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8:00      Opening remarks

Simeon Simeonov, Founder & CTO, Shopximity
@simeons | @shopximity

8:15      Keynote

Robert Tercek, General Creativity & This Week in Social Media
@superplex

9:00      Demos

Chris Grayson, Director of Digital, Humble
@chrisgrayson | @humbletv

Chris Hulls, Founder & CEO, Life360
@chrishulls | @life360

Seth Priebatsch, Founder & CEO, LevelUp
@sethpriebatsch | @thelevelup

Thi Wernau, VP Business Development, Skyrockit
@thilinh | @skyrockitsf

10:00    Fireside chat & audience Q&A

10:30    Networking break

11:00    Executive panel

Lars Albright, Founder & CEO, SessionM
@sessionm

Ron Elwell, Founder & CEO, Shopximity
@ronelwell | @shopximity

Scott Meyer, Founder & CEO, Evidon
@scottmeyer | @evidon

The wireless guest code for the Microsoft space is fm912.

The hashtags for this event are #FutureM and #MMF. To follow all the speakers & companies at the event and more, check out my Mobile Frontiers Twitter list.

Please, thank our sponsors @shopximity & @gcvp, Microsoft for hosting us in their great space and @FutureMBoston & @MITX for making it all possible.

Join us tomorrow (Thursday, 9/15/2011) at Marketing Secrets of Successful Startups: 11:30-1:30pm at CSN (177 Huntington Ave in Boston). Hear from marketing gurus who have grown ZipCar, Hubspot, BzzAgent, Wistia, RunKeeper & more.

This is a case study for the classic “How to Lie with Statistics,” in this case by accident. It’s like asserting that because, from an economic standpoint, on average, startups can’t raise money and startups fail it follows that entrepreneurs should pack up their bags and stop starting new companies and stop trying to raise money. Or that, because so few make it to pro sports and even there the injury rate is so high, high school and college students should stop trying to go pro. Or, as Freakonomics told it, drug dealers should quit the biz.

Well, there are many who feel this way but the ranks of founders, pro sports wannabes and corner dealers are growing. There are several things going on here…

Almost everyone learns about basic stats metrics such as averages and medians in the context of commonly-observed and often symmetric distributions such as the normal distribution. They make a lot of sense there. Applying them to a highly asymmetric distribution, such as iPhone app revenues or startup founder returns, without even knowing the shape of the distribution because granular data is not available, is likely to mislead the common reader. I know this because I’ve spent a couple of months studying angel returns and trying to separate reality from urban legend. More on this later.

From startups to pro sports to gambling, it is very human to pursue large statistically unlikely returns. Differently from gambling, as one invests more time in startups and sports, one hopefully gets better. And differently from sports where one gets only a couple of chances to go pro, startups don’t have this restriction. A serial entrepreneur can do many startups. In the process the entrepreneur hopefully becomes smarter, learns from past successes and mistakes and developers a bigger & better network, thereby improving the odds of success next time.

Repeat play is particularly important in games where the chances of success in any given game are very small. This includes both starting companies and joining companies as employees. If you are hot stuff, you are move likely to land a job at a hot startup.

Here is an example from angel investing based on data I’ve been looking at data recently: 68% of all angel investors lose all their money, primarily because they do too few investments. A change in portfolio size from 5 to 10 investments and 5 to 25 investments increases return at the beginning of the top quartile by 54% and 200%, respectively.  (The angel at the beginning of the top quartile has better returns than 75% of angels and worse returns than 25% of angels.) The distribution of angel returns is surely not similar to similar to iPhone apps so the example is purely illustrative.

Then there is the fact that many iPhone app developers build apps while having other jobs that provide cash, in many cases more than a typical developer salary because mobile development skills are in short supply. Therefore, we should be comparing expected returns from startup equity to expected returns from iPhone app development. It is a lot easier to start an iPhone app company than many other types of companies. Therefore, we should not be comparing the return on founding equity of a startup backed by high-quality angels and VCs. Instead, we should be comparing the differences in net cash together with the return on equity that non-founders get. I don’t have great data on this but from what I know I’d argue that, outside of lasting bubble markets, non-founders and non-execs don’t make that much on equity.

Last but not least, economics is not the whole story. Some people fall in love with code and startups. It gives them a sense of purpose and a way to express their creativity. With iPhone apps where it often takes a developer or two to build a basic app, entrepreneurs also get a lot of control and a higher likelihood of calling the shots as a CEO or an exec. I have several friends who are doing iPhone apps because they can be their own boss through a combination of consulting and self-employment. They could be founders and even execs at other startups but it’s unlikely that’ll be CEOs.

To recap, Tomi’s analysis uses good data and good reasoning but it misses the forest for the trees. This doesn’t mean everyone should pile on the mobile app bubble. My point is simply that this type of by-the-numbers analysis misses the point of why so many have gotten into mobile development.

Let me know what you think in the comments or at @simeons.

The background story here is of the explosion in mobile browsing and mobile applications driven by the iPhone. That s what fueled a lot of AdMob s growth in the past 18mos. I was at a dinner with Omar about a year ago. He had the numbers in his sights and predicted growth will accelerate.

This is mixed news for the other players in mobile advertising. The gap between the largest player and the next one down just got much, much bigger. Key takeaways:

• Google s reach with advertisers and their targeting technology are likely to improve the performance of the AdMob network measurably. It s difficult to see how others can compete meaningfully on scale.
• Startups main advantage is technical innovation and business agility. Both should be severely discounted in mobile where, in addition to the device & network fragmentation, operators and app store owners exert a significant degree of control which, often as an unintended consequence, slows the pace of innovation.
• There is an opportunity to shift competitive advantage from volume to quality as Quattro has done but that s a tough business to scale even in a growing market. In the end, the biggest risk here is that large players such as Google can always buy your customers with guaranteed minimums.

It s time for mobile publishers to take more control over their inventory by looking at players such as Nexage.

• SMS is completely portable across the world, which is particularly important in developing countries where the majority of consumers cannot afford fancy smart phones.
• It’s quite easy to get ubiquitous access via SMS to devices because of (a) SMS aggregators and (b) email interfaces to SMS.

Personally, I’m a big fan of SMS and it has played a role in the two mobile startups I’ve worked with. I take many Facebook actions through SMS. It’s much more efficient that logging in to the web site. I’d use it for Twitter also if there was a smarter way to reduce the volume of messages. One of the great benefits of SMS is that it is not that widely used and hence there is a lot less clutter there than on email.

But where consumer groups see a threat to privacy, companies see a user experience they claim can be managed by giving the consumer the ability to opt in or opt out. Google’s product manager for mobile services in North America told Forbes that mobile ads would have to add value, offer proper education and awareness for users and give them full control. The big question is will consumers and companies ever agree on what opt-in really means on mobile? If you read the full complaint, you’ll find that the vast majority of practices or services that companies think are adding value and are opt-in are things that USPIRG and CDD find objectionable. The groups found, for example, mobile marketer Velti’s opt-in loyalty campaigns of sweepstakes, fr*ee games, and alerts, that allowed advertisers to build up a detailed profile of their customer base from the signups as manipulative,’ noting that it was unlikely that consumers would fully understand the privacy implications of every discount coupon, fr*ee download, or ringtone offer that comes their way. Velti, I’m sure, believes they are adding value to the consumer experience by giving users fr*ee content. This really is an opening shot of what has been an issue that the mobile ad sector already knows they need to tread carefully around, and it’s not going away any time soon.

I hadn’t noticed that opt-in programs were considered highly objectionable. I do buy the argument that consumers don’t deeply understand what they are opting into much of the time. Case in point are sub-prime mortgages and nasty credit card offers. However, we are on a slippery slope when explicit consumer consent is not considered enough. The best solution IMO is to have clear and consistent disclosure guidelines. For a good read on this topic, I highly recommend Full Disclosure: The Perils and Promise of Transparency.Also,the BBC did a piece on behavioral targeting about the time Phorm was about to launch. Note the discussion of opt-in vs. opt-out.

The story goes something like this… Company X figures out a cool new way to collect and analyze lots of data for the purposes of better ad targeting or delivering better product recommendations. Company X comes up with a decent privacy architecture because they care about privacy. They launch. Things are going OK but business isn’t growing as fast as the investor presentation promised. Then, in a confluence of greed and idiocy, Company X does something crazy, sleezy and/or deceptive to make the business grow faster. Inevitably, someone finds out. They dig in and investigate. They write a blog post. It gets picked up. Then the lawsuits come. Then execs start resigning.

The latest story to follow this pattern is that of NebuAd, the company that snooped ISP traffic and surreptitiously modified, amongst others, Google’s home page in order to drop cookies on hapless consumers’ machines (that’s a simplification of what actually went on). I read some of the NebuAd whitepapers a while back and was struck by how they seemed to have taken the right steps from a technology standpoint to protect privacy. They were anonymizing IDs, using double hashing and other security techniques to break the link between personally identifiable information (PII) and the ad targeting profile they had created by observing traffic patterns. All that went to waste when they decided to act badly.

The point that gets lots in much of the privacy analysis in situations like that is that it is not the collection of information about consumer behavior that’s a problem. It is what companies do with that information. Or, in some cases such as NebuAd, what they do independently of  that. Modifying the traffic coming from major Web properties is a terrible idea that has absolutely nothing to do with data collection and building consumer profiles.

Personally, I don’t see a problem with companies tracking consumer behavior and building ad targeting profiles as long as how they use the information is legit. Advertising is just another form of content. Targeting adds relevance and increases the quality of consumer experience. When content is relevant consumers like to see it. For example, in the age of TiVo, I have friends who watch the Superbowl just to see the ads (yes, they fast-forward the plays).

What does it mean to be legit in this context? First and foremost, it means protecting the privacy of individuals. There are lots of ways to target without disclosing PII to advertisers. Second, it means clearly documenting and explaining what you are doing. No shady, secret stuff. Absolutely no deceptive behavior. Third, in some cases, it means allowing for a clear opt-out mechanism (unless the entire program is opt-in in the first place).

In every industry there are shady companies that misbehave and, inevitably, there are cries for more regulation. The latest one I’ve seen (and the reason for this post) comes from the mobile space, as reported by Adotas.

ADOTAS — Two consumer groups demanded today that the Federal Trade Commission launch an investigation into the mobile market, focusing especially on practices that they say compromise user privacy.

The Center for Digital Democracy and the U.S. Public Interest Research Group jointly petitioned the FTC and asked that the agency look into alleged mobile marketing privacy threats and inappropriate practices targeting children, adolescents, and multicultural consumers.

The reasons for the request are that “as our petition makes clear, mobile marketers have refined a wide range of sophisticated practices that allow them to track, analyze, and target millions of Americans who increasingly rely on their phones for information.” I have an issue with that positioning. I don’t think the mere act of tracking and targeting is objectionable. And I don’t see regulation as a good solution. Mobile media is an emerging, fluid market. I can’t see how the FTC will be able to regulate it in a meaningful way without substantial inefficiencies. I would suggest an alternative approach. An industry, in this case the mobile industry, should develop clear, testable guidelines for acceptable privacy architectures & tracking/targeting behavior. Testable in this context means that it should be possible to certify within reason whether a vendor is or is not following the guidelines. There is an opportunity to leverage technology to protect privacy and identify bad players. Once the bad players are identified, the market takes over. You know how it goes. The lawsuits come. Then execs start resigning.

In the next few days I’ll collect my thoughts and do a post on real question, which is about technology/tool/platform choices for building Enterprise 2.0, Web 2.0 and Mobile Web 2.0 applications. 

BTW, it will be difficult for Apple to maintain its semi-closed iPhone/iTunes environment with GOOG’s Android positioning + Verizon moving towards openness.

That’s why I refer to the big cellphone carriers as the “Soviet ministries.” Like the old bureaucracies of communism, they sit athwart the market, breaking the link between the producers of goods and services and the people who use them.

Walt does not, unfortunately, offer any great reasons for mobile operators to change their ways in the short run. After all, they did spend hundreds of millions building expensive networks and have the right to explore and exploit them as they see fit.

Walt’s reference to mobile operators as communist-era bureaucrats makes me think about the painful transition to market economies the Soc block went through. Not sure why any of the pre-transition governments would have signed up for the pain that followed… Wait, they didn’t. The benefits of a market economy in the future couldn’t justify the short-term pain.

China has really been the only country where the pain of not doing something radical–a likely peasant revolt–outweighed the costs of moving towards a more flexible and free economy. The Chinese model for managing the economy may be appealing to mobile operators. It is not a free market jungle but it is also far from central planning. It is a managed ecosystem. Could the threat of consumer revolt prompt mobile operators to move towards more openness?

Let me just say it: We want native third party applications on the iPhone, and we plan to have an SDK in developers’ hands in February. We are excited about creating a vibrant third party developer community around the iPhone and enabling hundreds of new applications for our users.

This is obviously good news for consumers who’ll get more choice and more innovation. It is also good news for the mobile industry which needs more examples of (hopefully lightly) managed ecosystems that tap into the Internet innovation/experimentation vein. I do hope what Apple has in mind passes my ecosystem test. The company does have a chance to be a leader in enabling great mobile user experiences and their initial approach to openness was well-aligned with what makes sense in the mobile software space.

According the the letter, security is the big reason for the delay.

It will take until February to release an SDK because we’re trying to do two diametrically opposed things at once—provide an advanced and open platform to developers while at the same time protect iPhone users from viruses, malware, privacy attacks, etc. This is no easy task. Some claim that viruses and malware are not a problem on mobile phones—this is simply not true. There have been serious viruses on other mobile phones already, including some that silently spread from phone to phone over the cell network. As our phones become more powerful, these malicious programs will become more dangerous. And since the iPhone is the most advanced phone ever, it will be a highly visible target.

I hope security does not become the excuse for putting a number of artificial controls in the ecosystem. As hackers have already shown, one hardly needs a malicious third party app that a user downloads to break into an iPhone.