About Me 0052: Making Money Opportunities

The last few days have been a blaze of reports about the future of Android and the sub $100 smartphone in 2011. I've been sucked into pieces from Fred, Fortune, Horace, and even some random dude (with good points to make) just as much as the next guy which is why it behooves me to say this now:

If you live in the world of startups (as an entrepreneur, rockstar hacker, seed investor, VC, or even cheerleader) none of this inside baseball stuff about who is going to take market share in the smartphone wars matters to you.

There, I've said it. If you are like me and don't actually follow sports, this whole market share thing is a great substitute.

It's also a big deal for the big tech companies. For instance, at HP we were highly motivated to have Android commoditize smartphones (at least until they went and bought Palm). Google also suffers tremendously if search doesn't port well to this new platform. And clearly Apple (which has already sold Macs to every sucker willing to pay the premium) loves the idea of selling more CPUs to the folks in the cult (me included).

But if you are building the next big SaaS startup? The next social commerce killer app? The next Internet infrastructure bit? You should absolutely not give a shit at all.

In fact, let me tell you what the recipe for determining what your "smartphone strategy" should be:

1. Think hard about whether you can ship an HTML5 version that your customers can find, use, and be delighted by. If so, do that and skip the rest.
2. If the answer to #1 is no, build an iOS app.
3. After you get to a million downloads (yes, 10^6) think about writing a version for Android. But only after you GOTO #1 and re-evaluate that issue.

Before you stop reading, consider this: I have three Android phones. I worked on several Android projects at HP. I love Android, but I love it as a political statement only because Apple's controlling stance on everything creeps me out.

If you want users with credit cards that spend money, mainstream reach, or a platform that actually might make an interesting case for abandoning open standards ("write once, run almost anywhere"), then iOS is it-- for everything else, just be happy the mobile web is now a legit platform to deploy to.

I meet with so many entrepreneurs who run startups and say something like "yeah, we love Android" and then go on to give me a demo on iOS. Why? Because this is where the users are. Not because it is more polished (it is), or because it has a higher quality filter in the AppStore's approval process (it does), but because when you are running a startup, you've got limited resources — and navel gazing about whether the $85 smartphone is going to cause Android to "explode" doesn't help to get you closer to winning, nor does betting precious development resources on political causes (backing the more "open" guy).

But wait, doesn't the openness engender more startup opportunities? Try as I might, I've only found four types of Android specific startup opportunities, none of which have made me particularly excited about investing:

1. Alternatives to key OS functionality (think Swype for the keyboard or Fring for the dialer). Because apps on Android can replace key OS-provided functionality, there are companies trying to invent a better keyboard, a better telephony app, etc. I love Swype (it is super cool), but as a business you only need to look back 15 years at all of the folks who thought they could replace subpar Microsoft-provided functionality for Windows.

2. Enterprise-proofing Android. I think there might be a couple of companies who will build interesting acquisition targets here (especially in the crumbling of the RIM empire) but there is high risk that someone on the actual Android team may wake up soon to the fact that CIOs everywhere (who buy "in bulk") want smartphones made enterprise-safe and thus significantly shorten the runway for all of these startups.

3. Making Android a much better platform for other sensor input. Blood glucose monitors. Bluetooth video cameras. Traffic analyzers. All of these seem to me to be cases for Android's more general form multi-tasking which is quite a bit better than the mongrel Apple shipped, but in the fullness of time, I suspect the folks in Cupertino will catch on to this (or at least the batteries should catch up).

4. Customizing Android for dumb "box maker" OEMs. This is an interesting small business opportunity, but if you want to know what the limited upside is here, just go and find one of the Canonical guys who've been dealing with HP and Dell for years.

Other than that, Android is only better for startups for one Really Big Reason: it puts more HTML5 capable browsers in the pockets of regular users. But guess what? No matter who wins (iOS, Android or even Rim/Nokia), these very capable browsers are now jacks-to-enter in the realm of smartphones.

Smartphones are great for startups, full stop. But Android versus iOS? Sort of like wondering whether the early customers to Amazon.com in 1996 were coming from Windows or Mac. Either way, the big deal was access not whose vehicle you came in.

There, I've said it. If you are like me and don't actually follow sports, this whole market share thing is a great substitute.

But if you are building the next big SaaS startup? The next social commerce killer app? The next Internet infrastructure bit? You should absolutely not give a shit at all.

In fact, let me tell you what the recipe for determining what your "smartphone strategy" should be:

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Thursday 13 January 2011

Making Money Opportunities

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