Mobile could be considered the largest technological shift in history. Many of the largest outcomes in venture capital in the past 15 years have come from mobile-consumer companies: Facebook (which was famously slow to embrace mobile but now has 82% of its ad revenue coming from mobile) is the largest public company created in this period and now has a $338 billion market cap. WhatsApp, which was purchased by Facebook for $19 billion, represents the largest-ever acquisition of a VC-backed company.
And currently, the three highest-valued private companies, according to data from CB Insights, are all purpose-built for mobile: Uber, Xiaomi, and Airbnb. It’s well-known that mobile has crossed desktop PCs in terms of number of users–2014 was the first year this was the case–and the time spent on mobile devices is dominated by apps; 86% of time spent on a smartphone is in-app. Based on the trends we are seeing, desktop web traffic is now flat or declining. Instead, growth is being driven from mobile initiated sessions.
In the B2B world, however, the mobile juggernaut hasn’t generated the same level of interest and financial activity. If you take a look at our SaaS Success Database, none of the companies listed could reasonably be described as “mobile,” with the potential exception of TOA Technologies, a field-service management company founded in 2003 that Oracle bought for $550 million.
Why is this? Consumers gravitated towards mobile-first experiences over the last decade as early apps and services allowed them to operate their lives from their pockets. Smartphones did more than just replace the PC in many cases; they also brought technology to those who could not afford a computer or Internet access. What’s more–and what intrigues us as business-software investors–is that the leading mobile-first consumer businesses were so far ahead of the curve that they were forced to build their own tools to analyze and engage with all these new users. There wasn’t a market for the segmentation, study and reactivation/re-targeting of mobile users, as there is on the non-mobile Web, because only about ten companies initially needed such solutions.
This mirrors what happened in the initial days of the Internet. Businesses like Yahoo, Ebay and Hotmail created a significant amount of value in the consumer world, but it took another decade before there were enough such companies, operating at a large scale, to support sophisticated B2B companies to help them further engage users and grow revenues. Eventually, though, B2B companies like Omniture*, ExactTarget* and Responsys stepped in to fill the void.
We feel that the same thing is now poised to happen on mobile. We’ve seen mobile really cross over to become a mainstream core competency for almost all consumer-facing businesses in the last year. Businesses across industries, from retail to consumer products to insurance and banking, have recognized that mobile needs to be a core part of their overall business strategy.
In other words, it’s not just Uber, Snapchat and WhatsApp that are betting their business on mobile; it’s Domino’s, Aetna and Cole Haan. Yet the incumbent Web-marketing and analytics companies, like Omniture and Responsys, are not built to deal with the increased amount of data generated by mobile businesses, or the user-centric (vs. page view-centric) technical architectures that mobility requires.
Recently, we’ve announced investments in two companies that we feel have built the strong platforms to address critical business needs as mobile crosses the chasm to become a mainstream business channel.
Appboy* is a customer-relationship management system for marketers in the mobile world. It enables customers—mostly companies selling to consumers on mobile devices—to reach current and new users with tools including push notifications, in-app messages and email. At the core of Appboy’s value proposition is its user-centric profiling, which helps its customers—businesses ranging from Urban Outfitters and Domino’s to SoundCloud and 1-800-Flowers– track individual user behavior. By collecting data like behavioral data, campaign interactions, purchase history, demographic information and social profiles, marketers can run cross-channel campaigns and create targeted, personalized experiences for mobile users. For example: If someone is shopping for a gift on the 1-800-Flowers mobile app and gets all the way to the final purchase screen, but then gets distracted and forgets to click “checkout”, Appboy will automatically send the potential customer a message in 30 minutes to remind her that her item is still ready for purchase.
And today, we announced we are leading a $15 million investment in Amplitude*, a Web- and mobile- analytics platform that also helps consumer companies understand their users. Amplitude’s technology is a sophisticated data collector that tracks how actively people are using a specific mobile app; what types of devices they’re using; where they live and what language they speak; and many other key data points, all of which are helpful to companies trying to do more business with people on all Web-enabled devices. The technology can track millions of data points per day to understand user behaviors.
A mobile retailer considering streamlining its checkout process, for instance, would want to study how specific people—heavy shoppers versus occasional users, people in San Francisco versus Topeka—go through that process now before making any changes. Amplitude provides the data.
To compare these companies to their traditional Web counterparts, Appboy could be considered a mobile version of ExactTarget*, which built an email marketing business around engaging customers online. Amplitude, on the other hand, is more akin to Omniture*, the well-known, Web-analytics company that helps customers track usage on websites.
We’ve known both these companies for more than two years and have watched their respective CEOs build out solid products and teams. Both companies are growing briskly and are following the T2D3 (triple, triple, double, double double) revenue-growth model Neeraj described in his original SaaS Adventure blog post. We’re excited to partner with both Appboy and Amplitude to help them push the boundaries of mobile software.
*For a full list of all Battery investments and exits, please click here.