When going mobile backfires: What to watch out for

  • Today in SEA, you can build a billion-dollar business just on the smartphone
  • Why going mobile just for the sake of going mobile is a terrible idea
When going mobile backfires: What to watch out forAS Benedict Evans of Andreessen Horowitz has philosophised, “mobile is eating the world.
 
And he’s not wrong, either. In 2000, there were literally no smartphones in the world; by 2014, there were two billion. And by 2020, this is expected to reach four billion.
 
Indeed, according to Evans, the next one billion people to come online in the next five years will do so exclusively through their smartphones.
 
While highly consequential in developed markets, it represents a paradigm shift in emerging markets like sub-Saharan Africa and South-East Asia.
 
In a recent study by Accenture titled Surfing Southeast Asia’s Powerful Digital Wave, 87% of consumers in Singapore and Malaysia have a smartphone; in the four less-developed economies Indonesia, Thailand, Vietnam, and the Philippines, mobile phone penetration is over 90%, but smartphone sales have grown at an average of 30% year-on-year from 2011 to 2016.
 
Combine torrid economic growth (annual GDP growth of 5% from 2010 to 2020); a growing middle class (an increase from 39% of South-East Asian households in 2010 to 59% in 2020); and an overwhelming acceptance of ‘mobile’ as the de facto platform for communication, digital consumption, and even purchasing behaviour – and it should come as no surprise why investors and entrepreneurs alike are so bullish on mobile-centric businesses.
 
Today in the United States, you can build a billion-dollar business just on the web.
 
Today in South-East Asia, you can build a billion-dollar business just on the smartphone. And in five years, there’s going to be a lot more smartphones.
 
This potential is reflected in the outsized attention and growth of some of the region’s fastest growing companies. GrabTaxi, Carousell, and Go-Jek all began – and live – on mobile. [Author’s note: Golden Gate Ventures is an investor in Carousell].
 
Add to those three the hundreds of other startups that are exclusively mobile, with the endless soundbites about the importance of mobile (case in point: this entire column), and it’s no surprise that most startups and entrepreneurs attempt to go the ‘mobile-only’ route.
 
Word of advice: Don’t.
 
Going mobile, for lack of a better term, simply because everyone else is doing it is a terribly simplistic way of looking at the medium. And that kind of simplicity generally translates into terrible results.
 
All too often, startups plan to duplicate their website onto smartphones. ’Not a problem,’ they might think, ‘We can simply reduce the dimensions to fit a four-inch screen,’ and ta-da! Their website is now mobile!
 
The really lazy ones won’t even optimise it, and you’ll have large, clunky websites proverbially shoved onto a tiny screen, complete with unreadable text and constant scrolling from one side to the other.
 
Not fun.
When going mobile backfires: What to watch out for
This way of thinking is mobile just for the sake of mobile. This type of mobile experience, at best, likely won’t result in any foreseeable benefit and will be a distraction while you try to figure out why, and at worse, will alienate first-time users from ever wanting to visit your site again.
 
Before you go down the route, it’s more important for startups to first understand exactly what kind of mobile experience they’re trying to provide.
 
In short: Startups can begin exclusively on mobile, expand into mobile, or use it as a complement to their existing product or service.
 
For companies beginning exclusively on mobile, their entire product or service can be effectively captured in a simplified mobile experience.
 
This is true for startups that can provide value without requiring a tremendous amount of engagement or input. Many of these types of companies begin on mobile and remain there.
 
Planning a trip to a foreign country, finding accommodation, and booking flights, for example, can be difficult on mobile, given the amount and depth of research a typical user does.
 
Curated travel sights like HotelQuickly, however, gives users a curated selection of hotels, reducing the amount of user input significantly. Spot News, a mobile news aggregator, lends itself naturally to a mobile experience: To consume content, users need only to swipe and scroll between and through articles. [Authors Note: We’re also an investor in Spot]
 
For startups that will have a strong web presence, mobile can be invaluable. These desktop-to-mobile transitions work best when a startup’s core value can be meaningfully captured or diluted into a mobile experience with little to no negative impact on user experience or quality.
 
This is typically very hard to do, but if done correctly, mobile can become a new channel for customer acquisition, top-line revenue growth, and content creation.
 
‘Correctly’ is the operative word, and many startups will fail to effectively capture the web experience on mobile.
 
Take e-commerce, for example. Shopping on mobile cannot and should not be the exact same user experience as on desktop. You can capture the user experience and flow of e-commerce on mobile, but it needs to be optimised for it: Larger text and high-quality photos, a curated shopping experience, simplified sign-in or registration all amounts to ‘shopping with one finger’ – which is exactly what mobile e-commerce sites should do.
When going mobile backfires: What to watch out for
Luxola, a make-up portal recently acquired by LVMH, optimised its shopping experience for mobile, and it continues to see tremendous growth through that channel as a result.
 
Finally, we have the smartphone-as-complement. This works for companies that simultaneously manage multiple users with significantly different needs, such as service marketplaces.
 
While the desktop remains an integral component of the company, the smartphone serves as a tool to help facilitate the transaction and so, in many instances, is a radically different application.
 
99.co, a  property search web portal that utilises smart algorithms to find properties, not only has an optimised mobile app, but also an app dedicated to realtors to help them manage listings and transactions. [Author’s note: We’re also an investor]
 
GrabTaxi has its front-facing user app, but also a driver app so drivers can accept jobs, rate passengers, and navigate to their destination. Kaodim, a home services marketplace, has one app for consumers, and another app to help service vendors manage current jobs and send quotations.
 
The platform is ultimately a reflection of the kind of value and service a startup provides. The smartphone can be fundamental for growth and scale but only if a startup’s mobile strategy is executed flawlessly.
 
Entrepreneurs need to be honest with themselves, especially when it comes to devoting the right kind of time, energy, and resources to getting the mobile experience right.
 
If a startup has the time and resources to emulate the user experience across multiple devices without any loss of value, go mobile.
 
If a startup can deliver its service with very little engagement or input, go mobile.
 
If a startup has to manage multiple end-user needs, go mobile.
 
And if none of these apply, then startups should ask themselves: Are they doing it just for the sake of going mobile?
 
Justin Hall is a principal at Golden Gate Ventures, an early-stage fund based in Singapore. You can reach him via Twitter at @JVinnyHall. This article first appeared on his blog and is reprinted here with his kind permission.
 
Previous Instalments:
 
The Singapore ecosystem: Growing into adolescence
 
Only cockroaches and startups left when unicorns become extinct
 
Don’t get washed by liquidation preferences
 
When the first cheque can kill you


The runaway train of startup valuations stops in SEA

  
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