Mobile Monday Boston - Compelling Mobile Business Models

Compelling Mobile Business Models January 12, 2008 present Keynote: Jeff Glass - Bain Capital Ventures Ajay Agarwal - Bain Capital Ventures Speakers: Bryan Barletta, Director of Marketing - AppVee Mihael Mikek, President and CEO – Celtra Casey Jones, VP of Business Development – MocoSpace Jorey Ramer, Founder and VP Corporate Development – Jumptap David Nowicki, VP Marketing and Product Management – Airvana Mark Lowenstein, Mobile Ecosystem

Boston Mobile Cluster Map

Boston Mobile Investment 2002 – 2008 in millions

Boston Mobile Investment by 2008 Quarter

Total Boston Mobile Companies Receiving Venture Funding in 2008

Mobile Startup Landscape Ajay Agarwal & Jeff Glass, Managing Directors Mobile Monday, Langham Hotel, Boston January 12, 2009 Bain Capital Ventures

Mobile Monday Deck
Mobile Startup Landscape Introduction Source: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08 Global Venture Capital Mobile Financing

Mobile Monday Deck
Mobile Startup Landscape Introduction Lemming University

Mobile Monday Deck
Global Venture Capital Mobile Financing Mobile Startup Landscape Introduction Source: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08 ?

About Bain Capital Ventures
Mobile Monday Deck
Mobile Startup Landscape Introduction Since our founding in 1984, Bain Capital has been an extremely active early stage investor and has a deep track record in the mobile space Our Mobile Portfolio (acquired by VeriSign)
First investment was a $600,000 seed investment in Staples
Seed investors in Aspect Development, which was ultimately sold to I2 in 2000 for $9B
Other early stage venture successes include DoubleClick, Shopping.com, eCredit, and Taleo (TLEO) and Staples
Over the years, Bain Capital has made more than 60 early stage investments
Today, we has over 25 active early stage companies in our portfolio
Our Early-Stage Focus
Unparalleled Access to the Fortune 2000 and 350+ portfolio companies across Bain Capital, yielding valuable customers and partnerships
People – our 30-person Venture team allows us to take an active, engaged role in partnering with entrepreneurs
Analytical Approach – we offer deep strategic and operational experience
Our Value to the Entrepreneur

Mobile Monday Deck
Mobile Startup Landscape Market Overview
The mobile ecosystem is undergoing systemic change
The network is becoming commoditized, and voice ARPU is dropping rapidly. In fact, it has dropped 19% since Q1 2005.
Smartphone penetration is increasing and operating systems are becoming more open, lead by OS X, Android, Symbian and Blackberry. This is leading to the proliferation of mobile application development.
The balance of power is shifting from carriers to operating system providers as they become the gatekeeper to the phone and the consumer. Apple, Google, and RIM have now all launched app stores where they decide which applications can participate, not the carrier.
The market is expanding as
Smartphones become a viable laptop replacement
New form factors such as Mobile Internet Devices, navigation devices, digital cameras, and e-readers are starting to include Wi-Fi capability.
Mobile phones are continuing to replace landlines, and new technology such as femtocells and Wi-Fi enabled mobile phones will only heighten this trend.
1 2 3 4 5
The net result will be an expanded market for mobile data services, and an opportunity for new startups.
Although the market for these services is projected to be large, it’s not clear how revenue will be shared amongst participants, which leaves room open for new and innovative business models.

Historical Acquisition Activity
Mobile Monday Deck
Mobile Startup Landscape Business Models Source: CapitalIQ, Bernstein Research – Nokia, July ‘08 Note: 1. Exits are for Wireless / Mobile / Cellular companies in US / Canada or Developed Europe backed by a financial sponsor acquired for > $100mm btwn. 1/1/00 and 1/1/07 as of 1/1/09. 2. Consumer Indirect Applications are applications purchased by Carriers / Handset manufacturers and preinstalled on phone while Consumer Direct applications are sold directly to the consumer. Historically, the bulk of acquisition dollars have gone to service providers, infrastructure software developers and hardware designers… Voice-C entric Ecosystem
Historically, carriers controlled the mobile ecosystem because they:
Owned the relationship with the consumer
Determined handset subsidies
Controlled application availability
Carriers competed with each other based on:
Network Coverage ( Early to late ‘90’s )
Network Quality (Late ’90’s to mid ’00’s)
Price (Mid ’00’s to current)
Therefore, companies that enabled increased coverage, increased quality, or lower pricing thrived… This meant that their priorities were those that were rewarded…

Recent Acquisition Activity
Mobile Monday Deck
Wireless/Mobile Exits (2007 – 2008) Data-Centric Ecosystem Mobile Startup Landscape Business Models Source: CapitalIQ Note: 1. Exits are for Wireless / Mobile / Cellular companies in US / Canada or Developed Europe backed by a financial sponsor acquired for > $100mm btwn. 1/1/07 and 1/1/09 as of 1/1/09. 2. Consumer Indirect Applications are applications purchased by Carriers / Handset manufacturers and preinstalled on phone while Consumer Direct applications are sold directly to the consumer. However, as the landscape changes, priorities are shifting towards data services, and over the past two years companies that enabled such services have seen success…
Mobile penetration in developing countries is reaching saturation
Voice ARPU is declining
-> Carriers must increase Data ARPU to
grow
Concurrently, as handset manufacturers try to maintain pricing, they are changing their focus from handset design to improving handset feature sets.
-> Therefore, the emphasis is shifting to
data-centric offerings including
navigation, music, video, internet,
and games.
Over the past two years, service providers represented only 43% of total acquisitions, with data oriented assets making up the bulk of the rest

Recent Acquisitions
Mobile Monday Deck
Mobile Startup Landscape Business Models Source: CapitalIQ Over the past two years, successful exits in the mobile data space have included mobile platforms, data assets, enabling technologies, and access points… Mobile Platforms Data Assets Enabling Technologies Access Points Navigation Semiconductors Audio / Video Codecs

Financing Activity
Mobile Monday Deck
The groundwork for mobile data services and applications is still being laid, and therefore the business models that have already been successful are those that:
Provide the underlying technology for building mobile data services
Help the mobile data market to inflect rather than depending on the underlying infrastructure being in place
However, Venture Capital inflows into mobile application companies have increased over the past year
Although overall investment in mobile was down, the percent being allocated to applications increased significantly.
Investors are ready to help build the next layer of mobile businesses
Mobile Startup Landscape Business Models Sources: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08 Notes: Carrier Applications are those sold through carrier decks, while Consumer Applications are those sold directly to consumers. During 2008, investment in mobile applications has increased… Global Venture Capital Mobile Financing Future Opportunities 1 2 Application as % of Total Consumer Application as % of Total Government Application Enterprise Application Carrier Application Consumer Application Carrier Semiconductor Enterprise Infrastructure Device Carrier infrastructure

Mobile Monday Deck
Mobile Startup Landscape Conclusion We believe that the opportunity to build a business in mobile is as strong as ever, and that there are a multitude of new opportunities for startups trying to be innovative…

What is AppVee?
iPhone and Android application reviews
Exclusive focus on video
Filter gems from garbage for iPhone and Android users
Based on merit, not price or downloads
Professionally reviewed and researched
We find what you should know about

Business Model
1) Advertising
On website
AppVee.com
700,000 pageviews/mo
100,000 uniques
AndroidApps.com
250,000 pageviews/mo
30,000 uniques
Above the fold (5, rotating)
Featured App
On App
iPhone
Over 150,000 downloads
1M+ Ad Impressions
~10,000 Daily uniques
Android
Coming Soon
Top, sticky, rotating
High CTR (up to 1.8%)

Business Model
2) Affiliate Sales
5% affiliate fee via LinkShare
Sold tens of thousands of dollars of applications
Much higher on the iPhone app than website

Business Model
3) Video Ad Share
YouTube
YouTube Partner within 3 months
5min
5min Partner from start

Mobile Challenges
Exposure, exposure, exposure
Rising number of applications = lost in the crowd
AppVee is one solution focused strictly on solving this problem
Gatekeeper restrictions
Where does Apple draw the line?
Does Google’s lack of gatekeeping hurt it?
Rising development costs
More developers, more apps, higher consumer expectation
Economic environment
Is technology affected? Yes and No
Market saturation
When will consumers say enough is enough?
Circle back to exposure

Where is mobile headed?
Games that rival the Nintendo DS and Sony PSP
Social gaming
Multi-user applications
Mobile ports of desktop apps
Deeper integration with other devices around us
More cloud support and desktop syncing

Thanks! www.AppVee.com Thanks!

Miha Mikek MoMo Boston, January 2009

1.1. – Intro Celtra is a mobile marketing enabler and a value-added aggregator
Started operations in 07, team of 5, self-funded
We offer Software-as-a-Service mobile marketing platform (engagement marketing)
Development platform for marketers (ad-agencies, brands, service providers)
SMS, MMS & IVR based campaigns (pers. calls, SMS alerts, coupons, content, comments, trivia, voting, games)
Modular, customizable mobile features and content mgmt. offer creative freedom
It enables integrated marketing campaigns (online and mobile convergence)
Beachhead: Movie industry
Our clients: 20 th Century Fox, Warner Bros, New Line Cinema, Paramount Pictures

2.1. – Solution Celtra enables integrated marketing campaigns that utilize mobile channel “ there's quite a bit of research out there that's shown existence of mobile in a campaign ... has improved both the response and the interaction rates of the online media.” Eric Bader, Brand in Hand

2.2. – Solution Multi-channel campaign distribution provides cost-efficiency and audience reach

2.3. – Solution
Development of campaigns without knowledge in technical aspect of mobile marketing
Turn-key solution for agencies and brands
Reduced costs and “time to market” for deployment of marketing campaigns
New, innovative mobile solutions for integrated marketing campaigns
Significantly better performance (conversion, click-through) compared to traditional promotional channels
Celtra enables fast and efficient campaign creation, deployment and distribution

3.1. – Case Case: Notorious movie promotion Online widget / Facebook app Showtimes widget / WHERE™ iPhone app

One out of three “Sex and The City” widget impressions generated a subscription to SMS tips from Carrie Bradshaw 3.2. – Case "Text and The City” campaign offered daily SMS tips form Carrie Bradshaw. Widget was promoted from the official movie web site www.sexandthecitymovie.com
Campaign results (conversion rate)
Opt-in for SMS alerts: 33%
Widget installs to personal profiles: 25%

5.2. – Inside the platform / Feature module

4.2. – Inside the platform / Feature module

MoMo January 12 Casey Jones

Company Snapshot www.mocospace.com The largest mobile social network in the US, with over 5.2 million registered users and over 2 billion pages per month #1 Mobile Entertainment site (Hitwise) - # 4 mobile search on AOL - Top 3 mobile site in US (Opera) founded in 2005 by mobile industry veterans and long-time best friends, Jamie Hall and Justin Siegel 24 Employees in Boston and Israel +$7 million raised from General Catalyst, Comerica, Pilot Group, retired eBay exec Michael Dearing -

These are the “Year of Mobile” www.mocospace.com Mobile Web has the momentum. . . growing 8X faster than Wired web – Nielsen (UK) . . . With Mobile Social driving the mobile web In U.S., 100 million mobile web users and 40 million mobile social users by 2012 - eMarketer

The First Screen for Trendsetters www.mocospace.com Highly Engaged Average sessions per day: 1.48 Average pages per session: 108 Average session time: 45 minutes Average # of friends per user: 60 Average pages per user per month: 1529 Average Age: 21 52% Male 48 % Female 33% African American 33% Hispanic 33% Caucasian 92% US & Canada Young and Diverse

What’s Working?
Ad Supported Model – mobile and web
JumpTap, Quattro, Third Screen, Nokia
Direct Deals – Kmart, Verizon Wireless, LionsGate
Viral, WOM Growth – 5 million e-cards over Holidays
Entertainment partnerships
Island Def Jam
SonyBMG
EMI
SRC
www.mocospace.com

Diversifying Revenue Streams Display Advertising Banners Sponsorships CPM/CPC/CPA Messaging SMS Commerce Ringtones Games Classifieds Premium Services Virtual Goods “ Bonus” features

Keys to Growth
Great Product / Member Experience – authenticity
Flat Rate Data Plans – keep activity affordable
MetroPCS, Cricket, Virgin Mobile
Smartphones driving mobile web browsing
Lower barriers for publishers help mobile web flourish
$100 for mobile web page vs. short code $$$$
Driving usage and mainstream appeal
www.mocospace.com

www.mocospace.com

Compelling Mobile Business Models Jorey Ramer Founder & VP Corporate Development Mobile Monday January 12, 2009

Who We Are
The global leader in mobile search and advertising solutions
Enable search and advertising for 16 operators in 9 countries and hundreds of mobile websites and applications

Evolution since inception

Impact of economic environment Percentage Of Ad Budgets Expected To Change Over Next Six Months Increase Maintain Decrease Online 68% 25% 7% Mobile 51% 37% 12% Cable TV 27% 49% 24% Magazines 18% 47% 35% Outdoor 17% 54% 30% Broadcast TV 16% 51% 33% Radio 16% 49% 35% Local Newspapers 11% 47% 42% National Newspapers 9% 43% 48% Source: Advertiser Perceptions Inc. Fall 2008 report. Advertising executives surveyed in October and November 2008.

Where mobile advertising is headed (or why mobile will be the Internet on steroids)
Personal nature of medium
Location based
Interactive
Exchange real value with user
Take phone everywhere
Targetable

Thank you For more information, contact: Jorey Ramer Vice President, Corporate Development +1 617-817-1334 [email_address] JumpTap: Ten Emerging Mobile Players to Watch in 2007 JumpTap: 2007 Mobility Award for Entrepreneurial Company JumpTap: AO Media Top 100 Companies 2007 JumpTap: Best Advertising & Marketing Search Engine 2008 JumpTap: Top 15 Innovator 2007

Airvana Mobile Monday Event Compelling Mobile Business Models David Nowicki Vice President, Marketing and Product Management January 12 th 2009 Stay informed: www.femtohub.com

Airvana At a Glance
Company Facts
Founded 2000: NASDAQ-AIRV
HQ in Chelmsford, MA, USA with offices in EMEA, Asia Pacific and the Americas
Over 500 employees
2007 Billings: $142M
Market Focus
IP Wireless Networks (RAN)
Fixed Mobile Convergence (FMC) pioneer
HubBub™ Femtocell
Universal Access Gateway
Products deployed in 70 operators on six continents
Internet Protocol Mobile Broadband

Partnerships for the Transformed Mobile Ecosystem CORE INFRASTRUCTURE RADIO ACCESS INFRASTRUCTURE CONSUMER DEVICES STANDARDS

First Business: CDMA 1xEV-DO IP-RAN
IP-RAN SOLUTION
IP-RN EV-DO Base Station
IP-RNC Radio Network Controller
AirVista Element Management System
AIRVANA ADVANTAGES
IP-RAN architecture optimized for mobile broadband
Consistent fast delivery of EV-DO roadmap
Rev A VoIP with QoS
Non-disruptive upgrade path to EV-DO Rev B and beyond
IP-RAN SOLUTION
IP-RN EV-DO Base Station
IP-RNC Radio Network Controller
AirVista Element Management System
AIRVANA ADVANTAGES
IP-RAN architecture optimized for mobile broadband
Consistent fast delivery of EV-DO roadmap
Rev A VoIP with QoS
Non-disruptive upgrade path to EV-DO Rev B and beyond

Today: Drivers and Barriers of Mobile Services 3G Services Device Innovation Spotty Coverage Poor Data Performance High Costs & ARPU Challenges Unrealized In-Home Market

Emerging Business: Enter The Femtocell “ Enter the femtocell: a little box with a whole lot of promise.” Fox News, November 2007 Issue Femtocell Impact Coverage Base station for the home Data Performance Dedicated capacity; all the bandwidth you need CAPEX/OPEX Delivery of mobile services far less expensive via femtocells than over macrocell infrastructure ARPU Potential for increased usage, reduction in churn & uplift from femtozone services

Femtocells Transform The Mobile Network Mobile Core Network MACRO ACCESS Femtocell and Dual-Mode Access HubBub™ Femtocell Wi-Fi Universal Access Gateway (UAG) HubBub™ Femtocell Internet

Femtocells Drive The Digital Home Era PERSONALIZED APPLICATIONS Home Zone Plan 3G phone Home Zone menu HOME CONTROL Video Surveillance Alarms FAMILY COMMUNICATION Presence-enabled applications Intercom Virtual home number DIGITAL HOME & ENTERTAINMENT Music and video Gaming Home Menu

Summary How
Infrastructure Software licensing
Femtocell Devices and App Enablers
When
Existing: Mobile Broadband Infrastructure
Emerging: Femtocells (FMC)
Who
Mobile OEM Channels & Operators
Consumers
Why
Mobile Broadband. Everywhere.
Transforming the User Experience
Where
Realizing the full potential of the mobile device
Femtocell at the center of the digital home

Thank You Stay informed: www.femtohub.com

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Mobile Monday Boston - Compelling Mobile Business Models

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