On October 8, Londoners saw their Metro wrapped in a four-page advertisement for Lloyds TSB’s mobile banking (‘m-banking’) services. Tactless? In fact, this was MoniLink’s first venture into dynamic banking, where at last you can move money between accounts using just your mobile phone.
The deal was a milestone for Alastair Lukies, founder of Monitise and its m-banking platform MoniLink. “We are a classic upside down company,” he says, “we had the technology ages ago, but we have had to wait for the market to catch up. Our infrastructure is delivered over the existing ATM network, so they don’t have much to do to be able to offer mobile banking.”
M-banking is still an opportunity because it won’t be long before as many people bank on their mobile as currently do it online – and more than ever, they’ll have to watch their balance. “For small businesses, the ability to control finances on the hoof and move money could make the difference between survival and not being able to pay staff,” says Lukies, who has just secured, through a mixture he admits of lucky timing and foresight, £12m of funding that will see Monitise through the straits of recession.
The power of voice
“Voice,” said Steve Jobs recently, “is the killer application for the iPhone.” Wireless carriers still make 80% of their revenues on voice communications. It follows that voice-related applications fish in a bigger pond than non-voice. Terry Hughes actually finds it amazing that as much as 20% of mobile phone usage should now be devoted to
non-voice applications. As a business development manager at Vodafone during the 1990s, he recalls wondering if texting would ever take off.
The English entrepreneur is now president of Canadian company Redwood Technologies, which he came across in 2005 while working in Canada for Zi Corporation. “The founders contacted me, and we met in a bar in north-east Calgary,” he recalls. “To be quite honest, I couldn’t see how their idea could ever work – after all one of them had been a professional hockey player and the other had been a cowboy.” But he was taken by their dream that one day BlackBerry creator RIM might be interested in the call tagging concept they had developed.
Two years down the line, Redwood is a partner of major North American and European carriers, including AT&T, Orange, and, indeed, RIM. The last deal, made earlier this year, was important because Redwood’s core market is the business user, and BlackBerry can still be said to define that market.
But why choose Calgary, when the UK is a perfectly decent base from which to develop mobile applications? SpinVox founder Christina Domecq could have chosen New York, Madrid or Los Angeles to launch her firm, but came to London.
“I’d say that any technology business with global aspirations should be based in London, because of its strong connections to Europe, the Middle East and Asia on the one hand and the Americas on the other,” she says.
Both SpinVox and Redwood’s flagship application, Momentem, add value to voice communication, one by turning it into text, the other by managing it; tagging calls so they can be recorded, annotated, allocated to a project, accounted for and costed. Even Hughes admits that London is a greater hub for technology than Calgary, but that’s where he was at the time, his family likes it, and he can make a mean argument for starting up in a
city where you’re more likely to meet a hockey player or a rancher than a geek.
It comes back to the power of voice. “North Americans talk even more than the British do,” he says. “At Redwood we built a value-added service for people who talk, so it was a good idea to build that in a place where they prefer to talk than to text. In the UK, I was a small fish in the very large mobile phone industry pond, in Canada I could be a bigger fish in a smaller pond.”
Troubled times
Funding the start-up was not too difficult. The original company had been bootstrapped by family and friends, but Hughes was able to find private investors for the next round, completed last year. “There’s plenty of money around,” he says.
“The fact that people tend to have it in oil and minerals is no disadvantage, because these investors often like to diversify, especially now.”
In fact, might troubled times actually provide an opportunity for an application designed to help business processes?
“We have a solution that helps people save money, save time, or make more money on their smartphones, and in these current economic conditions that is not a bad solution to have,” he says. “The carriers understand that. In this climate, they would rather take a solution to market that has a tangible return.”
In this, he is on exactly the same page as Domecq. “I think a lot about the power of capturing the spoken word and being able to search it, store it and deliver it,” she says. “I believe voicemail is dead – who wants to leave a business critical message with no idea of when it may be read?”
Filling a gap
Established in 2004, ROK Entertainment is another company that has been able to leverage the power of the mobile. Until recently, it had focused mainly on media rather than business through its Push Inbox, NOD (news on demand) and Mobile TV products, which can be adapted and customised for business users. Its marketing director Bruce Renny is convinced that mobile applications will develop to fill the gap left by declining laptop use. “This is the year mobile phones became a trillion-dollar industry,” he asserts. “Carriers are still making money even though calls are cheaper. But the UK market is saturated – the only way carriers can grow their business is through added value.”
The industry is at a tipping point, Renny believes, as business users see phones develop into a tool in which talk and text are minor components. “I think the market will be driven by services that require data and by web connectivity,” he says. In the developing world, laptop use will be leapfrogged, he thinks, as an entire generation goes straight to web-enabled mobile phones.
Meanwhile, Hughes can look on the example of Monitise and SpinVox if he needs to be reassured that carriers and professional consumers will always gravitate towards a service that puts more money back into their pocket than it took out for the subscription. “Ours is not a product, it is a platform and it is extensible,” he says. “The first application is call tagging, but the platform can be extended to things like m-banking. Today you are tagging your calls and your
emails, but next year you will be tagging the bank transactions on your phone, allocating them to the same projects and clients.”
The good news is that, even in the coming economic winter, private capital will still be available to the expanding mobile telecommunications sector. But investors will increasingly favour ventures that make business sense to the prosumer, saving them time or money: purely ‘lifestyle’ applications may have to wait for balmier days.
Terry’s Tips
Fresh from the success of Redwood Technology’s Momentem, Terry Hughes offers the following hints to entrepreneurs in the mobile applications space:
Gain deep knowledge of your sector
Cultivate the carriers and device manufacturers
Build a good network – in America, they call it your Rolodex
Build a team investors can believe in
Don’t be stubborn – listen and adapt
Don’t fear failure – the million dollar product may be number four