Wednesday, September 21, 2011

Our mobile, location-based future *is* coming... but not today

At the end of a call today with a nascent mobile advertising company, the entrepreneurs described me (fairly) as having dumped "a bucket of cold water" on their idea.

When I spoke at a local event a few weeks ago on "location-based services and the mobile ecosystem" (slides below), an attendee pointed out that I was "a bit of a wet blanket" on the subject.

Don't get me wrong, I'm as excited about the mobile future as anyone -- and after a decade of empty promises the smartphone revolution has finally kicked mobile innovation into high gear. But when I reflect on my time in the "m-Commerce" trenches back in the last bubble ('98-'99), I know in my bones that we're still in early innings on this thing.

Here's what I think will *eventually* happen:
  • Consumers will increasingly rely on their mobile device as an always-on, personalized enhancement layer on their real-world experiences (think augmented reality, but more effortless, personalized and relevant). Some of this will happen at the app layer, some at the OS layer, but between them the mobile share of attention (or potential on-demand attention) will be nearly constant.
  • In cooperation with their app- and OS-level partners, massive, data-intensive "mobile engagement enablers" (think OS-agnostic infrastructure players like Urban Airship and SimpleGeo) will maintain real-time maps of all those opted-in mobile consumers by location, demo / psychographics, intent + need states (both declared and inferred from location + social media exhaust), etc., etc., all made available to trusted partners via API.
  • Performance-based offer networks (notice I didn't say ad networks) will make it possible for anyone to bid for permission-based access to these opted-in mobile consumers by any combination of day-part, location, brand affinity, need state, etc. (Facebook's ad console is the closest thing that exists today, but still a pale approximation of what's to come).
  • Creative agencies will help their brand clients develop and implement new customer acquisition, latent customer activation and preferred customer incentive strategies (notice that I didn't say "advertising campaigns") across the mobile audience. Campaigns will unfold differently for different blocks of current and potential customers, based in part on those customers' relative influence in social networks and prior engagement history with the brand.
  • With the help of their creative and execution partners, brands will shift bigger and bigger chunks of ad spend toward personalized offers and incentives designed to reinforce brand loyalty and trigger new behaviors. These offers will mostly be delivered to mobile consumers via 3rd-party proxies (social media platforms, branded entertainment content, social games) but a few elite + high-engagement brands (think Starbucks) will be able to build rich new direct relationships with their mobile customers.
The good news is, lots and lots of really smart entrepreneurs see this same scenario unfolding and are hard at work staking a claim to one or more of the layers or components described above.

The bad news is, none of those players -- with the possible exceptions of Apple, Google, Amazon (soon) and Facebook (a dark horse contender) -- has the power to implement the full stack outlined above at anything resembling workable scale.

So what we have on our hands now -- and for the foreseeable future -- is a colossal battle for the future of consumer marketing and entertainment, worldwide. Since it costs almost nothing to start a software company these days, there will be limitless new entrants clamoring for attention.

As these midgets fight...  tech giants will battle with mighty strokes (think massive acquisitions and billion-dollar patent fights)...  traditional marketing enablers will delay their own obsolescence through FUD...  and brands will sit on the sidelines and wait for the dust to settle.

A smarter person than me once said, "being early is the same as being wrong". It's not too early to play in this market, but your strategic view (and by extension your financing strategy) had better have as its base case a long and bruising battle with victory a long way off.

Tuesday, September 13, 2011

Seattle's Angel Gap: Too Many Maseratis, Too Few Seed Investments

A few months ago I was invited to speak to the Bellevue, WA chapter of Rotary International on my favorite topic: how to create a globally competitive early-stage technology ecosystem here in the Pacific Northwest.

As I was putting my thoughts together (full deck below + full props to Brad Feld, Fred WilsonMark Suster and Marcelo Calbucci for pushing my thinking on the topic), I found myself wondering for the thousandth time: for all the obvious strengths of the Pacific Northwest tech scene, why do we consistently underperform our considerable potential?

If I could wave a magic wand and change one thing about our local community, it would be to turn every Microsoft and Amazon alum who walked away with at least $5MM in personal net worth into an angel investor.

As a region, the Pacific Northwest is awash in "tech wealth", wealth that was created by some of the most remarkable entrepreneurs the tech world has ever seen. But of the thousands of people who participated in those companies' success, very few self-identify as entrepreneurs -- people who feel connected emotionally and intellectually to the startup experience. Absent that emotional connection to the entrepreneurial life, most wealthy beneficiaries of Bill Gates' and Jeff Bezos' startups put their money elsewhere -- family foundations and hedge funds, real estate and wine collections.

Paradoxically, because the vast entrepreneurial wealth Seattleites enjoy today was created by just a few massively successful companies, too little of that wealth is being recycled in the next generation of local entrepreneurs. And with fewer dollars flowing into the local innovation economy, the odds of the next Microsoft or Amazon emerging in the region are that much lower.

In the short run, Seattle loses because we have fewer startups. In the long run, though, we run a much more serious risk: of losing our position in the global innovation economy and failing to attract the kind of talent needed to make this the kind of city that our children and grandchildren want to live in.

Microsoft is on the ropes. Starbucks is up off mat but has had a tough few years. Amazon is still ascendant, but for how long?

Who among the many thousands of Microsoft and Amazon multimillionaires currently on the sidelines will step forward to help build the next generation of tech giants here in the Pacific Northwest? Raise your hand and I'll do everything I can to connect you with the early-stage community here, and to share the joy I feel every day chasing big dreams about the future with the smartest and hardest-working people I've ever met.