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Mobile-is-the-Future
John Malloy
General Partner & Co-founder-BlueRun Ventures
Thursday, May 3, 2012
New trends and focus for investment

Our primary investment focus is on Mobile software and services. The biggest trend is of course the dominance of smartphones and the newest trend is the emergence of "Mobile First" services.

Smartphones are just the beginning.

Smart phones have changed the entire mobile eco system. Fortunes have been won and lost by manufacturers. Operators are no longer the sole gate keepers to new features and services on consumer's phones. This new mobile era is increasingly about applications and there is an all out competition for mobile developers by everyone.

This shift has made the U.S. the epicenter for this transformation. Today more than 50 percent of all new phones sold in the U.S. are smartphones and analysts expect that number to be near 100 percent by 2014. Even traditional Broadcast Media companies are using mobile apps to reach and communicate with audiences more effectively. For example, Channel 7 (a major primetime station) in the Bay Area is using Waze, a community based traffic and navigation mobile app, to give its viewers real time traffic information and social feedback loop.

But mobile is an industry of truly global scale and immense competitive pressure. Mobile devices are five times bigger than the PCs. Mobile phones are simply our most essential and increasingly personal device. Competition will continue to drive prices for devices down. Yesterday's $500 smartphone in Palo Alto is tomorrow's $40-$60 phone in Mumbai. Meaning the same "smart phone" capabilities will soon be pervasively available where entrepreneurs can use them to create more than just entertainment apps. We will also see new commerce systems, healthcare innovation and educational advances in emerging markets all powered by this new mobile form of ubiquitous computing power.

"Mobile First" Services are the future

Here in Silicon Valley many are focused on the long awaited Facebook IPO. The story of Mark Zuckerberg is so interesting that they made his life into a Hollywood movie — started in his dorm room, created an online directory for Harvard students, followed by other Ivy schools to world domination, etc. But where is the next Facebook? Could there ever be another? What would it take? Where would it likely come from?

Well we got the answer last week, from Facebook itself, with the announced $1 billion acquisition of Instagram. A two year old start-up that leveraged ubiquitous camera phones to create a service growing so fast and approaching such scale that Facebook had to acquire it. While many focused on the photo sharing aspect of Instagram, it was really about making a significant push into mobile.

Hottest technologies evolving today

This new wave of mobile is creating problems that need to be solved.

Real Time vs. Batch

Mobile consumption is increasingly about here and now. Consumers expect services to know where they are, what they have said or done via the social graph and to give them relevance choices. A service like Waze gives users the ability to know the real time of the traffic in front of them and gives them a dynamic Estimated Time of Arrival. This is a new type of contextually relevant service. The old internet solution plotting your route based on static and dated map inputs no longer cuts it.

Developer Led Open Source

To operate nearer to real though requires increasingly flexible architectures, dynamic filtering, smarter algorithms to predict patterns and determine relevance. Back-ends have to be cloud based from the start and capable of scaling with the user base. Developers are identifying and pushing for new open source solutions that will meet these needs.

M-commerce

The fastest growing segment of "online" commerce is actually mobile commerce. The biggest driver for this consumption is Pads growing nearly 500 percent year-on-year in Q4 2011. This growth rate is particularly astounding when you realize that more than 80 percent of those transactions were on iPads since Android had not penetrated the market substantially by then.

The combination of high glossy images with the ease of a "one click" shopping experience is transforming assumed close rates and brings a fun new experience to the age old catalog shopping model.

New areas of opportunity for innovation for startups

Mobile is just beginning its radical transformation into the dominant global computing form. Besides Facebook, Social is increasingly horizontal too impacting Enterprise, Commerce, Communications, and more.

Smart entrepreneurs will use these changes and others to attack inefficient markets. One example of a monster market that should be ripe for technology innovation is healthcare. There are lots of reasons why things do not work in healthcare today but entrepreneurs see past problems to what is possible.

Advice to Entrepreneurs

• Pick a strong co-founder. Entrepreneurship is tough. You need a solid sounding board of someone you respect and can trust absolutely.

­­• Aim high. Pick a market that is worth your most precious commitment of time. The bigger the target, the less refined your aim has to be.

• Challenge everything. Turn over all possibilities. Thoughts are free. Be open to following the customer & market. Great entrepreneurs recognize when something is not working and course correct proactively.

• Listen and learn but keep your own compass for what is right for your business.

• Execute and Have Fun!

1998 founded BlueRun Ventures is a leading early stage venture capital firm with focus on Internet, Mobile and Media. BlueRun works closely with entrepreneurs to build market-changing companies such as PayPal (EBAY), WiderThan (REAL) and Enpocket (NOK). With offices in Menlo Park, Beijing, Shanghai, Seoul, Helsinki and Mumbai, BlueRun brings distributed insight to each market and opportunity to help young companies navigate dynamic markets. With over $1 billion of capital under management, it continues to look for passionate entrepreneurs and market changing ideas. The firm generally makes initial investments of between $1-6 million with additional capital reserved for follow on rounds.
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