I don’t do a lot of angel investing. When I do, it’s usually because I’m familiar with the industry or technology, and can actively help the company beyond my paltry financial input.
But there are occasions when I’ll invest outside my expertise, and those investments generally occur because two fundamentals are present: an idea that looks obvious in hindsight; and the baby steps to get there.
(More polished investors might call these a “large total addressable market” and a “well thought-out go-to-market strategy.” I am not one of those investors.)
I’m an OnBeep investor because I believe the company has both in spades. Here’s why.
OTT dashed mobile’s hopes
In the early days of the mobile phone industry, carrier product managers had long lists of features you’d get from your phone: voicemail, call waiting, videoconferencing, messaging, stock updates, weather, group chat, and more.
To a large extent, those features haven’t caught on—at least, not in the way carriers hoped they would. Smartphones added Internet connectivity, which was a kind of Trojan Horse for all of the services they’d hoped to sell you “a la carte” to come in via the Internet Protocol, from third parties. You got your video from Skype or FaceTime; your messaging from Whatsapp; your weather from Yahoo; your stock from Google.
Carriers refer to functionality that “leaks” into the handset via the Internet connection as Over The Top, or OTT, services. By letting the Internet into the handset, carriers knocked down the walls of their own walled gardens. You might argue that they’ve been trying to build them back up ever since—see the Net Neutrality debate shows.
Real-time, 2-way interaction is hard to launch
One of the few services that didn’t really make its way over the top was Push-To-Talk (PTT). This popular service turned a phone into a CB radio, allowing small groups to come together quickly and stay in touch. There are a number of reasons PTT was hard for someone other than the carrier to do:
- First, it’s a physical problem, requiring a change to the actual device (in Nextel’s case, PTT-specific handsets.)
- Second, there’s a hard protocol problem to solve, since communications have to be scalable, reliable, and low-latency.
- Third, you have to deal with the shallow part of the viral curve. You need to kickstart demand, since it’s only useful if the other people in your group have the same functionality, which often requires a passionate chunk of early adopters with a strong unmet need.
If you can get past those hurdles, though, then PTT—or any group communication tool—is extremely addictive and inherently viral. Anyone who’s worked at the end of a radio—firefighters, police, and the military—will tell you it’s their lifeline, and communicating in this way quickly becomes second-nature.
It turns out that these small groups also make great first customers for two-way devices, because they are small teams that need constant contact. They might be a tradeshow team setting up at a conference; a rally car pit crew; a group of aid workers; the field staff of a small service company.
Unintended consequences are fun
But it’s the unintended consequences that really excite me.
- Early cellphones were the exclusive domain of financiers and the One Percent—think Gordon Gecko, strolling on a beach, with a gigantic brick to his ear. Today, cellphones are so ubiquitous we couldn’t live without them, and we use them for everything from keeping track of kids to asking our partners to pick things up from the grocery store.
- Similarly, early pagers were used for critical updates; today, we use them for everything from flirting to sending pictures to relatives. We’ve gone from elite to mundane. It’s Jevons’ Paradox writ large: ubiquity lets tens of millions of new use cases bloom. All it took was the smartphone, and an app store, and abundance.
OnBeep is building real time, instant group communication for everyone. They are solving hard problems: physical ones, technical ones, even aesthetic ones. Investors have a word for that, too: competitive advantage.
So where are they at? The company is doing a limited trial of their devices now, but things are promising: the people who are using them don’t want to give them up. And the team is a truly unique mix of electrical, mechanical, and design engineers, marketers, manufacturers, and logistics experts, brought together by crowdfunding and tech communities.
The two criteria of an investment
But back to my two criteria, and why I’m an investor.
First, an idea that’s obvious in hindsight. Once you communicate in this way, talking in real time with groups, it just makes sense. But smartphones make realtime interaction better: Joining and leaving chats is easy; you can quickly get additional information on participants, such as their location.
When you bring a set of use cases into a new technology environment, it makes entirely unexpected kinds of group usage possible. Things that weren’t possible until smartphones. Things we haven’t thought of yet. It’s not just usage, it’s emergent behavior.
And second, the baby steps are there. The product is simple to use, easy to add on to a smartphone. The early adopter markets are clear and reachable, and badly need a solution. Group communications products are inherently viral, enjoying the kind of network effects that only a few products—like Skype, WhatsApp, Dropbox, and Hotmail—experience.
Products and services like this are rare. They usually wind up as case studies, obvious in hindsight. This time, it’s great to watch it unfold in real time, as we, collectively, discover new ways of using a re-imagined communication technology.