Uber, a three year old start-up that has created a marketplace for car-service booking, last week announced a mammoth fundraising round of $361 million, at a valuation of approx. $3.5 billion. Leading the round was Google Ventures with $258 million, the other notable new investor being TPG with $88 million.  Uber is expected to bring in around $125 million in revenue this year, so the latest round represents a ~30x revenue multiple. In addition to enabling consumers to obtain quick access to taxi-cabs and luxury cars, Uber’s app currently enables seamless payments (using its dynamic pricing setup) and driver and commuter ratings.

With the advent of mobile and distributed work-forces, the car is becoming an important environment to track user behavior around, so having the backing of Google with its driverless cars and its Waze know-how suggests Uber could well become the first player to crack the public transit and commute optimization problem. But beyond that, Uber represents an example of the emerging, data-driven ‘sharing’ economy.  Today, there exist sharing and rental marketplaces around homes (AirBnB), planes (Blackjet), cars (of course), fashion (Rent the Runway), and so on. Each of them relies on data to disrupt the existing paradigm around pricing and logistics. Some, like Uber, have proven that there is a real business here, yet the broader question is whether this is a real, sustainable trend or whether this trend might be limited to a specific urban demographic for the near term.

So what could Uber do with the money it has just raised? Buy its own fleet of vehicles (driverless or otherwise)? Expand into other transit systems such as buses? Integrate into the vehicle POS system and become an ad network? Become a key player in location-based services? Quite a large number of possibilities – some are far-fetched, some not so much. Irrespective, one thing is clear, which is that with this latest raise, Uber has made it astronomically more difficult for its closest competitors to keep up.

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Another mobile advertising acquisition is in the books – last week, mobile display ad network Millennial Media acquired competitor Jumptap for approx. $225 million in an all-stock transaction. The combination of Millennial and Jumptap owned approximately 28.7% of the United States third-party mobile display advertising market and had approximately $240 million in total revenues during 2012. The combined entity would become a market leader in this segment, at par with Google (29.0% share) and larger than Apple iAD (14.8%), in third party mobile display advertising.

Mobility is a fast-growing trend, and so are projections for mobile advertising dollars. Yet, the mobile advertising landscape has been quite curious from an IPO/M&A standpoint. Aside from AdMob’s $750 million acquisition by Google, there seems to be a soft ceiling of ~$300 million for acquisitions in this space. On the public equity side, recent IPO and public company valuations seem to all be at $600 million range or lower. Isn’t it interesting that there isn’t currently a stand-alone billion dollar company in this high-growth space?

Let’s start with the numbers here. Global mobile advertising (including search, display and messaging-based advertising segments) revenues were $8.9 billion in 2012.  Of this, mobile search advertising accounted for ~53% (with Google being the dominant player) and mobile display advertising was at 38.7% (~$3.4 billion). Further, the mobile display advertising market can be divided into two categories – first-party (e.g Facebook, Google, Pandora, Twitter etc. managing display ads on their own mobile sites), and third-party (e.g Millennial displaying ads on third party owned content sites). This third-party mobile advertising segment is currently approx. $850 million in size as back-calculated from Millennial’s announcement, meaning first-party mobile ads accounted for more than two-thirds of display ad revenues last year.

So, a company like Millennial Media needs to compete not only against other pure-play third-party ad networks, but it also has potentially limited access to the largest content sites owned by Facebook, Google, Pandora and other big players. Further, as content sites get scale in mobile, they will want to become their own first-party display ad networks to ‘cut out the middleman’ – meaning a pure-play provider like Millennial will always run the risk of key customers walking away from them. Not good for any business, even in a hyper growth market.

Acquiring Jumptap gives Millennial a bit more scale for today, but the bigger question is whether the likes of Millennial can remain viable and thrive over the long run. As of now, neither the stock market (in the case of Millennial), nor venture investors (who put in $122 million into Jumptap for less than a 2x return) seems to think so…

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Last week, Los Angeles based startup FreedomPop announced that it now has more than 100,000 users, and that it will now be using Sprint’s LTE network as its infrastructure backbone (in addition to its ongoing use of Clearwire’s WiMax infrastructure). The two-year old startup is a wireless internet provider delivering free 4G mobile broadband internet access using a freemium business model. Users get 500MB of free monthly data usage (using a FreedomPop provided LTE hotspot) and pay for data overages at ~$10 per GB. Users can gain additional free data capacity by recruiting others to sign up or by responding to surveys / sharing information with advertisers.

In today’s subscription plan based world of mobile services, FreedomPop is trying to bring a viral, disruptive business model. The company has so far raised approx. $16 million, and with the Sprint partnership and the initial subscriber traction, looks promising so far. But going forward, for the company to scale sustainably, a number of pieces need to fall into place on three fronts. On the infrastructure front, FreedomPop will need to get long-term price and usage guarantees from Sprint (or another major carrier) around its wireless spectrum usage. On the consumer front, FreedomPop will need to show consistent free-to-paid conversion rates and prove to the underlying carrier that a FreedomPop user is on average more valuable than a standard status-quo subscriber. Additionally, it will need to educate and convince users to unbundle their wireless data plans from their cellular contracts, and, if further possible, to convince them to adopt VoIP. On the advertising front, the company will need to prove out ROI to marketers and brands. Each of these fronts is a challenge in itself. Sprint’s LTE network currently lags other major carriers and so may not be attractive for consumers. For consumers, hotspot and VoIP adoption poses its own risk due to perceptions around portability and performance. And advertising ROI in today’s world of social networks and mobile apps may be extremely difficult to estimate. Complicating matters further for FreedomPop are alternative approaches such as residential small-cells.

FreedomPop might be an example of a startup that’s fighting too many battles all at the same time. Yet, the reality also is with FreedomPop, a freemium model at scale might enable much better optimization around willingness to pay, and might more easily be able to track Sprint’s spectrum capacity constraints and infrastructure buildouts. ‘The internet is a right, not a privilege’ – so goes FreedomPop’s tagline on its webpage. Let’s hope FreedomPop can establish itself as an ally for the mobile consumer; a hundred thousand users is a great start in that pursuit!

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Last week, Google announced its latest smartphone, the MotoX. The device, which was developed by the Google’s Motorola Mobility unit over the past year, offers a number of enhanced features, yet has generally been reviewed as more of an incremental step up than as a revolutionary new smartphone. Two key new features for the MotoX include the ability to customize its look-and-feel (available for the near term only to AT&T subscribers), and the tight integration of the device with Google Now.

For Google, as the central node in the Android ecosystem, any in-house smartphone development presents the risk of ruining the company’s relationships with a number of key device manufacturers like Samsung, LG and HTC. At the same time, it is becoming clearer that the next frontier in mobile technology is around contextually intelligent apps (the likes of Siri and Google Now). Given these, the MotoX in its design phase would have had two alternative paths – the first being to become the sleekest, most powerful, cutting-edge device possible, and the second being an example of the kind of user experience that Google Now and other Google services could represent. Google has chosen this latter, Apple-esque path both in word and in deed, while other Android devices continue to push the limits of performance. Given this chosen path, the MotoX now goes into the marketplace with its Motorola brand (which might be weak on the high-end but stronger in the low-end segment), its customizability (an unknown feature), its ‘Made in the USA’ sticker, and its incrementally better features. Not helping at all in this journey is the $199 price tag which pits it against dominant models like the iPhone and the Galaxy.

All in all, it is quite likely that the MotoX won’t make much of a dent in the market in the near term. But like numerous other Google products that seemed intriguing but not clear winners when launched (Chrome, Google Docs, Google+ and so on), the success of MotoX might still just be a matter of time, even if that takes a year (or a few) and a generation of devices (or a few)…

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So the $35 Chromecast is in the market now, having been released last week. Chromecast is a small form-factor dongle that can be directly connected to the HDMI port on a TV and which can stream content over Wi-Fi from any of our mobile devices as well as from Google Chrome browsers on PCs. Functionally similar in many respects to the Apple TV, Chromecast takes streaming-to-television to the next level, being platform and OS agnostic, easier to install, and significantly cheaper.

Currently, approx. 14% of broadband-enabled households in the United States own a dedicated streaming device (Apple TV, Roku or other), whereas 25% own a Smart TV (which come with streaming capabilities embedded). Smart TV adoption has doubled whereas streaming devices have only seen a small uptick in penetration over the past two years. Thus, the Chromecast (or any streaming device for that matter) might only be a medium term solution until smart TVs become the default in households. The long-term objective for Google would then be to own the streaming software / firmware layer inside smart TVs, and, consistent with Google’s approach for all its new offerings, Chromecast will serve as a great testing-ground for Google in this pursuit.

From a TV broadcasting perspective, is Chromecast yet another (and maybe the strongest yet) candidate for disrupting revenues for the cable networks and content studios? Can the TV screen be disrupted to become just another screen for online content to be consumed and interacted with? A certain amount of upheaval is bound to happen, for example around access to on-demand content and ability to rate such content. But beyond that, the psychological aspects of TV viewing such as the relatively passive, lean-back experience and the content discovery aspect will still need to be fulfilled. Given these needs, can smart content from YouTube upend traditional broadcasting media? Probably a bit, like Pandora is doing to radio, but beyond that, things should still remain broadly the same for broadcasting.

And thus continues the trend towards multi-screen convergence. Here’s hoping that despite the evolution of technology, there will still continue to be a single-button-push, stupid-smart, lean-back-and-relax, right brain experience like TV is today (and hopefully for cheaper monthly rates!).

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