Four Questions with Nasser Manesh, Frucall CTO
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Written By Sepideh Saremi | April 9, 2008 | Share This
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Nasser Manesh is an entrepreneur and the co-founder and CTO of Frucall, a mobile comparison-shopping site. Manesh also writes a blog at Unixica, where he comments on startup news. Searchviews asked him for his insights on mobile development and advertising. Here’s what he had to say.
Searchviews: On your blog Unixica, you recently referenced an article about the decline of mobile development. As CTO of Frucall, a mobile shopping search engine, what do you think about this report that discourages developing products just for mobile, and how has it changed the way you approach your business?
Nasser Manesh: Mobile applications have caused a lot of hype over the past decade and a lot of companies were built around making mobile applications mainstream. Unfortunately most of these companies are not around any more, and the others, for the most part, have shifted their focus in order to be able to survive. For a number of years now industry analysts have been predicting the mobile application space to be the next revolution, similar to what happened when the PC was introduced to the market and when the Web was put to mainstream, commercial use.
But this revolution has not happened in the US market, and that’s what this report is talking about. Personally I agree with most of the writer, Michael Mace, has written. He has had very high positions within Palm and PalmSource, front runners of the mobile application space, and what he says comes from first-hand experience. There are a number of reasons for where we are today, mostly inter-related, and I think US mobile carriers are at the heart of these issues.
Carriers have tried to prevent what made the Web successful from happening in the mobile space: An open and free paradigm of delivering content and applications. Access to the handset is highly guarded and the carrier wants to have a share – usually the lion’s share – of whatever a content or application owner wants to deliver to a handset.
Mobile data plans have been a source of revenue to carriers rather than a means to an end, i.e., monetizing content and applications. As a result, consumers have been reluctant to adopt and use data plans. Those who have been more curious to pay have not found enough useful applications that would justify the cost, because mobile carriers have failed to create the right ecosystem to attract third-party application developers.
All of this has resulted in a psychology of “it’s just a phone” in the US consumer market. There is a reason for hearing the term “cell phone” from the average US consumer while average European or Asian users carry “mobile devices.” What we did at Frucall was to leverage this psychology. Instead of building a fancy mobile application, we built a voice application, which users can call to get information. In the back-end, Frucall is all web API calls and integration with Internet retail services, but to the caller it’s just a phone call. People in the US are used to touch-tone applications, as pretty much all banks and large organizations operate with touch-tone services. So why not use the same for a mobile application to make it familiar? Later, we added text (SMS) services and finally mobile web. We avoided downloadable mobile applications. You can see the reasons clearly verbalized by Elia in Mace’s article. The economics of supporting a vast number of devices for such a small percentage of users simply does not make sense for a startup.
SV: You’ve also noted on your blog that monetization is very difficult in mobile. How do you think the mobile space needs to change to spur more advertising dollars and opportunities for monetization?
NM: I have to admit I’m not a big fan of advertising on mobile phones. The mobile user experience is very different from the PC – there’s less screen space and the device is constantly with the user, making the nature of mobile advertising more intrusive. Add to that the fact that the mobile device “knows” more about the user – the incoming and outgoing calls, the location of the user, and other things we usually consider private. Just how companies like Yahoo! and Google analyze the content of your hosted email to show you relevant ads on the side bar, a mobile application can analyze these more private pieces of information to serve a more targeted ad. Location-aware advertising is on the radar of many companies. Think of Tom Cruise walking in the mall in “Minority Report” and how the voices were trying to sell him things. It will become real much sooner than we think, thanks to the mobile phones we carry with us.
There are a few companies though, such as AdMob, that have adopted the same ad-brokerage model used on the Web and are serving ads for mobile web pages. Unfortunately, iPhone aside, the user experience for mobile web browsing is unpleasant and usually slow, so users keep it to the absolute minimum.
I think one aspect that is less explored is tying mobile into the web. A lot of applications have natural mobile extensions and components. We do not have to port the whole application to the mobile device just because we can; we should study the usage and see which parts of the application can be “mobilized” to add value to the end user. Obviously one monetization strategy is to charge more for those mobile components, the other is to collect data from such components that would help serving more targeted ads later on when the user is browsing the web on a PC.
For example, in the case of Frucall as a mobile comparison shopping, if the user calls Frucall to search for a Nike shoe, next time they visit the Frucall web site we can show them a sports-related ad, or an ad from Nike or a competing brand. Companies are doing a lot for behavioral targeting these days. I would like to think of the mobile components of applications as extensions that can collect more behavioral data related to a certain application. All of that, of course, is still limited by the way carriers are controlling the applications.
SV: With the overwhelming popularity of the iPhone and increasing ubiquity of more sophisticated handheld devices for US consumers, how should companies be approaching the mobile market in the United States now?
This is a tough question and what I say here is my personal view, but I think the iPhone is going to have a big impact and at this point it might make sense for some companies to only focus on the iPhone and forget about the other platforms. This is not because of Apple being behind iPhone, but because of the user experience which has made it easy – for the first time – for users to use applications on a phone. Statistics, for example, show that Google searches are 50 times more prevalent on iPhones than other phones. That’s because there is less friction in using search on an iPhone. I am not particularly a fan of Apple’s model of controlling application distribution, bit still it’s much better than the traditional carrier model, and the fact that AT&T has agreed to Apple’s way of application distribution is a huge leap forward. There are some limitations within the iPhone SDK but I’m sure they will be resolved over time. It’s Unix underneath, after all, so capabilities such as multiprocessing are built in. It’ll just take some time.
There are two other platforms currently showing traction or at least hype – Google Android and LiMo. Personally, I expected more from Android. Creating the Open Handset Alliance was a very good move by Google and the promise of an open source mobile operating system is a good - and only a company with high levels of influence such as Google can pull it off. But in retrospect it looks like they were not ready for the prime time. Things are moving very slowly.
LiMo, on the other hand, is backed by a number of phone manufacturers and has actual handsets. The problem there is that LiMo supporters don’t come from an application software background – they are phone manufacturers. So LiMo seems to lack the developer ecosystem to add value to it. Look at how many people are trying to do things around Android, even though there is no phone out there. That’s what Google can do. Limo is ahead of Android in terms of availability, but the development support is practically non-existent, which in the long run can kill it.
Note that most of the things I’m covering is consumer-oriented. There’s a whole different mobile market out there for enterprise users, and Blackberry has done a great job there. Apple is aggressively targeting that market through their integration projects with Microsoft and Cisco and there will be application opportunities there, but as usual, enterprise sales in general is much tougher so I think small companies and startups have a smaller chance of making money in that market.
SV: Your company, Frucall, has a social network element, with users able to create profiles and connect to friends, as well as presence on Facebook via an application that allows users to share product lists with their friends. What were your considerations in creating your Facebook app? Do you think it’s more valuable for new companies to build in social network capabilities or for them to leverage existing user bases on highly-trafficked sites?
NM: I certainly think social networks are a viable marketing strategy. Obviously one has to find the right angle and come up with something that fits naturally within both their application and a social network’s expected behavior, otherwise it will fail. But if there are aspects in an application where sharing make sense, leveraging the social networks will reduce both the user acquisition cost and time. In older days the ACPU (Average Cost Per User) which is an indication of how much money one should set aside to get users, was in $10-$20 range. A good, useful web application with clear messaging and meaningful value can expect less than that, maybe in $3-$7 range. But that’s still too high – getting a million users will cost you a few million dollars. So what do you do? You make your application viral, to let users bring in new users without you spending. Now, you can either build the viral elements inside your application, or you can leverage the tools and the platform that inherently exists within a social network and just create the right hooks between your application and that platform. It’s still easier said than done though. It’s been very hard to predict how users react to these viral mini applications added to their social network such as the ones on Facebook. Most of the ones that are very viral are not adding value (depending on how you define value); they are just for fun. The problem with the “fun” applications is that they become viral quickly, but they also die down and disappear quickly. So there is no recipe out there for tapping into a social network to do the marketing, but it’s definitely one of those things that should be on the task list of a good marketing manager to look into how they can design their marketing strategy to take advantage of social media.
Topics: Interviews, Open Source, Wireless & Mobile |
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