Social Networks, Swedish Phone Throwing, & More at Mobile Northwest
“One banker says to the other—wait, what other banker?” says Tom Huseby. The Seattle venture capitalist and wireless guru slipped in a joke about the thinning ranks of financiers during his keynote talk at today’s second annual Mobile Northwest Conference. I had a chance to stop by and see this morning’s session at the convention center in downtown Seattle. Just a quick recap here.
Huseby, the co-founder of SeaPoint Ventures and chairman of several local mobile-company boards, spoke about deals, markets, and what he likes to focus on in the wireless space. But first, he addressed the economy. “Who thought we’d end up where early-stage venture capital would look like one of the safer investments?” he said. “It’s better because nobody expects to get any money out of it for a long time, that’s it! Venture funds are supposed to last 8-10 years. It’s a long investment cycle.”
“So the venture community is pretty good,” he continued, pointing out there’s still a large number of investments being made in startups. “Compression of market cycles is enormous. The real economy is going to lag, the markets aren’t.” When it comes to startups, he said, “Hope is diminished, no question…Venture capitalists are marginally connecting the dots, and now they don’t even see the next dot. But one thing hasn’t stopped at all, and it’s the great American startup machine. Barring restaurants, America starts a huge percentage of companies in the world. The miracle is a totally undeserved sense of self-confidence. We revere new wealth, and people who’ve started companies…We compete on how humble our origins are.”
Huseby went on to describe the big trends he’s seeing in the mobile sector—”superphones” like the iPhone that are connected to the Internet all the time, and “Superusers” who “walk around doing things [on the devices] we never thought they’d do.” Then there are “all-you-can-eat” data plans. “Mobile this year became embedded in everything. Everything is wireless. We all of a sudden can get viral with it. It didn’t used to be that way—not enough users had the right phones,” he said. “That to me is the big sea change.”
So what does he look for in new deals and companies? “‘Winner-take-all Switzerland’ plays,” he says. This is where a small company comes in and solves a problem that the big guys (the Samsungs and Verizons, say) are in a standoff over. So a small company—like a Tegic or a SnapIn Software (both bought by Nuance)—can enter as a neutral party and own the space, providing a simple but necessary technology to handle things like text messaging or customer support.
Huseby took the time to answer several questions from the audience. One was about what he thinks of new business models like mobile advertising, in the context of the economy. “The downturn is not good for anything. I don’t think people will spend more on their phones, or buy more games. They’re going to do less,” he says. “The key to mobile advertising is to get out of the ‘new stuff’ budget…You have to turn it into media, and remove all obstacles.”
Someone else asked for Huseby’s thoughts on Google’s Android phone. He joked that because of its high weight-to-surface-area ratio, it could do well in the annual Swedish phone-throwing contest (apparently there have been at least nine of these “international” events so far). “They overkilled on hardware, and we’ve seen the first evolution,” he says. “The big question is what will they bundle with it that’s open and free? Are they in fact the true evil empire?…Every startup needs an evil empire to compete with.”
Huseby finished with some thoughts on mobile companies today versus Web companies during the bubble of 2000. Then, he says, entrepreneurs had a “that’s not fair” attitude—”‘others made millions, we made nothing,’ they were whining. Venture capitalists said, ‘I guess we knew it was too good to be true.’ Bankers were much more culpable… That’s not what’s happening now. Mobile has become mainstream.”
Next up was an interesting panel on social networking and social media in the mobile sector, moderated by Tricia Duryee of mocoNews. The panelists represented a good cross-section of local and national mobile companies: Brent Brookler of Treemo, Peter Claasen of Ontela, Venetia Espinoza of T-Mobile, and Timo Bauer of NewBay Software.
Some of the key take-aways:
—The importance of small, individual-based social networks. “Most people call about five people,” says Espinoza, and those five people also get the vast majority of pictures, videos, and other content shared by the user.
—When it comes to social networks on mobile devices, “Immediacy is where the opportunity is,” says Brookler. “It’s a great and active extension” to social media on laptops and desktop computers, says Claasen, who points out that users are drawn to rich content (like baby pictures, for instance), which can lead to “viral” distribution from user to user. “What Facebook and Google don’t have is creating [mobile] content,” adds Bauer.
—As for whether social media is a stand-alone product for mobile devices or just a feature or extension, Bauer says, “There’s a huge opportunity if you own the interface” that connects social networks of families and friends. Espinoza says it’s “probably both. We see lot of applications developers who use social networking as an ingredient in what they’re doing. Not to replicate what a Facebook is doing, but using the social aspect of the application you’re making to get the word out and get distribution.” Brookler points out that “Six months ago, it was ‘I need a Facebook page.’ The last two months, it’s ‘I need an iPhone app.’ People are looking to companies to power this transformation.”
Lastly, Duryee asked the panelists about their future outlook and the impact of the financial downturn. Brookler pointed out the challenge of advertisers cutting back. Claasen said, “One thing I think we’ll see out of carriers is more neutrality in the social networks they’re building.” Espinoza didn’t disagree, emphasizing that mobile devices and plans shouldn’t suffer too much in the grand scheme. “Customers say, ‘This is one of the most important things I pay for,’” she says. “They’ll let go of their land lines, or cable, before wireless.”