There is a truism in venture: While enterprise investing follows a linear path, with each new development leading to the next, consumer investing steers through a turbulent sea of peaks and valleys, sometimes with little link between them.
The industry appears to be in one of those consumer valleys right now. Following great waves of investing around the social internet and then mobile and mobile messaging, consumer investing has hit a lull. The next big platform on which to build is not yet clear.
“Everybody is like waiting for Godot,” said Venky Ganesan, a managing director at Menlo Ventures. “We’re waiting for the next platform.”
Nevertheless, at this time of uncertainty, several things seem clear. A handful of technologies—including mobile, speech and augmented reality—appear frontrunners to define the next platform, and with enough of them available today, early signs of that platform could show up as soon as next year.
Such an outlook suggests a pick up in consumer investing isn’t far away.
“We haven’t seen it yet,” said Rebecca Kaden, a general partner at Maveron. But “I don’t think we’re all that far away. New platforms will emerge.”
According to venture capitalists, the first of the technologies likely to be at the core of a new platform is mobile, the most established of the bunch and the underpinning of the last great platform hope, Snapchat.
The second candidate is machine learning, and perhaps artificial intelligence, which will provide interactivity and personalization to apps and services. Both machine learning, or the ability of computers to learn without being programmed, and artificial intelligence, giving machines the ability to perform human tasks such as seeing, have made significant strides in recent years and could help tailor products from reams of collected data.
The third of the technologies, the speech interface still has room for improvement, but is making progress in products, such as Amazon’s Alexa and Google Home. Already it is capturing the imagination of a growing consumer audience for its simpler way to interact with machines.
Finally comes an overlay of augmented reality, the biggest wild card among the technologies. It is the hardest to conceive of at present and most likely the last to arrive. However, the apps it inspires could ultimately be the magnets for a mainstream audience.
“It might be the combination of all these things,” asserts Dayna Grayson, a partner at New Enterprise Associates, referring at least to speech, A.I. and AR. “These are the necessary building blocks of the next platform.”
Yet knowing what it will look like is hard predict. Most probably it will rely on short text and voice messages, Grayson suggests, making it convenient. It also could trigger a wave of new or reworked apps to bridge the virtual and real worlds.
The first place it might show up is inside the car, since the car seems the closest example of what might evolve, with its hands-free apps for music, mapping, navigation or autonomous driving, Grayson added.
Already next generation GPS under development by companies, such as Telenav, is showing intriguing possibilities. Apps could more readily offer consumers suggestions for purchases and activities while on the road. That could mean providing choices on where to buy coffee or breakfast on the way to work or dinner while traveling, with apps then placing orders and routing drivers to where their purchase is waiting.
The excitement around such a new platform is high. If AR unleashes a new consumer interface, apps for dating, e-commerce and mapping could find big new opportunities. Imagine a dating app that displays information about a person simply by pointing a phone.
Such a new generation of apps could be a big trend like social was, Ganesan said.
Already one early AR milestone—the toolkit Apple released in June for putting virtual content in the real world—is showing the possibilities. Developers can layer AR onto their App Store products.
The deal flow for startups with AR-based apps already is high, said Daniel Gulati, a principal at Comcast Ventures.
“It just feels like we’re going to see this new wave of AR based apps…that are going to be fundamentally different,” he said.
Many obvious use cases exist for speech, as well, such as gaming or purchases, as Amazon is trying to encourage with its Alexa discounts. And if Alexa becomes the consumer’s go-to speech assistant, it is approaching substantial market size, with an estimated installed base of close to 11 million Alexa-based speakers and devices at mid-year.
But significant hurdles remain. Speech, for one, is still in a play-around mode for many people and can’t afford its present level of mistakes. Few people, if any, live their lives by relying on Alexa-powered speakers. Monetization models also are unclear for startups in a system that is controlled end to end by a company such as Amazon.
Speech in its present form is murky for investors, Gulati noted.
Augmented reality is another technology that has proven hard to crack. Pokemon Go, now one-year-old, showed what is possible, but interest in the game faded as the development team behind it shifted resources to infrastructure from new features.
“I think AR is more likely to happen than virtual reality,” Ganesan said, but not for a couple of years.
History also offers a guide for what will be necessary for a new platform to succeed. For instance, Snapchat, which came on strong in the mobile messaging arena and seemed a candidate for a platform shift, failed to cross the chasm when it remained a closed system for developers. An open system seems a necessity.
Musical.ly, too, drew plenty of buzz, but wasn’t able to take the important step of broadening beyond its teenage audience.
A separate platform-like candidate that might be best called a “smart agent” also is an extension of mobile. But it is more than that.
The concept is that of an app that blends intelligence and personalization to anticipate needs, perform tasks for people and coordinate with other apps, said Rick Heitzmann, a managing director at FirstMark Capital and an investor in Pinterest and Airbnb.
On a trip to Los Angeles, for instance, it might recommend seafood restaurants near Santa Monica, knowing a user’s preference for food and where she is staying. It also might ask whether she wants to stay at the same Airbnb place as last visit, or identify hotels within five miles of the meetings scheduled on her calendar.
Perhaps it will even arrange a car-riding service, knowing when the user’s airplane is expected to arrive, or suggest renting a car for a trip to Disneyland, knowing it is cheapest way to get there with three kids.
“It’s wait and see whether that is a new platform,” Heitzmann said. “I’m not sure how much of it will be additional functions on existing platforms and how much will be a new platform.”
But should it come to fruition, its promise is one that startups will be eager to exploit.
It also may require changes to operating systems, or at least new APIs, and force companies to work together as they gather information and develop algorithms to make sense of it.
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