Mobile developers make the magic (so why do platforms owners keep kicking them in the teeth?)

I've been spending a ton of time in the mobile world lately, mostly on behalf of Founders Co-op portfolio companies AppStoreHQ and Urban Airship, and the deeper I get in the mobile ecosystem, the more perplexed I am by Apple and Google's behavior toward the iPhone and Android developer communities.

With iPhone (the high-end pioneer) and Android (the democratic fast-follower), Apple and Google have unlocked an entirely new vector for mobile software innovation, and they deserve praise, admiration (and their current lofty market caps) for doing so. But their snazzy platforms aren't worth shit without the staggering volume of useful, creative and just plain fun apps that 3rd-party developers keep building for them. And yet both companies - each in their own way - continue to kick sand in the faces of the very folks who make their mobile platforms so great.

As a web entrepreneur-turned-investor, I'm absolutely convinced that the most exciting innovation and value creation in the global economy is coming from software entrepreneurs: small teams of crazy, passionate hackers that can make magic with their minds. Apple and Google were built by hacker-entrepreneurs, which makes their tone-deaf handling of the mobile developer community all the more surprising.

Let's start with Apple:

Beginning with the iPod, then iPhone, and now even more transparently with iPad, Apple is primarily focused on extending their power over established media players - record labels, TV and movie studios, print publishers (as well as the ad agencies who help monetize all this premium content). The company seemed genuinely surprised by the initial success of indie app developers on the iPhone platform, and with a few notable exceptions (mostly top-grossing apps and a lucky few hand-picked to boost credibility in selected target markets), has treated their indie supporters with a capricious mix of indifference and open hostility.

Each annual OS upgrade has included new restrictions on app developers and the companies that support them, all with the intent of further securing Apple's control over the content and monetization in their ecosystem. The iOS4 restrictions on (among other things) 3rd-party analytics, cross-platform development frameworks and non-Apple monetization platforms are just the latest and most egregious example, with the steady drip of app approval issues and outright bans offering daily evidence of Apple's real opinion of the indie community.

All of this is completely within Apple's rights as a profit-maximizing entity, but I'm not convinced it's in their long-term self-interest. The aging media behemoths that Apple is so focusing on "serving" (a.k.a. harvesting) are on a fast train to insolvency, mostly thanks to the Internet and all the pesky software and content entrepreneurs that Apple so disdains. The company is executing their current media-focused strategy brilliantly, but they're leaving a gaping hole for their arch-nemesis...

Google:

Google's Android platform has exceeded all expectations for global adoption, as carriers and handset makers terrified by the Apple juggernaut run to Google's relatively more open platform as lifeline to maintaining (temporary) relevance among consumers and businesses gone wild for the smartphone experience. And Google has poured on the juice for their enterprise partners, rapidly releasing OS upgrades and subsidizing reference hardware designs like the Droid and Nexus One to demonstrate the promise of the platform. The almost-giddy tone of Google's recent developer conference revealed just how pleased the company is with Android's remarkable progress, and the platform currently looks like the only real threat to Apple's global dominance.

All of which makes it even more puzzling why Google isn't doing more to deliver value to the Android developer community. Yes, they're handing out free Android smartphones to any developer with a pulse, and using cash and goodies to lure proven winners over from the iPhone platform. But what developers care about most is seeing their work in the hands of as many users as possible, and Google's efforts on that front are surprisingly lame. The company has a quasi-religious opposition to desktop software, meaning they're unwilling to offer a direct competitor to Apple's iTunes as an Android software and media management console. They've also failed to create a competent webstore for Android apps, forcing all app discovery into the very basic on-device Android Market experience. Finally, the company has been slow to expand app payment options - limiting most paid apps to U.S.-only distribution. All of this has artificially suppressed the market for Android apps, allowing Apple to remain the preferred platform for mobile developers based purely on distribution and monetization advantages (and not the purported "technical superiority" or "platform fragmentation" issues touted by the fanboy community).

So what happens next?

While neither Apple nor Google has distinguished themselves in terms of developer relations, my money is on Google as the ultimate winner in this space. Apple's ratcheting lockdown of iOS is steadily wearing down the patience and passion of all but the most rabid iPhone OS purists, and Google's meteoric rise and relatively looser atmosphere will continue to lure the most entrepreneurially-minded developers, even if the company's official support remains lackluster. If Google wakes up to this opportunity and acts more aggressively to unblock the current distribution and earning constraints on Android developers, all bets are off on how quickly they can replace iOS as the developers platform of choice.

Foundry backs BigDoor and CEO Keith Smith offers a peek behind the curtain

It's only Tuesday but it's already been a big week here at Founders Co-op. First, the news broke about our  newest company, RevenueLoan, raising $6MM to create a new and potentially disruptive finance offering for high-tech companies. Then BigDoor Media, a Founders Co-op portfolio company, announced a $5MM venture round led by Brad Feld at Foundry Group.

There's already lots of information and commentary in circulation about these two companies and what they're up to, but if you want a peek behind the scenes to understand how they came into being, you should absolutely read this post by Keith Smith, BigDoor's CEO and co-founder.

Instead of talking about what BigDoor does, Keith's post tells the story of how his company got off the ground, what role my partner Andy Sack and other early investors played in that process, and how Brad and his partners at Foundry engaged over a period of months before coming to a decision to invest. Here are a few choice quotes to whet your appetite for the full text:

On Andy's response to BigDoor's decision to scrap their first six months of work:

"Andy listened intently, probed with questions and within 30 minutes said, 'Great, let’s do it.'... We had made commitments to Andy and our other investors, and changing direction like this meant he was willing to forget every one of those prior promises and start down a new path.  We needed more capital and more runway than initially planned, and our investors immediately got behind us."

And on Foundry's evaluation process:

"Never once did anyone at Foundry ask us for projections or historical financials.  We didn’t talk about the deal, valuation or board composition and we never talked about exit timing or how much money they needed to make.  Product, customers and philosophy – that’s where we spent our time."

 Keith is an incredibly capable and disciplined entrepreneur, and everything he's accomplished to date is a result of his total commitment to making BigDoor a success. What's most gratifying about his post is his appreciation for the role that investors can play in building a new business, and his candor about the type of investor interaction and support that "feel right" to an experienced entrepreneur. In Keith's words:

"Brad and Andy are cut from the same cloth... and are both passionate to their core about helping startups."

I'm proud of the role that Andy and Founders Co-op played in Keith's early success, and incredibly excited that Keith and his team now get to work with Brad and his partners at Foundry Group to take BigDoor to the next level.

It's official! Founders Co-op is in the Royalty Based Finance business

TechCrunch just published a terrific introduction to our newest Founders Co-op company: RevenueLoan. Andy and I got excited about the idea of royalty based finance for early-stage companies more than a year ago and have experimented with the structure in our first fund. As we worked through the details on these deals we realized that there was a much bigger opportunity out there than we could tackle "on the side". With the help of local institutional investors Voyager Capital and Summit Capital, we now have a vehicle dedicated exclusively to this approach.

As scrappy, dilution-averse entrepreneurs ourselves, we love this approach to growth financing for successful early-stage companies. Between TechStars at the earliest stages, Founders Co-op at the seed stage, and RevenueLoan for profitable and growing companies, we now have an investment offering for bootstrap-minded entrepreneurs at every stage.

Congrats to Andy, Randall and the Voyager and Summit teams on a great new offering. If your startup is doing ~$1 million a year in revenue, running at or better than breakeven and needs a little growth capital to really take the next hill, you should definitely give them a shout.