This article is part of a 3-part series on early stage investment in mobile. Part 1 is available here and this is part 2.
The central thesis of my bestselling book on mobile, mobilized, is that our mobile products are extensions of ourselves. So, when thinking about what makes a great mobile product, I think about what we are when we strive to be our best selves and I use the mind-body-spirit framework to describe what that means:
- Body: We all want to look good and expect the same from our mobile product.
- Spirit: We all want meaningful lives and similarly expect that our mobile products will be highly personalized.
- Mind: We all want to learn and grow and we expect that our mobile products will do so with us.
Where are opportunities for investors? What should they stay away from? Let’s look at part 2: spirit. We want personalization yet we need to deal with the consequences of sharing personal data.
Personalization: the paradigm of search on mobile is NOT typing.
Ten or fifteen years ago, when you asked someone to help you find something, they called friends, looked under the table, browsed a few catalogs, etc. Today, most people go to Google and type up some keywords. That typing paradigm is cumbersome on a small mobile device and will become even more so as we move from a smartphone to a watch or glasses, or other form factors. We need more natural and personalized ways to search on mobile and China is showing us the way. WeChat has become the go-to platform of 800M people, who use it to search, communicate, transact, and generally find answers to everything. Surprisingly to most Westerners, WeChat users say what they’re looking for, instead of typing it, which explains why The Economist recently featured voice recognition as a technology to watch. Image/video recognitions will also become important as those technologies mature.
Control over personal data: the good, the bad and the ugly.
We love the perks of personalization, but not so much its perils, particularly as it relates to sharing our personal data. Our data can be used by people, businesses and government, each offering different opportunities for investors:
- A person using our identity is a criminal. Startups trying to prevent identity theft and mobile hacking are addressing a real problem and there are still too few of them.
- A company using our data is mostly welcome (whether we like to admit it or not). We will trade privacy in exchange for a free service, paid for by advertising. Mobile advertising has matured a lot recently and I see many companies, like LeanPlum, trying to reinvent it.
- A government using our data requires clear policy. We need to stop relying on gross approximations to keep us safe (like race, gender, and age), when we could use reliable information (like who regularly interacts with known terrorists and where). But we need to do that ethically and responsibly because history has shown us that governments with access to personal data can turn into surveillance state. Commercial solutions will make sense as soon as we have proper policy, which means there’s an opportunity for civic-tech mobile innovation.
What am I less excited about as an investor: Red tape.
While I believe we need a debate on privacy, I dread the thought of policy makers sticking their nose in Silicon Valley because regulating innovation seems like an oxymoron. Yet I can’t help but see the FANG platforms operate like global monopolies, the new players of the OnDemand economy treat their freelancers like employees and many unicorns try to stay private at all cost to avoid the stringent scrutiny of public markets. My advice to investors is to stay vigilant: red tape is looming with e.g. the EU demanding retroactive tax payment from Apple and cities regulating hosting on Airbnb.
If you’re an early stage investor, I’d love to hear your perspective and who knows, we might co-invest. If you’re an entrepreneur building a mobile company, I’d love to help you so drop me a note or grab some time with me via my website: scmoatti.com.