You always remember your first — whether it is a car, love, or … a venture capital investment.

Today, Highlight announced its new 2.0 version as well as news that they’ve partnered with DFJ as lead investor in their Series A round. I’m excited to share the story about how I found and made my first investment at DFJ. But before you read further, take a moment to download Highlight 2.0  to try a smarter and more polished experience than ever before. The team would love your feedback. You can learn more about all that went into Highlight 2.0 on their blog.

Earlier this year, when I moved over to Sand Hill Road from Hacker Way, everyone said I should blog. You know, to get my ideas out there and create a brand. While I’m still working to find my voice and pace, it is fun to write, share thoughts, and connect with new people around the mobile ecosystem. But, if you would’ve suggested those posts would lead me to my first investment, I wouldn’t have believed you, even though several great VCs have talked about sourcing great deals by blogging.

An old friend, David King (CEO of Blippy), read my first post, and shared it with Highlight’s CEO Paul Davison. I’d long been interested in location-based applications and had kept an eye on Highlight as a result. So, I was very excited to meet Paul when he reached out. We clicked in our first conversation. Right there, I knew I wanted to work with him and his team. We all spent a lot of time together, going through all aspects of Highlight’s engagement data, their consumer brand, the mobile a/b testing frameworks they’d built, and their long term vision.

There are, of course, reasons *not* to do this deal, as with many deals. There are still questions around the space: Are we too early? Do people prefer to stay private? Do we really want to build a sixth sense around us? But just as there are reasons not to do a deal, there are reasons to move forward, quickly. Paul and his team, their collective product and industry vision, their steadfast commitment to the product.  All of these factors greatly impressed me. This is not a “take off in 15 minutes” type of product. The team has spent nearly two years prototyping, building, and refining, but they know leaps and bounds and several more versions and iterations are to be had. That takes determination, patience, guts, and deep passion.

I haven’t had a chance to blog much about location applications as I’ve been focused on sharing my perspective on Android. Briefly, my interest in location applications stems from the fact that it is inherently native to the mobile experience. This is becoming more self-evident as mobile devices improve location capabilities via hardware such as the M7 chip & protocols such as Bluetooth LE.  Battery life continues to significantly improve as software layers offer increasingly sophisticated ways to manage location sharing through geo-fencing, iBeacon, and intelligent algorithms that minimize radio usage. So in short, while timing is always hard to predict, I believe the enabling technology for location has tipped such that ambient location based applications will be mainstream within the next two years.

Talking through this deal with my partners at DFJ gave me the opportunity to really think about what kind of investor I wanted to be. Given my background, I’m going to be focused on mobile (with a specialty around the Android ecosystem) and consumer products. No surprises there. But, I also needed to think about markets, verticals, and the stage of investment I wanted to make. Working through the Highlight deal gave me the conviction that I want to be a classic Series A investor who  bets early and is a partner to great CEOs who are focused on building enduring companies.

With Highlight, Paul, and the team, all of the ingredients came together: incredible team with a big vision, huge market opportunity, and the kind of deal DFJ does best. All three were important drivers of my conviction, but if I had to pick one it element, it would be the team. Coming from an operating role, I needed to make sure I wasn’t imagining the product as I would build it but rather understand where Paul was taking it and how Ben was approaching building it. The thoughtfulness, passion, and insights they showed thoroughly convinced me that Highlight is a one in a million team that I wanted to be a part of.

Highlight is in its early days but its potential is staggering as the team continues to push a whole new space forward that will be part of our daily mobile computing experience. I’m proud to represent my colleagues at DFJ in this journey and that the Highlight team has chosen to partner with us. I couldn’t help but share a little bit of the context on how everything came together behind the scenes. However, today’s news is really about the product — Highlight 2.0. It’s about Paul and his team’s vision, the 20+ months they’ve been building and iterating on product, the resolute belief in the power of mobile and ambient location, and our innate desire to learn more about the people around us.

AllthingsD Guest Post: “A Blueprint for a Massive Mobile Company”

AllthingsD Guest Post: “A Blueprint for a Massive Mobile Company”

Originally posted on Nov. 5th, 2013 at: http://allthingsd.com/20131105/a-blueprint-for-a-massive-mobile-company/

Full Text:

It sounds cliche, but mobile is the single-biggest secular technology platform shift of our time. It’s so big, it bears repeating, and for entrepreneurs (and investors like me), presents edge-of-our-seats opportunities waiting to be unlocked. This is no surprise, of course, as every big company and small startup is trying to focus on mobile. With so much competition in the mobile world, entrepreneurs could benefit by knowing a secret, and in this post, I will share one secret I’ve uncovered through my years of being a mobile entrepreneur and working on the “Facebook Home” team at the social network. This secret, I believe, could unlock an ever-lasting, durable, mobile technology company, not just an app someone launches on their phones and forgets about.

I’ll cut to the chase: The secret is that there’s an opportunity for a mobile-focused startup to build the equivalent of Google’s Chrome Browser. While the details of this vision differ slightly on Apple’s iOS platform versus Android (and forks of Android), in this post I will focus on Android because it offers an open platform for developers.

In order to appreciate the secret, we must revisit the past, both personally and professionally. Before joining Facebook, I tried to start companies around browser add-on technology, and before that, I was responsible for Bing’s toolbar when I worked at Microsoft. The Web was a very different place back then. Years ago, Web browsers used “toolbars,” which now sound like a joke, but during that time, were deceptively simple add-ons that actually turned into very profitable businesses. Today, innovation in browser add-ons has largely gone away, and for good reason — browsers built in the most valuable and innovative functionality, while browser platforms and security (especially on mobile browsers) locked down add-on functionality to limit use of browser add-ons to scam unsophisticated users.

Despite their less-than-savory reputation, toolbars show how add-ons and customization can improve the user experience of widely used software while generating sizeable returns for their developers. As toolbars made browsers more functional and interesting for the user, behind the scenes, toolbar developers were getting paid handsomely by Google, Yahoo, Bing and Ask for the search traffic they generated when they changed and “protected” the default search provider. As toolbars devolved from useful add-ons into conduits for malware, viruses and spyware, they were still a real business for their developers, who have reaped billions of dollars in search syndication revenue. To summarize, the evolution of the toolbar space loosely followed this pattern: Original browser experiences ceased to innovate after commoditization; then add-ons innovated the browsing experience (search boxes, form fill, etc.); then the underbelly of the Internet maliciously took advantage of browser add-on hooks; then core add-on functionality was built directly into browsers and add-on hooks were narrowed; and, eventually, the core browser experience innovation via toolbars and browser add-ons ended.

It’s important to revisit this history as it provides an analog for mobile today. In the world of Android, “launchers” — and more broadly, the Android Intents system and overall platform design — behave similarly to browser add-ons in their prime: Hooks to improve the core product experience with very few guardrails. With hundreds of launchers already available and more on the way, there’s no point in releasing a new Android launcher unless we’re ready to learn from the aforementioned toolbar phenomenon. Just like toolbars, Android launchers need to focus on innovating the core phone experience in order to be installed and retained by users. And similar to toolbars, successful launcher developers will be chasing syndication deals as a key source to revenue generation.

This cozy arrangement probably won’t last forever though, because some launcher developers will pee in this pool of opportunity by using Android’s platform hooks for unsavory purposes — the same way some toolbar developers did. Not only can launchers bundle replacement apps for the native phone dialer, camera, browser, calendar, mail, SMS, keyboard and more, launchers can hide competitive apps and drive users to their alternatives, i.e., apps that are paying syndication fees. Viruses, spyware that steals your data, and over-commercialization are the obvious demons, but so is simply degrading the user experience with poorly designed products that are just front doors for revenue-sharing schemes. This will no doubt happen, so users should be cautious about which launchers they download.

The long history lesson is important because the principles may repeat themselves today. Here, if history repeats itself, launcher apps will eventually go extinct the way toolbars have. For a few years, toolbars were a very interesting and lucrative business. Then, browser publishers like Firefox and Microsoft simply incorporated the innovative browser add-on functionality into the browser, rendering add-ons obsolete while also tightening the add-on platforms to keep the bad actors at bay.

So now … back to our secret. I believe there is a massive opportunity for a developer to create the mobile equivalent of Google’s Chrome browser on Android devices. This focused user-centric strategy could easily put a startup in position to control the third mobile platform — something Microsoft, Palm, Amazon and many others have spent billions of dollars to try to achieve without success to date. So developers who want to build a lasting large company should look for ways to rethink the core Android experience to “wow” users, and not worry at all about the easy money that will come from syndication deals and newfound ad real estate. There is unlimited potential to improve every aspect of the phone experience, and it’s amazing that there aren’t more startups trying to do this, because the rewards will be immense. First movers who bet deeply and execute flawlessly have a shot at this opportunity.

Beware, though — there is stiff competition here as well. Super-polished new apps likeCover are re-setting expectations for what is possible on Android while making iOS users jealous. Some companies are already moving beyond the launcher to the next level and replacing the entire Android OS with a customized version, as startups likeCyanogenMod and Xiaomi’s MIUI do, because they’ve hit upon the limits of Android’s platform in their quest to build the best product experience. Their next step is to release devices loaded with a customized OS that removes all of the friction of installing on top of an existing OS. Both of these companies are clearly on the way to doing something special, but there is a little voice in the back of my head that wonders if this strategy is analogous to Chrome OS. Of course, that chapter is unwritten, so it will be exciting to watch and see how this all unfolds.

Bill Gate’s 1995 Internet Memo Updated for Mobile


The Internet Mobile is the most important single development to come along since the IBM PC web browser was introduced in 1981 1990. It is even more important than the arrival of the graphical user interface web search. The PC modern web browser analogy is apt for many reasons. The PC web browser wasn’t perfect. Aspects of the PC web browser were arbitrary or even poor. However a phenomena grew up around IBM PC the web browser that made it a key element of everything that would happen for the next 15 years. Companies that tried to fight the PC web standards often had good reasons for doing so but they failed because the phenomena overcame any weaknesses that resisters identified.

The Internet Mobile is a tidal wave. It changes the rules.

–Bill Gates, May 26th 1995

–Bubba Murarka, December 10th, 2013

Why 5 billion people will never use your app

Living in the Silicon Valley it is easy to focus on mobile products that target folks who are relatively price insensitive (well, when compared to the rest of the world).  However, for every mobile phone sold in the developed world, four are sold in developing countries. Of the more than six billion mobile phones in the world, more than five billion are in developing countries, mostly in Asia and sub-Saharan Africa. Within the next decade, virtually every phone sold will be connected to the Internet and run third party apps, which means companies that understand the differences in the global mobile ecosystem are going to create & capture massive value.

There are stark differences between the ecosystems in developed and developing markets to discuss. To be successful, app developers need to understand those differences if they want to be successful in developing markets. In both markets, the mobile ecosystem layers can be simplified & represented like this:

Apps (client & cloud)
Operating System

Some players vertically integrate multiple layers (notably Apple & Amazon) or are trying to integrate multiple layers (Samsung & Google).  But for the most part companies tend to be specialists in one of the layers of the ecosystem.

Once Apple popularized the mobile app store, app developers gained a lot of leverage, as they could now directly acquire users without intermediaries. So in developed countries, the mobile ecosystem revolves around the OS providers and app developers. However, because the carriers in developed countries provide device subsidies and essentially extend 30 days credit to the end user, they have outsized influence which has kept the OS providers relatively in check and sets up app developers to capture the largest share of value over time.

In the developing world, for the foreseeable future, the ecosystem revolves around price-conscious users who buy an unsubsidized phone directly from an OEM retail partner and hop between the cheapest pre-paid plans, with no loyalty to carriers (or even their mobile numbers). So the carriers have largely been forced to compete on price and the OS providers became subservient to the OEMs in order to get to market given they are key channel.  Thus the OEMs, who compete via differentiated hardware features & physical availability, have outsized influence and power.  I think this is one of the reasons Nokia was able to dominate for so long.

App developers hoping to expand into the developing world have no choice but to adapt to these different dynamics. Apps developed for high performance smartphones and always-on high-speed Internet connections will struggle at best. And while strategies like Facebook for Every Phone are important for large incumbents I think building great experiences for low end Android devices the critical priority for fast growing startups that are resource constrained.  Here are some of the ways apps have to be different to succeed in the developing world:

  • Distribution & engagement: Preloading, even with a tax of exclusivity or device specific features, is a much more valuable tactic.  Similarly, SMS becomes more important than email or social network based channels.  Finally, think about how to handle users that only have phone numbers.
  • Low-bandwidth & poor networks: Strip your first-world app of extra features and frequent data updates.  Make it resilient to lost connections and long latencies.  Think about server to client compression and efficient file formats. Work on ways to gracefully degrade your application & enable offline use for key scenarios.
  • Battery usage: Likewise, start to think about your battery budget as apps that drain battery power are also going to be unpopular.  How much processing and how often you spin up any radios matters.  We take 24-hour electrical service for granted in the U.S. and Western Europe but many people don’t have full time power, and plugging in isn’t always possible for the user.

Don’t get me wrong: Developed countries still constitute a very large market for apps. Developers can continue to work on innovative and feature-rich apps that leverage the smartphone ecosystem in those countries. But mobile players hoping to break out in a global market absolutely must take into account these stark differences between the developed and developing world, or they will be frustrated and disappointed by the unsatisfactory response to their products.

3 Crazy ideas for giving everyone in the world access to the Internet

It was fantastic to hear Mark announce his ambition to accelerate universal access to the internet. I strongly agree with this goal and wanted to suggest some admittedly crazy ideas for the effort. We’ve all got to dream very big to help realize this goal and hope others will share their ideas.

As context, there is a huge disparity in Internet access between developed and emerging countries. In the U.S., 81% of the population has Internet access, and in Europe, it’s 75%.  However in Asia, where there are more than 4 billion people, only 32% have Internet access, and Africa, where there are a billion people, only 16% have access. There is no country in the world that provides its citizens with universal free access, which I strongly believe would increase quality of life for all residents and skyrocket a country’s GDP over a relatively short time (back of envelop estimate would be within two generations).

How we provide access is the big question. The recent formation of Internet.org by Facebook, Ericsson, MediaTek, Nokia, Opera, Qualcomm and Samsung is a good start, and they laid out some lofty goals: decreasing the cost, increasing network efficiency and developing new business models. But they were short on specifics, because this is a very tough challenge within a complex ecosystem. These aren’t the only players making an effort – Google, which is not part of the coalition, is working on several different initiatives to provide free access, including unorthodox ideas like Project Loon, and there are other global initiatives such as those being spearheaded by The Internet Society.

Here are my top ideas for addressing each area internet.org has enumerated as key levers to universal internet access:


Fund free access by charging carriers royalties for the most popular apps. Right now, people buy devices and service, to get access to great apps. Amazingly, the carriers pay nothing for apps (and in fact sometimes get paid!), despite the fact that without apps, there is limited value in paying for internet access. Compare this to the basic cable TV model in the U.S., where users buy the hardware and service, but the cable carrier pays for access to the channels (whose parent media companies also make money off of advertising without sharing it to the cable companies).

Let’s extend the Cable TV model to the mobile app ecosystem. If any of the massive top apps were to pull out of the app store and require the carriers to license their apps to provide access for their subscribers, we would see a massive shift in value capture.  Concretely, imagine if each carrier had to pay something on the order of a $1-3 per user per month to preload apps like Facebook, Google Maps, Instagram and Gmail. Of course the software companies would be tempted to pocket the money, but I think their long-term interests could bend their short-term incentives to ensure they used the funds to enable affordable universal access. Worse case scenario is they could be taxed for profiting off of national resource of wireless spectrum.  Think about the economics: Facebook and Google each currently have about one billion mobile users. At $1 a month per user, that’s at least $24 billion dollars a year for subsidized access right there.

Why would the carriers agree to pay? Imagine if you could not use the Facebook apps on AT&T or the Google apps on Verizon but could use both on Sprint. Users would still be able to use mobile web versions (which, by the way, are the most popular versions), but the carriers would have little choice if any major mobile app company implemented this strategy. Once one did, all of them would be able to do it because apps & OTT services are now driving customer subscription revenue and where differentiation (or lack thereof) is most impactful.


We could improve utilization of existing and future network infrastructure by changing the way data moves across the network. Today, the primary data transmission protocol (TCP/IP) finds a path on the network, then push bits through that path as fast as it can until the transmission is completed. Often the path that was found gets overused, or congested in network terms, and thus the transmission has to be slowed down. And just like highway traffic patterns, there are times of day and certain geographic corridors where everything crawls along. This is a big reason why it’s still hard to send huge files (on the relatively small order of a terabyte) in a timely way. Network congestion makes it impractical.

Continuing with the highway analogy, one of the more expensive aspects of managing highway congestion is adding new lanes and building new highways.  Unfortunately, data network infrastructure has similar cost characteristics.  So one way to visualize the goal of getting everyone in the world on the Internet is to imagine giving everyone in the world a car & then telling them to always drive their car while they are awake. DISASTEROUS!

So this idea for free Internet access would take advantage of the fact that roughly half of the world is asleep while the other half is not.  Thus there are zones of times where you can assume the vast majority of people in an area are offline and networks built to support them are underutilized.  The way the system works now, if you want to send a terabyte of data over the Internet from Japan to the U.S., it likely travels the direct route West-to-East via trans-Pacific cables regardless of time of day. If those cables are congested with other data, the transmission slows. But if we were able to send it via the most efficient and least congested path, that data might flow East-to-West at certain times, completing the overall transmission much faster.

If we rewrote the transmission protocols so that we used the most efficient path by throughput to move data, two things could happen: quicker data movement around the globe, and lower aggregate transfer cost per megabyte. We would be increasing network utilization while decreasing cost. This would allow us to offer Internet service at a much lower aggregate capex cost, which would lower price to the point were access could be free for people depending on time of day or what resources they are accessing.

Business models

We could give people free Internet access in exchange for using their mobile devices for data collection. Since mobile devices are chock-full of sensors we could create data sets that have never existed before. What if we gave away free Internet-enabled cellphones in return for real-time weather information collected by sensors on the phones? Yes, this is possible!  I suspect this would quickly displace traditional expensive data gathering techniques and also would have very nice network effects that could also decrease backhaul costs.

An analog that comes to mind is electronic toll collection devices. In addition to their primary purpose – collecting tolls – those devices transmit real-time traffic data that is aggregated and reported out as average traffic speed and freeway congestion. I bet that could be a billion dollar idea if it was done on mobile handsets via a clever consumer app.  Oh, shoot, that specific idea has already been done…though I suspect it would probably would work again.

Those are my current favorite ideas to spread free Internet access more quickly around the world. If you can run with any of these or have another idea to make this happen, you will likely be remembered for eternity.  I’m excited to see it happen and would be thrilled to help make it so if opportunity come arises.

The most important mobile design decision a startup faces

I’m working on my “tweetable” titles as my blogging coach Andrew has advised but before we can talk about the most important decision we need to talk about what is necessary.

All consumer application creators need to focus on three core challenges:

  1. A differentiated product experience
  2. Attracting and growing a user base
  3. Keeping the user base engaged

On mobile, the strategies and tactics for achieving the above are still nascent. I’ll expand my perspective on each challenge below and then close with what I think is most important design decision a startup faces.

1. Building a differentiated product experience

To date, the state of the art in mobile design has been focused on how to design for smaller screens, defining key-touch-and-gesture input patterns and iterating on approaches to navigation. While those advances were necessary, they have not been sufficient to unlock the full potential for differentiated mobile product experiences, nor do they provide long-term differentiation because of the Joel UX design principle  The next phase of great mobile UX design will be all about what you can enable users to do that is specific and unique to a mobile computing experience, one that isn’t tied to a fixed location, uses data from a variety of sensors, is always connected and highly personal.  Many of these experiences will be Mobile Only.

The next wave of products will leverage the unique aspects of the mobile experience, including more use of the many sensors (gyrometer, location, ambient light, thermometers, etc.), the network connection type and abstractions like patterns of physical movement. Mobile device data & functionality, such as the user’s address book and SMS, are being leveraged to drive growth and engagement today, but there are many ways these can be used to improve the core product experience. On Android, developers can take advantage of the tremendous amount of data from Google services, given the high likelihood of users being signed into Google. There are near limitless novel ways to leverage the data in gmail, call history, web history, and more into a differentiated product experience.

2. Attracting and growing a user base

 “Mobile first” thinking led some people in the wrong direction when it came to finding users. It constricted their distribution channel to the app store and the device itself, and users just don’t have enough opportunity for discovering and trying new apps in those environments.

Now a days developers drive downloads through social platform integrations, cross promotion within your app suite or with complimentary apps, paid ads, and even offline distribution via brand marketing. However, if you have a web version of your app, you have an opportunity to amplify your relationship with the user by closely tying your web and mobile apps, making it seamless for the user to transition from one platform to another. On desktop or mobile browser to app. Frankly, this dynamic is one of the most under leveraged areas of growth innovation is mobile today.

Google Chrome is a good example of a cross-device experience.  If you’re logged in to Google when you are using Chrome on the desktop, you can open Chrome on a smartphone and pick up where you left off. For app developers, this is a good example of how you can amplify your audience naturally, and make your app more essential, by allowing people to move seamlessly from one context to another and back again.

3. Keeping the user base engaged

You can buy traffic and installs, but you don’t want to have a million installs with only 10,000 active users. That means you’ll always be “filling a leaky bucket.”

But how can you keep users engaged after they’ve downloaded and tested your app? The standard approaches of “first-run experience” or “new-user experience” are great but not enough.  The key to driving engagement is to actually know your product’s “magic number.” The magic number is the single metric that is most correlated with product engagement.  For many social products it is the number of friend relationships the user has established.  In productivity applications it tends to be providing enough data for the application to show off its usefulness. Dropbox designed a clever way to get users to their “magic number” with its Getting Started task.  Reverse engineering leads me to believe that their “magic number” is the number of devices you have installed the Dropbox client on.

Dropbox Checklist

Mobile messaging apps have done a good job of building engagement, because almost every notification is from someone else, which creates reciprocity in that the user has to use your app to respond.  You can replicate this in your product design by minimizing the number of push notifications you send that are not from another user.  It is amazing to see how poorly this principle is understood by virtually every application out there.

Finally, I think email is one of the most under-appreciated channels. Every smartphone has email on it, so why not build engagement through email instead of just using it as a duplicative channel to push notifications? Think about ways of linking to your mobile app from email, even though the links won’t work when clicked from a desktop email client.  At the very least, make sure you are thoughtful about re-directing when you see users click through from their mobile device.

I don’t think any of the above is controversial, but these challenges do bump up against the core challenge for every startup: prioritization and resource allocation. Therefore I believe the most important design consideration is choosing which mobile platform to start on. Don’t plan on taking shortcuts by launching on iOS and Android smartphones and tablets all at once. It’s not likely to work as well as you think it will. Instead, pick one target platform and nail it across all three areas outlined above.

If you are building something that has never existed before – if you are trying to capture people’s imaginations, or create a new consumer behavior – you’ll be better off targeting the iPhone and launching a highly polished  v1. Instagram and Uber are two examples where this focus has worked very well. If you are targeting the enterprise, you might want to start with iPhone as well, because it has far more penetration right now than Android.

However if you are trying to create a viral loop or iterate your way to success by figuring out how to displace existing workflows over time, you should start with Android. Unlike iOS, there are no App Store delays to go through – you can publish new versions everyday if you like and even push updates to your app silently, directly from your servers. The ability to iterate so quickly comes at the cost of device fragmentation and less platform functionality than iOS.  Said another way it is hard to build beautiful on Android.

What do you think is the most important mobile design decision is for a startup?

edit: fixed link

Android is the most important OS & platform in the world

Five years ago, when Android was introduced, it was met with wide skepticism and little enthusiasm by many pundits and experts. It delivered on that skepticism with a lackluster initial commercial launch. But today, Android is the dominant mobile operating system – preloaded on 70% of smartphones shipped worldwide in 2012 – and it is now poised to be the OS that runs the world.

Android has turned out to be the cheap, flexible yet powerful new OS of the future, not just compared to iOS, but compared to Mac OSX, Linux and Windows as well. Some of the early Android-powered non-smartphones attempts include Samsung Ativ QNVidia Shield, OYUA, Nikon Coolpix Camera, and of course Google Glass. It’s only a matter of time before Android is built into home sensors, cars and anything else you can think of.

How did this happen? Android proved itself first by filling a specific void in the wireless marketplace, where major hardware manufacturers needed a smartphone OS to compete with iPhone. Historically, competition in the highly fragmented mobile OEM ecosystem was based on hardware differentiation, not software innovation, as the OEMs didn’t have the necessary software engineering competency in house. Then iOS launched and OEMs knew they couldn’t compete with Apple on software and hardware. By offering Android for free and nurturing a developer ecosystem that rivals Apple’s, Google was the answer to iOS for OEMs.  Much like iTunes was the answer for the music industry’s piracy challenges. Whoops!

Wireless carriers were the other major gatekeepers in mobile and Android appealed to them by changing the economic rules of OS distribution even more dramatically than Linux. Google’s Android model was the most compelling answer for carriers given iPhone’s “over the top” strategy that provided no revenue share & customer disintermediation but was being demanded by consumers worldwide.

For its next act, Android is set to overtake Windows and OSX to become the de facto OS and development platform. As mobile devices become more powerful, and as screen sizes inch up, users will shift their computing time from PCs to a combination of smartphone and tablet. This is further accelerated by cloud-based services, single purpose devices and M2M data offerings such that fewer and fewer devices will need to run Windows, OSX or Linux OSes to meet user needs.

At the same time, entrepreneurs are starting to find creative uses for Android beyond the smartphone and tablet sectors, putting Android in the pole position to be the base operating system of a big new emerging technology market, the much-anticipated Internet of Things (IOT). The IOT refers to everyday products such as thermostats and scales enhanced with microprocessors and Internet connectivity. A large subset of those devices will need an operating system, application platform and an active engineering population to develop for it. Android is the obvious choice.

Structurally, this implies a whole generation of engineering talent is likely to never be exposed to Xcode, Visual Studio or COM.  Instead, they will learn to develop and publish apps using the free Android Studio toolchain. They will think in terms of product experiences and have the ability to experiment with revenue generation with practically zero barriers to entry. I have to imagine this is Bill Gates’ worst nightmare come true.

So what will Android-powered devices do? I listed a few of the early examples above that use it for things like SLR cameras and game consoles, but it has hardly been the land rush you might expect. My money is on China serving as the primordial soup that spawns several new Android use cases & variations. Watching their market dynamics from the outside indicates they are about 5 years ahead of the world in terms of Android ecosystem evolution. The China market also experiences more chaos and innovation, as Google has lost control of Android there, so more interesting stuff will emerge as part of natural selection process.

Irrespective of its likely lock as world’s most important OS, Android still has several weaknesses that need to be addressed to maximize its potential. Android’s current shortcomings include a long upgrade cycle, a proliferation of versions and customizations, the lack of a standards body, and a current lack of enthusiasm for Android-related software startups. Let’s take them one-by-one:

  • The long upgrade cycle has been cited by many as Android’s Achilles heel. Even as Google aggressively moves to combat this I think it is a forever fact of existence for Android. It’s the downside of an open-source OS that commoditizes OEMs, forcing them to differentiate their products via proprietary features. This results in private forks of the OS for each OEM with forward and reverse integration into the “public” source trunk. As fast as Android is moving, and as the prices of mobile devices plummet, OEMs have little incentive to back port to last year’s device. This means that app developers have to account for the differences, and apps may not run on some devices or may otherwise be impaired.
  • All the different versions of Android, not to mention flavors, on the market means that developers have to make an important decision about what to support.  If you want the most reach, you have to target the current versions plus previous two major releases (as of now effectively Jelly Bean, Ice Cream Sandwich and Ginger Bread, since Honeycomb was a ghost release).  However, if you want to create the best possible user experience, you’ll likely want to focus on the features introduced in the most current version of the OS, which will cap your market size significantly. Who knows what you have to focus on to generate meaningful revenue on the platform. So this becomes nothing less than a “bet the company and/or product” decision, since it affects the software architecture and product experience design so deeply that it is virtually impossible to change once product development is underway.
  • Android customization also means that developers have to find ways to build inroads with multiple Platform Vendors (at the very least Google, Samsung and Amazon if you are U.S.-centric) that are all competing with each other and looking for exclusive differentiation.  Globally, the landscape is even more challenging. Loath as I am to suggest it, I actually think Android needs some sort of standards body that leverages developer influence to apply pressure to the different Android Platform Venders as API levels evolve. This will become even more necessary in the next few years as more companies do what Amazon has done in forking Android to create the Kindle Fire OS thus break “Android” for developers.
  • Android is still a second-class citizen in Silicon Valley and among U.S.-based software companies. I live and work in Silicon Valley and can count on one hand the number of Android phones I see everyday. My sense is this is changing, as I’ve recently been pitched about a dozen different Android launchers in my short tenure as a VC, though that may be because I started the team that launched Facebook Home more than an increase in the popularity of Android. I’m still hoping to discover start-ups that are thinking much more broadly than launchers about the level of disruption Android enables, both on mobile and non-mobile devices.

I’m eager to see the creative ideas entrepreneurs will have about how to leverage Android to build amazing products!

9 ways a billion dollar new mobile company might be created

We’ve been in “New Mobile” – a world of wireless broadband and mobile OS platforms enabling great end user experiences – for about 5 years. The improvement in the capabilities of devices has been astonishing. But in truth we are still in the first inning of New Mobile reshaping just about everything we do and everywhere we do it.

Since leaving Facebook, I’ve been asked more and more for my perspective on mobile ecosystem. Here are my current observations on why New Mobile is still in the earliest stages:

  1. The move from feature phones – mobile phones without robust browsers or a compelling application ecosystem – to always-connected touchscreen computers in our pockets still has a long way to go. Smartphones are barely the majority of total mobile phone sales in the U.S., let alone globally.
  2. The industry talks about smartphones and tablets as both being “mobile” devices instead of seeing them as two very different beasts. This is starting to change and I’m excited to see the wave of companies that are “tablet first” – but please don’t let that become a mindless mantra!
  3. It’s no longer about iOS vs. Android. Now the hard question is which Android versions (Gingerbread vs. Jelly Bean) and flavors (e.g. Samsung, Amazon, etc.) you are targeting and why. Said another way, Android fragmentation, and dominance, has just begun.
  4. Completing transactions on mobile is still a big hassle (except for M-Pesa). App store and carrier billing fees are too expensive to be an option for anything other than high-margin digital goods. Whoever cracks this in a way that any 3rd party app can use is going to be very rich.
  5. Content creation on mobile devices is horrible. Much of the content we consume on mobile today requires the capabilities of a PC to produce, including the keyboard, mouse and purpose-built apps. Products like Paper and Vine have shown that there is considerable demand for creation via the touchscreen.
  6. True mobile multitasking hasn’t been invented yet. Smartphone screens are smaller and better suited to handle one app at a time with abstracted file access. But we’re used to working with multiple windows and applications our computers with a global file system. When will a new UX model emerge, especially on tablets, to enable multitasking?
  7. There’s no “mobile native” ad unit to allow publishers to monetize their audiences and thus focus on building richer and more engaging experiences. Instead, startups have to spend a ton of time on business model innovation, which is another really hard problem to tackle. My money is on Facebook cracking this nut (full disclosure: I am still heavy on the stock, so my money is literally on them) though I think Yahoo could be a surprise contender.
  8. Only two types of paid subscription services have gained traction on smartphones: Content licensing such as Rdio and Pandora One, and storage such as Evernote. What else are users willing to pay a subscription for on their smartphones?
  9. There have been some billion dollar exits like Instagram and Waze, but we haven’t had a stand-alone, New Mobile company go from garage to an enduring multibillion-dollar independent company in the Americas or Europe yet (it has happened in China though).

There is a lot to be unpacked and everything above is up for debate as we refine our collective thinking through discussion. The only thing I know for sure is that I’m excited to learn about, identify and nurture the best mobile-focused companies out there.

Hello World

First post on new blog & url.

Site design is a work in progress. 

My goal is to post about once a week.

Old blog at murarka.com going offline soon.

Feedback appreciated!