Mobile-Fueled Valuation: Uber at $40B?

I am not a financial analyst so will not speak to the specifics on the $40 billion.

Uber isn’t a mobile app service. (I heard a taxi driver call them “app cars”). Uber is a business enabled by mobile.

Mobile changes consumer expectations of convenience in three dimensions:

  1. Immediacy. I may wait three to 10 minutes for a ride, but I have instant access to information (e.g., the location of the vehicle and when it will arrive).
  2. Simplicity. I press a button “pick me up” and a car is ordered for my precise location. Ordering a ride could not be any simpler — well, at least until someone learns to anticipate when I need a ride and asks me before I order. (I’m waiting on my airline to do this for me).
  3. Context. Context is the sum of all of the information that a company has about a consumer (or employee — in this case supply of rides also) including situation (time, location, etc.), past behavior or preferences, and emotions inferred from one’s logistics. Uber depends primarily on real-time context or location in the moment to match supply and demand. Drivers also use ratings to decide if they want to pick up a passenger.
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Mobile Predictions: The Game Will Change in 2015

Mobile reached a tipping point in 2014 as it solidified its position as one of the most disruptive technologies for businesses in decades. Not since the advent of the Internet, has a technology forced businesses to rethink completely how they win, serve and retain customers. Mobile has completely shifted consumer expectations. Today, consumers expect to get anything they need immediately, in context. Forrester refers to this as the mobile mind shift.
 
Forrester believes that, in 2015, the gap will increase between leaders and laggards. Leaders will use mobile to transform both their customer experience and their business. They will anticipate the needs of their customers and engage them at exactly the right moment with the right content and services. Forrester refers to these moments as mobile moments. Doing so will require massive spending in the tens if not hundreds of millions of dollars to put the infrastructure, technology, processes and organization in place to engage consumers in their mobile moments.
 
Most companies will fall short. They have a myopic view of mobile. Why?
 
  • Treat mobile has a squeezed down version of a PC experience or a portion of their digital strategy. Why? That is how they are organized and goaled. As a result, they fail to optimize the use of mobile for their overall business. Second, they fail to serve the needs of customers.
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You Need Stickiness To Make Your Mobile App A Destination

Too many brands fail to leverage the potential of mobile because they act like destinations. Some of you may think being a destination is awesome. Who doesn’t like Paris or Bora Bora? But what does it mean to “act like a destination” in mobile? For most brands, their only strategy to engage their customers is on their own mobile web site or app.
 
Let’s step back a minute and talk about destinations.  
 
Atlantic City was conceptualized as a destination in the 1800’s. Tourism peaked during Prohibition when drinking and gambling rules were not enforced. Consumers had limited options. That changed. Fast forward 50+ years. In 1976, Atlantic City legalized gambling which led to a partial comeback, but they’ve struggled since the early 1990’s because consumers have better options and prefer to spend their time elsewhere. People still go there – just fewer. 
 
Developers have since tried to revitalize Atlantic City as a destination. In May 2012, the Revel Casino opened. Billions were spent to create a destination with shops, restaurants and gambling – everything a visitor could want. How many people visited last weekend? Zero. Revel – this casino - closed its doors in September 2014 with its assets liquidated for small change relative to the investment. 
 
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Financial Consequences For Obese Employees In Singapore: Another New Business Model Enabled By Mobile

I showed up at a business meeting in Singapore today and each member of the company within the meeting was wearing a Jawbone. I thought, "Wow, that's unusual ... and statistically very unlikely." Turns out, the company gave the devices to the employees. And ... added some teeth to the program. Approximately one week's compensation each month is linked to the employee's BMI. The formula is a bit more complicated than that, but that is the general idea. 

This offers one powerful example of the new business models that mobile enables. (See my research report from this winter that outlines the possiblities.) 

Despite the links between wellness and productivity at work, there are many reasons why this model wouldn't fly in the US - at least at a public company. Studies show that healthy employees are more productive, have higher energy levels, etc. However, there are always nuances, pre-existing conditions and laws in the US that protect employees from employers increasing or decreasing compensation based on their perceived health. Genetics come into play. Healthy - fresh, organic, slow cooked, local -  foods can be expensive and beyond the research of the average family in the US. 

Insurance companies in the US are piloting programs to reward members for good behavior (e.g., exercise, eating healthy foods, sleeping well). Rewarding members with discounts on premiums or vouchers for goods is very different though that linking compensation to an employee's BMI. 

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Amazon Fire: Winning In Its Customers' Mobile Sales Moments

I had the opportunity and privilege to get an early look at the new Amazon Fire phone. It delights in many ways, but I’ll focus on the shopping experience enabled through Firefly.

For those who may not remember, Amazon put a dedicated physical button on the left hand side of the phone that launches directly into image recognition. If the image is recognized, then a web-based mCommerce experience launches. The user can then buy the product or it on a wish list, among other things. From there, the experience is more ‘traditional Amazon.’ The ‘new’ is the image, email, URL, etc. recognition.

Why is selling mobile phones important for Amazon? mCommerce in the US alone will add up to nearly $100M by the end of 2014. The new battleground for retailers is in the mobile moment – the point in time and space when a consumer pulls out her phone to get something she needs immediately and in context. Amazon’s FireFly service facilitates two core types of mobile sales moments:

  • Impulse Sales Moments – these are often flash sales (e.g., WTSO.com, SteepAndCheap, etc.) or spontaneous purchases (e.g., Groupon). The opportunity for Amazon here is in minimizing the friction between consumers seeing something they want, and enabling them to buy it before they forget about it, or find it later in a store nearby.
  • Replenishment Sales Moments – the phone (or something like an Amazon Dash) is with me when I realize a shampoo bottle or milk is empty or I need more toothpaste.
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Yahoo! Acquires Flurry: Inexpensive Audience Acquisition For Yahoo!

Today Yahoo! announced its acquisition of mobile analytics and ad platform, Flurry. TechCrunch and Kara Swisher on re/code both reported the deal, with a $300M minimum price and $1 billion on the upper end. According to the press release, Flurry sees app activity from 1.4 billion devices monthly and 5.5 billion app sessions per day.

A little math: 1.4 billion devices does not equal one billion active users. However, a user could have one or many apps on his phone with the Flurry software embedded. Apps do not tend to have exclusive arrangements with one mobile analytics provider – let alone the free ones. They tend to have one or more. The code is small and there aren’t many compelling reasons to limit the number of buyers for your inventory unless there is unique value. It becomes hard to compare to the price tags of Viber ($900M) or WhatsApp ($17B to $19B). This is as much a play for audience as it is analytics. Flurry’s scale makes it interesting as an acquisition more so than what they do.

What does the acquisition mean?

No doubt, it’s a huge financial payoff for Flurry and its investors. When we interviewed Flurry a year or so ago for our research, they had 150 employees. 2014 will be known as a year of phenomenal mobile exit events – especially for those companies buying audience. It’s a good time to sell. A few thoughts:

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Mobile App Innovation Has Paused

Why? eBusiness pros are pursuing too many one-off initiatives without tight collaboration with their Technology counterparts. And, they are doing too little to build infrastructure to support future mobile services - and mobile moments. Check out our full report "Developers Are The St. Bernard For Mobile Projects." 

I've Stopped Opening My Favorite Mobile Apps

Mobile has transformed my expectations putting me on the bleeding edge of the mobile mind shift. I've had a smartphone in my hand since August 30th 2005 when a broken wrist forced me to be a one-handed typist - better done on a smartphone than a laptop. My Lark wearable wakes me each morning. My Nike Fuelband tracks my steps. I tweet and check Facebook on my phone. I deposit checks. Honestly, there are a handful of websites that I can no longer navigate because the complexity of the experience overwhelms me. It's simply easier to do stuff on my mobile phone. 

Today, I rolled into Starbucks a little after 7am to pick up an iced tea. I had to reload my stored value card within the app. (I don't use auto reload in case my phone is stolen. My bus card was autoload ... the last time it was stolen, the person must have handed off to six other people to travel before I could shut it down.) What was my reaction when I realized I would have to reload the card? "Sigh" ... well, really a "heavy sigh." The thought bubble over my head was: "Ugh, I now have to open this app, type in my password, etc." Usually I just open Passbook and do a quick scan. Please keep in mind that I think the Starbucks app rocks and reloading my card takes about 30 seconds. That said, I was annoyed that I had to go into the app. 

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Wellness Wearables Battleground Shifts From Hardware To Mobile Moments Enabled By Ecosystems

One of my first mobile moments this morning was a text from my husband on WeChat announcing that he had a Lark sleep quality rating of 9.4. We’ve become competitive sleepers.  The Lark is a wearable device worn on the wrist at night to track the quality (e.g., number of times awake) and length of sleep. Activating the device requires you to set an alarm (and lets me know how few hours I have to sleep). The device wakes you by vibrating on your wrist. Disarming it in the morning includes journaling information on how you feel and what occurred that may have helped you to sleep well or disrupted your sleep.

While I love this device, in April Lark announced it will discontinue making hardware, but support existing units. It’s retained hardware staff to continue to understand how to make the most of data collected from sensors on the phones. Similarly, Nike didn’t announce it was discontinuing the FuelBand, but there were rumors it had laid off its hardware team.

Why these shifts?

These devices and apps are creating mobile moments by sharing basic data, a concept outlined in our new book, The Mobile Mind Shift. But, the excitement of reaching milestones of 5,000 or 10,000 steps a day or shifting your sleep behavior quickly fades once consumers have a sense of what it takes to reach these goals. In fact, overtime data can even demotivate individuals.

In order to change consumer behavior in the long-term, these wearables must offer effective engagement mechanisms that create relevant mobile moments that change over time with consumer needs. To succeed requires:

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Amazon’s Firefly Generates Impulse Sales Moments

With the launch of Firefly, Amazon has the opportunity to create millions of what Forrester calls impulse sales moments. These are the mobile moments when I pull out my phone and make an unplanned purchase – even if it is for something that I need. Impulse sales moments are one of the leading mCommerce opportunities, which we detail in our new book, The Mobile Mind Shift. They include flash sales, sales of diminishing/remnant inventory, or sale of goods that I would have otherwise forgotten to buy. WTSO, Backcountry.com, and Gilt all use this tactic.

How often have you seen something you wanted to buy only to later forget? Sometimes it is as simple as milk at the grocery. Other times it is the latest kitchen gadget at your friend’s home.

Yesterday, Amazon announced its new Firefly service (and hard button on the Amazon Fire Phone). As a consumer, you point your phone at an object or hold it to listen to music, and the Firefly service will identify the product, music, or video. Amazon uses a combination of optical or audio recognition.

Buying products on Amazon – especially for Prime members – is already low friction with 1-click purchase. Firefly takes even more friction out of the process.

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