-Mao said it

Imagine if you’ve recieved a request (bounty, quest, assignment, mission, challenge) on your mobile phone for someone wanting to see live footage of an event happening where you are.

Example:  [message on your mobile device from user "Ed L."] “I’d really like to see a live broadcast of Lady Gaga’s appearance at NYC Time Square this Saturday,  I’ll give XYZ to anyone who does this”.
1) It’s Saturday.
2) You are at Time Square.
3) You came to see Lady Gaga make an appearance on the today show.
4) You take the bait and accept the bounty.  You start the Live Camera tab on your Tackable iPhone app and your personal broadcast begins.  In two minutes, you see that ~60 people are watching your video stream right now but the number of viewers keep changing.  That’s because there’s about 20 other people who’ve also accepted the bounty and they are broadcasting as well.   Viewers in remote locations are “channel surfing” through all the different Tackable broadcasters.  Forget ABC, NBC, CBS, FOX.  Let a thousand broadcasters bloom.

In the future, (1)live video channels will be structured and satisfied by advertising your desires (Bounty = “I want to see the cherry blossoms in Osaka”); (2) Your desires will be satisfied by many different live broadcasters (people who are there), (3) weirdness ensues.

• Is Badging or points necessary?
• When badges are prolific they lose their value.  ”Oh man, another badge application.”
• “Badgification” of the internet.”  Industry of Excess.
• Games are “social signaling”
• Advertising has always been a game.  Message substitution & response.
• What about the ability to trade up to another team?
• Badgeville - a company that brings a badge platform to brands
• Reputation management.  Check ebay and WOW as model on fair user policing
• Collective Badge – Everyone shows up at one place.  If you get at least 50 people, then you call get a special badge.  Flash mob with mobile.
• Network effect coming to Foursquare.  Last year, there were 6 people check-in at a Giant’s Baseball game in San Francisco.  This year, there was 60.  Next year?  200?  The year after that?
• FourSquare has conflict and no conflict mechanics.  Everyone can get a superuser badge but only one person can be the mayor
• hunch
• venture chronicles

LBS & Advertising:

• Areas of high dwell times
• Need to flip the ad models to work.  Media buy guys are 27 year olds working at places like Olgivy who look at spreadsheets mapping volume, thousands of impressions, and don’t care or understand about location targeting.  Square peg, Round hole.
• Billboard guys don’t want any smart intelligence revealing true impressions.  The metics of CPM are outdated but the industry does not want to mess with it.
• Tech company pitched to demonstrate that they could measure exact the number of engagements an outdoor sign would receive.  It would show that there are more impressions during 3pm in the afternoon.  The sign company didn’t want to hear it because it would also show that no one is watching at 2am.  Who would buy advertising at that time?
• Traditional  model supports making money by blanket campaigns.
• Skyhook even offered free trials onto their platform for targeting advertising.  No one would accept.
• Reachlocal (trying)
• SnackSquare (shows specials on foursquare)
• Fake Mayor (an app that fakes being the mayor of a place to get the special)
• echoecho.  Where are you?  Here’s where I am.
• There is value in the location trail (information trail)
• People don’t care about where you are.  They care about the information about the place.  The information trail regardless of people.  tips.
• Virtual Social networks.  Adhoc and temporary based on location
• “Check-in” is just a transition to “what do we do now?”   What’s the larger service.  (For example, 3000 people check-in to a Giant’s Baseball game.  Can you then create optional experiences for those 3000 people?  Fantasy Baseball, questionnaires, gamboling?  What’s the business on top?
• Pure location is noise
• Zagat with FourSquare.  If you friend us on FourSquare, you get xyz

Interesting companies to check out. Speed Geeking session:

• Yapper – Another fill-in the webform and get a iphone app in 30 min
• Geodellic – A platform for businesses to go mobile without the work
• MogoTix - A simple way to do ticketing.  Couple guys.
• Burbn - Impressive one man shop doing social network on mobile
• Stalqer - scary cool.

Designing outside the Box (Games Everywhere)

• Facebook games, club penguin, mafia world, etc work by revealing new psychological ways of parting a person from his cash.

Vlab hosted a “real-time” panel last week and it seems like the discussions have moved beyond “real-time”.  The concept has woven itself into the mobile web and the invisible hand that’s moving us towards new behaviors and expectations.

Words heard….

• VC Talk:  The best investments are the ones that were polarizing like twitter.  Half the partners loved the idea and the other half hated it.  When you have that kind of polarizing idea, it’s got potential to be a breakthrough product.  (Another split usually happens between partners over 45 and those younger…”The kids are going to destroy us”).
• VC Talk:  Look out for ‘fanatical users’ in the early stages and don’t focus so much on volume.
• IDEA: Create a business where you review your co-workers like reviewing restaurants on yelp (push the envelope of linkedin).  Reputation management is something that needs to tackled (“massive need”).
• IDEA part II: ‘ Everyday people’ will become like celebrities.  They love to control their image and hate when they can’t.
• Investors are opening up wallets again. Get ready to see more opportunities for invesment.
• Mobile advertising still has a lot of room for other players.  It’s not what admob is doing.  There is something else.
• Watch for tech that starts taking down political barriers.   The use of social media in the Obama election was a drop in the bucket.  ”We are transforming from Nation States into a “state of minds”.
• Adhoc group forming with mobile
• How long someone takes to respond to email reveals how important you are to them.  Implicit monitoring of various metrics.
• Business Tip:  Own the data.  Don’t just build on top of someone else’s.
• Business Tip #2:  The customer is way smarter than you.  Engage and Test.

ngmoco, Inc.

At a GDC presentation a few weeks ago, Neil Young (CEO) gave a presentation on how dynamic and unpredictable the iPhone app market has been and how ngmoco has had to ‘pivot’ several times to stay ahead.  One of his slides stated simply, Vision becomes Math.  Within that slide was the the company’s goal for the future.  The story in bullet points:

• ngmoco was founded on the premise that it would make great games and charge money for them.
• This worked fine for a few months.  Then it became obvious that the landscape was going to shift as more and more and more games flooded the market and charged a very attractive price of ‘free.’  The shit was going to hit the fan.
• There are 1440 minutes in one day.  ngmoco and other iPhone apps try and steal some of that time away from you.  (They actually try to measure how many minutes they can take from everyone’s day.  Generally, people spend 1-10 minutes firing up an app and then moving on and doing something else.  This is not the traditional gaming experience that might steal a few hours after work.  This is a minute by minute experience. )
• Your time is valuable.  Giving some of your valuable time to ngmoco enables them to monetize it either by making you look at ads or , better yet, selling you items to make more effective use of your time.  These accelerators or power-ups are used in many games.   For example, virtual fertilizer to make your virtual crop grow faster.
• Here’s the way ngmoco looks at it (and this is how its probably sold to VC’s or their limited partners):

1. Current industry data suggest that a Daily Active User (DAU) generates between $0.02 to $0.10 per day for this category of free-to-play (freemium)games.  For example, Farmville supposedly makes $0.01 per DAU but they’ve got so much volume through Facebook that the economics work out well.  Assume for an average ngmoco game its $0.05/day.   That means 500,000 Daily Active Users (DAU) generate about $5,000/day.
   

   CEO of ngmoco had to learn on the fly or die.

2. Play with the numbers a bit and move forward in time.  Is this possible:  10M DAU?  If so then here’s the math: 10,000,000 * $0.05 * 365/days = $ 183M/year in revenue.

Ta da!

Although its not impossible to make hit after hit after hit (IE. Pixar), most game companies can’t guarantee they’ll have an indefinite supply of money making variations of interactive entertainment titles.  The scary thing about becoming a company like ngmoco is that you’re pretty much forced to grow to meet expectations.  I assume that ngmoco is spending their war chest on buying the rights to many games, funding small promising game dev teams and other properties that give them mobile screen real estate.  It’s the same play that’s worked before in similar markets and they’re applying it to the iPhone venue.    Using a similar  bet-on-10-assuming-2-succeed strategy is familiar and comes straight out of the play book of Venture Capital.   Laying out a familiar strategy must feel like warm comforting blanket in the unpredictable brave new world of mobile.   I can’t find any holes in that vision but I was never really that good at math.

*Most speakers were referencing and recommending one book:  FREE by Chris Anderson.

• As far as mobile opportunities are concerned, we’re in the second inning (reference to baseball’s 9 innings)
• The plumbing is just being built.   For example, “Facebook Connect” was just released last fall (2009).  [Facebook connect =  social plumbing].  Mobile payments are just starting to be tested.  [Mobile transactions = financial plumbing].  Once all the plumbing (infrastructure) is in place, theres going to be another wave in mobile just like what happened on the web.
• The price of a very capable Android smart phone will hit $150 (unsubsidized) in two years putting it in the hands of the developing world.  iPhones will probably never drop their price low enough to reach the real mass market.  Therefore if you are a developer chasing $, you should NOT be developing exclusively for the iPhone.   //Apple strives to be the BMW and not the Toyota/Honda of the market.    Therefore, there is a ceiling of how much of the global market iPhone will ever own.
• The understood risk with android is fragmentation.    Johnathan inferred that Google upset a lot of hardware and carriers by releasing Nexus One.   He stated that they no longer trust Google and he’s betting on the rise of the commodity players who still dominate mobile OS or new players like Samsung Bata (To which the VC’s laugh at him).
• The VC’s on the panel expected social multi-user apps to dominate smartphone applications but 90% of apps being used are single user experiences.   Multi-user social apps are not ramping up as fast as expected (Loopt, etc).

AdMob is a mobile advertising company founded by Omar Hamoui. It was incorporated in 2006 [1] and is based in San Mateo, California. In November 2009 it was acquired by Google[2] for $750 million. [3]  AdMob is one of the world’s largest mobile advertising platforms and claims to serve more than 7.1 billion mobile banner and text ads per month across mobile Web sites and handset applications[4]. -Wikipedia

Notes from tonight’s discussion between Omar (AdMob Founder) and Jim Goetz (Sequoia Capital) at AdMob’s MeetUp. After seeing so many well-rehearsed & polished Silicon Valley entrepreneurs do company presentations and pitches, it was refreshing to see/hear someone different.    Ego well tamed.

On Funding Omar (AdMob):

• Sequoia liked that Omar had “scar tissue” (Failed twice in mobile and failed twice in other ventures.  Battle scars or experience)
• Prior to getting on Sequoia’s radar, Omar saw 6 VC’s  and one gave him a term sheet.  It was Tuesday and the term sheet expired on Friday.  He asked a professional contact to look over the term sheet to help him evaluate the document (Omar had no/limited experience with term sheets).  This individual secretly passed the term sheet to Jim Goetz.   This got Sequoia interest.  Omar didn’t want to waste his time talking to yet another VC but Jim gave him a personal call (Omar just wanted to get to work).   Omar finally agreed to visit Sequoia that week.  On Friday, within 24 hours of meeting Jim,  Omar signed a term sheet with Sequoia.  ”Contrary to popular opinion, even institutional venture capitalist can move fast when they want to”.
• Jim found out that Omar didn’t own a suit when he set up a key meeting with AT&T for AdMob.  Sequoia and Accel (Series B investors) tease affectionately that Omar doesn’t like attention and isn’t fashionable.  Algae green Camry driving shorts and sandals kind of guy.
• Omar didn’t know what an “ad network” was even though he was building one  nor did he have a business plan (I assume he had a slide deck).  One guy with a laptop (no team in place).  The business itself was running and there were some metrics to look at.
• Omar wanted to start a business that could start making money on day-one (as opposed to things like twitter).
• What did Sequoia see in Omar?:  (1) conviction  (2) domain expertise.
• (1) Conviction = certain that the mobile would be bigger than the current web.
• (2) Domain expertise = he knew his shit.

Personality of founder translating to company culture:

• Culture of doing and not talking:  ”It’s hard to do a thing.  It’s not hard to think about things.”  (aka, ideas are cheap. execution is paramount)
• Criticism about other companies: (1) They talk/meet too much;  (2) Worry too much about their ‘secrets’.
• Authentic disdain for egos.

About mobile opportunities:

• This is the largest disruptions we’ll see for the next decade
• Discovery:  In comparison to the growth of the internet,  we’re “in the Yahoo phase of growth” (Pre-Google phase).   There are about 150K apps in the app store just like there use to be 150k websites.  What happens when there are +1,000,000 apps?  What kind of filtering, search and sorting do you need to find the right apps for you?

AdMob notes:

• 60% of app ad volume promotes another app.    During the pre-iPhone days, most of the advertisers were other publishers (mobile sites).  AdMob assumed that the same thing would happen on iPhone.
• AdMob’s metrics reports are well known in the industry.  There was a concern that sharing these business metrics would be a competitive disadvantage.   Back to company values….”Companies worry too much about their secrets”.

Parting Advise

• It’s extremely difficult to make reliable bets in this extremely dynamic environment
• Hedge.  Cover your bases.  AdMob assumed that ads would be mobile browser based and not app based.  They put most of their resources to that end.   This turned out to be the wrong bet.    If they didn’t hedge that bet by developing an SDK for in-app advertising,  they might have lost the initiative.    In the end, the business was all about in-app ads.
• Try to win no matter how things  evolve.
• Having said that the future is unknowable, he also thinks the future will not be too different than what exist today.
• People in Silicon Valley take the resources they have here for granted.   When Omar was living in other parts of the country, he had no idea how to contact investor or partners. //I’ve heard it said before that being involved in a failed start-up is perceived as part of the entrepreneurial process in Silicon Valley.  This is quite different in most other places where failure is viewed as the end of one’s career as an entrepreneur.

Scobel has a video interview with Omar (no link here, google it).

Addendum:  There are already a lot of blogs, predications and commentary on iPad but I picked up a few more tidbits at a admob/VC panel:

• Apple’s build forecast for 2010 is 8-9 million units.  That means 1million/month in 2010
• VC expectation is more conservative,  500k-750k units in 2010
• About 1/2 of Kleiner Perkins Caufield & Byers mobile portfolio companies have an iPad app in their pipeline (KPCB)
• Developers are building apps that have a 1-2 hour experience versus the  1-10 min experience on iPhone.

Is a FourSquare badge, Gowalla trinket, myTown property or Yelp superuser status worth bragging about?  In many social situations, there probably wouldn’t be an opportunity to brag that you’re a proud owner of a “Crunked” badge.    In another context however, I would argue they’d be more impressive than having an advance degree in rocket science.    That latter situation is rare but not out of the question.  What if these badges could be verified and represent an accomplishment that carries some social value.   Live Strong ribbons are everywhere.  What if you had a badge that showed you donated $100 to Haiti relief.   Yes, it’s more noble to give from pure altruistic motivations, but would some people give more for that badge?  A limited edition red badge to show the world what a great guy you are.

The difference is between badges you get for doing something trivial or ‘real’.    The psychology behind badges isn’t new.  Back in the 7th grade, my peer group would look up to guys owning a Level 18 D&D Dark Elf  with a +5 magic crossbow.    The fact that I wouldn’t share that bit of news to my co-workers today reminded me how fragile the value of virtual currency can be if its loses its shiny quality.    In its current incarnation, FourSquare badges are like art.   Its value is highly subjective and market driven.  A FourSquare trinket retains its value only if FourSquare remains cool.  The moment the FourSquare brand turns sour (much like what happened with MySpace), we’ll all bury our badges.

What FourSquare did was no small feat.  While pitching TerraTacks, we often heard the argument that no one will want to broadcast their location to the world (privacy issues).  Loopt and Brightkite heard that argument long before we did and their lack of mass-market appeal was the proof standing in everyone’s way.  FourSquare crept in and transformed people’s psychology.  People had fun collecting badges and dismissed the fear that big brother might use the information to send storm troopers to arrest me,  the Mayor of Peet’s Coffee.  (I’ve heard 80% of people will give away their Social Security number for chance to win a free iPod)

Last night I heard a representative of Booyah discuss their app, MyTown.  To his credit, he praised FourSquare and Gowalla for opening the door to the success of MyTown.  He didn’t say that exactly but he inferred that MyTown was traveling in the slipstream pioneered by those two groups.  I suspect that the failure of Booyah’s first app (Booyah Society) drove them to search for a model that did work.  In the past month, probably coinciding with PR plans for 2010, there’s been significant uptick in the media noise being generated by these three players.  First was Gowalla saying they’ve got more users than FourSquare.  Then MyTown’s PR team sent a press release that they’ve got more users by download than the others.  FourSquare this week claims the most check-ins (a critical measure of engagement).   If you’ve ever been inside a company with a well-oiled PR and marketing machine, you know the strategies being played out with the goal to win mindshare.  At this early stage, is getting press coverage really that important?  Booyah showed a graph of how getting press coverage helped ‘discovery’ (the process of how somebody finds your needle in the AppStore haystack) to drive downloads.  With over 150,000 choices in Apple’s AppStore, I’ve seen start-ups trying to survive when they are not ranked in the top 50.   Booyah complemented press coverage with a burst of advertising.  According to AdMob and Flurry, who were also at this event, those 2-3 day burst of advertising will run you $10,000-$50,000.  Booyah hinted that their ad campaigns are slightly north of the high figure (+$50k).

There’s plenty of room to play in location based check-ins.  These three guys have been making all the recent noise and recognized as the the leaders.  They are all venture-backed and have the capital to drop $50K on a 3-day ad burst.  They are all solid apps baiting check-in engagement in slightly different ways.  Having a solid app as the foundation to any campaign is critical.  As a final comment, Booyah cited the early success of their second app, MyTown (compared to the relative failure of their first app), as a trigger to turn on the propaganda machine.  ”You can’t light a fire, if your wood is wet”.  In other words, ‘yeah, we’ve got the capital to drop +$50K in 3-days but we’ve got a kick-ass app to justify it”….  It an’t just about the money (but its also about the money).

MyTown session graph. yellow stars = press coverage | orange star = ad campaign

–Additional Notes

• Average cost to acquire users on iPhone: $2-3
• Ad Conversion Rates on iPhone: Games 8-12%, Other apps 4-6%
• CPC: $0.05-$0.20