The Biggest Problem in Mobile: Retention
When I read Fred Wilson's post this morning about the tough times consumer companies are having raising money, his second point resonated with me most: … This made me think of how frequently we attribute success on mobile to downloads instead of monthly active users.
Context & Ripple Effects
The argument lands mid-correction. In July, Fred Wilson made the case that mobile is where the growth is; five months later his follow-up warns that consumer companies are struggling to raise money, with Wilson, Paul Graham and Mary Meeker already framing 2012 as a valuation correction rather than a bubble burst. Cristina Cordova picks up his second point and names the metric failure underneath it: the industry credits success by downloads instead of monthly active users.
First-order effects
- Consumer mobile founders pitching in this market face investors who, following Wilson's post, discount download counts and demand monthly-active-user and retention curves before writing checks.
Second-order effects
- App marketing budgets tilt from paid user acquisition toward analytics and engagement tooling, since a download-heavy funnel no longer clears investor scrutiny without proof of retained users.
Third-order effects
- If the correction holds, mobile capital concentrates in products that demonstrate durable engagement, echoing the skepticism of 2007-era doubts about mobile monetization — the sector's second reckoning over whether its headline metrics measure anything real.
The trend: Mobile investing is shifting from download-count growth stories to engagement-based underwriting, with the 2012 funding correction forcing retention metrics to the front of consumer pitches.