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In Between the Platforms

It is winter (almost) and we are discontented. [1]

The source of our current agita? We’ve been told there is a new gold rush, yet just a few companies have hit the motherlode so far (and maybe just one, really). And so as happens every time someone cries “Gold!” people have started to worry, to freak out. Maybe this new El Dorado is just another myth. </Gold Rush metaphor>.

In a business that absolutely fetishizes youth, one of the advantages of being a little older is it’s easier to stay calm during these predictable periodic Freak Outs. I think this is the fifth or sixth such episode I can recall over the past 20 years. Another advantage: you learn through painful experience that just as there are laws of physics there are certain immutable truths that apply to our digital world.

Here’s one such truth. If you create a free consumer-focused service, you’re competing with lots of other people and things and companies for a very finite resource: people’s time and attention.

That’s a particularly hard truth to accept for those who got used to the fresh and breezy ways of the web, which could and did deceive lots and lots of people into thinking they were building something special. The nature of the web — lots of very short visits to lots (and lots and lots) of sites — too often nurtures the illusion of growth. Just hook your web service up to Google Analytics or Kiss Metrics and watch the numbers climb. “Look at my up and to the right chart showing growth in unique visitors to my site!” Think of how many breathless posts you’ve read in just the past year or two trumpeting some incredible rise in unique visitors to some web service (or how many bro’grammers thumped their chest and told you they were “crushing it”).

But  as most of us have learned by now, lots of unique visitors doesn’t mean you’ll make money. You have to extract hard cold cash from those visitors (great businesses including Amazon, eBay, Fab, Etsy, Airbnb, Bandcamp have done this). Or, if you’re giving something away for free to people, you need to win their time and attention, the more the better. Why? Because attention, measured in units of time, is one of the best objective proofs we have about the depth of relationship between your service and the people who use it. The more time people spend on your service, the deeper the relationship you have with them, and the easier (generally) it is for you to sell some of that time to advertisers.[2]

And very few services are actually able to gets lots of attention from lots of people. This has always been true. Dig into a lot of those hockey stick graphs showing growing web traffic and you’d find a sad truth — lots and lots of short visits of a minute or two. A lot of people figured out Distribution on the web; hardly anyone solved the riddles of Retention and Engagement.

You might get 30 million unique visitors a month to your web service; but if they don’t stay around for long it’s unlikely you’ll ever make money from them. The only people who have made gobs of money from this arrangement are Google and various ad networks who aggregate all this shallow attention across lots of sites into something more marketable. And the clever souls who managed to flip their hockey stick visitor charts into an acquisition offer.

If you think that’s wrong or maybe too cynical, ask yourself this: How many web services from the first decade (call it 1995-2004) really built big (billions of dollars of value), durable businesses based around our attention on the web? I can only think of three: Yahoo!, Google, and AOL. How many since 2005? More, but not as not many  as you’d expect– Facebook, Twitter, YouTube, Yelp, LinkedIn, and probably WordPress and Tumblr. Maybe Pinterest will join the list (too soon to tell). It’s never been easy to build a billion dollar business based on a thing in limited supply, our attention, regardless of the platform or medium.

At the end of the day only a few services have a strong grip on our attention. We only have so much of it to give. That’s the hard truth.

And that hard truth is made manifest on the mobile platform.  As Hunter Walk has correctly  noted people only have room for 20 or so apps on the main screen of their smartphones or tablets. If your app isn’t one of those 20, you basically don’t exist.The limited shelf space on the first screen of your mobile device reflects the limited time you have to give. The web sometimes obscured that reality.

Depressed? If you’re a real entrepreneur (or investor) you shouldn’t be. Get your app onto someone’s main screen, and you’ll find the opportunities may be even bigger on mobile than they ever were on the web. When you’re lucky enough to build such a service, you’ll be rewarded with gobs and gobs of attention. With our app, Showyou, the average session length on the iPad is over 40 minutes. On the iPhone it’s over 20 minutes. I know other leading app makers like Flipboard have seen similar usage patterns. I’ve been doing this 20 years, and I’ve never seen anything quite like it, except for Facebook.

So if you’re making something for consumers that’s free, don’t ask “mobile first” or “web first” — that question is settled. Most people will increasingly spend most of their time on smartphones and tablets, you need to make something specific and great for those devices.

Ask instead if you think yours is likely to be one of the 20-30 services that people allow into their lives. That’s a damned scary question. It’s the one every entrepreneur should have been asking all along. And it ought to send a lot of people running, scaling back their ambitions, or revising their plans at the least. [3] You have to have a plan for Distribution and Engagement and Retention. Getting onto that first screen requires you to meet all of those challenges (too many people think it’s just about distribution). Ask any app maker, even the most successful among them, and they’ll tell you these challengers are very real, they’re daunting, and there ain’t any easy answers right now.

But for some of us entrepreneurs, it’s time to dream those impossible dreams, to conjure up Steve Jobs, Ted Turner, Jeff Bezos, Larry Page and all the others in the pantheon of the Crazy Ones. Because we’re in between platforms. When things are hard, and haven’t been figured out yet, and there isn’t a playbook. When people think you’re crazy and foolish and won’t give you any money. That’s when habits change, when opportunities arise, and the big new things get built and invented.  [4]

1. I’m talking about the here & now in the metaphorical-if-not-real Silicon Valley of course, not the England of Richard III:

Fred Wilson: Rethinking Mobile First

Vibhu Norby: Why We Are Pivoting to Web First

Fred Wilson: What Has Changed

Om Malik: Who Says Startups Are Easy?

2. Yes there are exceptions, and yes this is simplistic. Google has built the best free business on the web by converting relatively small units of attention (time) because they also are harvesting “intention.” And conversely, there are examples of services that chew up a lot of our time & attention but don’t convert that efficiently into money. Facebook is currently such a business; so are most mobile chat apps. And I should note it’s not always an either/or choice (free w/ attention, or paid for); historically some of the very biggest and best consumer services combined both, e.g., magazines, newspapers, cable television.

3. This is not to say there will only be 20-30 viable mobile businesses; rather, I’m arguing there will likely only be 20 or so big businesses on mobile, businesses worth more than $1B. There will certainly be dozens if not hundreds of smaller, very interesting and viable businesses. But entrepreneurs will need to be thoughtful about how much money they raise and from whom if they’re not going to be one of those big $1B+ businesses. Don’t raise $15M if you don’t think you have a real chance breaking into that Top 20 list. Conversely, might be an interesting strategy for a VC to invest smaller amounts in this next tier, to look for targeted niche players.

4. The honest entrepreneur should be very alive to this real threat: the big platform operators (Apple and Google for now) know all about the importance of those 20-30 apps. Why do you think Apple booted off all those Google apps, and Android is chock-full of Google service by default? They love them some vertical integration. Yikes!

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