Charles Hudson's Weblog

In the past few months I’ve looked at quite a few commerce marketplaces and social networks. One thing I’ve been trying to understand more deeply is the set of circumstances when commerce networks tip toward winner-take-all outcomes, with one dominant network accounting for the bulk of transactional activity. This blog post is very much a work in progress, but it’s a topic I want to understand better as I’m interested in continuing to invest in marketplaces going forward.

Winner-Take-All in Social Networks

In social networks, we’ve seen strong winner takes all dynamics in some geographic markets and around certain horizontal use cases. Facebook and Tencent are global general purpose social networks that offer their respective user bases a wide variety of social sharing and communications features. But even with their horizontal dominance, there are other strong networks that have emerged to compete with them. In some cases, the vector of competition is geographic focus (Kakao Talk, LINE) and in other cases its around a laser focus on a particular feature (Instagram before Facebook bought them, WhatsApp prior to the Facebook acquisition, Pinterest around visual sharing and communication, and many other examples too numerous to list). The one other thing we’ve seen in social networks is the ability to defeat powerful incumbents by focusing attention and product development on interaction models that are orthogonal to the core value proposition of the leaders. I would put Snapchat and Twitter in this boat – in each case the interaction model (asymmetric follow for Twitter, temporal photos for Snapchat) is very different from what Facebook proposes and hence it has been hard for that company to compete with those services effectively.

In most social networks, it seems that they tip to winner-take-all in broad horizontal categories because most people want to participate, share, or interact where others are. Not surprisingly, social networks are largely governed by the power of network effects when it comes to sharing and communicating.

When Can Commerce Tip to Winner-Take-All?

The dynamics of commerce marketplaces is slightly different. Most social networks seem to grow or die based on ongoing usage and participation by one’s social network – that engagement reinforces the value of being a part of the network and encourages you to participate more fully. For commerce networks, the incentive is somewhat different. For commerce networks, buyers want to be where sellers are and sellers want to be where buyers are as that formula tends to drive maximum liquidity for all.

The more commerce marketplaces I see, the more I tend to believe the natural state of affairs for the markets in which they operate is to have one dominant marketplace provider that wins. Late last year, I started asking myself the same question every time I get excited about a particular new commerce marketplace:

Is there a really compelling reason that all buyers and sellers shouldn’t be on one single platform? If that outcome doesn’t maximize transaction liquidity, why?

Framing the question this way has helped me think through the opportunity to invest in marketplaces. In trying to get to the answer to the question above, I try to think about the 3 somewhat durable ways I’ve seen commerce marketplaces differentiate themselves:

• Geographic segmentation – For some marketplaces, there are reasons that you cannot have a global or national marketplace in a given product or service. That could be due to the nature of the product, cultural differences, fulfillment issues, or some other reason that allows several regional players to flourish over time (as opposed to exploit a temporary advantage). Increasingly, I find geographic segmentation to be more of a temporal, as opposed to durable, advantage for marketplace companies.
• Supplier or Buyer Self-Selection – One other reason that marketplaces can avoid tipping to winner-take-all is that buyers or sellers self-select into or out of a given marketplace. One way in which this happens is by the chosen business model for the marketplace. For example, if the marketplace sets prices, wages, or rates, service providers who want to charge more might opt out of the marketplace. By the same token, if the quality of service providers is concentrated in either high-skill / high cost or low-skill / low cost, there can be buyer populations whose needs are not served in that marketplace. This can create multiple marketplaces that self-sort based on the needs of buyers and suppliers.
• Commodity Products vs Experience Goods – Last, I think the nature of the product or service being sold really does matter. As I’ve written about in a previous post, the nature of the product or service being sold matters. Is the product or service a standardized service or product that is easy to evaluate prior to usage or is it something where consumer preferences and tastes matter and the only way to evaluate the service is by becoming a consumer? For commodity or standardized products, I think the power of concentration on one platform is high – if I want to buy an unboxed iPhone, I’ll probably want to buy it at the place that has the most unboxed iPhones for sale as they’re all the same. Service marketplaces tend to be different – in many cases, the only way to figure out if the marketplace meets your needs is to test the service providers offered.

Of the 3 bullet points above, I spend the most time thinking about the implication of the last bullet points. Understanding the nature of the product and service being sold really drives a lot of my thinking. Take ridesharing for example. If you think that a ride from point A to point B is a commodity good where the primary driver in consumer decision-making is price, then you’d suspect that the one provider who can consistently provide the lowest cost and highest liquidity will win the entire market. However, if you think that ridesharing is an experience good where consumers do not think of a ride from point A to point B as a commodity but as an experience where they will trade price for convenience, style, or some other feature, there is a strong argument for why multiple services can thrive.

In addition to ridesharing, the other areas where I think this could play out in an interesting way are the home and apartment rental sharing space (airbnb and onefinestay), peer-to-peer second-hand commerce, and those who are trying to chip away at Craigslist on specific vertical use cases.

As always, comments are open below. You can also share your thoughts with me on Twitter @chudson.

A few days ago I was trying to find two new-ish apps, Jelly and Secret and I went to the App Store and just tried to find them via search. The results were not encouraging. I got a lot of results that were not at all what I was looking for. It turns out that the fastest way for me to find both applications was to actually just do a search on Google and click on the iTunes link that pointed to the app install pages. I shared this tweet and got a lot of interesting results from developers and others:

It's a sad state of affairs when it's easier to find iOS apps by name with a Google search than the native App Store search on iOS.

— Charles Hudson (@chudson) February 2, 2014

Only Apple Can Fix iOS Search

Apple will never let a 3rd party take over its App Store search. They have been pretty consistent about that. I don’t think we’ll see another situation like where Google powered search on Yahoo – nobody will be given that opportunity. And anyone who has tried to create a recommendation or discovery layer that puts their company between Apple and the consumer gets shut down or decides to do something else. I think the reason is very simple. Apple, like most other companies that own their own search engines, understands that owning the data on search intent is valuable and critical to understanding how consumers are ultimately finding the content they desire. And I took Apple’s acquisition of Chomp nearly two years ago as a signal that they were going to devote more resources to improving the search experience.

I don’t know much about how the Apple App Store search algorithm works, but I do know that it rarely seems to return my intended result at the top of the list. In many ways it feels like searching the Internet before Google had PageRank up and running. There’s lots of obvious keyword stuffing and title or description manipulation designed to capture people looking for popular apps. In my experience, the App Store search engine seems to do a poor job of disambiguating app names and category names. It’s hard for me to understand how search results are ranked when I do get results for queries. Overall, it’s a frustrating experience for me in searching for apps and most times it just feels easier to use Google.

At some point I hope that Apple App Store search feels more like Google, with largely relevant and consistent results, than the Internet pre-Google. But only Apple can make that happen and I hope they are continuing to make progress on that front.

As always, feel free to leave a comment below or send me a message on Twitter @chudson.

In the past three years I have had the pleasure of meeting many marketplace companies looking for seed funding. I have also had the privilege of investing in quite and continue to learn along the way. One of the things I spend a lot of time thinking about and exploring is what drives “leakage” and what marketplaces can do to keep transaction settlement on their platforms. One of the most common ways in which marketplaces try to keep transactions on-platform is by rolling out rating or review services for service providers (and in some cases for buyers as well). I’ve been thinking about when and why these rating systems work (they are not instant panacea) and more broadly about some observations about marketplace dynamics that tend to lead to “leaks”, or off-platform transactions where the platform provider does not capture the revenue associated with the transaction they helped facilitate.

What Good Marketplaces Do Well

I studied Economics in college, so I’ve always been attracted to the marketplace model. When applied and executed correctly, good marketplaces do many things to reduce transaction costs between buyers and sellers, including the following:

• Reduce search costs for buyers and sellers – Good marketplaces make it easier for buyers and sellers to find and connect with each other. This liquidity is the lifeblood of a healthy marketplace.
• Reduce transaction costs for both parties – When speaking about transaction costs, I don’t simply mean facilitating financial payments. Many marketplaces have standard fees and rules that make dealing with unknown strangers simpler and transactions more standard.
• Reduce bargaining and enforcement costs – A good marketplace usually has both norms and rules that make dealing with unknown parties safer. These rules and services can include payment escrow, trust and safety teams, and dispute resolution for cases when things go wrong.

The nice thing about the marketplace business model is that marketplaces that provide the services above are often able to command a transaction fee or premium for doing so. However, doing so often means that the marketplace needs to be in the middle of the transaction. The real risk to most marketplaces is that they provide all of these valuable services and, at the moment of the transaction, the transaction “leaks” and the buyer and seller settle the transaction off platform.

Experience Goods Tend to Have Marketplace Leakage Issues

Experience goods are products and services that require actual usage and experience in order to evaluate the quality of said service. For example, housecleaning services and ridesharing services are both experience goods. On the other hand, any unboxed iPhone is effectively the same as any unboxed iPhone – all unboxed iPhones are effectively commmodities. For experience goods, the main risk for a buyer is often that the quality of service, once delivered and experienced, will prove to be of low quality. For commodity goods, the main risks are that the seller will not actually fulfill his or her end of the transaction by providing the product or that the product will prove to be counterfeit or otherwise defective.

The reason that experience goods tend to have leakage is that once you know that a given supplier has proven to be good, there is a tremendous incentive to use that person again. And given that a lot of the value that many marketplaces provide is associated with the search and identification of a trustworthy service provider, there can be a strong incentive for both parties to complete future transactions out-of-band as it allows both the buyer and supplier to avoid the marketplace transaction fee. If you want to kno more about marketplace, rakes, you should definitely read this post by Bill Gurley as I reference it often.

One way that many marketplaces try to combat leakage is by rolling out rating and review systems. More on the logic as to why below.

The Role of Rating Systems in Transaction Costs and Leakage

Ratings systems are a pretty simple and tried-and-true system to grasp. In most cases, buyers have the ability to review the experience in dealing with a seller. In some marketplaces, namely eBay and Uber, both sellers and buyers can review each other. In order for a review system to work in terms of enforcing norms of good behavior, two things have to be true:

1. Suppliers have to value their rating, either as a buyer-facing signal of quality or because supplier rating determines how leads are distributed and routed within the marketplace.

2. Buyers have to trust in the validity and quality of the rating as a reliable indicator of supplier quality.

When both of these conditions hold, there is at least a chance that reviews will be of some value to those in the market. If suppliers do not value their rating, they will not care about taking their transactions off platform because having a high rating does not tie to the things they care about – making more money and potentially getting more customers. And if buyers believe that ratings are gamed or otherwise influenced, they lose their value as a signifier of quality. Getting review systems right is not easy, but well-designed rating systems can provide a strong nudge to settle transaction on-platform.

There are three situations where I continue to see strong incentives to go off-platform even in the face of the existence of a rating system. I’ve outlined them below:

1. Situations where there is real value to repeat usage with a chosen service provider. One area where I tend to see opportunities for leakage is the world of services marketplaces. In the case of tutoring, housecleaning, childcare, or any other service that is truly an experience good, there is almost always buyer risk on the initial transaction. But once you, as a buyer, find a service provider you like, the search is over. And, often the value of completing the transaction on the marketplace and paying the associated fees goes down. It might be more economical and simple for both the supplier and buyer to complete the transaction off-platform and avoid paying a fee.
2. Marketplaces where the marketplace itself delivers a small percentage of the service provider’s total income.The other situation in which I tend to see marketplace leakage is where the marketplace delivers a relatively small portion of the service provider’s total revenue. In those cases, suppliers tend not to care about their ratings because the amount of money to be made or lost on that marketplace is small relative to their total income. Any money or leads lost due to a low rating can easily be made up elsewhere.
3. Marketplaces where the buyer and supplier are geographically proximate and can easily complete the transaction offline. Last but certainly not least is what I describe as the Craigslist use case. In situations where buyers and sellers meet in person, there is a huge opportunity to simply settle in cash, Square, or some other form of payment rather than complete the transaction on the platform.

Of the three points mentioned above, I think the first tends to be the most pernicious. And the more marketplaces I meet, the more I am beginning to believe that the most pernicious situation of all is the combination of #1 and #2. I might even argue that marketplaces that are struggling mightily with #1 and #2 might want to rethink whether they are in the marketplace business or really in more of a lead-gen context. And when I meet new marketplaces, I try to get comfortable with how they will address the points above should they occur.

I think it’s really hard to build a marketplace that effectively balances the three concerns above. I think the ridesharing services, Uber in particular, are doing a great job of balancing all of these pressures. I suspect that Uber-delivered rides represent a significant chunk of income for their drivers. And drivers and riders are matched with each other in part based on their respective ratings or scores. That creates a pretty strong incentive to not “cheat” the platform and to care about your score as both a service provider and a buyer. That, to me, is evidence of a well-designed, well thought out system.

If you’re working on a marketplace and have insights to share, I’d love to speak with you and hear your experiences. As always, comments are open below. You can also chat with me on Twitter @chudson.

I’ve been wearing and using my Pebble a lot more since they announced support for a broader framework of notifications with the release of iOS 7. I was excited to learn that I’d be able to get notifications from a broader set of applications as I thought it would make the watch more useful and interesting. Thus far, I’ve had a mixed experience with the new notifications. The problem is that I get too many notifications – I get every notification that I normally get on my phone on my watch. There is a way to tinker with this via settings, but it requires me to change the way I handle notifications on my phone as well – I don’t really want to change those. I want to change how my Pebble determines what’s worthy of an interruption and what isn’t.

When I first got my Pebble I thought I wanted a phone on my wrist. I thought I wanted something that would largely replicate my phone experience but in a wrist form factor. The more I use it, the more I realize that I don’t want something that replicates my phone on my wrist. I want a very smart subset of my phones features on my wrist and I want that wrapped in some intelligence about how and when to notify me about something new.

I wonder if Pebble (or someone in the app ecosystem) will end up making a smart notification manager that handles this much better. For people who do not have many notifications enabled on their phones, this is not much of a problem. But I have a lot of apps and a lot of notifications that I actually find useful. I think there is an opportunity to build something that handles this more elegantly than a blast firehose.

I also wonder if the major hardware companies who are investing in smart watches, namely Google, Apple, and Samsung, will use their smartphone footprints to make notification management work natively for their vertical stacks. I would like to hope that the iWatch, GWatch, and Galaxy Gear will have smart notifications managers that can differentiate between what I get on my phone and what goes to the watch.

Ironically, the deluge of notifications that I get now has made me acutely aware of the kind of notifications that I don’t get but would like to get. For example, I’d love it if my Pebble + phone combination were smart enough to know that I am in a meeting and either switch to silent mode or only disturb me with a buzz if the incoming item is pertinent to this meeting or the next or is truly an emergency. Also, I have no need to get notifications that are not actionable on my watch.

As always, comments are open. You can also send me a message on Twitter @chudson to share your thoughts.

I’ve written a few posts about how I think about location sharing and location sharing applications, the latest of which is this one. One of the most interesting experiences I’ve had of late is trying to activate my network to start using Twist. For those who are unfamiliar, Twist is a mobile app that allows you to share both your current location and your ETA with someone else. I find myself continuing to use it more and more each day for three primary use cases:

• Given the current awful state of Bay Area traffic, I generally send a Twist whenever I am heading to or from San Francisco to or from the Peninsula. Originally I used Twist to just to tell people when I was running late, but now I send it out in advance because sometimes it turns out I’ll arrive early and we can actually start a meeting sooner.
• For my intra San Francisco meetings, I use it in much the same way – I like to walk to most of my meetings when possible (and Lyft or Uber when necessary). It’s surprisingly easy to make bad guesses when it comes to the time required to get from one meeting to the next and I feel better when the other person has some visibility that I’m on my way and when I’ll arrive.
• The third use case is social (as opposed to professional). If I’m going to pick up a friend or meet someone, I’ll usually send a Twist so that I know that I’m on my way. It takes a lot of the guesswork out of when I’ll actually get there and is super useful when you’re trying to pick someone up and want them to know that you’re on your way.

I tend to have two experiences when I send someone a Twist, which suggests that they install the app so they can have the same experience.

• Whoa, this is really cool – I got to see when you were on your way. Totally downloading this app.
• What is this and why are you sending me this Twist thing? Just text me when you’re on your way.

I honestly don’t get anything other than these two polar responses. There isn’t any really anything that predicts where someone will land on that spectrum, either. I have some techie friends who love apps and don’t particularly like Twist and I have some late adopter friends who have really taken to using the app aggressively. I also have friends across a pretty wide age spectrum and even age doesn’t seem to predict whether someone will like the experience or not.

The one thing I’ve seen that seems to be predictive of adoption and usage is the “ah ha” moment of getting insight into someone’s ETA when their initial guess or suggestion as to when they’ll arrive. At the end of the day, I do think Twist really competes with the alternatives of sending a text to tell someone you’re on your way or simply doing nothing and hoping you arrive on time. If people have that “ah ha” moment on their first or second experience with the app, I bet it sticks. If they don’t perhaps it doesn’t feel like it’s worth the effort beyond using a text.

If you use any of the location sharing applications and have experiences you’d like to share, feel free to leave a comment below or send me a note on Twitter @chudson.

One area where I’ve been spending some time meeting companies and learning is in the broad area of Android UI customization. I’ve started to see a handful of companies providing interesting approaches to customizing the Android home screen UI as well as taking over the lockscreen to provide consumers with information or entertainment.

It’s not surprising to me that people are spending lots of time trying to own this real estate – it’s the first thing you see when you pick up or unlock your phone. According to one report, people swipe their phones 100 or more times per day. That’s a lot of views and time that nobody currently controls. And the opportunity to be the first thing that people see (or control the experience that they see) that many times for day is a really interesting opportunity for both startups and established companies and one that I expect to get more competitive in the near term. There are already a few startups tackling this space, namely Aviate, Cover, and Locket, along with a few other teams and companies that have not yet launched or publicly announced what they’re doing. And then there are some of the newer Android hardware devices that include things like Active Display Notifications that allow you to peek at incoming items without actually unlocking your phone.

The interesting thing to me is that I’ve seen three relatively distinct approaches around how to better use the homescreen and lockscreen real estate. I think they can all be successful but all have really different approaches and value proposition for consumers:

Ad-Driven Monetization Experiences

Many of these seem to be inspired by the Cash Slide experience in Korea, where consumers earn a small amount of money for swiping on ads or otherwise interacting with promoted content with the lockscreen. The primary hook or driver here is obvious – it’s a way for consumers to earn money (real or some form of reward currency) and there is already a pool of advertisers willing to get their marketing messages in front of consumers on that screen. The ultimate test of these models is whether customers will, in the long term, continue to have an interest in looking at ads or other promoted content and whether the companies providing this promoted content can have a good mixture between things that monetize well and things that engage the consumer.

Putting Social Front and Center

Another approach for building launcher and UI customization is Facebook Home. I think Facebook Home is still a very interesting experiment in how much persistent screen real estate and UI consumers are willing to give up in order to stay connected to the core Facebook experience. I think Facebook is out in front in terms of pushing the boundary of what’s possible here and I imagine they’re learning a lot about what consumers like and dislike about having a more pervasive social experience outside of the core application.

Beyond Facebook, I wouldn’t be surprised if some of the more social applications on mobile (the new crop of messaging services, Twitter, the newest crop of photo services, etc) move toward making their product experiences more pervasive over time. And I would also expect some developers to start building social application experiences like Home that pull from multiple services.

Context and Content Driven Intelligence

The last major approach I see people taking is making the lock screen and overall layout smarter by taking into account context (location, upcoming meetings, interest, etc) and matching that with relevant content. That can include anything from using knowledge of my calendar to push me information that’s relevant for my next meeting even if my phone is locked (something richer than a simple push notification) to more complex scenarios like pushing me breaking news complete with video or imagery (as opposed to just a link in a push notification) when topics or interests I follow have meaningful updates. I think this is a really interesting area to explore, but it is also likely to push these companies toward the current arc of Google Now. For me, the big unanswered question is how hard Google will push Google Now to the forefront of the Android UI experience. Google Now already does a pretty good job on context and content but it’s not (yet) front and center in the Google experience. I read a good Ars Technica article on their take about how Google is beginning to push some of its services more to the forefront.

As always, comments are open or you can send me messages on Twitter @chudson.

I wanted to write a quick blog post based on a tweet I shared recently:

I continue to believe that Kickstarter campaigns tell me more about category demand than demand for a given company's actual offering.

— Charles Hudson (@chudson) November 1, 2013

Overall, I continue to believe that Kickstarter (and IndieGoGo and self-starter) campaigns are generally more indicative of consumer interest in a given product category than they are of consumer interest in a given company’s product. As others have noted, this is largely due to the fact that most pre-order campaigns generate interest based on the product promise as opposed to the actual product. This doesn’t mean that popular crowdfunded / self-started products won’t be successful. Rather, I’m just arguing that you shouldn’t substitute crowd enthusiasm for the work of figuring out whether a given team has the right product and concept for a given market. Evidence of demand in the form of pre-orders doesn’t mean that a given company will be the winner.

As always, comments are open. You can also share your thoughts on Twitter by sending me a message @chudson.

The world of mobile messaging has really taken off in the last few years, with products like WhatsApp, MesssageMe, Kakao, LINE, WeChat, Facebook Messenger, Kik, Viber, and others building large and growing user networks. I think many of these companies are really interesting and many of them are building really interesting businesses in their own right, whether as platforms that enable other applications and games to ride on top or finding other ways to directly monetize the usage of their own applications.

Network Effects vs Cost of Simultaneous Usage

As with many communication tools, many (if not all) of these products have strong network effects. One nice property of network effects businesses is that they have the ability to become really sticky – switching off the social network or mobile messaging product that your friends use becomes more difficult as you have more friends on a given platform. If you want to read more about the nature of network effects, you can read more here.

The latest crop of mobile messaging companies feel like the next evolution in communication. And, as is the case with previous waves, there is some question as to whether this market will tip toward winner-take-all (as was largely the case with social networks) or will support islands of relative strength (as was the case with instant messaging).

While a lot of the conversation about how mobile messaging will play out is focused on the importance of network effects and the potential to create winner-take-all outcomes, there is another dimension to consider. The other dimension to consider is the cost of using several products simultaneously. While network effects make products sticky, having a low cost of simultaneous usage means that it’s not that hard to use several products at the same time. In the case of social networking, the cost of using several services is high – it’s not financially expensive, it’s expensive in terms of time and attention. Most people don’t want to post status updates, upload photos, and be active on many social networks (but they will use more than one). On the other hand, the cost of simultaneously using several instant messaging products is fairly low – you either run multiple clients or use some sort of aggregator.

I tried to create a simple table of the various services and markets and the nature of their network effects and the cost of simultaneous usage:

In the end, I don’t think mobile messaging is one of those markets that will tip toward winner-take-all outcomes. While the network effects are definitely present, the cost of simultaneously using these products is low. The products are, for the most part, free or very inexpensive to use. They are all delivered as applications and widely available on the most common mobile OS platforms, so access is not an issue. They all use push notifications or other channels to bring you back to the app when you have a message, so the cost of keeping up with message activity is also fairly low – so the attention overhead can be very low.

At the end of the day, I think it’s relatively easy for me to just let my network use whichever messaging platform suits their needs. The cost of simply responding to them in whichever messenger or platform they want to use is fairly low and the cost of trying to get them to all switch to a common platform feels high.

Fortunately for these companies, building interesting businesses in this space doesn’t require a monolithic winner-take-all outcome. There is plenty of diversity across geography, demographic slices, and use cases to allow lots of companies in this space to flourish without one company being the dominant product for all people in all use cases.

As always, comments are open below and you can also send me a message on Twitter @chudson.

A decent chunk of my blog posts are inspired by things that other people tweet that catch my eye. Recently @hunterwalk tweeted out about how Evernote or Twitter should buy my favorite read it later service, Pocket:

As Pinterest adds "read it later/bookmark" features I'm waiting for Twitter or Evernote to buy Pocket

— Hunter Walk (@hunterwalk) September 24, 2013

When I saw that tweet, I immediately thought that Twitter is a much more likely acquirer for Pocket than Evernote. While I love Evernote and use it every day, Pocket is all about links to content I want to read later and that’s how I use the service. That’s valuable information about my intent and interests.

You know who cares about the value of links as a measure of intent and interest? Twitter sure does. Look at their history of taking control of other people providing links to content shared on Twitter. They have a history of moving to take control of 3rd party services that are aggregating information about links and sharing activity:

-Bit.ly was replaced by t.co for link shortening
-Twitpic and yfrog gave way to native image sharing with pic.twitter
-I can only assume that Twitvid and others will eventually give way to Vine and some native video hosting or sharing service

I also think that Twitter cards are going to give Twitter even more insight into how people consume media objects on Twitter – they know the value in understanding how content is shared and consumed on their network.

Twitter doesn’t have its own version of a Read It Later service. As it has done with other services in the past, the Twitter client gives you the option to choose a Read It Later service. Twitter has already moved aggressively to control the content I consume and share in real time. The next frontier in better understanding my interests is in also understanding information that I find interesting but choose to consume later.

To be clear, Twitter has integrated Pocket into its core application, so it does get signal data on how often a given piece of content is saved on Twitter. They also get all of the data about other content I share via email or other services as well. But I think of Pocket as my personal newspaper and adding Pocket to Twitter’s arsenal of services would give them an even wider perspective on what Twitter users care about and read when they are not on Twitter. As someone who believes that Twitter will continue to focus on monetizing through interested-targeted advertising, knowing what I read and care about on and off Twitter is valuable interest targeting data and I can see why Twitter would value that.

As always, comments are open. Or you can message me on Twitter @chudson.

About three years ago there were a handful of companies that set out to build Android-first or Android-only startups. All of those, including the one that I co-founded, had a thesis on why focusing on Android first or exclusively was a wise strategy. With a few exceptions, most of those companies, including mine, have not yet been successful. The reasons all vary, but I wanted to lay out what I thought were the perspectives on why Android-first or Android-only strategies would work and why they haven’t worked for most companies as of yet.

This is not to say that there aren’t companies, particularly in games, where usage and monetization are sufficient to support an Android-first or Android-only strategy. You can look to those companies as examples of why it can work when certain conditions are present.

Most people working on Android strategies from the start adopted one of three core strategies, each of which I will summarize below. All three strategies generally supposed that Android would get better – the devices would improve, monetization would improve, and developing for Android would get easier.

“We will be like [insert iPhone app] but for Android.”

The basic logic of this strategy was that many of the iOS-focused companies who were building great applications would not prioritize building for Android and this would leave a gap in the market for Android-focused developers. One of the early targets was Instagram – Instagram did not rush out an Android version of their application and that left a hole to build the “Instagram for Android.” The theory was that while those iOS-focused companies stayed focus on iOS, the Android-focused companies would find good traction on Android. Doing so would create Android-focused competitors with whom their iOS counterparts would have to reckon. The end game for this strategy was to either a) build a real beachhead that would yield an interesting company based on audience or traction or b) be well-positioned to get acquired by another iOS-focused competitor when they wanted an Android play.

“We will focus on Android first and then launch on iPhone when we work out the bugs and user experience.”

This was another common strategy I heard articulated by smart people. The goal for these folks was not to be Android-only and ignore iOS but rather to use the nature of Android and Google Play (no gatekeeper on pushing updates, more freedom around app promotion and customer acquisition and the large, rapidly-growing audience) to test out concepts and ideas which would later either migrate to iOS or become multi-platform mobile products or services. The core thrust of this strategy was that the ability to push updates and tinker with an app on Android was a faster path to learning than dealing with the iOS ecosystem. And, as a corollary, there was a belief that lessons learned on Android could be applied to iOS development.

“We will become good at developing Android and learn its ins and outs until monetization catches up with iOS.”

This is what I call the patience strategy. It was basically a recognition that Android was not, at the time, a compelling monetization platform for developers when compared to iOS. Rather than trying to force the issue, a set of developers decided to hunker down, focus on Android, learn the platform from a technical and distribution standpoint, and grow as quickly as the platform would allow. This strategy assumed two things. One key assumption was that the lessons learned in the early days of Android would have lasting value going forward and would be hard to replicate. A second assumption embedded in this strategy was that being in market and learning would confer an advantage relative to waiting until the platform was more stable and attractive and jumping in them.

Broadly speaking, I think all of these strategies have proven difficult and I have some thoughts as to why that has been the case.

The cost for waiting to address Android as an iOS-focused company has proven to be low.

Probably the most difficult market development for the Android-first crop of startups has been that the cost of ignoring Android for iOS-focused companies has proven to be pretty low. For companies that build really great applications on iOS, waiting to release on Android has been okay. I look at a lot of the larger companies, including both Instagram (when independent) and Facebook, where their decision to wait did not create a window for a viable competitor to emerge.

The technology and design principles that can propel you to success on Android don’t necessarily map to success in iOS.

Another challenge, particularly for the folks who chose to start on Android and migrate to iOS, was that the design principles and technical skills that can lead to success on Android don’t all translate to iOS. I think this is particularly true when it comes to UI and UX. I use an Android and an iOS phone every day and I can say that Android gives you a lot more option to use menus and submenus to hide stuff and I, as a user, have more buttons to use to navigate when I’m inside an app. And it has to work on a variety of screen sizes and form factors. In many ways, the iOS experience is more constrained and the general way I use iOS apps is different.

The benefits to getting in early and learning are still unclear.

Three or four years ago, Android was really a mess. It’s not perfect now, but it has come a long way. The platform itself does more for developers than it used to. Fragmentation is still an issue, but the core OS has gotten better, as have the devices. So there’s a legitimate question as to whether lessons learned in 2011 and perhaps even 2012 still apply if you are starting Android development today. In some cases, getting in early allowed a company to build a really strong market position and defend it – see Dragonplay in the world of poker apps in Google Play. In many other cases, those early entrants simply confirmed that building on Android was hard and maybe was a good deal of pain for an uncertain amount of gain.

The lack of consistent per-user monetization limits the ability to invest in paid user acquisition.

I think people have written pages and pages about how Android per-user monetization is not on par with what you see on iOS. That is true for many (but not all) categories. The challenge in low per-user monetization for startups is that for many, paid user acquisition is part of how they plan to grow. That per-user revenue provides the funds required to support advertising and paid user acquisition. The challenge, at least in my opinion, seems to be that while Android users are less expensive to acquire (when compared to iOS users on average), the return on that spend is not always high enough to support paid user acquisition. So that basically takes paid user acquisition off the table as a growth strategy for many companies not in games or other high monetizing questions.

Ironically, I think the net result of the lack of success for Android-first or Android-only strategies has been that iOS companies now think about tackling Android earlier in their lives, even if they don’t do it right away. In my conversations with mobile startups, they all know they’ll have to answer the Android question even if the answer is that they’ll address it later.

As always, feel free to leave a comment here or send me your thoughts on Twitter @chudson. I’m particularly interested in your thoughts if you have started an Android-focused company or led Android development at an iOS-focused company.