TinyCo‘s Big Opportunity

Let me put you on the game
—The Game, Put You On The Game

1. A Big Frackin’ Market

IDC estimates that there will be 1 billion mobile Internet users by 2013 and that estimate may very well be low. There are currently 4.5 billion mobile phones worldwide and, despite the fact that some think that there will always be a place for so-called feature phones, feature phones will be replaced entirely by smart phones over the next 5-7 years. As smart phones become the volume leaders, the component costs for smart phones will fall below the corresponding component costs for feature phones. Some people may be very happy without an intelligent phone, but in the future they will have to pay more for a dumb phone than a smart one. This trend will eventually render feature phones obsolete. The same phenomenon happened when the world moved from text-based to graphical PCs in the late 80s and early 90s despite many users claiming they would be “just fine” with their text-based computers. 4.5 billion mobile Internet users translate into an extremely large number of potential mobile gamers.

As importantly, the early data suggests that the mobile game market may be distinct from the web-based game market. Intuitively this makes sense as the screen sizes, user interaction methods, and usage models are all quite different. Thus far, the top selling mobile games have not been the same as the top performing web games. As a result, the eventual market leader may well be a new company.

2. Impressive Execution

Although web-based gaming and mobile gaming may be different, much can still be learned in mobile from the explosive web gaming market and TinyCo has done just that. In their initial games, TinyCo takes the best elements of Facebook gaming—continuous product updates and content additions, virtual currency and goods, and constant, relentless review of user data to improve the overall experience—and optimizes them for mobile devices.

This approach has delivered stunning early numbers. TinyCo’s early games, Tiny Chef and Tap Resort, have been downloaded over 10 million times. They both reached the top 5 in the App Store and generated enough revenue to profitably build the company to 40 employees with no invested capital.

3. Phenomenal Entrepreneur

Despite terrific early traction in what appears to be a massive market, it would be too early for us to invest in this kind of company unless we believed the entrepreneur behind it was so determined, skilled, and talented that he would likely build the team that wins the market.

Suli Ali, TinyCo’s co-founder is just that type of guy. A graduate of Georgia Tech and a veteran of the gaming business at an early age, he moved the TinyCo team from Brooklyn to San Francisco, because he understood the size of his opportunity and its implication that he could make no compromises in building his company. He knew that he would have to have direct access to the best talent, financial resources, and thinking that the industry had to offer.

Even more impressively, based on his early career experiences, Suli thought long and hard about the kind of company he wants to build and what that means for everything from TinyCo’s hiring practices to their employee on-boarding and training programs, to the principles required to construct a true meritocracy. The result is an exceptionally well-run, profitable, 40 person company with the foundation to be one of the few large companies in the world that will be a terrific place to work for extremely talented people.

And we are very excited to be a part of it.

 

 

 

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

Want more a16z?

Sign up to get our best articles, latest podcasts, and news on our investments emailed to you.