Core investment theses (III) - Analytics

Our third thesis is even greener than the second thesis (I began with the strongest and richest and moved down, as perhaps you can tell, and by green I am not highlighting our eco-friendliness but rather our lack of maturation). It begins with several fundamental ideas:

• The mobile computing platform generates one or two orders of magnitude more information than the next platform (the Internet). This is because the mobile device contains a large number of built-in machines, because it is active a much higher proportion of time than say a laptop, and because it can access much more contextual information than the laptop (for example, where the device or the device user happens to be located).
• The information that is being generated has the potential to be incredibly valuable, given the density and ubiquity of the information that is being generated, the ability to match this information to an individual (much more so that with a laptop), and the ability to deliver solutions of value at the point of maximum utility
• However, in general the amount of information actually used is extremely low compared to other industries including the Internet (e.g. Google), or financial services (e.g. Capital One) or even the gambling industry (e.g. Harrahs). This is primarily because the bulk of the information generated resides in the bowels of mobile operators, organizations that have historically been managed primarily as acquisition engines, and where the prevailing wisdom was "spray and pray". Nothing wrong with this for the past 15 years, where you had an industry that was growing rapidly. However, it takes time to realign assets and capabilities and so today for the most part this rich data is being wasted.
• We should not minimize other issues: often incompatible information systems; privacy concerns; the willingness of users to engage via the mobile phone given other jobs they are trying to get done through this device, and so on.

With this as set-up, our perspective is that over the next 2-5 years there will be a number of opportunities to build venture-backed businesses that smartly leverage the available information into delivering better business solutions for players across the entire system: operators, suppliers to operators, content companies, enterprises and ultimately end-users themselves. We have been fortunate to become an investor in Carrier IQ, a company that is a pioneer in this space, primarily focusing on helping operators and their partners solve really big problems - how to optimize their capacity plans; how to ensure that handset can be launched with a minimum number of bugs; how to ensure that applications are usable and used (and do not interfere with other important stuff like making phone calls). We are also actively looking at other investment ideas in this space, and in some cases we are steering our portfolio companies to embed more and more analytics into their core business. Ultimately, we are increasingly seeing that "analytics" will be an important or central component of any investment we make.

Again, this is raw and I am out of time. In future blogs I shall delve deeper into this field but hopefully this is a good start.