A Blueprint for a Massive Mobile Company

It sounds cliche, but mobile is the single-biggest secular technology platform shift of our time. It’s so big, it bears repeating, and for entrepreneurs (and investors like me), presents edge-of-our-seats opportunities waiting to be unlocked. This is no surprise, of course, as every big company and small startup is trying to focus on mobile. With so much competition in the mobile world, entrepreneurs could benefit by knowing a secret, and in this post, I will share one secret I’ve uncovered through my years of being a mobile entrepreneur and working on the “Facebook Home” team at the social network. This secret, I believe, could unlock an ever-lasting, durable, mobile technology company, not just an app someone launches on their phones and forgets about.

I’ll cut to the chase: The secret is that there’s an opportunity for a mobile-focused startup to build the equivalent of Google’s Chrome Browser. While the details of this vision differ slightly on Apple’s iOS platform versus Android (and forks of Android), in this post I will focus on Android because it offers an open platform for developers.

In order to appreciate the secret, we must revisit the past, both personally and professionally. Before joining Facebook, I tried to start companies around browser add-on technology, and before that, I was responsible for Bing’s toolbar when I worked at Microsoft. The Web was a very different place back then. Years ago, Web browsers used “toolbars,” which now sound like a joke, but during that time, were deceptively simple add-ons that actually turned into very profitable businesses. Today, innovation in browser add-ons has largely gone away, and for good reason — browsers built in the most valuable and innovative functionality, while browser platforms and security (especially on mobile browsers) locked down add-on functionality to limit use of browser add-ons to scam unsophisticated users.

Despite their less-than-savory reputation, toolbars show how add-ons and customization can improve the user experience of widely used software while generating sizeable returns for their developers. As toolbars made browsers more functional and interesting for the user, behind the scenes, toolbar developers were getting paid handsomely by Google, Yahoo, Bing and Ask for the search traffic they generated when they changed and “protected” the default search provider. As toolbars devolved from useful add-ons into conduits for malware, viruses and spyware, they were still a real business for their developers, who have reaped billions of dollars in search syndication revenue. To summarize, the evolution of the toolbar space loosely followed this pattern: Original browser experiences ceased to innovate after commoditization; then add-ons innovated the browsing experience (search boxes, form fill, etc.); then the underbelly of the Internet maliciously took advantage of browser add-on hooks; then core add-on functionality was built directly into browsers and add-on hooks were narrowed; and, eventually, the core browser experience innovation via toolbars and browser add-ons ended.

It’s important to revisit this history as it provides an analog for mobile today. In the world of Android, “launchers” — and more broadly, the Android Intents system and overall platform design — behave similarly to browser add-ons in their prime: Hooks to improve the core product experience with very few guardrails. With hundreds of launchers already available and more on the way, there’s no point in releasing a new Android launcher unless we’re ready to learn from the aforementioned toolbar phenomenon. Just like toolbars, Android launchers need to focus on innovating the core phone experience in order to be installed and retained by users. And similar to toolbars, successful launcher developers will be chasing syndication deals as a key source to revenue generation.

This cozy arrangement probably won’t last forever though, because some launcher developers will pee in this pool of opportunity by using Android’s platform hooks for unsavory purposes — the same way some toolbar developers did. Not only can launchers bundle replacement apps for the native phone dialer, camera, browser, calendar, mail, SMS, keyboard and more, launchers can hide competitive apps and drive users to their alternatives, i.e., apps that are paying syndication fees. Viruses, spyware that steals your data, and over-commercialization are the obvious demons, but so is simply degrading the user experience with poorly designed products that are just front doors for revenue-sharing schemes. This will no doubt happen, so users should be cautious about which launchers they download.

The long history lesson is important because the principles may repeat themselves today. Here, if history repeats itself, launcher apps will eventually go extinct the way toolbars have. For a few years, toolbars were a very interesting and lucrative business. Then, browser publishers like Firefox and Microsoft simply incorporated the innovative browser add-on functionality into the browser, rendering add-ons obsolete while also tightening the add-on platforms to keep the bad actors at bay.

So now … back to our secret. I believe there is a massive opportunity for a developer to create the mobile equivalent of Google’s Chrome browser on Android devices. This focused user-centric strategy could easily put a startup in position to control the third mobile platform — something Microsoft, Palm, Amazon and many others have spent billions of dollars to try to achieve without success to date. So developers who want to build a lasting large company should look for ways to rethink the core Android experience to “wow” users, and not worry at all about the easy money that will come from syndication deals and newfound ad real estate. There is unlimited potential to improve every aspect of the phone experience, and it’s amazing that there aren’t more startups trying to do this, because the rewards will be immense. First movers who bet deeply and execute flawlessly have a shot at this opportunity.

Beware, though — there is stiff competition here as well. Super-polished new apps like Cover are re-setting expectations for what is possible on Android while making iOS users jealous. Some companies are already moving beyond the launcher to the next level and replacing the entire Android OS with a customized version, as startups like CyanogenMod and Xiaomi’s MIUI do, because they’ve hit upon the limits of Android’s platform in their quest to build the best product experience. Their next step is to release devices loaded with a customized OS that removes all of the friction of installing on top of an existing OS. Both of these companies are clearly on the way to doing something special, but there is a little voice in the back of my head that wonders if this strategy is analogous to Chrome OS. Of course, that chapter is unwritten, so it will be exciting to watch and see how this all unfolds.

Bubba Murarka is a Managing Director at DFJ. A product manager and entrepreneur by training, Murarka is now a venture capitalist focused on mobile and, most recently, spent five years at Facebook where he started the Facebook Home project and was responsible for Facebook’s Android products. Follow him on Twitter at @bubbam.