Investing In Mobile 2016

As someone who worked in mobile, wrote about it all the time, lived and breathed iOS platform, and discussed widely my reservations for investing in the space, I’ve been thinking again lately how I’ll invest in mobile in 2016 — or even at all. I’m a broken record on this point, as we all know the mobile market is the biggest market to ever exist, yet it is so hard to get distribution and the power law in app distribution and usage makes investing in the category quite a crapshoot.

I’ve kept this post by Fred Wilson on Contextual Runtimes open in my browser and finally had the chance to digest it. In his post, he focuses on the search for the next runtime, pulled from a larger post on mobile from Benedict Evans. Because the App Store is a mess and because the dominant mobile OS today is a closed system (iOS), and because OEMs who fork Android lose access to Google Mobile Services (GMS), I found myself agreeing with a few of the new runtimes that could be on the horizon, but mostly disagreeing with the others.

Type I: Permission Likely Required
-Facebook Messenger, WeChat, LINE, etc.
-Google Now on iOS

Type II: No Permission Required
-Open Street Maps

Type III: OS-controlled
-Siri (on iOS)
-Google Now (Android)

Type I apps suffer from the same platform-dependency services faced when leveraging platforms like Facebook. One day, Facebook could just turn off or divert the flow. A new app could integrate into Messenger, but if it took off, would Facebook stop it? History seems to point to “yes.” Type III is a similar situation. On iOS, is Siri even viable for Apple’s own native app suite? Probably not. I’m not holding my breath. For voice on Android, I’m not on the platform but I’d imagine Google’s product here is great and with Android’s open source ethos, easier for a founder to build and though the threat exists, it’s hard to see Google stopping anyone. However, Google may control what goes into Google Now. We’ll have to wait and see. And, Maps seem obvious as the OS acts as a gatekeeper.

So, if we focus on Type II, on the “no permission required” list in the middle, those are the areas that could be more ripe for an investment given that the founders of a new company won’t run the risk of having the mother platform disrupt their status. First, notifications. At the moment, any native app on iOS can build in more interactive notifications and widgets, and those in-notification interactions can make it such that a user doesn’t even have to enter the app itself. Second, keyboards are a cool idea but just a whole mess. The implementation is bad and I don’t expect it to get better soon. Once installed, the UI to access them isn’t, in my opinion, a mainstream behavior. Third, open maps like OSM or other mobile mapping development platforms could liberate founders from the pricy API calls for Google Maps or Apple Maps. Fourth, the rise of Slack and all the creativity around new Slackbots is promising because, unlike Facebook Messenger, Slack (1) can’t really control what accounts with specific properties get created and (2) they’ve organizationally shown an interest in inviting more bot-makers to the platform, to the point where they just launched a $80M fund to invest directly in them.

Speaking of bots, Fred’s partner Albert also recently wrote a post on the rise of bots, like Slackbots:

Another place to look for sustainable businesses in the Bot Rush is to consider the picks and shovel suppliers. Is there something that all bot companies can and will use and won’t consider core? One thing might images. If your bot needs to understand what’s in an image you may not want to build that yourself but rather use an API such as Clarifai.

In my current fund, I’ve only invested in two (2) consumer-related technologies, and one of them is in this mobile-bot picks & shovel space. I’m really excited to see how it plays out. The founder is great. I believe in him and his team’s talent. And, I’d love to meet more founders attacking the Type II areas I list above (minus keyboards). If that’s you, please contact me.