5 questions with Matt Murphy

Kleiner Perkins Caufield & ByersMatt Murphy recently launched a blog (at ifundvc.com) to discuss what opportunities he and his firm are looking at. Murphy runs the iFund, which has $100 million to allocate as part of a joint effort by Apple and Kleiner Perkins to invest in early stage companies developing software and services for Apple’s iPhone.

Murphy told the New York Times recently that the objective is for iFund investments to go public within seven to eight years. Murphy has also talked about how frustrating the mobile space has been until only recently. “I was frustrated along with everyone else about how slowly everything was moving…until the iPhone came out.”

PE Week Senior Writer Alexander Haislip caught up with Murphy last week.

Q: The iFund works closely with Apple, so you should know, how is Steve Jobs’ health?

A: No comment.

Q: Has the iFund been well received?


Launching the iFund had an enormous impact in terms of how many deals Kleiner Perkins has seen. We have received 2,500 business plans for potential iPhone application startups since we launched it [the iFund has backed five companies].

There’s no hard allocation here, we’ll continue to allocate dollars commensurate to the opportunity. We’re going to continue to invest at the pace at which we see great companies.

Q: What opportunities do you see in location-based services?


It’s just part of what makes mobile a unique medium. A number of applications integrate location, even apps you wouldn’t think of might take advantage of it.

Location is integral to an application like Whrrl, which is used to connect with friends that are around you. But if you’re a social gaming property, you might want to play with people in your city, town or your area. It just reminds you that there’s activity around you and that your physical location is important to how you use your device.

Q: Location-based services for mobile phones have always been an ‘almost here’ industry. Is this the year it actually is here?


A year or two ago, 50% of handsets had location, but the carriers completely locked down their application programming interfaces (API). The difference with the iPhone is that it’s an open API. Once developers see that, they jump on it. It’s an enhancer. The most basic applications are a lot cooler if the application knows where you are.

You need critical mass on handsets and you need the API opened up and both of those things are happening.

Q: It appears that people are spending less time interacting via mobile social networks than using PCs to interact. How does that affect a startup’s ability to count on revenue from advertising?


You get much more interesting and targeted information [on mobile devices]. What would you pay for an ad unit if you knew that somebody traveled to New York three times a month? It’s a person device, it can build a profile on you and that generally leads to a much higher advertising unit price. We’re still in the early days of mobile advertising. The local advertising market needs to mature.

The opportunity is enormous at maturity and we’re just trying to help that ecosystem reach that maturity.