Mobile Monday Boston - Compelling Mobile Business Models


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Slides from the Mobile Monday Boston event, "Compelling Mobile Business Models" on January 12, 2009, generously sponsored by Bain Capital Ventures.

Jeff Glass and Ajay Agarwal from Bain provided the keynote and discussed the current climate for mobile investing. Then presenters from early stage mobile companies (AppVee, Celtra), mid stage companies (Jumptap, MocoSpace), and late stage (Airvana), discussed their business models.

Published in: Technology, Economy & Finance

Mobile Monday Boston - Compelling Mobile Business Models

  1. 1. 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
  2. 2. Boston Mobile Cluster Map
  3. 3. Boston Mobile Investment 2002 – 2008 in millions
  4. 4. Boston Mobile Investment by 2008 Quarter
  5. 5. Total Boston Mobile Companies Receiving Venture Funding in 2008
  6. 6. Mobile Startup Landscape Ajay Agarwal & Jeff Glass, Managing Directors Mobile Monday, Langham Hotel, Boston January 12, 2009 Bain Capital Ventures
  7. 7. <ul><ul><li>Mobile Monday Deck </li></ul></ul>Mobile Startup Landscape Introduction Source: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08 Global Venture Capital Mobile Financing
  8. 8. <ul><ul><li>Mobile Monday Deck </li></ul></ul>Mobile Startup Landscape Introduction Lemming University
  9. 9. <ul><ul><li>Mobile Monday Deck </li></ul></ul>Global Venture Capital Mobile Financing Mobile Startup Landscape Introduction Source: Rutberg & Co. Wireless Industry Newsletter, Dec ‘08 ?
  10. 10. About Bain Capital Ventures <ul><ul><li>Mobile Monday Deck </li></ul></ul>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) <ul><li>First investment was a $600,000 seed investment in Staples </li></ul><ul><li>Seed investors in Aspect Development, which was ultimately sold to I2 in 2000 for $9B </li></ul><ul><li>Other early stage venture successes include DoubleClick,, eCredit, and Taleo (TLEO) and Staples </li></ul><ul><li>Over the years, Bain Capital has made more than 60 early stage investments </li></ul><ul><li>Today, we has over 25 active early stage companies in our portfolio </li></ul>Our Early-Stage Focus <ul><li>Unparalleled Access to the Fortune 2000 and 350+ portfolio companies across Bain Capital, yielding valuable customers and partnerships </li></ul><ul><li>People – our 30-person Venture team allows us to take an active, engaged role in partnering with entrepreneurs </li></ul><ul><li>Analytical Approach – we offer deep strategic and operational experience </li></ul>Our Value to the Entrepreneur
  11. 11. <ul><ul><li>Mobile Monday Deck </li></ul></ul>Mobile Startup Landscape Market Overview <ul><li>The mobile ecosystem is undergoing systemic change </li></ul><ul><ul><li>The network is becoming commoditized, and voice ARPU is dropping rapidly. In fact, it has dropped 19% since Q1 2005. </li></ul></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>The market is expanding as </li></ul></ul><ul><ul><ul><li>Smartphones become a viable laptop replacement </li></ul></ul></ul><ul><ul><ul><li>New form factors such as Mobile Internet Devices, navigation devices, digital cameras, and e-readers are starting to include Wi-Fi capability. </li></ul></ul></ul><ul><ul><li>Mobile phones are continuing to replace landlines, and new technology such as femtocells and Wi-Fi enabled mobile phones will only heighten this trend. </li></ul></ul>1 2 3 4 5 <ul><ul><li>The net result will be an expanded market for mobile data services, and an opportunity for new startups. </li></ul></ul><ul><ul><li>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. </li></ul></ul>
  12. 12. Historical Acquisition Activity <ul><ul><li>Mobile Monday Deck </li></ul></ul>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 <ul><li>Historically, carriers controlled the mobile ecosystem because they: </li></ul><ul><ul><li>Owned the relationship with the consumer </li></ul></ul><ul><ul><li>Determined handset subsidies </li></ul></ul><ul><ul><li>Controlled application availability </li></ul></ul><ul><li>Carriers competed with each other based on: </li></ul><ul><ul><li>Network Coverage ( Early to late ‘90’s ) </li></ul></ul><ul><ul><li>Network Quality (Late ’90’s to mid ’00’s) </li></ul></ul><ul><ul><li>Price (Mid ’00’s to current) </li></ul></ul>Therefore, companies that enabled increased coverage, increased quality, or lower pricing thrived… This meant that their priorities were those that were rewarded…
  13. 13. Recent Acquisition Activity <ul><ul><li>Mobile Monday Deck </li></ul></ul>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… <ul><li>Mobile penetration in developing countries is reaching saturation </li></ul><ul><li>Voice ARPU is declining </li></ul><ul><ul><li>-> Carriers must increase Data ARPU to </li></ul></ul><ul><ul><li>grow </li></ul></ul><ul><li>Concurrently, as handset manufacturers try to maintain pricing, they are changing their focus from handset design to improving handset feature sets. </li></ul><ul><li>-> Therefore, the emphasis is shifting to </li></ul><ul><li>data-centric offerings including </li></ul><ul><li>navigation, music, video, internet, </li></ul><ul><li>and games. </li></ul>Over the past two years, service providers represented only 43% of total acquisitions, with data oriented assets making up the bulk of the rest
  14. 14. Recent Acquisitions <ul><ul><li>Mobile Monday Deck </li></ul></ul>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
  15. 15. Financing Activity <ul><ul><li>Mobile Monday Deck </li></ul></ul><ul><li>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: </li></ul><ul><ul><li>Provide the underlying technology for building mobile data services </li></ul></ul><ul><ul><li>Help the mobile data market to inflect rather than depending on the underlying infrastructure being in place </li></ul></ul><ul><li>However, Venture Capital inflows into mobile application companies have increased over the past year </li></ul><ul><ul><li>Although overall investment in mobile was down, the percent being allocated to applications increased significantly. </li></ul></ul><ul><ul><li>Investors are ready to help build the next layer of mobile businesses </li></ul></ul>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
  16. 16. <ul><ul><li>Mobile Monday Deck </li></ul></ul>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…
  17. 18. What is AppVee? <ul><li>iPhone and Android application reviews </li></ul><ul><li>Exclusive focus on video </li></ul><ul><li>Filter gems from garbage for iPhone and Android users </li></ul><ul><li>Based on merit, not price or downloads </li></ul><ul><li>Professionally reviewed and researched </li></ul><ul><li>We find what you should know about </li></ul>
  18. 19. Business Model <ul><li>1) Advertising </li></ul><ul><ul><li>On website </li></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><ul><li>700,000 pageviews/mo </li></ul></ul></ul></ul><ul><ul><ul><ul><li>100,000 uniques </li></ul></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><ul><li>250,000 pageviews/mo </li></ul></ul></ul></ul><ul><ul><ul><ul><li>30,000 uniques </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Above the fold (5, rotating) </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Featured App </li></ul></ul></ul></ul><ul><ul><li>On App </li></ul></ul><ul><ul><ul><li>iPhone </li></ul></ul></ul><ul><ul><ul><ul><li>Over 150,000 downloads </li></ul></ul></ul></ul><ul><ul><ul><ul><li>1M+ Ad Impressions </li></ul></ul></ul></ul><ul><ul><ul><ul><li>~10,000 Daily uniques </li></ul></ul></ul></ul><ul><ul><ul><li>Android </li></ul></ul></ul><ul><ul><ul><ul><li>Coming Soon </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Top, sticky, rotating </li></ul></ul></ul></ul><ul><ul><ul><ul><li>High CTR (up to 1.8%) </li></ul></ul></ul></ul>
  19. 20. Business Model <ul><li>2) Affiliate Sales </li></ul><ul><ul><li>5% affiliate fee via LinkShare </li></ul></ul><ul><ul><li>Sold tens of thousands of dollars of applications </li></ul></ul><ul><ul><li>Much higher on the iPhone app than website </li></ul></ul>
  20. 21. Business Model <ul><li>3) Video Ad Share </li></ul><ul><ul><li>YouTube </li></ul></ul><ul><ul><ul><li>YouTube Partner within 3 months </li></ul></ul></ul><ul><ul><li>5min </li></ul></ul><ul><ul><ul><li>5min Partner from start </li></ul></ul></ul>
  21. 22. Mobile Challenges <ul><li>Exposure, exposure, exposure </li></ul><ul><ul><li>Rising number of applications = lost in the crowd </li></ul></ul><ul><ul><ul><li>AppVee is one solution focused strictly on solving this problem </li></ul></ul></ul><ul><li>Gatekeeper restrictions </li></ul><ul><ul><li>Where does Apple draw the line? </li></ul></ul><ul><ul><li>Does Google’s lack of gatekeeping hurt it? </li></ul></ul><ul><li>Rising development costs </li></ul><ul><ul><li>More developers, more apps, higher consumer expectation </li></ul></ul><ul><li>Economic environment </li></ul><ul><ul><li>Is technology affected? Yes and No </li></ul></ul><ul><li>Market saturation </li></ul><ul><ul><li>When will consumers say enough is enough? </li></ul></ul><ul><ul><ul><li>Circle back to exposure </li></ul></ul></ul>
  22. 23. Where is mobile headed? <ul><li>Games that rival the Nintendo DS and Sony PSP </li></ul><ul><li>Social gaming </li></ul><ul><li>Multi-user applications </li></ul><ul><li>Mobile ports of desktop apps </li></ul><ul><li>Deeper integration with other devices around us </li></ul><ul><li>More cloud support and desktop syncing </li></ul>
  23. 24. Thanks! Thanks!
  24. 25. Miha Mikek MoMo Boston, January 2009
  25. 26. 1.1. – Intro Celtra is a mobile marketing enabler and a value-added aggregator <ul><li>Started operations in 07, team of 5, self-funded </li></ul><ul><li>We offer Software-as-a-Service mobile marketing platform (engagement marketing) </li></ul><ul><li>Development platform for marketers (ad-agencies, brands, service providers) </li></ul><ul><li>SMS, MMS & IVR based campaigns (pers. calls, SMS alerts, coupons, content, comments, trivia, voting, games) </li></ul><ul><li>Modular, customizable mobile features and content mgmt. offer creative freedom </li></ul><ul><li>It enables integrated marketing campaigns (online and mobile convergence) </li></ul><ul><li>Beachhead: Movie industry </li></ul><ul><li>Our clients: 20 th Century Fox, Warner Bros, New Line Cinema, Paramount Pictures </li></ul>
  26. 27. 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
  27. 28. 2.2. – Solution Multi-channel campaign distribution provides cost-efficiency and audience reach
  28. 29. 2.3. – Solution <ul><li>Development of campaigns without knowledge in technical aspect of mobile marketing </li></ul><ul><li>Turn-key solution for agencies and brands </li></ul><ul><li>Reduced costs and “time to market” for deployment of marketing campaigns </li></ul><ul><li>New, innovative mobile solutions for integrated marketing campaigns </li></ul><ul><li>Significantly better performance (conversion, click-through) compared to traditional promotional channels </li></ul>Celtra enables fast and efficient campaign creation, deployment and distribution
  29. 30. 3.1. – Case Case: Notorious movie promotion Online widget / Facebook app Showtimes widget / WHERE™ iPhone app
  30. 31. One out of three “Sex and The City” widget impressions generated a subscription to SMS tips from Carrie Bradshaw 3.2. – Case &quot;Text and The City” campaign offered daily SMS tips form Carrie Bradshaw. Widget was promoted from the official movie web site <ul><li>Campaign results (conversion rate) </li></ul><ul><li>Opt-in for SMS alerts: 33% </li></ul><ul><li>Widget installs to personal profiles: 25% </li></ul>
  31. 32. 5.2. – Inside the platform / Feature module
  32. 33. 4.2. – Inside the platform / Feature module
  33. 34. MoMo January 12 Casey Jones
  34. 35. Company Snapshot 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 -
  35. 36. These are the “Year of Mobile” 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
  36. 37. The First Screen for Trendsetters 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
  37. 38. What’s Working? <ul><li>Ad Supported Model – mobile and web </li></ul><ul><ul><li>JumpTap, Quattro, Third Screen, Nokia </li></ul></ul><ul><li>Direct Deals – Kmart, Verizon Wireless, LionsGate </li></ul><ul><li>Viral, WOM Growth – 5 million e-cards over Holidays </li></ul><ul><li>Entertainment partnerships </li></ul><ul><ul><li>Island Def Jam </li></ul></ul><ul><ul><li>SonyBMG </li></ul></ul><ul><ul><li>EMI </li></ul></ul><ul><ul><li>SRC </li></ul></ul>
  38. 39. Diversifying Revenue Streams Display Advertising Banners Sponsorships CPM/CPC/CPA Messaging SMS Commerce Ringtones Games Classifieds Premium Services Virtual Goods “ Bonus” features
  39. 40. Keys to Growth <ul><li>Great Product / Member Experience – authenticity </li></ul><ul><li>Flat Rate Data Plans – keep activity affordable </li></ul><ul><ul><li>MetroPCS, Cricket, Virgin Mobile </li></ul></ul><ul><li>Smartphones driving mobile web browsing </li></ul><ul><li>Lower barriers for publishers help mobile web flourish </li></ul><ul><ul><ul><li>$100 for mobile web page vs. short code $$$$ </li></ul></ul></ul><ul><ul><ul><li>Driving usage and mainstream appeal </li></ul></ul></ul>
  40. 41.
  41. 42. Compelling Mobile Business Models Jorey Ramer Founder & VP Corporate Development Mobile Monday January 12, 2009
  42. 43. Who We Are <ul><li>The global leader in mobile search and advertising solutions </li></ul><ul><li>Enable search and advertising for 16 operators in 9 countries and hundreds of mobile websites and applications </li></ul>
  43. 44. Evolution since inception
  44. 45. 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.
  45. 46. Where mobile advertising is headed (or why mobile will be the Internet on steroids) <ul><li>Personal nature of medium </li></ul><ul><li>Location based </li></ul><ul><li>Interactive </li></ul><ul><li>Exchange real value with user </li></ul><ul><li>Take phone everywhere </li></ul><ul><li>Targetable </li></ul>
  46. 47. 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
  47. 48. Airvana Mobile Monday Event Compelling Mobile Business Models David Nowicki Vice President, Marketing and Product Management January 12 th 2009 Stay informed:
  48. 49. Airvana At a Glance <ul><li>Company Facts </li></ul><ul><ul><li>Founded 2000: NASDAQ-AIRV </li></ul></ul><ul><ul><li>HQ in Chelmsford, MA, USA with offices in EMEA, Asia Pacific and the Americas </li></ul></ul><ul><ul><li>Over 500 employees </li></ul></ul><ul><ul><li>2007 Billings: $142M </li></ul></ul><ul><li>Market Focus </li></ul><ul><ul><li>IP Wireless Networks (RAN) </li></ul></ul><ul><ul><li>Fixed Mobile Convergence (FMC) pioneer </li></ul></ul><ul><ul><ul><li>HubBub™ Femtocell </li></ul></ul></ul><ul><ul><ul><li>Universal Access Gateway </li></ul></ul></ul><ul><ul><li>Products deployed in 70 operators on six continents </li></ul></ul>Internet Protocol Mobile Broadband
  50. 51. First Business: CDMA 1xEV-DO IP-RAN <ul><li>IP-RAN SOLUTION </li></ul><ul><li>IP-RN EV-DO Base Station </li></ul><ul><li>IP-RNC Radio Network Controller </li></ul><ul><li>AirVista Element Management System </li></ul><ul><li>AIRVANA ADVANTAGES </li></ul><ul><li>IP-RAN architecture optimized for mobile broadband </li></ul><ul><li>Consistent fast delivery of EV-DO roadmap </li></ul><ul><li>Rev A VoIP with QoS </li></ul><ul><li>Non-disruptive upgrade path to EV-DO Rev B and beyond </li></ul><ul><li>IP-RAN SOLUTION </li></ul><ul><li>IP-RN EV-DO Base Station </li></ul><ul><li>IP-RNC Radio Network Controller </li></ul><ul><li>AirVista Element Management System </li></ul><ul><li>AIRVANA ADVANTAGES </li></ul><ul><li>IP-RAN architecture optimized for mobile broadband </li></ul><ul><li>Consistent fast delivery of EV-DO roadmap </li></ul><ul><li>Rev A VoIP with QoS </li></ul><ul><li>Non-disruptive upgrade path to EV-DO Rev B and beyond </li></ul>
  51. 52. Today: Drivers and Barriers of Mobile Services 3G Services Device Innovation Spotty Coverage Poor Data Performance High Costs & ARPU Challenges Unrealized In-Home Market
  52. 53. 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
  53. 54. 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
  54. 55. 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
  55. 56. Summary How <ul><li>Infrastructure Software licensing </li></ul><ul><li>Femtocell Devices and App Enablers </li></ul>When <ul><li>Existing: Mobile Broadband Infrastructure </li></ul><ul><li>Emerging: Femtocells (FMC) </li></ul>Who <ul><li>Mobile OEM Channels & Operators </li></ul><ul><li>Consumers </li></ul>Why <ul><li>Mobile Broadband. Everywhere. </li></ul><ul><li>Transforming the User Experience </li></ul>Where <ul><li>Realizing the full potential of the mobile device </li></ul><ul><li>Femtocell at the center of the digital home </li></ul>
  56. 57. Thank You Stay informed: