. I’ll also be working to extract perspective from some great minds that aren’t very vocal in public print. I am always looking for great insight, so hit me up on Twitter @popo if you spot any.

1. Apparently the mobile web is dead and it’s all about native apps now, according to stats from Flurry. Basically the ‘mobile web’ in this instance has to do with browsing websites from your mobile device — aka, using Safari or Chrome (Safari dropped from 12% to 7% usage from March 2013 to March 2014. What’s happened is that the content people would be viewing in a browser, is still being viewed but rather in specialized apps with built-in browsers. Twitter, Facebook, Tumblr, Pinterest — these are all essentially mobile web browsers these days, but not *technically*. Content links simply open in those apps themselves as they have built-in web browser functionality — I recall that a lot of content years ago use to open externally into the Safari app on your mobile device.

Something to take from this data is that your company should likely have an app. Although I do question whether all businesses should have their own apps — like restaurants or plumbers. Those businesses might be just offering content like their menu, hours, and photos of their work. At the moment as a consumer, it’d be tedious to have to download an app each time I wanted info for that type of a business. Maybe that experience becomes frictionless someday.

2. Om Malik wrote a post a few weeks ago about ‘Tweet-diarrhea‘, in which he says it all started with Marc Andreessen. Now it does seem like others at Andreessen-Horowitz are following suit, including a 41-tweet perspective on ‘full stack’ by General Partner Balaji Srinivasan, which then ends up getting retweeting practically tweet-by-tweet by Marc Andreessen. Honestly, I love the insight and perspective that Marc is adding, but any insight over 2 tweets deserves a blog post in my opinion. Having to scroll through my feed the other day of those 41-tweets (FORTY ONE!) was cluttered and annoying. Was it really easier for him to tweet all of that vs blog it? If you have that much to say, blog it and let others curate it into tweets.

3. My hometown Buffalo is holding a $5 million business competition: 43North. There are 11 awards from $250K – $1mm each. You can submit a plan, a startup or an already established business. If you’re a winner, you give up 5% equity and move the business to Buffalo. This is the first year of the program, so they lack a brand, but being the largest competition in the world, I really thought this would get more press than it has. Business (plan) competitions in tech seems like an outdated concept given incubators and accelerators these days, but this competition is open for most all industries. The competition is part of the “Buffalo Billion”, in which NY State is trying to jumpstart the economy here in Buffalo and attract businesses to create jobs.

4. Fred Wilson wrote about the 43North competition and the nugget of wisdom was in the comments section by FAKE GRIMLOCK, in which he said, “YOU WANT REAL JUMPSTART? PAY 50% SALARY OF ALL STARTUP DEVS IN BUFFALO FOR 1 YEAR. THAT HOW STARTUP A TOWN.” Brilliant idea. I have no political clout or know how to run with that idea, but I’d love to see New York implement that.

5. The other comment nugget from Fred’s post came from James Harradence, whom said “They should add some sort of immigration angle. A young person with entrepreneurial ambition would find access to the US market very attractive.” Craig Kanalley (Buffalo Sabres Social Media Director) added, “Couldn’t this be tied to universities somehow? Come for education + incentives to stay.”The University of Buffalo (UB) has a ton of international students, whom we educate and most then leave the area. Why? Well for one thing, in my opinion and from what I’ve heard from some, there are two campuses for UB, one is in Buffalo and one is in Amherst (a suburb of Buffalo). The majority of students are at the campus in Amherst and they think that is Buffalo. Most haven’t been downtown or if they have, they went to Chippewa (a street that encapsulates a couple blocks of bars/nightclubs geared towards the younger crowd). I wish there was a big initiative by UB to get students more intertwined and exposed to all of downtown Buffalo — our architecture, our parks, our museums, and our awesome neighborhoods that are different in their own rights. I know we could cut off some of the brain drain. We have a great opportunity with nearly 40,000 students attending that school each year.

6. Sam Altman was named the new president of Y Combinator (YC), taking the reigns over from Paul Graham. He’s 29 and Re/code did a piece about him that’s worth the read — he’s a fascinating guy. Warning: The article will make you feel lazy after reading how much Sam accomplishes in a day.

I digress, I really wanted to bring up his blog post The Founder Visa (again). It’s an open proposal to the US Government to allocate 100 visas to founders per year, under the direction of YC. This is after no(?) progress being made when YC requested 10,000 per year, five years ago. Essentially the argument is that we welcome all of these super smart people from other countries to the USA, educate them, then kick them out to go back to their home countries to start businesses, create jobs, and compete with the USA — because it is so difficult for them to stay here permanently. I admire YC’s initiative and I found it amazing how many people were quite frankly pissed off at YC (see comments) finding the proposal self-serving in that YC would want all the power over these visas — ultimately giving YC an advantage over entrepreneurs trying to stay in the USA. I understand the reaction, but it sounds like a bunch of whining. YC is trying to open the door to government for all VCs to have this opportunity, but the initiative needs to start somehow — and the simpler the better. YC has proved itself a leader in funding entrepreneurs that build companies that have created thousands (tens of thousands?) of jobs in less than ten years time.

7. Uber is doing $40mm/week and are doing more trips in SF than the taxi industry. It’s great to see this success for Travis Kalanick and team. He opened his home to me years back while I attended TechCrunch Disrupt. His energy was infectious. He’d have these late-night “jam sessions” as he called them, in which a bunch of super smart geeks would come over and they’d be whiteboarding up any of their startup ideas. They’d be going til all hours of the night and this was a regular thing! This is of course when he wasn’t schooling you at Mario Kart in his basement. Hunter Walk (Partner at Homebrew) had some interesting ideas about restaurants paying for your Uber if you dined with them — or discounting your bar tab.

8. Interesting idea from former TechCrunch writer Nick Gonzalez (Nervora), “What if apps of the future eschewed advertising and instead made money by mining cryptocurrency in the background while in use?” From those I’ve spoken with, this seemed far-fetched, but it was accomplished this past week — even if it wasn’t with permission from the users. It does seem there must be something our idle plugged-in devices could be mining while we sleep or are watching Netflix. Who remembers SETI@home?

9. During the Oscars last month I tweeted, “‘What’s a tweet? What’s Twitter? What’s a selfie?’ – thoughts by likely 50% of the people watching the Oscars right now”. I was wrong. Twitter’s audience for the Oscars was 37mm vs ABC’s audience of 43mm. Ellen’s selfie picture got 32mm impressions, although that doesn’t include all the impressions that picture generated from TV and print media showing off that picture. Twitter has become the second screen experience.

10. Some great historical items that take a couple seconds to view: The Future Of Gaming and a 1933 book passage about the California Gold Rush.

11. Lastly for a laugh: Startups Anonymous: “What I’d Really Like To Say To Investors”. This post literally made me laugh-out-loud at one point. Being in the thick of fundraising for my startup Act Away, some of these comments are spot on.

If you’d like to receive this weekly column via email, input your email address here (I promise to only send this column weekly and you can unsubscribe at anytime): http://tinyletter.com/popo

About the Author: Steve Poland is working to bring asynchronous charades to mobile with Act Away (currently fundraising). Follow him on Twitter @popo or reach-out steve@vestedventures.com.