Q: What did Pink Panther say when he stepped on an ant?
A: “Dead Ant! Dead Ant! Dead Ant Dead Ant Dead Ant!”
Q: What did Pink Panther do when he saw a live ant?
A: He first stepped on it, and then said:
“Dead Ant! Dead Ant! Dead Ant Dead Ant Dead Ant!”
Every so often, I get pitched a really cool idea for a mobile app. In fact, sometimes I really like the idea, but still end up passing on investing or sometimes passing even on taking a meeting. My explanation of why I’m passing, goes something like this…
Mobile is a key area of focus for Apple and Google. You can also add Microsoft, Samsung, Xiaomi, HTC, Facebook and Twitter to that list. These are the Elephants.
When you look at the mobile ecosystem, there is hardware, operating systems and apps. As the hardware becomes increasingly commoditized, it’s becoming clear that the operating system and the apps are what keep consumers on one platform versus another.
Apple and Google are going head to head with each other on mobile and are investing billions of dollars in order to one-up each other in an attempt to gain and maintain competitive advantage.
To be the best mobile platform the Elephants need to be constantly innovating and adding new features. The best way for them to do this is often to look at what apps are providing core utility to their user base and then build that in as a feature of the operating system.
There are several example of this, probably the simplest one is that of the Flashlight app. The flashlight app was very simple, all it did was turn your phone on maximum brightness or turn on the LED flash so you could use it to illuminate a dark area. Well, the flashlight function is now part of iOS and is accessible in one swipe and one click from Control Center. I’m sure some people may still be buying the numerous Flashlight apps, but for the majority of users, the feature that is built in to the OS is sufficient.
It ultimately comes down to the power of the default and minimal friction. Downloading a special app from the App Store adds more friction. By contrast, a feature built-in to the OS that’s readily accessible, is practically frictionless.
If you’re a startup that’s building something that’s a very cool, widely used and a nice to have feature on a mobile device, one of your biggest risks is that one of these Elephants, in an attempt to compete with each other may just end up making your sole product a feature of their OS and end up stomping all over you and your startup. You become collateral damage.
As an investor I don’t want to invest in a startup, that could get stomped upon by Elephants as they duke it out with each other. In other words, I don’t want to invest in companies where they could have the rug pulled out from under them if the value they’re delivering becomes part of the platform in the future.
Don’t interpret this as a fear of large companies. Quite to the contrary, I am of the opinion that most big companies cannot compete with a startup in general. However, if you try to compete with a big company in an area that the majority of their effort and focused is on, that’s very different. And for mobile, Google and Apple are definitely pretty focused on improving their mobile platforms. Don’t play in an elephant arena.
A few years ago Fred Wilson published a post about “filling holes” in the Twitter product. The post was instrumental in helping to shape my thinking about investing in the mobile ecosystem. So a big shoutout to Fred for this early education and for helping me to deftly avoid investing in many mobile companies whose apps have since become features.
You may also follow me on @Twitter at @ManuKumar, and for all things @K9Ventures K9 Ventures is also on Facebook and Google+.