Building a business in mobile

Some truly useful information came to light this afternoon at Mobile 2.0, as a panel of mobile experts addressing an audience that was 50% mobile startups. The topic of the panel was “building a business in mobile”, and the panelists have been deeply involved with mobile startups of all stripes for many years now. The following is a selection of the advice they gave. Now, I also recorded this panel - so I should be able to post the entire thing either tomorrow or early next week. But I felt that it had such good content that I should get at least some of it posted as soon as possible!

Moderator: Peter Vesterbacka, SomeBazaar

Panelists:
Chris Wade - CEO, ShoZu (social media hub)
Martin Frid-Nielsen - Founder and CEO, Soonr (mobile upload and backup)
Michael Mace - Principal, Rubicon Consulting (high tech consultant)

MOD: if you are a startup in mobile, what advice should you get? What should you do, and what shouldn’t you do?

Chris - the first thing, do not fall in love with your technology. There is a fundamental requirement to understand who is actually going to start the cash chain! No matter how revolutionary your technology is, if there’s no market for it it won’t go anywhere. You have to understand how the money is going to come to you. Nobody can create a market that doesn’t exist.  So I have two pieces of advice: 1) Is there a market for your product? 2) Do you understand who you’re selling to?

Martin - Having been in the space since ‘05, we have some scars to show. I would say that before you enter the mobile space, you should have your head examined! This is an extremely hard market to be in. The returns for mobile are not great, and there are a lot of risks. You need to be careful about how you raise money - you can’t rely solely on advertising. You have to have user uptake, or your business will not be sustainable. If you are a startup, you have some things going for you these days. You have app stores, you have events like Mobile 2.0 and Mobile Monday. Mobile operators are more likely to work with developers these days… but despite all this, if you do not have an audience of people who are willing to buy and use your product, you will go nowhere.

Michael - the most common problem I see is companies that are not really clear on what the core problem is that they’re solving for the person who is paying for their application. It may be a really cool app and exciting for engineers, but often it doesn’t solve a problem that needs to be addressed. At the consumer end, people are becoming conditioned to pay nothing for software, thanks to trends in the iTunes app store… but this isn’t true for enterprise applications. Another big problem is the revenue share. Handset manufacturers in particular are slow to share money with developers. You might have a really cool piece of software that you think you can license with a manufacturer for 3 euro a pop… but these people have a budget of pennies per unit for mobile apps.

Chris - Remember, you are in a mutually competitive relationship with manufacturers. You want to extract as much revenue per phone sold as possible, and they are trying to reduce your revenue.

Martin - you also have to remember that there are 85,000 apps in the store now. Being able to generate buzz and noise is incredibly important. What has changed in the last couple of years in mobile is that it has become less of a sideshow. Mobile is now a question that comes up in the higher ranks. People ask “what’s our mobile strategy?”, so you must remember that you now have a chance to talk to senior partners, and see smaller companies getting acquired for decent sums of money.

MOD: yes, a few years ago there was no discussion about mobility in Silicon Valley. In four years, this has changed completely. Mobile now is part of pretty much everything. There is huge opportunity if you know this space and talk to large companies.

Q&A:

Student - if a company that is trying to launch an app store, they are highly dependent on sales volume. But initially they will have little money for marketing. How do they over come this?

Chris - well, the web has lead to an extraordinary thing called a blogger! These are intelligent and engaged people, who enjoy writing about these topics - and they write for free. They also have an audience.

Martin - I agree. Bloggers are people who are interested in the space. If you reach out to them you’ll find you get a good reaction.

Michael - be careful about launching an app store, by the way. There is a rush to launch app stores from a huge number of companies, and an app store is a whole series of little things that have to be done right… and if you get just a couple of them wrong you’ll find you get a poor response. Also, you have to make sure that billing works properly, it’s just incredibly important.