Editor’s note: Doug Renert is a co-founding partner of Tandem Capital, Silicon Valley’s first and largest mobile accelerator fund. Follow him on Twitter @dougrenert.
Mary Meeker explains in her oft-cited report that the world’s 1.1 billion smartphone users still comprise only 17 percent of mobile subscribers. Yet, these users have tripled mobile Internet access over the last two years. This points to enormous continued growth in the mobile space over the coming years, and countless droves of mobile-focused startups are emerging to reap the rewards.
But not all mobile startup opportunities are created equal. Entrepreneurs should consider the odds of disrupting a given market before they spend their time chasing just any opportunity. Some markets are overly saturated with powerful incumbents. Others are simply too nascent to yield significant results.
While reviewing hundreds of startup applicants to our mobile accelerator fund over the last quarter, I noticed patterns begin to emerge in the businesses they were pursuing and dropped them into a few mental “buckets.” Innovative entrepreneurs will create exceptions within each of these buckets, but I still wanted to offer my thoughts as we enter 2013 looking to find the next big thing in mobile.
Too Crowded
Location-based social networking. The idea of finding your friends anytime, anywhere through a single app has been exhausted by independent platforms like Foursquare and integrated into existing social media platforms like Facebook. Even apps like Twist made an attempt by providing friends your ETA via email, but it has yet to find success. In the end, there’s still no better mobile meet-up tool than a text message. Additionally, even if a new service can build an audience, it’s unclear if revenues will follow. Just ask Foursquare.
Photo-sharing. The clear winner when it comes to photo-sharing is Instagram (and by default Facebook), and more recently Snapchat has exploded. But in this space, there are hundreds of apps for every single one that “makes it.” In addition, monetization remains elusive in this category, giving newbies next to no chance of survival other than an acquihire.
Workplace collaboration. It’s a challenge to attribute any kind of value to a service that requires multiple people, using it at the same time, for growth – just ask Huddle or Double Dutch. With players such as Google and Dropbox (and now Dropbox Mobile) well entrenched in our work lives, that challenge has become even greater. Even though most of the existing services have glaring weaknesses, this mobile niche is an incredibly tough row to hoe.
Nascent
In-car-based apps and services. I love that auto companies are pouring money into startups, but there’s no reason for startups to individually build for them – yet. The most popular mobile apps will be integrated into these cars automatically, like Aha and Pandora have. Once auto2app integration becomes more standard (in the next couple of years), fledging startups can then focus on the car versus just expanding to it.
Mobile wallets. The mobile wallet is an idea waiting to be perfected, with valiant efforts by Google and Apple’s Passbook, as well as initiatives by everyone from Visa to a carrier-based conglomerate called Isis. But with all the hype there still is no clear winner. Is the public not yet ready to surrender the monetary security blanket that is their physical wallet? Or maybe they just don’t see the point. Fortunes will be made in this category, but very few startups have the time and money to crack this market.
Integrated TV apps. Though integrated TV apps show great potential for second screen opportunities, the behavior of watching TV is still locked into its respective screen. Mobile-only viewing will grow with the help of more partnerships like Hulu Plus and BuddyTV. And when it’s ready, the opportunity will be huge – especially if you believe in Steve Jobs’ “Interactive TV” dream.
Just Right
Everyday apps. Evernote transformed the way people take mobile notes, and the company continues to update and refine their platform. And it’s only getting better. CloudOn became one of the fastest-growing business apps of all time by bringing Microsoft Office to all popular smartphones and tablets before Microsoft itself did, again focusing on everyday consumer pain points of accessing and editing important documents. It can be quite powerful to transform the experience around applications that people use every day by leveraging device features, integrating social networks and offering enhanced user interfaces. Mobile calendar and contact organization will be next in line for disruptive redesign.
Mobile developer platforms.Developers are looking for new ways to boost their retention and monetization. Companies like Urban Airship, Kiip and ChartBoost are stepping in to help in their own ways. 2013 holds strong possibility for startups that want to take developers beyond ads and analytics and focus on engagement.
Rich messaging and SMS marketing. So much is done around e-mail despite its decline, and the companies on the growing SMS side still seem to just be scratching the surface. Will retailers opt-in for SMS marketing and leave e-blasts behind? A recent study by SnapGiant sure thinks it would be wise, given their market research shows 50 percent of those surveyed transacted from a text alert. CallFire also sees promise in SMS marketing, but cautions the thoughtful timing and strategy needed to make it successful. It’s time to brainstorm what more can be done with this popular, personal and instantaneous method of mobile communication.
There are a dozen more mobile markets within each of these buckets in which startups and VCs belong. Which ones do you consider too crowded, nascent or just right?
[Image via Flickr]