Apps Solidify Leadership Six Years into the Mobile Revolution

Last year, on the eve of the fifth anniversary of the mobile revolution, Flurry issued its five-year report on the mobile industry. In that report we analyzed time-spent on mobile devices by the average US consumer. We have run the same analysis, using data collected between January and March of 2014, and found some interesting shifts that we are sharing in this report.

Time spent on a mobile device by the average US consumer has risen to 2 hrs and 42 minutes per day from 2 hrs and 38 minutes per day in March of 2013. Apps continued to cement their lead, and commanded 86% of the average US mobile consumer’s time, or 2 hrs and 19 minutes per day. Time spent on the mobile web continued to decline and averaged just 14% of the US mobile consumer’s time, or 22 minutes per day. The data tells a clear story that apps, which were considered a mere fad a few years ago, are completely dominating mobile, and the browser has become a single application swimming in a sea of apps. 

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The chart below takes a closer look at app categories. Comparing  them to last year, gaming apps maintained their leadership position at 32% of time spent. Social and messaging applications, including Facebook, increased share from 24% to 28%. Entertainement (including YouTube) and Utility applications maintained their positions at 8% each, while productivity apps saw their share double from 2% to 4% of the overall time spent. 

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Coming back to the overall time-spent on mobile, the average US consumer spent an additional 4 minutes/day on a mobile device compared to last year. That is just a 2.5% year-over-year increase. Time spent in apps was 2 hours and 19 minutes this year compared to 2 hours and 7 minutes last year. That is an increase of 12 minutes per day or 9.5%. This is a modest increase in time spent, yet not as spectacular as the five previous years.

Google and Facebook: The First Franchises in Mobile…

While examining the chart above, it is hard to ignore the time-spent on Facebook. As in the previous year, we placed Facebook (including Instagram) in its own category, albeit in the social segment. In terms of time spent, Facebook still has the lion’s share of time spent in the US. While the social segment grew, driven mainly by messaging applications, Facebook was able to maintain its position with the help of Instagram. That position will be even more cemented, if not increased, by the reach and time-spent inside WhatsApp. This has given Facebook a great degree of confidence on mobile allowing it to start focusing on the next platform. The following statement from Mark Zuckerberg’s post on the Oculus acquisition was very revealing: “We have a lot more to do on mobile, but at this point we feel we're in a position where we can start focusing on what platforms will come next to enable even more useful, entertaining and personal experiences”.

In this year’s analysis, we have added YouTube as its own segment, albeit in the entertainment category. On its own, YouTube is a whopping 50% of the entertainment category. Google has many other widely adopted apps, such as maps, but we kept those in their respective categories.

Both Google and Facebook have very well established franchises on mobile, but the market is still very fragmented. In fact, Google and Facebook combined probably command less than 25% of the total time spent by the average US mobile consumer. In addition the top ten franchises, according to ComScore, account for less than 40% of the time-spent. So despite massive efforts by Google and Facebook, the market still hasn’t consolidated and over the past couple of years we have seen new franchises emerge in almost every sector of mobile. Apps like Pinterest, Snapchat, WhatsApp (acquired by Facebook), Waze (Acquired by Google), Spotify and many more received wide adoption and commanded a percent or two of the time spent. In short, six years into the mobile revolution, there are numerous opportunities for new franchises to emerge in almost every segment of the mobile economy. 

…and in Mobile Advertising

There is an old saying in the world of advertising: “time-spent is the timeless currency”. It means that advertising revenue distribution follows time-spent distributions. As an example, if an app commands 17% of time spent, it should command 17% of the ad revenues for that channel. This is exactly the position Facebook is in right now and this is reflected in the chart below. 

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According to eMarketer, at the end of 2013, Facebook earned 17.5% of the overall mobile advertising revenues. That is in-line with their share of the time-spent. On the flip side, Google, according to eMarketer, earned 49.3% of the overall mobile advertising revenues, much more than its fair share of time-spent. (For the time-spent analysis, we accounted for YouTube and all the time spent in browsers where Google monetizes search and display.)

There are other display networks and other search monetization players out there, but if we combined mobile search and display ads on the mobile web, Google probably has a high market share in terms of ad revenues. The rest of the apps, including gaming apps, are simply not getting their fair share of advertising spent. The “other” apps command 65.3% of time spent but only receive 32% of ad revenues. This represents a massive opportunity for applications, including gaming apps, to monetize through advertising. eMarketer also projects that the mobile ad market will grow 75% this year, making the opportunity even bigger. In fact, analysts predict that in-app ad revenues will surpass web display ads in 2017.

It is still too early to predict the trajectory apps will take in 2014. But one thing is clear - apps have won and the mobile browser is taking a back seat. Now every company in the world including Google is adjusting to that reality. 

Tech Merger Frenzy in L.A. Highlights New Set of Startups


By Rob Golum and James Nash

Two takeovers in two days are putting a spotlight on Southern California’s role as a hotbed for technology startups.

Facebook Inc. said March 25 that it agreed to buy the virtual reality company Oculus VR Inc., based in the Orange County city of Irvine, for at least $2 billion in cash and stock. A day earlier, Walt Disney Co. plunked down a minimum of $500 million for Maker Studios, a supplier of shows for YouTube that has its headquarters in Culver City, next to Los Angeles.

Southern California has developed enough talent and financing for a self-sustaining community of tech startups to take root and grow, from the seed capital stage on up. Local universities are pushing entrepreneurship programs, the flow of venture capital money is on the rise and earlier startups have helped attract talent that’s remained instead of moving north to Silicon Valley.

“There’s been a proliferation of both angel and seed capital over the last couple years, and that’s allowed companies to stay here, build and grow,” said Paul Bricault, a venture partner with Greycroft Partners, a backer of Maker Studios.

Facebook’s interest in the region came to light last year, when Chief Executive Officer Mark Zuckerberg unsuccessfully tried to buy SnapChat Inc., a mobile photo-sharing service in Venice, a beach community on the west side of Los Angeles.

The company, founded by two Stanford University graduates, turned down his offer of about $3 billion, people with knowledge of the matter said at the time.

Bricault,who’s also managing partner of Amplify.LA, which assists startups, said the climate for new businesses has changed over the past two decades.

Staying Put

In the past, entrepreneurs in Southern California would leave as their funding needs grew and not return, he said. Now “companies are not only electing to stay here, but they are drawing capital from outside L.A. to fill the gap.”

Southern California ranks No. 3 worldwide for technology startups, behind Silicon Valley and Tel Aviv, according to a 2013 report by Be Great Partners, a technology incubator based in Los Angeles.

A concentration of immigrants and universities are driving the growth in technology businesses, said Stephen Levy, director of the Center for Continuing Study of the California Economy in Palo Alto.

Some companies are big enough to be considering initial public offerings. The Rubicon Project Inc., anonline advertising company based in Los Angeles, expects to raise as much as $132.4 million in an offering of up to 7.79 million shares at $15 to $17 each, according to a regulatory filing.

Car Culture

TrueCar Inc., an online auto shopping service, attracted a $30 million investment from Microsoft Corp. co-founder Paul Allen’s Vulcan Capital in December. The Santa Monica-based company is working with Goldman Sachs Group Inc. and JPMorgan Chase & Co. on a possible IPO, people familiar with the matter said in November.

Venture capital financing in Los Angeles and Orange counties has amounted to more than $17 billion over the past decade, according to data from PricewaterhouseCoopers LLP. The two counties cover almost 5,000 square miles, about the size of Connecticut, according to Census Data.

The number of deals in the region rose to 267 in 2012, the highest since 2004, according to Esmael Adibi, head of Chapman University’s Center for Economic Research in the City of Orange, citing PricewaterhouseCoopers statistics.

Small Business

The role of digital business in the region is still small relative to the wider local economy, which is led by shipping, the entertainment industry and construction, as well as aerospace and fashion. Los Angeles is the largest manufacturing center in the U.S., according to Mayor Eric Garcetti’s Office of Economic and Workforce Development.

Small and midsize businesses play a particularly large role in Los Angeles, according to Helena Yli-Renko, director of the Lloyd Greif Center for Entrepreneurial Studies at the University of Southern California.

The back-to-back sales of Oculus and Maker Studios underscore how vibrant the startup climate has become, said Bricault, whose company oversees investments of $400 million.

“If you look today, the number of companies that have raised money in excess of $500 million and their private market valuations, it’s probably higher than it ever has been before,” he said.

In Los Angeles, employment in e-commerce and digital entertainment has climbed 24 percent in the past five years to 14,920 jobs, according to the Milken Institute in Santa Monica.

Homegrown Companies

“Los Angeles and Silicon Beach are profiting from the shift to digital entertainment leveraging the large number of entertainment workers already living in the area,” said Kristen Keough, a Milken research analyst.

Locals shouldn’t view the sales of homegrown companies as a setback for the regional economy, Yli-Renko said. Oculus plans to continue running independently, while Maker Studios will remain in Culver City.

“Both of these companies look to be at the point where they can really benefit from additional resources to grow and expand, so I don’t think there’s a negative to it,” she said. Oculus and Maker Studios have demonstrated “strong proof of concept and strong proof of market adoption.”

Angel group investments, valuations climbed in 2013

2013 Halo Report By Region

By: Cromwell Schubarth, Senior Technology Reporter-Silicon Valley Business Journal

Investments by angel groups last year grew with increases seen in investments in startups in the Internet, health and mobile sectors, according to a new report.

The findings came in the Halo Report, which measures only the activities of angel groups and doesn't include the seed investment activities of venture firms, accelerators or angels who act independently. The report is issued quarterly and annually by the Angel Resource Institute, Silicon Valley Bank and CB Insights.

The three most active angel groups in the country last year were the Golden Seeds, Tech Coast Angels in Southern California, the Houston Angel Network and Silicon Valley-based Sand Hill Angels, according to the Halo Report.

California had the largest share of deals involving angel groups (19%) and the greatest amount of investment (20%). The report also showed that about three-quarters of angel group investments are done in their home state.

Five regions of the country accounted for about two-thirds of the deals and dollars invested: They are California, New England, Great Lakes, Mid-Atlantic and the Southeast. 

Median angel group round sizes have remained steady over the past three years at $600,000.  But when angel groups co-invested with other types of investors, the median round size reached a three-year high of $1.7 million.

The amount invested in healthcare startups by angel groups rose from $1.1 billion in 2012 to $1.5 billion last year. In the Internet sector it rose from $935 million to $1 billion. In mobile/telecom it went to $1.1 billion from $1 billion.

Growthinker Melissa Welch Speaking and Giving Back at the Youth Business Alliance Program

Melissa went above and beyond and gave back to the community with 60 minute presentation at  the Alliance College Ready Academy in South Los Angeles o 30 high school students accepted into the Youth Business Alliance Program based on having the highest GPAs in the school  and having an interest in and passion for business and entrepreneurship. 

Great and inspirational work, Melissa!!

CELEBRATE! on March 26! Surprise Launch Jump-Started by Maverick Angels

Register for the event here. Growthink is a proud sponsor of Maverick Angels.


At this event, Maverick Angels will be unveiling the Launch of our New Company -- and We Want You to Join in the Celebration. This is the night when we will reveal exciting details of our New Venture -- it's a Wild Idea dedicated to the Greatest Pioneers of our Time...Entrepreneurs! 

  
So...if you're the type who crosses at a red light, has your hair on fire exploding with ideas and challenges the Status Quo, then you will feel right at home during our Big Bash on March 26th. Please join us at this historic event and meet up with Angels, Other Investors, Accelerators, Incubators, Crowdfunders, Sponsors & Affiliates and LA's Influencers.

  

We have mastered mixing business with fun, so bring plenty of business cards as we Collaborate, Educate and Get Down to Learning about YOUR Ventures. 

Here's the Deal: 

Who It's About: Entrepreneurs at All Stages
Date: Wednesday, March 26, 2014 - 6PM to 9PM PDT

Location: 

Loyola Marymount University

Roski Dining Hall located in University Hall

1 Loyola Marymount University Drive
Los Angeles, CA 90045
 

Parking:  

On-Campus parking will cost $10 for the evening.

As you enter LMU from Lincoln Ave and pass security, University Hall is the first building you see on the right. Simply enter the adjacent parking lot and park anywhere. The parking fee is payable at machine kiosks located near each elevator bank. You may pay with either cash or by credit card. 

  

Price: $10 + $1.54 (Eventbrite Fee) for Non-Sponsors

NON-REFUNDABLE

 

What's Up at the Launch?

Fire Up for Our Famous Elevator Pitch Contest 
We've Got Swag--Get Your Goodie Bags Ready
Guest D.J. (Name to be Announced) in the Lounge
More Fun Surprises to Tell You about Coming Soon!

 

Don't Miss Our "Ask the Experts" Panel! This evening is all about you--so work it. Make it happen by interacting with our group of Top Mentors who are there to share their knowledge by answering your questions related to the success of your start-ups.

Who Gets Funded? Great Businesses vs. Great Presentations

From ideas come businesses.

From businesses come needs – like raising capital. Raising capital usually means pitching investors.

So which businesses are most likely to be among the approximately 5% who raise funds from professional investors? The chart below tells the brutal truth quickly and easily.



A great business which gives a great presentation is most likely getting funded.

A lousy business with a lousy presentation isn’t getting funded.

But what about a good business with a lousy presentation? Is it more or less likely to get funding compared to a good business with a great presentation? The answer probably won't surprise you.

After speaking with over 110 angel investors, VCs, entrepreneurs and educators, the consensus was solidly in favor of the good business with a great presentation. The deciding factor came down to the team, the single factor which most influences investors.

A person and a team who made a great presentation took the time to practice. Investors like to see the results of preparation and hard work. A great team willing to practice may simply need some advice and be willing to pivot, changing a good business into a great business.

A good business which gives a lousy presentation says to investors, “We didn’t care enough to put in our best effort.” The lack of preparation and the condescending attitude toward investors will derail just about any business seeking capital.

At the very least, it says the team is not ready, not mature enough, and probably not coachable.  With plenty of investing opportunities from which to choose, investors quickly move on. 

Want to improve your chances when pitching to investors? Follow the eight recommendations below to maximize your chance of raising capital.

PRACTICE your pitch
If you didn’t practice 25-50 times before presenting, it will show in your lack of confidence, poor pacing, and use of filler words like “uh”, “um” and “like”. Then you’ll likely resort to the boring reading-slides-to-your-audience-with-your-back-turned method of pitching. Buy the coffin. You’re dead.

GENERATE some enthusiasm!
No one expects you to have over-the-top local sportscaster enthusiasm. But don’t pitch with a sleep-inducing monotone, either. If you don’t have passion for your business, neither will an investor.

PREPARE for contingencies
Fertilizer happens. Prepare for it.
* Know every slide in your pitch deck by heart
* Have two thumb drives with your pitch deck saved in PowerPoint / Keynote and PDF
* Bring your own laptop, projector, clicker, batteries, microphone, cables and cords
* Inspect the room beforehand, if possible. Know the lighting and sound conditions

BREVITY is king
Got 10 minutes to pitch? Finish in 9:45. Almost nobody finishes with a strong close in the allotted time. Investors love someone who can manage time effectively. It sends the message that you can manage other areas of business effectively, too. Keep your pitch deck to 10-12 slides maximum.

NAIL the opening and closing
Tell a brief story; do something unexpected; focus on emotion. Those are great concepts to open a pitch. Close powerfully with your call to action. Now think about how most people open speeches – and don’t do that.

STORIES sell
Sprinkle in stories to drive home a point, to magnify emotions, and to keep your audience engaged. Generally, a single story should take no longer than about 7% of your total pitch time. For a 10 minute pitch, a story is most effective when 45 seconds or less.

Use storyboarding, a technique invented by Walt Disney in the 1930s, to create your overall theme. Do this before designing your pitch deck.

VISUALS, not text
Your pitch deck should be primarily visual. You’re the focus, not your pitch deck. If your slides are full of text, your investor audience is reading the slides and not listening to you. Your audience can read faster than you can speak. When they finish and you’re still talking, they’ll disconnect. After that, they’re almost impossible to re-engage. Great visuals enhance your story because vision is the most dominant sense in people.

WIIFI: What’s In It For Investors?
Why you? Why now? Why should an investor care? When your pitch answers those questions in a concise yet detailed manner, your chance of funding improves. 

Knowing your investor audience is essential. Pitching friends and family is somewhat causal, pitch angel investors is more serious and pitching institutional investors is sophisticated. Tailor your pitch accordingly.

 

Successfully raising investor funding is often a long, frustrating and complex process. Getting turned down dozens or hundreds of times will test an entrepreneur’s patience. Persistence doesn’t guarantee success but quitting guarantees failure. Investors use the process to find the most resilient entrepreneurs worthy of funding. Getting investor funding will often change your life and your world for the better. The guidelines above will make your process faster and easier.