5 questions with John Malloy

As a venture investor focused on the mobile industry, John Malloy used to spend much of his life on the road.

As recently as a few years ago, the BlueRun Ventures partner estimates that he spent an average of more than 10 days a month traveling. Much of it was overseas, with frequent trips to mobile innovation hotbeds in Asia and Europe.

In the last couple of years, however, things have changed. These days Malloy says he’s doing more dealmaking near his home in Silicon Valley. While BlueRun has offices in Korea, China, India and Finland, Malloy says that the partners are seeing the most interesting startup activity in the mobile space closest to their main office in Menlo Park, Calif.

BlueRun is currently investing out its $240 million fourth fund, which it closed in 2008. Malloy recently chatted with PE Week Senior Editor Joanna Glasner.

Q: How does having a multiple number of mobile phone devices, such as the iPhone, Android, BlackBerry, Palm, etc., affect your approach to investment in the mobile space?


All these platforms are in a battle for share of developers. Today there’s a lot of angst with Apple because they take unilateral action. It’s harder to get an app approved and harder to get it promoted. This is also the year where Android is credible. The number of Android-enabled phones has actually surpassed Apple. What remains to be seen is whether a market will be created that’s as attractive.

The Hewlett-Packard acquisition of Palm is a really positive thing for the ecosystem. It takes a lot of resources to fight an OS battle. It’s the province of somebody who can put in hundreds of millions of dollars in marketing muscle.

Q: What’s hot in mobile?

A: It’s all about touchscreens and displays. They’re going to change how we interact with information.

Q: What are you looking to invest in currently?

A: Topsy

, our most recent investment, does application discovery. There are about 200,000 apps on iPhone, and finding things is difficult. Another is Waze, an Israeli technology startup, which has a game where people download the client and map their driving.

Q: Mobile has historically been a tough sector for venture-backed exits. Will the exit climate improve in the next year or so?


Exits are hard for VCs in general, and mobile has been difficult in the past. It took time, because you had to go through operators. But we’ve had some exits in mobile. Bitfone, a provider of software for managing mobile devices, sold to HP. WiderThan, a developer of ring back tones, was a public company and then was acquired by RealNetworks, and EnPocket, a provider of mobile advertising services, sold to Nokia.

Q: We keep hearing about how much cheaper it is to launch a startup. To what extent is this reflected in your mobile investments?


Our average investment across all rounds (and sectors) is less than $10 million, and the average continues to go down. In the last five years, the cost of starting an Internet company has gone down to about a quarter what it used to be. For a mobile startup, it’s about half.

The biggest change for mobile is if you’re going on a platform, you can get to prototype, beta, and signup of customers in a much shorter period of time. Where the debate is more nuanced is whether you want to ramp with venture capital or just have a lifestyle business.