Mobile-Native Network Effects

The extremely successful entrepreneur and venture investor Peter Thiel recently downplayed the opportunity for innovation on the mobile Internet, noting “The Yelp of cellphones will be Yelp, the Google of cellphones will be Google.”

We think that the opportunity for mobile innovation is bigger than many, including Thiel, might realize.   Many large Internet companies look at mobile as continuous with their existing businesses.  But they are missing the opportunity to design apps from the ground up to take advantage of the mobile form factor and the distinct user behavior of the mobile web.

In our previous post, we mentioned a company, Trapster, that is particularly illustrative of the mobile opportunity.  Trapster is a mobile app with features to help car drivers.  It collects user reports on speed traps and other roadside disturbances.  It’s essentially a mobile social network for drivers.   

As a business, its differentiating factor compared to most apps is that it has strong, mobile-native network effects.  It’s also an app that wouldn’t be nearly as useful if it were a non-mobile website.   

We think this is a harbinger of the future.   There are a handful of successful apps with mobile-native network effects that have received great interest from the media, such as Foursquare.  We think the attention is justified.

Remember, it’s early in this market.  High-speed mobile web connections have only recently become common.  We think it’s too early to know where the most powerful network effects of mobile connectivity will emerge. 

As Thiel would note, Facebook and Twitter are doing a greatjob attracting mobile usage.  But they were designed from the perspective of the desktop web.  We think mobile is a different world and will, over the next few years, unleash a slew of great businesses built on mobile-native network effects.