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Want to cash out? Move to the Valley

Recent research from CB Insights clearly highlights San Francisco as the place to be for someone in the tech space (in terms of US cities that is).  San Francisco accounted for 9% of the M&A deals of private companies since 2012.

However, when looking at the list and considering all the cities that are in the Silicon Valley, this becomes even more crystal clear:

Bay area cities in yellow

Adding up Silicon Valley cities which tally 17 strong of the top 100, the Bay Area’s share is actually 29%. This is quite staggering.  It gets even more strange if you consider proximity to a large body of water (i.e. either an ocean or The Great Lakes). Out of the top 30 cities, which account for nearly 70% of the deals, only 2 cities are more than 300 miles from the water.

If doing a start-up is a bet, and acquisition the end game, it is quite clear where you should place your bet as an entrepreneur.  The next time your VC asks what your exit strategy is, part of that answer is quite simple.

Posted in Other.

Are Google and Apple too dominant on mobile?

The battle for the OS in the PC world has pretty much been at status quo for a few decades, save for some slight growth of Apple’s OS.  For mobile it may seem we are moving to a similar duopoly, and  a key question to ask is how Google and Apple have managed to get such dominant positions in the mobile space. To point to how they have focused on apps to capture consumer’s attention is an oversimplified view, as it really has to do with looking at offers across the entire eco-system that is mobile, with differing strategies that has delivered different results:

Source: Mobile Megatrends, Vision Mobile

Source: Mobile Megatrends, Vision Mobile

For Apple the formula has been simple, in that they control everything, from the OS, to the store, to the handset and features, to the business models. For Google, the answer is more complex, and it really comes down to the decoupling of the operating system of Android to the apps and services offered on Google Play. This is very well explained in Vision Mobile’s Mobile Megatrends report, which shows how Google has moved key services such as maps, search, mail, authentication/sign-in, in-app billing, sharing APIs, remote wipe, etc, etc).

The question then becomes to what extent should this sort of domination be allowed? To what extent do you put Google through the same scrutiny Microsoft was put through over a decade ago?  Interestingly, while Microsoft was forced to open up for any browser on a paid proprietary platform, such scrutiny has not been awarded to Google on a platform that theoretically is open but which is clearly locked in. To what extent is a browser different from an in-app billing engine when soon 90% of revenues come through this mechanism? Yet for a few landmark attempts from competing app stores like Aptoide, and probes by the Australian news media, regulators seemingly are taking little action.  You could also make the case that despite being closed (as Microsoft has been), Apple’s iOS is now big enough to be awarded the same scrutiny the Windows platform was put under.

Don’t get me wrong. I am an Android fan to the hilt, and love what Google has done. But at the same time I see what a hindrance it is to dictate APIs and tie things to one store, especially for smaller developers who simply do not have time and resources to maintain a huge number of SKUs of their app in order to fully distribute it globally. The complexity of the business rules and the share number of payment SDKs to maintain is a stretch even for larger players.  I love Amazon too, but if Amazon had made a construct where most suppliers of household goods, clothing, electronics etc could only distribute through (unless they were megabrands and had the power to distribute elsewhere) I’d be pretty upset with as well.

Android developers have enough fragmentation to deal with, as Ben Evans points out in an excellent post. Fragmentation in hardware and operating systems is hard enough, but couple it with fragmentation in business models, created by artificial and constraining rules about what you can and cannot use to be visible in an online store, seems worthy of some scrutiny. Perhaps time for Super Mario (Monti) to return to save an industry currently dominated by games.

Disclaimer: The views expressed on this post are mine and do not reflect the views of any clients or companies I am currently working for or have worked for.

Posted in The Business of Mobile.

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Tired of apps? There’s an app for that!

“The mobile browser is dead. Long live the app!” touts Forbes in a recent article. 86% of time is spent in an app instead of a browser.  What went wrong? Well, nothing really, this is just what was coming for a long time (like I’ve been saying for years as well).  While the mobile browser is perfectly suited for consuming information, there are a number of factors driving app usage:

  • Majority of app usage is gaming. Mobile browser gaming kind of sucks (do you even remember the name of one?)
  • Contrary to popular belief, designing a well functioning HTML5 with lots of navigation bells and whistles is not cheaper than making an app (search for the Financial Times case study on this site)
  • HTML5 is just not there, and even if it gets “there” it will always(!) play catch-up to native apps who can much quicker and much more efficient take advantage of new device features

Source: Flurry

And the “appsplosion” is happening faster, as even distinct services create multiple apps to separate user activities or have better performance in their apps.  Or the real reason is possibly just to take up space on your device to push others out.  Of course as the number of available apps go up, so does the number of sub-par apps, and soon we find ourselves in need of something that cleans up what we don’t use, like the app Aviate.  Google and Apple are not doing anyone any favors either, with overloaded stores making it near impossible for users to find good apps, and the top 25 dominating everything as users are time poor and can’t be bothered searching.

Rodney Byfield in an article entitled “Customer integration in the App world” puts it well though:

There is a real need to harness customer input while leveraging the selection process in App development, leading to the thought that greater customer input leads to more acute selection, with the intention of creating a customer-centric product.

This is not a novel concept, in fact it is something that has been driving successful businesses for years. Except now it needs to get done in 5 square inches or less, and that is a formidable challenge. Furthermore I have seen little evidence of leveraging users in the app selection process, a technique we used in MoConDi back in the days when apps were referred to a midlets and app stores were wap sites.  I strongly believe the app fatigue that has already set in will open up formidable opportunities for those who crack the code for user involvement in app development and discovery – and the beauty is I doubt they will have to be constrained by what Apple and Google tells them to do…

Posted in The Business of Mobile.

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