One Man’s Roadmap to 2013 Mobile Startup Opportunities

We at Tandem bet the farm on mobile back in 2011, and we feel even better about this decision as we enter 2013. Per Mary Meeker’s oft-cited report, the world’s 1.1B smartphone users still comprise only 17% of mobile subscribers. This user base has tripled mobile Internet access in just the last two years.

Riding this wave, Tandem has invested $200k each (and six months of active, on-site mentoring) in 15 early stage teams from around the world over the last 5 quarters. And we’ll select another 3 from the founders who apply by this January 7th.
But as bullish as we are on the overall consumer mobile space, clearly not all opportunities are created equal.

While the strength of the founding team is our most important evaluation criteria, we also place great weight on the market each company is pursuing. Some startups may be too early, and some too late. Some appear to be entering overly saturated markets. Others are going up against powerful incumbents.

Tandem looks for that perfect combination of a superb product team going after a massive, relatively open market that is now ripe for disruption. As we evaluate incoming opportunities, we remain very open to innovative entrepreneurs who frequently convince us of their visions. But we still find it worthwhile to think hard about the odds of success in each market, especially given the huge opportunity cost for investors and founders when they choose to pursue a specific area. So, as we enter the new year, I thought it would be interesting to reflect on a subset of the market opportunities that pass our screens as more and more entrepreneurs apply to Tandem.

I should also note that this list relates to U.S. market opportunities only. Each emerging market really needs its own list, as certain crowded spaces within the U.S. remain wide open in other regions for that team that can deliver a simple, elegant experience to meet the needs of consumers there. In fact, these international markets present a very exciting opportunity for Tandem, as we observe the winners and losers in Silicon Valley and use the learnings to pursue greenfield opportunities elsewhere around the globe.

Too Crowded/Too Late:
• Casual, social gaming – For every Rovio and Supercell, there are of course thousands of unknowns (this still leaves open more targeted plays; see below).
• Cross promotion app platforms – there are quite a number of these already, and even the leaders will have to evolve to provide more value, quickly.
• Device synching – We backed ZumoDrive (now owned by Google via Motorola), but all the big players are now squarely focused on the problem.
• Location-based social networking – somebody will eventually make this work; and there are still hundreds trying…
• Jobs/Recruiting – big spending continues to attract LOTS of entrepreneurs, but how much disruption is left here?
• Mobile casino – We got in just before the window closed with Bash Gaming.
• Merchant loyalty services – the daily deal sites pivoted to this (and we all know how many of those are out there).
• Mobile ad networks – There’s tremendous opportunity around mobile advertising, but it’s not enough to be the middleman.
• Mobile ad targeting – See the 1990’s and 2000’s; how many winners emerged in the traditional Internet world?
• Mobile analytics – As a builder of mobile consumer businesses, I love to see a steady stream of these companies; but I find it tough to build something big here amidst all the noise.
• Personalized news platforms – it’s fascinating to me how so many are trying to do something here. Why?
• Photo sharing – enough said.
• Workplace collaboration – I’ve always found it a challenge to grow services that require many people to use them to have value. Now, it’s even more difficult with so many existing players. And yes, I know most of the services still suck…
• Many more…

Too Early
• Car-based apps and services – I love that the auto companies are pouring money into startups, but there’s no reason to build for them just yet; the most popular mobile apps will get integrated into the cars first anyway.
• Mobile wallets – It will happen; but we’ll measure progress by how many more calendars it takes. This should probably go under the “too expensive” category for us as well.
• Integrated TV apps – People still spend a lot of time there, but behavior is locked (this still leaves big second screen opportunities – see below).

Too Expensive (for us at least)
• Mobile payment systems
• Traditional education platforms
• Enterprise software

Just Right?
• Everyday Apps – Evernote fixed Notes; how about Calendar? Contacts? And there’s more…
• Kid apps and platforms – I like to think beyond just games and books.
• Mobile developer platforms – Developers always need to boost their retention and monetization (figure out how you can help them beyond ads and analytics).
• Personalized tablet magazines – I’m excited about all the innovation that will happen here in just the next year (but let’s go way beyond news!)
• Rich messaging – what is next beyond sending texts and photos?
• Second screen – This is what will change the TV experience over the next 2-3 years (but it should extend beyond sports betting)
• Sound-oriented businesses – audio is an underutilized feature of the smartphone, and I’ll leave it at that (this doesn’t include music subscription by the way!)
• SMS marketing – So much is done around email despite its decline, and yet the companies on the growing SMS side still seem to just be scratching the surface.
• Tablet commerce – Already crowded, but still so much opportunity left on the table.
• Targeted mobile gaming – Mid- and hard-core games are still in their first generation and do not need tens of millions of users to get very profitable.
• Vertical content aggregation – I think of the best parts of Pinterest and Houzz made for the Post-PC world around all sorts of categories.
• Wearable sensors – It’s late for fitness, sleep and vitas, but there’s still a lot of meat left on this bone.
• Many, many more – Barely a day goes by that we’re not wowed by someone who’s figured out a creative way to disrupt an existing market. All it takes for us to believe is a small glimpse of that experience that blows us away, and we can then begin riffing on all the possible routes for massive growth from there.

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Tandem in Mexico

Tandem’s Michael Silverwood spoke last night to 150 mobile developers at Apptualizate 2012 in Mexico City about how to start companies in the mobile industry. He has been in Mexico for the entirety of the event, watching all 150 developers work and sleep in the same room for 48 hours without a single person leaving before finishing their mobile projects.

For anyone who wasn’t present, or wants to check out the slides, here is the presentation Michael gave at the event on YouTube/Slideshare:

[Video is available in HD if you click the gear icon]

Also speaking at the event were Startup Weekend co-founder, Clint Nelson, Startup Labs partner, Tugce Ergul, DevToaster founder and ex-Apple iPhone SDK developer, Ryan Bruels, The Next Web writer and founder of #BlameDrewsCancer, Drew Olanoff, and founder of Raku, Norberto Ortigoza.

Michael also sat on a panel alongside Drew Olanoff and Ryan Bruels at the Institute of Science and Technology’s Technical Innovation Conference and Expo, to discuss the importance of mobile development and startups in Mexico.

In the end, what the trip made clear was that there is just as many talented developers and designers located in Mexico as anywhere else in the world, so it is only a matter of time before the next big tech company is started here.

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The Great iPad 3 Wait

Live updates from the Burlingame Apple Store

In order to get some third generation iPads into the Tandem house and into the hands of Tandem companies, Michael will be reporting from the front lines all morning of the iPad 3 launch. He’ll be posting updates here with pictures and info from the rain soaked line at our local Burlingame Apple Store, one block away from Tandem. If you have any questions, or want to know if it’s worth it for you to join in the waiting, send Michael a tweet at @Michael_one or leave a comment in the post.

 

4:30am They’re taunting us with brand new iPads through the window.

5:30am The line is beginning to grow. Closing in on 50 soggy people waiting now in the rain.

 

6:40am The line continues to grow! Shorter line here in Burlingame than San Francisco though, apparently they already have hundreds.

6:45am Steve Wozniak has been spotted at an LA store (interview with Shira Lazar).

Video Source

7:30am Got our tickets! Almost iPad time.

Success!

8:30am Old iPad? Meet new iPad.

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Gimmie Welcomes in GDC 2012: Part 2

Yesterday we covered what went on at Gimmie’s pre-GDC game developer mixer, and today we’re following it up with the second half of the story: the games. Lots of excited developers were on hand at the event, and we talked to a few of them about their newest games.

ZiGGURAT

ZiGGURATTim Rogers, veteran game designer and Kotaku writer, was at the Gimmie event to talk about his newest iOS game, ZiGGURAT, as well as some of his other upcoming projects. ZiGGURAT is the first title out of Tim’s new studio, Action Button Entertainment, but before starting out on his own he worked at Grasshopper Manufacture in Japan on triple A titles like No More Heroes.

ZiGGURAT Gameplay

Tim’s goal with ZiGGURAT, and most of the other upcoming games from Action Button Entertainment, was to first build a mechanic that worked really well on its own, and then build a game around it. In ZiGGURAT, that mechanic is swiping your finger along the bottom of your iPhone or iPad’s screen to aim at robotic alien skeletons jumping at you from either side. The game’s mechanic is simple and fun: just swipe left and right to aim, and let go to shoot. As cliched as it is to say, the game definitely has a really good balance between being easy to play, but difficult to master. And anyone with a soft spot for retro, pixel art graphics will appreciate the impressive art style and animations.

Action Button has already been working on building Gimmie into the next update of ZiGGURAT, so pretty soon you’ll be able to earn real rewards for blasting the most aliens. In posts on Kotaku, Tim has written about “Hamburger Moments” in games, and Gimmie fit the bill for creating these moments, where players feel like they are accomplishing something real, and being rewarded for it. When Tim first heard about Gimmie, he already had plans to include a similar method of rewarding players, and he liked that Gimmie’s approach was mindful of the consumer.

You can download ZiGGURAT on the app store here, and when you do, be sure to check out its unique leaderboards on Game Center where you can compete for seemingly arbitrary, yet fun things like most shots fired or most play time. And keep your eyes open for the next game from Action Button, Copter Wilde, a Diablo-esque social game about flying helicopters and collecting gems coming to the App Store at the end of 2012.

Peter Pog

Peter PogWe also got to talk to Shu Chiun Cheah of Geolopigs, about his recently released iOS game, Peter Pog. In the game you take control of a flying pig, and navigate your way through Miyazaki anime inspired levels. The game is a classic 2D shooter, but in addition to dodging bullets and shooting down enemy ships, you must also try to collect crates along the way.

Geolopigs is a two person team that is always looking for ways to increase engagement through social platforms, and are currently integrating Gimmie into their Goals system in order to give their players real world reasons to keep playing and unlocking new things.

Peter Pog is available on the App Store right now as a free, universal download for both iPhone and iPad.

Inkky Games

Inkky GamesStephen M. Levinson was also at the event, showing off his unannounced, first game for iOS. For his new gaming startup, Stephen is focusing on the characters first. He wants players of his games to form a real connection with the characters, and build fun game mechanics around aligning the player’s goals with the motivations of the character.

With regards to engagement and metrics, Stephen felt that both would play an important role in his upcoming games. The player’s experience with the characters and worlds he is creating is paramount, so he wants to take advantage of engagement metrics to continuously improve his games. Stephen is also adamantly against putting banner ads in a game that people have paid for, and has been looking for the best ways to make his games profitable without harming the user experience.

You can follow the development of Inkky’s first game on their Tumblr.

If you missed the first part of this post, you can read it here, and if you want to meet up with Tandem or any of the Tandem companies at GDC, send a tweet to @dougrenert.

Onwards, to GDC!

This post was contributed to by Michael Silverwood.

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Gimmie Welcomes in GDC 2012: Part 1

Gimmie GDC

Last Wednesday night, Gimmie kicked off what is looking to be a massive GDC with an event focused on engagement in games. The event took place at Citizen Space in San Francisco, and drew a crowd of over 120 game developers and investors.

Panelists Jason Citron, Alex Marquez, and Sunil Bhargava, captured the audience’s attention with insights on the importance of game metrics to investors, and how to make a game that is engaging. Jason made sure to remind everyone that the whole point of a game is to engage and entertain the player, but that plays into one of the biggest reasons why metrics are so important: they give the developer an unbiased assessment of whether or not their game is actually fun, and help them determine what kinds of tweaks they can make to improve the experience.

Alex and Sunil also gave developers some perspective on what investors look for in the gaming industry. Alex talked about how VCs look for metrics that indicate future growth potential, and Sunil noted that while Tandem invests more in the teams of entrepreneurs themselves, he frequently helps companies determine the most important metrics to use when gauging the success of their business plans. Although the emphasis on metrics differs slightly from the seed stage up to series A and B, both agreed that engagement, and the tools to track engagement were critical for any mobile game or app.

Jason at Gimmie Mixer

Gimmie also made their real rewards platform proud by offering a ton of great prizes at the event including MusicSkins, Lyrix earjax, Cyderz iPhone cases, coupons for Milipower chargers, and an Xbox 360 for the winner of Gimmie’s hackathon that took place last week. They also promised that more events like this one will be in the pipeline, so if you missed out on this one, make sure to follow their updates to catch the next.

The Game Developer’s Conference officially starts today (March 5th) and runs to March 9th. Tandem and many of our companies will be at the event all week long. If you’d like to meet up with any of us, leave us a comment below, or send a tweet to @dougrenert.

And check out part 2 of this series for coverage of some of the games we got to see at Gimmie’s GDC event!

This post was contributed to by Michael Silverwood.

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Intro to Angel.co

Our new intern at Tandem, Michael Silverwood, just researched and presented to our portfolio companies how they can best leverage Angel.co.  He knocked the ball out of the park, so I asked him to share it with the broader startup community.  In it, you’ll find tips and best practices for building your Angel.co profile and using AngelList to raise your first round of funding.

If you find it helpful or want to share your own tips or experiences with AngelList, let us know in the comments section below, or send us a tweet at @dougrenert.

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Riding the Latest Apple Wave – Until It Breaks

iPad Article Photo

Apple just blew past all expectations yet again for a record quarter in Q1 2012 lead by their mobile devices. iPhone sales hit 37 million (yep, in one single quarter) putting them on par with all Android phone sales combined, but what was slightly less talked about was the huge gain for iOS as a whole. Just last year, Apple sold 33.36 million iOS devices to consumers in its first quarter. This quarter: over 62 million. And the iPod Touch has virtually stopped contributing to this growth entirely.  Rather, it’s the less than two-year-old iPad that’s really helping the iPhone drive things, boasting 111% growth year over year.iPhone, iPad, iPod Touch Quarterly Sales 2011-2012

Tim Cook’s comments during the Apple earnings call were telling. He of course sees a day in the not so distant future when tablets are more common than PCs (today iPads are already outselling desktop PCs). So this is all great news for Apple, but what does it mean for the mobile app businesses?

Well, there is huge opportunity on iOS, but the place to focus if you’re not already a top player is the iPad, not the iPhone. The iPhone’s App Store has become very crowded with well-known favorites such as Angry Birds, Instagram and Words With Friends. However, there are 55 million iPads now in the hands of consumers, all of whom are looking for new things to do on the device. But most app categories have yet to be disrupted with game-changing apps.

Take “Lifestyle” for example. The leading shopping apps there include eBay, Amazon Mobile and Gilt. But none of these make shopping truly entertaining and easy. None of them offer an experience vastly different than using a website with larger buttons. Developers are obviously still learning how to use the device’s new form factor to build the next generation of apps.

So this is all great news for Apple, but what does it mean for the mobile app business?Also, not only does a quality iPad app have more of a chance to get to the top of the App Store charts, it typically does so with a price $1 greater than the equivalent iPhone app. And the outlook for free apps is similarly bright, with a top 25 list that exhibits far more variation and deference to new entries than the iPhone’s charts, which are currently dominated by free-to-play games from established publishers.

So, there is still a lot of room for category-defining apps to emerge and solidify their place on the iPad charts, but is this window quickly closing? It will be pretty soon. The iPad has accelerated far faster out of the gate than the original iPhone, and developers were not as caught off guard by its success. Already, before the end of its second year on the market, we’ve seen apps like Flipboard, Notability and Hipmunk, which use the large touch screen very effectively in their areas. If the iPad’s amazing growth rate is anything to go by, we should see innovative iOS developers gobble up the other opportunities out there far more quickly than they did on the iPhone. Now is the time to strike with that next disruptive iPad app – before someone else gets there first…

Apple Quarterly Sales

Contributed to by Michael Silverwood

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