Mobilize: The VC Panel

We’re rounding out the panels with a gathering of VCs. Venture funding for mobile has been energized by the iPhone App Store and other recent developments, but what are the opportunities for a venture-backed big-time success between mobile apps, mobile web efforts and various business models? Here are my notes:

Matt Marshall, Editor and CEO, VentureBeat: What are the most popular iPhone apps and what are you seeing in new companies?

Matt Murphy, Partner, Kleiner Perkins Caufield & Byers: We are seeing at the iFund 15 percent enterprise, 85 percent consumer, with even distribution between social networking, games, communication and stuff like that. Right now they’re simple, lightweight, fun, easy to use — given that we’re only three months into this and six months since we launched the SDK, pretty good. Not bad revenue streams either. I’m most excited going forward about the next wave of more sophisticated applications.

Scott Raney, Partner, Redpoint Ventures: I’m excited about the number of developers we’re bringing into the space lately.

Marshall: Data last week said $14.8 billion in data revenue for the carriers, Apple revenue $180 million run rate for applications on the platform. That’s just a drop in the bucket.

Rick Segal, Partner, JLA Ventures: That’s just data. Today I don’t think it’s a particularly large space, but that’s where the growth is. For a user or a guy in a garage, could be great, but it’s problematic for the venture capital basis.

Jake Seid, Managing Director, Lightspeed Venture Partners: The fastest-growing source of traffic and revenue has order of magnitude lower price per bit than the existing one, so will be problem for carriers.

Richard Wong, Partner, Accel Partners: If you go back, and Infospace were venture-backed — but of course that was a generation ago. We have mCube now, but that was in the $300 to $400 million range. The pace may not be as large as wireline, but a number of us do continue to invest heavily into mobile.

Segal: We collectively have seen this movie before. “The multimedia PC with a CD-rom drive, then Internet, then high-speed”…mobile development is playing out exactly like the Internet did, and will end up the same way, with good players, dominant players.

Murphy: It’s dangerous to look in the rear-view mirror because now we’re looking at an open environment. Jamdat was done on 5 percent of consumers downloading games, now we’re looking at 20 to 25 percent, and I’m sure on the iPhone it’s more like 90 to 95 percent.

Seid: Also changing is the ability of people developing these applications to make money.

Raney: In the carrier situation it was struggle to get on deck, so the business model revolved around that. With App Store, T-Mobile and Google will hopefully allow those who perform the best to rise to the top. But rising to the top will only get more difficult.

Murphy: The only thing Apple has done really well is merchandising. People attribute the success of the Black Eyed Peas to iTunes featuring them. If they like your application, chances are they’ll feature it.

Wong: Apple’s a great platform, but I think we have to recognize that in other parts of the world, iPhone is not going to be so dominant.

Murphy: What’s made investing hard for all of us is we had to fund these then wait for them to get onto carrier decks, now people can get their application up to the App Store and see if people like it before changing into business with a monetizable customer base.

Segal: History says now it becomes marketing, it becomes the skill of the team.

Murphy: What’s top in Japan are browser apps, somewhat-dumbed-down, not-downloadable applications. Browsers are getting better here, but not that compelling to the graphically amazing things you can see here.

Raney: I’m disappointed in emphasis on apps in the last year because it fragments the market.

Marshall: When will the mobile browser speed rival the PC?

Segal: In Asia, Thailand, there are fairly good speeds, but mobile browser won’t be as fast as PC for at least five years.

Wong: That’s the wrong question. The old BlackBerry is faster than the laptop sometimes at email because it’s focused on one thing. There are always going to be parts of the country or the broader world that you’re roaming in that are not going to have high bandwidth.

Segal: There are opportunities now that we have a smart device with decent CPU and memory so use bandwidth when you have it.

Seid: (References Skyfire, a Lightspeed portfolio company.) A lot of people are taking the web paradigm and applying it directly to mobile, but we see an opportunity to leverage the power of each platform.

Murphy: In Korea, mobile revenue is 60 percent virtual goods, 40 percent is advertising. There will also opportunities for things that lead to commerce.