They were second to market with a bang behind Foursquare as pioneers of the check in economy. Their product was beautiful, the experience was elegant but they came up short in 2011.
What can I say about Gowalla that I haven’t already said here and here. They built a product that was, hands down, a better Foursquare, but they slowly eroded their vision to a point where they woke up one day a marginalized curated travel app – yes, it was beautiful (again), but missing a sweet spot and about a year too late.
I don’t think this is a tale about the app – there are winners and losers in mobile just like every other industry. The $10 million invested is a small risk in the bigger game of picking the next new company and it happens quite often that the money going into a company is lost.
This is a tale about an idea that fell into business looking for a way to make money – all without a real plan. We are seeing this everywhere in mobile these days. A great idea that cannot stand alone as a great company. A great idea that is hard to defend against when larger, more robust and better funded (either by revenue or investors) company enters the space. A great idea that deserves its day but as a feature of someone else’s product offering. A great idea that becomes dial tone – a commodity without distinction. This is what happened to Gowalla and they won’t be alone.
These are not the dot com days
We like to compare what’s happening with mobile to the end of days of Web 1.0 but we aren’t there – yet. What we are seeing is the early days of the web where innovation wasn’t searching for a business model. The only difference between now and then is the amount of money (for the most part) that is going into these companies is relatively small. Investors are spreading out their cash and making multiple bets. Marc Andreessen, of Netscape fame, has invested in a trail of mobile startups – betting on more than one company is sound especially when the cost of starting a company like this is as close to zero as it has ever been.
The mobile industry is a messy goop of primordial soup where companies are building product as close to real-time innovation as we’ve ever seen. There is no foundation, no roadmap, no previous version to look at for guidance. We are building brand new concepts today because of mobile and, at the same time, trying to see how users react, adopt (or don’t) and pay for (or don’t) these ground-breaking technologies.
When a product sticks – an Angry Birds or an Instagram or a Foursquare – something incredible happens in mobile. The inflection point accelerates beyond anything we’ve ever seen. Before mobile, most software developers were thrilled to get their creations into 100 hands. They were blown away to have 1000 people using something they built. They were heroes among their peers if 10,000 had their product as an icon on their desktop.
Today, these numbers seem common, almost embarrassing to the new generation of developers. Angry Birds is downloaded over 1 million times per day (with over 300 million downloads worldwide) and Instagram and Foursquare have 15,000,000 registered users each. These numbers are staggering and shows the power of the reach and viral nature of mobile today.
The key is the transition
The difference between then and now – web 1.0 versus mobile 1.0 – is the pull factor. We woke up one day and there were 5 billion connected devices. We woke up the next day and 50% of North America was carrying a computer in their pocket. We woke up the third morning and everyone was playing Angry Birds.
But now what?
Here’s where Gowalla really failed to make a mark: They couldn’t move from “neat” to “necessary” which meant they couldn’t move from “users” to “revenue” and ultimately couldn’t find a business model that could sustain them. The outcome was that they moved to a larger company in Facebook that could afford to build their vision as a feature of a much bigger product and expose it to an already established audience.
Gowalla’s plight will be more common in 2012 as the demands to move to revenue emerge – at least I hope revenue factors into the conversation. It is here that the mobile industry can set itself apart from its predecessor.