Last week, French company Withings, a leading innovator in connected health and wellness devices, announced that it had received $30 million in venture funding from a syndicate of investors led by BpiFrance. Established in 2008, Withings has introduced a number of smart connected devices such as weighing scales, blood pressure monitors and baby monitors. Most recently, in early 2013, the company introduced the Withings Pulse, a pocket-sized activity tracking device that monitors heart rate, distance, elevation, calorie consumption, quality of sleep etc.

The connected health space has seen hundreds of millions of venture investment over the past five years or so, Withings being the latest example. Future projections are quite bullish as well – annual revenues and annual shipment volumes both increasing approximately tenfold from 2012 to 2017, reaching ~$16 billion and ~18 million shipments respectively in 2017. Implicit in these projections is the expectation that most of the revenue earned will be from services and insights around valuable consumer data, with the device sales accounting for less than 20% of the revenue dollars (most devices cost approx. $100 even today). At the same time, the market for connected health devices is and will remain fragmented, with each device manufacturer currently offering its own proprietary data platform. So, in the grand scheme of things, the risk is that each device would create a data silo around it, until and unless one or more credible aggregators come along to merge these data silos and thereby provide the consumer with a unified view of his or her health and wellness. A few efforts are underway to create such unified views, but we are still in the early stages.

Given the above dynamic, some of the most interesting health IT venture investment opportunities for today might be in this aggregated data and insights layer around connected devices. This data layer will eventually be a key component of a true Personal Health Record, and together with ongoing startup efforts to ‘modernize’ EMR, might represent the path towards a truly quantified self. Most importantly, this data layer can support many winners.

If connected devices represent the infrastructure layer for consumer-oriented health IT, then Withings’ latest fundraising (along with Jawbone’s and Fitbit’s) indicates that we are getting to the later stages in this infrastructure game. It may be time for the frontier to move further, into data and insights and outcomes and a more efficient wellness economy.

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Speaking of Dropbox, the company had its first developer conference last week, where the company announced its Dropbox Platform, consisting of a Sync API, a number of ‘Drop-ins’, and a Datastore API. The platform builds on Dropbox’s Core API, which was released in late 2011 and which enables apps that use that API to store and sync files across devices for Dropbox users. The latest announced features take sync’ing beyond files, allowing web (javascript) and mobile (iOS and Android) apps to use the Datastore API to sync underlying app-related structured data (say the state of an in-progress mobile game, or an app-configuration, or key strokes that go into a digital drawing) across devices for a Dropbox user.

Dropbox’s freemium business model has seen a free-to-paid conversion rate of approx. 4%. Assuming that conversion rate stays reasonably stable, growth in its current user base of 175 million will be a key business driver for Dropbox. The interesting piece is that while there are a few billion individuals with multiple internet-connected devices (thus Dropbox’s user base being a small piece of the pie), very few pure-play networks have been able to grow larger than where Dropbox is today. So how do you tackle the growth challenges at such an inflection point? You develop an ecosystem of apps that use the Datastore API to simplify their development efforts around sync’ing, you use these apps as channels to reach new devices, you thereby obtain more Dropbox users, and soon you have created a positive feedback loop for additional virality. This is an interesting case where the app piece and the platform / middleware piece complement each other very well. So even if Dropbox makes not a single dime off the app-developers that use its Datastore API, there should be enough value for the company to make this all worth the effort.

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Yahoo announced three acquisitions last week, to go with 14 earlier acquisitions made by the company since Marissa Mayer took over as CEO in the second half of 2012. Last week’s acquisitions were of inbox and address-book management startup Xobni for ~$48 million, iOS movie creation app Qwiki for ~$50 million, and one-person fantasy sports app shop Bignoggins Productions for an undisclosed amount. Each of Yahoo’s 17 recent acquisitions, with the exception of Tumblr, is in the 0 to 60 million dollar range and seems to have been made mainly for the talent. For context, Yahoo did a total of 13 acquisitions in the four years preceding Marissa Mayer.

It has been surmised by analysts that while Google is about search, and Facebook is about the social graph, Yahoo under Marissa Mayer wants to be about the consumer’s daily-life activities. Yahoo’s recent acquisitions are consistent with this strategy, covering aspects such as productivity, image and video sharing, content aggregation, interaction, gaming etc. But the question still remains as to whether a company with Yahoo’s broad range of websites and recent history of turmoil can successfully acquire its way into relevance. According to comScore, Yahoo’s erstwhile crown jewel, its homepage, has remained flat in terms of visitor uniques over the past year and a half, and without a growth engine driving the rest of the sites in its portfolio, Yahoo can at best become a conglomerate of many moderately valuable assets (AOL comes to mind as an analogy). Except that, as opposed to a true conglomerate, Yahoo has it’s sites all joined together at the hip by the need to cross-sell display ads (whether web or mobile). Adding talent at small scale thus may not really change the core DNA of the company. As such, a new crown jewel – something of the magnitude of a Dropbox for example – may be the need of the hour for Yahoo. Until then, Yahoo will continue to be in the news, but its stock price will continue to be determined more by Alibaba and Yahoo Japan than by its own activities in the marketplace. Now, if Marissa Mayer can help Yahoo acquire or build in-house something of the scale of Dropbox, then *that* will represent one extraordinary turnaround story!

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Hadoop has been a buzzword in technology circles for more than five years now. As unstructured and multi-structured data continues to explode, enterprises have increasingly resorted to storing this data in a distributed fashion using Hadoop clusters, with the expectation that this stored data might in the future have value for operations, competitive intelligence, compliance and so on. Except that, so far, Hadoop has mostly been a storage paradigm rather than a source of business insights. In this context, how would we like it if the folks from Splunk (one of the most successful stories around multi-structured data analytics) offered a solution that could help enterprises easily obtain insights from their stored Hadoop data? Well, introducing Hunk, a product that promises to do exactly that.

A number of features on top of Hadoop have emerged recently, such as SQL querying (Hive, Impala), BI visualization (via connectors into Tableau and others), streaming insights (YARN being the most prominent) and analytics appliances (e.g Teradata Aster). In this evolving landscape, what might make Hunk unique? For starters, Splunk’s 5,600 customers are excellent targets for cross-selling Hunk. The open question today is whether there is a strong positive ROI around insights from Hadoop, and with Splunk’s large customer base, Hunk has an excellent shot at a land-and-expand strategy (more so than the multiple Hadoop distribution companies that are now moving upstream into insights). Splunk’s credibility around actually helping enterprises improve their bottom-lines should spur customers to give Hunk a shot, and Hunk’s perceived ease of use and future enhancements in data visualization can only help further. So, as Hadoop becomes the de-facto storage option, and as real-time / streaming insights become commonplace, Hunk should gain market share over the next few years. Along the way, we should also expect some cannibalization of Splunk’s other product revenues, which in the big picture should still work out well for Splunk.

If the money follows big insights and not just big data, then with Hunk, Splunk is showing how to play the money game right.

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