It’s been a year since Sequoia Capital distributed a memo that later became to be known as “panic notes,” which warned their portfolio companies of a deep impending economic downturn.
So, what’s the environment like now?
Ask Tom Huseby, a venture capitalist with SeaPoint Ventures, who said today during a keynote at the second annual Mobile Northwest event in Seattle that “the industry is over the panic.” He listed Google’s $750 million acquisition of AdMob and a couple recent venture investments in the space as evidence. “It’s cool to see that activity,” although he warned, not all start-ups should count on those kinds of exits. “That only happens once. You will actually have to grow and be a big, profitable company.”
So, what are the big market opportunities? Huseby said there’s two big problems that need solving in mobile: meeting bandwidth demands by carriers and how to pay for that bandwidth. “My friends and carriers are promising always-on connectivity. It’s really hard to do that….If you can think of a way to do it in a way that’s less expensive, there’s opportunities.”
He said that if bandwidth is the first problem, the next is how are carriers going to pay for it. He asked the crowd “how many people think they will pay less and consume more data in the next year?” Nearly everyone raised their hand. “They aren’t going to get the money from us. I think they will have to get it from advertising. That’s one major source of revenue.”
In a following panel on venture capital investing in mobile, Ignition Partners’ Adrian Smith agreed with the opportunity around bandwidth. He said that the carriers are spending billions of dollars on providing additional bandwidth and building out 4G. If a company can offer a cheaper way to pump capacity in to the network, there will be huge demand. Geoof Entress of Voyager Capital said while there’s plenty of application companies looking for cash, he shies away from any deal that relies on any one platform too much. T-Mobile’s Puneet Tandon, who also sat on the panel, approached the question from a different view. If bandwidth is increasing exponentially, and advertising is one of the avenues for additional revenues, then measuring, monitoring and having insights into what people are doing on the mobile web will be critical.
In other words, the industry needs a new analytics company. Huseby knows a thing or two about that as Chairman of Ground Truth, a Seattle-based company that is trying to operate under the radar despite having raised $2.6 million this summer. Huseby was reluctant to provide too many details, but said: “Ground Truth is helping advertisers figure out how big advertising is, and is helping carriers understand how big advertising is. My motivation to get involved was that no one knows what the mobile web means to them….How many people use the mobile web? We don’t know. I see it as a big problem. Until we can get the agreed upon metrics, we won’t know.” Huseby said people immediately jump to the conclusion that Ground Truth is about targeting individuals. “Ground Truth is not in the business of measuring what individuals do on the internet. It’s about what groups of people do in general on the mobile internet…We are as far as away from targeting as we can get. We aren’t doing that. We are measuring millions of people interacting with the web billions of times a day, a week, or a month. I’d like to be more specific, but can’t.”

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