Launching the iFund Blog….
Posted by Matt Murphy, September 15th, 2008 at 3:54 amToday we’re launching the iFund blog. The purpose is to share (and hear) perspectives around the iPhone and emerging open mobile ecosystem. We’ve been blown away by the amount of entrepreneurial activity in mobile since launching the iFund on March 6th. In 6 months, we’ve received over 2700 plans. To put it in context, that’s about 20x what we received in a similar period last year. Out of that group, we’ve funded five companies totaling more than $30M of investment:
- Pelago – social discovery and location sharing through an application called Whrrl which is live on the AppStore
- iControl – a home automation and monitoring solution available in Q1
- ng:moco – iPhone games launching its first titles this month
- GOGII – A new social interaction and marketing platform, launching in Q4
- An unannounced venture launching in Q1
We’re excited to be working with these five iFund companies and we’re in active conversations with many others.
The purpose of this blog is to create a forum for dialogue around the impactful trends and observations as the promise of open mobile is being fulfilled. From time to time, we’ll have various KP partners and execs from our mobile companies contribute to this blog which should broaden the scope and perspective.
This first entry seems timely as we come out of CTIA Fall. It’s a good time to reflect on the last year and the dramatic changes we’ve already seen and those afoot across the mobile industry.
- First and foremost… the iPhone. In a word, “Wow!” 1M 3G devices in 3 days and an estimated 6M in 7 weeks.
- Second, the astonishing success of the AppStore. “Double Wow” and an even more impactful event for the industry that demonstrates the promise of simple discovery and consumer choice. 60M downloads in 30 days. And hot off the presses 100M in 60 days! According to our estimates and M:Metrics data, that’s more iPhone application downloads in 30 days than all US carriers combined have in a quarter.* That means a relatively small base of handsets (~12M, mostly US) is dramatically outperforming the other 250M.
iPhone App Downloads vs. Rest of US Market
Is it the early adopters? Is it the iPhone’s great UI/screen/device? Is it the AppStore? Is it the developers and draw of a great development environment? It’s all of the above, but most importantly it illustrates what is possible. The impact of openness is now undeniable. The keys: open the mobile eco-system, solve the discovery problem, and deliver great apps…users flock to download them.
Developers for the first time have been given a great SDK and powerful platform to deliver to, but the bigger impact is the direct access to consumers with a clear set of business rules (free = free and 70/30 revenue split). This leads to developers coming forward in droves. No more building apps and spending 12-18 months to get carrier business deals. On the consumer front the data is dramatic. When you give users choice and solve the discovery issue (make it easy to find, read reviews, and quickly download) we’ve seen people downloading on average ~8 apps/user for every user in the first 30 days! This compares to <25% of users downloading apps on other devices and downloaders on average having 2.5 apps/year.
Is it game over for every one else? It depends on how others respond. The opportunity is even clearer, but reaching that goal is the hard part for many industry participants. Apple has set the bar extremely high with a beautifully integrated hardware, software, and distribution system. The iPhone is a driving force that is finally pushing others in the mobile ecosystem (from developers to handset manufacturers to carriers) to move faster. Ultimately this is better for everyone as users do more on their phone, buy data plans, transact, etc.
Telecom CMOs are getting pressured by CEO’s asking what their answer is to the iPhone, where are all our cool apps? Brand and media companies CMO’s better have an iPhone strategy as their CEO’s are calling too. It’s been interesting to see brands as varied as Chanel, Lenovo, and Audi develop iPhone apps to address consumers. A different, but very interesting form of marketing.
While these changes have been dramatic, we have only seen the first few pitches of a 9 inning game. The iPhone has changed users’ expectations of what is possible in a mobile device and UI and the AppStore finally showed the promise of mobile data applications. This is good for the mobile industry at large and particularly for the consumer who has never before had the choice the iPhone now provides. As investors, we’re enthused to see developers and entrepreneurs embracing mobile knowing there is a clear path to the consumer. As long time partners with carriers, it’s great to see them moving faster to embrace open models such as T-Mo’s application store, VZ’s developer conferences, AT&T’s partnership with Apple, Sprint’s open developer program, etc. All industry constituents are innovating faster. The choice of applications and how to access them will be the fastest evolving area over the next few months.
The next waves to watch are: 1) the execution of incumbent operators as they embrace open and deliver application stores and 2) an even more sophisticated set of applications from developers on the iPhone.
#1 was the hot topic at CTIA and we were impressed with how fast many carriers are “saying” they’re moving to a model which allows any app developer to reach their subscribers. Now it’s about following through. The risk is that many elements have to come together well for them to achieve success (handsets, OS, UI, effective storefront and merchandising, etc.). In addition, working with closely with developers has not been a core competency.
#2 is already in evidence as the recent apps on iPhone are already half a generation ahead of the apps that launched in July. After all, the iPhone SDK has only been available for 6 months! We know some of the apps in the pipeline will take things to a whole new level. And the volumes are clearly there, with some apps in these early days already reaching 1-2M downloads.
Stay tuned for a future conversation on mobile monetization and navigating the trade-offs of free versus paid applications.
* (250M devices X (20% downloading games + 5% who download apps) X 2.5 apps/phone) = 150M downloads/year = 37.5M/Q; excludes ringtones, music, and wallpapers – content that is more similar to iTunes purchases than AppStore downloads. Sources: M:Metrics, 1/31/2008 Survey of U.S. mobile subscribers, n = 31,389 and Apple Inc.
September 14th, 2008 at 11:48 pm
[...] Kleiner Perkins says it’s starting the iFundVC blog “to share (and hear) perspectives around the iPhone and emerging open mobile ecosystem. [...]
September 15th, 2008 at 1:05 am
Welcome to the blogosphere!
September 15th, 2008 at 3:47 am
And the #3 wave to watch will be the marketers and their brands as they join in the iphone/itouch app landrush.
Marketers need to connect their increasingly peripatetic audience. The creativity, engagement metrics and control Apple apps can offer are the perfect hooks to developing and nurturing brand tribes, particularly when these apps can be leveraged across the Apple platform (tv, laptop, mobile).
September 15th, 2008 at 3:59 am
Now that Steve branded the iPhone as the number 1 mobile gaming platform, I’m curious to see how Nintendo and particulary Sony are going to respond to this. The sheer computing power the iPhone brings to the table is on par with the Playstation Portable, its interface features broader than the Nintendo DS, and the App Store allows players to download games on the fly for a fraction of the regular mobile console retail prices.
It basically obsoletes the current platforms in the market.
The most important thing is that the iPhone is getting traction from traditional game studios instead of the shovelware that’s been pushed onto the mobile 1.0 market. Because the iPhone/AppStore is a quality platform and the supply chain isn’t restrictive, it attracts quality devs.
Another important reason for studios to pick iPhone is that mobile phone users and especially the loyal Apple fanbase are willing to pay for content. 9 out of 10 games for DS and PSP are pirated. It’s the same shift that happened due to piracy on the pc, single player PC games are nearly extinct and the majority of studios are now developing for XBOX or Playstation.
I’ve already heard rumors of Nintendo digitally distributing on its next-gen console and judging from the Playstation Phone’s design I’m afraid Sony is going to miss the mark with its clunky nGage-like design.
http://gizmodo.com/gadgets/cellphones/sony-ericsson-gaming-chief-says-playstation-phone-coming-by-christmas-294296.php
Telcos are starting to realize the opportunity they’ve missed out on. SMS traffic by far outpaced the revenue generated from games and other apps for years, so they couldn’t be bothered setting up a decent platform. Now that the AppStore is being a major succes they want to hop on the bandwagon, but that wagon already left a year ago.
September 15th, 2008 at 4:35 am
I’d like to add, if Sony manages to succesfully integrate its Playstation Network like it has done with the Playstation Portable and delivers on the promise of its Playstation Home platform and somehow manages to move that onto the PSPhone, it could provide some competition. However, I believe that SonyEricsson and Sony Computer Entertainment aren’t strategically aligned well enough to fight in the mobile arena. They’re best off just making consoles.
September 15th, 2008 at 9:31 am
One BIG problem with the AppStore is how Apple is handling rejections. Basically, a developer could spend a great deal of time and money developing an application, only to find out that Apple has decided to reject it because it judges that the app duplicates some feature that Apple already offers. The ground rules need to be a lot clearer, or there should be some sort of pre-approval process.
September 15th, 2008 at 11:27 am
‘6M in 7 weeks’!!!
If true, that blows away even the rosiest of iPhone 4Q FY estimates. This would mean we’re looking at, at a minimum, 9M for the quarter. Wow.
I’m surprised this figure isn’t getting more play.
September 15th, 2008 at 12:39 pm
Blogging is great for deal flow and for your portfolio companies.
Key to success keep putting out valuable information…information is the new lead gen for deal flow..
FEED THE BLOGGERS
September 15th, 2008 at 1:36 pm
You just made Monday a much better day by blogging the for the iFund. Hope to read a little more about what you’re up to, scale and retail focus if any (ie. non-gaming). Thanks & welcome!
September 15th, 2008 at 2:24 pm
There’s a lot of discussion around Facebook vs. iPhone and it will be interesting to see if “useful” applications which never got a foothold on Facebook will work on iPhone.
(iPhone + right apps) has the potential to be the computer/palmtop for the future (starting now!) and this can open up a lot of opportunities that are not necessarily social or gaming related.
Looking forward to the conversation developing on this blog.
September 15th, 2008 at 2:39 pm
Welcome to the world of blogs! I look forward to reading future posts here. I own a 1st Gen 8GB iPhone and I love the app store, so I’m thrilled to see that venture capitalists are taking notice and helping to cultivate the need for innovation in the mobile platform community!
Thanks for all your work!
September 15th, 2008 at 5:33 pm
[...] original $100 million. From over 2,700 pitches they have received, iFund manager, Matt Murphy, has stated that over $30 million has gone to only five different applications developers over the past six [...]
September 15th, 2008 at 6:23 pm
[...] iFundVC Enjoyed the story? Get the news and updates as we publish them. To subscribe to RSS News Feed [...]
September 15th, 2008 at 7:20 pm
[...] iFund Gets A Blog Today we’re launching the iFund blog. The purpose is to share (and hear) perspectives around the iPhone and emerging open mobile ecosystem. We’ve been blown away by the amount of entrepreneurial activity in mobile since launching the iFund on March 6th. In 6 months, we’ve received over 2700 plans. To put it in context, that’s about 20x what we received in a similar period last year. [...]
September 15th, 2008 at 10:59 pm
“Some developers demand Apple try to communicate better, lest they assume the worst of the platform vendor. While that sounds plenty reasonable at face value, given the curatorial demands on the fledgling state of the App Store platform and Apple’s overall reliance on product-plan secrecy, we shouldn’t realistically expect Apple to ‘open up’ anytime soon,” as I explain in:
Resolved: Apple is right to curate the App Store
http://counternotions.com/2008/09/15/app-store/
September 16th, 2008 at 12:16 am
[...] Kleiner Perkins has set up iFund, specifically for investing in iPhone apps startups. Read more here. « Let the blogging begin Social network overload? [...]
September 16th, 2008 at 7:17 am
It would be great if iFund supports more ventures needing less capital e.g. $100k-200k and also global developers. That way the risk is spread and there are more chances of high returns. Looking forward to reading more on this blog. Good luck.
September 16th, 2008 at 11:46 am
I believe that your fund will make a crucial difference in providing much needed capital to this new, exciting ecosystem that is growing around the iPhone/iPod Touch. It is important to note that true mobile internet devices are just beginning to appear on the market as the new wireless technologies are emerging to make them truly worthwhile. Specifically, WiMAX hold the greatest potential for delivering true high speed broadband access to a new generation of devices that are now making their way to the marketplace. Since Intel is the leader and patron support of WiMAX,
it behooves Apple to begin to move in the direction of supporting WiMAX on the iPhone and breaking out of the AT&T exclusivity arrangement. Intel is readying a new generation of mobile internet device chips that will be WiMAX compatible.
While I believe that Apple’s iPhone is the most innovative device in the market, it needs to push forward true high speed wireless adoption beyond 3G. Devices that work wirelessly on the road and in the home will be the foundation for anytime, anywhere access to content that consumers are increasingly demanding. The existing cellcos can’t deliver the bandwidth required with CDMA technology based on Qualcomm’s proprietary technology. Nor will their proposed move to LTE in 3 years suffice. Only an open standard can provide the necessary infrastructure to make wireless internet widely available at a low price. This will usher in new applications, new customers and possibilities for revenues from sales and advertising. WiMAX is ready now !!!
September 16th, 2008 at 2:31 pm
I’m wondering when a ‘cross platform mobile’ application market will be launched?
Obviously there are more windows mobile applications than any other mobile platform out there just seems strange nothing competing with the iPhone app store has been launched.
Seems like an obvious choice with
http://windows.MobileAppStore.net
or
http://android.MobileAppStore.net
or
http://iphone.MobileAppStore.net etc etc.
Cheers,
Dean
September 16th, 2008 at 4:49 pm
hey guys,
looking forward to reading this as much as possible. As always, it’s not so much the published stuff that is interesting (although it is), it’s the comments and stuff that surrounds the topics which is really interesting.
I’m looking forward to seeing who can aid in the development in anticipatory ubiquitous information (topic of my Masters), now that the tool to provide such information is now out there on a global scale. All of the apps and development from a US point of view was interesting, but even in places like New Zealand and the UK, business and information have vastly different cultures and ecosystems.
So looking forward to yet another blog to read and keep up with for the cutting edge of information in society. Cheers
September 16th, 2008 at 5:26 pm
[...] iFund to back new ideas for the iPhone platform. Almost a third of the money is already spent, according to fund manager Matt Murphy. Recipients include: Pelago, developers of a social discovery and location [...]
September 16th, 2008 at 5:30 pm
I’m glad you’re making an effort to share this information, thank you.
September 16th, 2008 at 5:31 pm
Let’s not get over excited though–the AppStore is a bit of the wild wild west. We have a lot of gaming going on with the store where developers are busy releasing application updates to be listed “new” again in a given category. Some competitors are even dropping 1 star reviews on others to mislead users into believing that an application is not fit to download. You still have others who are releasing free applications to get the download count and converting to paid so they show up in the top 100 applications. The AppStore manipulation needs to get under control as overall it hurts developers unless you’re there to play the AppStore manipulation game yourself.
Then there is the issue regarding application prices. Many really great applications can not come to market because the average user thinks that $9.99 for an application is a lot — regardless of the development time or the licenses that need to be paid.
Further Apple has done a poor job in policing the AppStore–reporting concerns do little and with a sustained effort users are able to over-promote or kill an application.
I am excited about the AppStore but definitely feel that one should some caution before jumping in with both feet. Things need to mature a bit–starting with managing the AppStore more reasonably.
September 16th, 2008 at 5:35 pm
Actually, I am really looking forward to making this a must read.
As you state, this really is the first couple of pitches of a long game. I’d go back even further and suggest this is spring training, with iPhone first gen being little league.
Apple have given us a wonderful tool (seems you can reinvent the wheel), and it’s up to the developers to see what they and their customers do with this tool. When the first stone wheel was raced down a hill who would have thought that 4 of them would be burning around an oval with nearly half a million people watching trackside, let alone the millions on TV. Where big and small developers take this technology is almost unimaginable, but I’m looking forward to seeing who can do it.
The second thing is to see how the likes of RIM and Nokia respond to this. Apple hasn’t just stolen clients, it’s expanded the market place, and just as Pew research today suggest that 97% of American kids play computer games, the numbers for smart phone technology usage are going to go through the roof. Some companies have already been seen to have dropped the ball, while others I could imagine are right in there looking to see where and how mobile user interfaces and user interactions can be taken.
This is going to be fun, and this blog could be just another cog in the machinery that enables all of this. All the best guys.
September 16th, 2008 at 6:12 pm
Matt - we’re thrilled the blog has launched. We’ve talked to a lot of great startups focusing on the iPhone in prep for the next Under the Radar. Can’t wait! Mobile is on fire!
Under the Radar: “The iPhone isn’t changing the game - it’s reinventing the whole sport. While their competitors followed the rules and fumbled, Apple wrote their own playbook and proved to the world that mobile innovation isn’t about waiting for the opportunity - its about creating it. It doesn’t matter whether carriers and mobile giants want the change - simply put, they don’t have a choice. From Verizon to Google and Nokia to Apple, every big player is competing fiercely for market dominance, spurring an emergence of startups ready to join the match and oust the reigning champs.” — November 12, 2008, Mountain View, CA.
Under the Radar: Mobility. 400 Attendees. 32 Companies. 1 Day.
http://www.UnderTheRadar.com
September 16th, 2008 at 10:35 pm
[...] al fine di creare nuove applicazioni per l’AppStore. Ieri Matt Murphy ha introdotto il blog ufficiale dedicato ad iFund, tramite il quale possiamo apprendere che 30 mila dollari sono gia stati [...]
September 17th, 2008 at 7:59 am
Thanks for sharing these informations!
September 17th, 2008 at 12:01 pm
Legend Mobile to Develop iPhone Applications
NEW YORK, NY–(MARKET WIRE)–Sep 8, 2008 — Legend Mobile Inc. (OTC BB:LGMB.OB - News) today announced that it intends to enter the market for iPhone software. The company is currently developing several products it expects to release in the fourth quarter of 2008.
The initial products will be targeted towards a male audience. Legend is negotiating with several combat sports athletes as well as recognized motor sports brands to use their trademarks and likeness on various software products for the iPhone and iPod touch.
The unique capabilities of the iPhone and the iPod touch offer a new experience through the use of their touch screen, multiple sensors, and advanced graphics. Legend plans to develop a portfolio of branded applications using world recognized brands based on these new features.
According to industry reports, iPhone users have downloaded more than 60 million applications since the App Store opened in July. Prices for applications range from free to $9.99. Legend does not expect to offer free applications in its first set of products.
Legend Mobile has previously worked with internationally known athletes and celebrities in the areas of mobile gaming, entertainment, and information. The company’s past successes in the mobile space and extensive relationships with potential licensors could lend themselves to rapid growth in this new and wildly popular platform.
September 17th, 2008 at 12:06 pm
Thanks for the blog. I’m looking forward to your monetization blog. It’ll be interesting to see the economic trade offs of paid versus free and how they foot with general usage differences and even the likelihood for Apple to promote (paid versus free apps). It would be great to get your take on hybrid monetization strategies (e.g. offering free for a limited amount of time to drive awareness - Air Sharing).
September 17th, 2008 at 1:13 pm
I’ve been impressed by the few companies in the App Store who are doing more than just put out apps but have started to build a network around the apps themselves: particularly EA, Jirbo, and Gameloft.
Cheers,
Cynthia
September 17th, 2008 at 3:21 pm
[...] the whole process and (hopefully) keep us up to date on just what the $100 million is getting them. The first post gets us up to date on who’s getting this cash — apparently ngmoco is one of the groups [...]
September 18th, 2008 at 6:28 am
[...] von Kleiner Perkins Caufield & Byers bisher noch nicht verlauten lassen. Jetzt aber wird ein neuer Blog zum Entwickler-Fonds Licht ins Dunkle bringen. 2.700 Kandidaten hätten sich für den iFund bereits [...]
September 18th, 2008 at 3:23 pm
If the AppStore has a ‘Gift This App’ feature similar to ‘Gift This Song’ feature in iTunes store, the sales may boost in the coming holiday season.
September 21st, 2008 at 12:00 pm
I heard a rumor at Cedia that iControl lost its funding. Has anyone else heard this? Any news on when their product will be launhed?
September 21st, 2008 at 2:24 pm
@ Samuel — not true. iControl is well funded and expects to launch their product in Q1 2009.h
September 23rd, 2008 at 2:02 pm
Interesting statistics on app downloads - remember that these types of download rates occurred on other phones when they were new as well.
September 24th, 2008 at 9:02 pm
[...] Are you an iPhone developer hoping to get a piece of the $100 million iFund? You better hurry up. The Kleiner Perkins-backed cash hoard earmarked for coders working on Apple's mobile platform, is about a third gone. [...]
September 26th, 2008 at 11:40 pm
[...] brand-new iFund blog spells out just how active things are in its very first post: “In 6 months, we’ve received over 2700 plans. To put it in context, that’s about [...]
September 27th, 2008 at 6:49 am
[...] brand-new iFund blog spells out just how active things are in its very first post: “In 6 months, we’ve received over 2700 plans. To put it in context, that’s about [...]
September 29th, 2008 at 7:02 pm
Chi-Hua, thanks for the update and glad to hear. Their product looks exciting. Will they be selling direct, retail, or will they be trying to sell through carriers?
October 1st, 2008 at 10:56 pm
Sam — I don’t want to steal their thunder, so I’d encourage you to wait until they make their product announcements. But I think you’ll find their offering quite interesting!
December 1st, 2008 at 3:10 am
Hello
Wow, this is a great post. Thank you for taking the time to pen it…
May 14th, 2009 at 12:41 pm
[...] Via iFundVC [...]
June 8th, 2009 at 11:16 am
[...] Via iFundVC [...]