A few weeks ago, I wrote a post that covered my areas of investment interest for 2010. Three of the areas I find most interesting are the mobile ecosystem and the payments sector and the theme of “platform” business models. You can find that post here. The natural question I’ve since been asked is:
“What about mobile payments?”
My friends at PYMNTS.com asked me to join in the discussion in their Briefing Room on Mobile Payments. My answers are here.
Bill Daniels, a cable tycoon, was a consummate deal maker. I never had the honor of meeting Bill, but his reputation in the industry has stood the test of time as have some quotes that have been attributed to him. My Partners, some of whom had the great pleasure of knowing and doing business with Bill, are fond of one such quote:
You set the price and I’ll set the terms.
From what I am told, Bill understood the interaction between pricing and structure better than most. The essence of the quote is that pricing and structure are inextricably linked; you cannot fully understand the valuation of the deal without fully understanding each of its elements.
Often, I find that entrepreneurs overemphasize pricing (the pre-money valuation) and under-value structure.
The last couple of days have seen a flurry of activity in mobile. Apple announced its response to Google’s acquisition of AdMob by acquiring mobile ad network, Quattro. Google announced the much awaited Google phone, the Nexus One. The bulk of the discussion has been around the mobile application battle between Apple and Google. Henry Blodgett thinks Apple is poised to repeat mistakes of the past by remaining a largely closed (or at least tightly controlled platform). Bill Gurley thinks the battle between Apple and Google is largely a business model question and that there is room for both, serving different segments of the market with Apple in the high-end of the market and Google in the low-end.
I have always been fairly thematic in my investment approach. For me, the process starts with identifying big markets that are either 1) emerging (and will therefore be created over the next several years) or 2) undergoing some structural shift that will enable new entrants to grab market share from incumbents. I have seen Companies succeed in both types of markets and so I don’t have a preference for either approach. In 2010, there are a several big themes that I’m tracking which are likely to influence my investment selection during the year.
Everything is a service
For several years I’ve been spouting off about the notion that “everything is turning into a service”.
For me, the end of a year and beginning of a new one is an opportunity to step back and reaffirm core beliefs. The list of affirmations (really reaffirmations, because I have believed what is written below for some time but never committed the thoughts to writing) are what you might consider guiding, daily operating principles. Because these beliefs may help to explain my behaviour, entrepreneurs with whom I interact and my colleagues in the business may benefit from reading this post.
In no particular order: