A Yotta Insights on Making Money in Mobile, from Dan Shapiro of Ontela

7/10/09Follow @gthuang

While a lot of people were out enjoying the sunset and discussion at Seattle’s Olympic Sculpture Park last night—see TechFlash and TechCrunch for a nice recap of the Naked Truth startup gathering (and thanks to Seattle 2.0 TV for broadcasting it)—there was another compelling event happening on the Eastside.

This one, hosted in Bellevue by TIE Seattle, was about how to make money in the mobile industry, from an entrepreneur’s point of view. (Sounds like there was some overlap with Urbanspoon co-founder Ethan Lowry’s comments about iPhone apps at Naked Truth.) I asked Dan Shapiro, co-founder and CEO of Seattle-based Ontela, for his thoughts on the mobile event, since he was moderating the panel. He graciously agreed, and I’m printing his comments in full here.

Dan Shapiro writes:

“I had the honor of moderating a distinguished panel tonight for the sold-out TIE dinner event, “Making money in the mobile ecosystem”. Our panel followed the hypothetical conundrum of an entrepreneur with a brilliant idea that could be brought to life on a mobile phone. I was too busy thinking of questions to take notes, so I’ll post my best recollections here and ask for apologies in advance for quotes mangled, misattributed, or misunderstood.

The pre-panel keynote was delivered by Chetan Sharma of Chetan Sharma Consulting. Chetan shared some staggering numbers, most notably that we were on track to store a yottabyte, or a trillion terabytes, of information online in the next few years—and that the amount would double every 11 hours. He challenged everyone in the room to envision that world, and what the mobile interface to it could be.

Then, the panel kicked off. The first order of business was simple: with limited resources, which platform should our entrepreneur support first? John SanGiovanni of Zumobi made the case for the iPhone. With 11 applications in the app store and 8 that have hit top-10 status, his recommendation wasn’t hypothetical. He argued that the iPhone still represents the best intersection of audience size, device capability, and purchase intention. Brendan Benzing of Motricity took an interesting counterpoint and said that it was a trick question: this nascent business should focus on programming for the Web, a capable platform that is evolving rapidly and has the indisputable advantage of actually working on most handsets in the market.

So our entrepreneur, listening to this wise counsel, deploys a Web and iPhone version of the service and meets with a warm reception. Reviews are hot and sales are solid but not enough to make it big yet. How can our valiant developer turn a garage business into a sustainable company? Shiv Bakhshi of Mobile Perspectives put it simply: the elephant in the room is always the carrier. Wireless operators command a huge audience, and the easiest way to scale is through partnering with them. Mobile companies that ignore the operator equation and treat the market as a free-for-all are missing out on the big opportunities: the big moneymakers like Tegic, SnapIn, and Motricity get their money by working with carriers effectively.

Fortunately, we had Sajal Sahay of T-Mobile in the room, who did not appear to take offense at being called an elephant. While carriers may have a reputation of being hard to work with, Sajal told an inspiring story. An entrepreneur came to pitch a product with eight slides and a passionate vision for mobile that nobody else had shown them. They were intrigued, and worked with the entrepreneur to develop the idea further. Some months later, his company is VC funded and his product is ready to roll out to an audience of millions. This entrepreneur didn’t know a soul at the carrier prior to sending them his PowerPoint deck, and he’s now a major partner. The moral, he explained, is that it’s entrepreneurs’ jobs to show a compelling vision of the future. When that happens, carriers listen.

That, of course, brought us to the final challenge this entrepreneur would face … Next Page »

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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