Jonathan Libov, Union Square Ventures, Fifty App (http://fiftyapp.com)

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Union Square Ventures, Fifty App (http://fiftyapp.com)

cc'ing Andrew Weissman, as he's cited here

Growth Lead at Pinterest

We had a discussion about unbundling recently on Quibb. Here's my somewhat contrarian view: http://caseyaccidental.com/mobile-unbundling-niche-marketplaces/

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Union Square Ventures, Fifty App (http://fiftyapp.com)

Ah wow I didn't realize you were on Quibb. I read your post this morning again before I finished my draft.

I agree with most everything in your post - in particular that frequency is likely correlated with the types of services that are going to be unbundled and that each consumer has a limited mental capacity for apps. And I can vouch for the fact that mobile app discovery is hard - it's what I do for a living at Appsfire ;-)

The part I'm after in my post is not necessarily to try to pick out which apps look like they're going to follow the "unbundled" pattern, but to try to explain why they've been unbundled and to hopefully gain some predictive power.

You wrote: "The key to being a successful venture capitalist then shifts from finding businesses that tackle very large markets e.g. Craigslist to finding businesses that target markets that could be much bigger with unbundling e.g. Airbnb." I'm wondering aloud here exactly how one might identify these types of businesses.

Scout Ventures, Dozen Digital

A real world example of unbundling that I've observed is in the NYC food market. It seems that some of the most talked about and seemingly successful places are restaurants that focus on doing one item really well (meatballs, mac n cheese, grilled cheese, macaroons, etc). Curious to hear you might map your theory to that phenomenon.

Could it simply be that in situations of a substantial amount of demand for a specific thing (photo taking online, or eating mac n cheese in real life), a company that focuses on the unique needs/attributes of that particular consumer will win, displacing the bundled service (facebook, big multi-item restaurant, in this analogy)?

In the case of the unbundling of Craigslist, I wouldn't say those taking off slices of CL have a fundamentally different delivery mechanism. I'd say the closest situation for which that IS the case would be something like TaskRabbit. Maybe mobile is the delivery mechanism there that allows it to unbundle from CL? For something like Airbnb, maybe social proof/reputation is the "delivery" mechanism that allows it to unbundle from CL?

Also, I believe eventually LinkedIn may be unbundled by networks that focus on the needs of particular industries (Dribbble as a place for designers, as an example). I'd probably say this fits more into the model of a product just simply being more attuned to the needs of that consumer, but willing to hear out how something like this may also fit into the theory.

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Union Square Ventures, Fifty App (http://fiftyapp.com)

Not sure about the specialty restaurants (though I do love all the food you listed... :-)

TaskRabbit/Craigslist is an interesting example. You'd argue that TaskRabbit is unbundled *from* Craigslist?

I also mostly agree on Dribbble, Github, StackOverflow unbundling LinkedIn and professional listings. Putting aside the fact that they're product is really half-assed and user-hostile, I don't find that I need a single, canonical place for my professional identity (according to my nascent theory, "professional identify" is the delivery mechanism), nor most of the services LinkedIn provides through my network.

Scout Ventures, Dozen Digital

Yeah there is a massive amount of small time work/gigs being done on Craigslist. But like everything else on CL, there's no real value add within that marketplace other than lots of liquidity (which is why my guess is 95% of smalltime work is still done there). So TaskRabbit has built the tools to make it a better process for both the supply and demand sides, and should slowly take marketshare from that portion of Craigslist in the same way that Airbnb has.

Union Square Ventures, Fifty App (http://fiftyapp.com)

I agree that Cragislist is ripe for unbundling by the likes of TaskRabbit and AirBnb, particularly because it's nearly their mission not to develop/innovate. It makes you wonder how you'd describe Craigslist's reasons for success - the best one I can think of is that they're always "on your mind", and they reinsert themselves there every time you go to them for an apartment search, task hire, job-related inquiry, etc.

Scout Ventures, Dozen Digital

I may be a bit in the minority on this, but I think their lack of product innovation is the reason for their success. Above all else, marketplace success relies on liquidity, and CL's almost ridiculous product minimalism I think actually optimizes for that liquidity. As people in tech, we forget that we're in the 95th percentile of web users, and forget the vast number of people who may not participate on a site if there are complicated extra features.

And yeah, they're definitely "on your mind", as they've established a unique brand (I think based on the above simplicity, and almost guarantee of finding a buyer/seller). I think the vertically focused marketplaces will slowly chip away at CL, but I don't see them going away any time soon.

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Union Square Ventures, Fifty App (http://fiftyapp.com)

well put

brief contrarian viewpoint here: i'm not convinced that "unbundling" is by itself a profitable or even desirable tactic for product development. I don't think Fred's product/feature analogy holds because every one of these little apps is attempting (for its own selfish survival) to establish a fiefdom around your data and your behaviors. That's natural, but represents a cost that has to be outweighed by any prospective benefit from being more focused. Normal users (!= 'power' users) don't want to be systems integrators - they just want things to work.

Union Square Ventures, Fifty App (http://fiftyapp.com)

I'm not sure I follow. You're suggesting that the requirement of each "unbundled" app to build a product and data model from scratch is a development cost that impedes product development?

no, i was referring to the requirements placed upon the user to download a new app, learn its functionality, adapt it to their workflow, etc. basically what Casey talks about more eloquently below.

great post by the way, and this insight: "A product can be unbundled inasmuch as it does not rely on the delivery mechanism used by the bundle" is an interesting one. however - at the end of the day what many folks call "unbundling" is just bundling. much of the growth of new platforms comes from new users, and not "unbundling" users or behaviors from other sites. it's just that with more precise messaging and positioning it's easier and cheaper to penetrate a wider audience. so for eg. before u saw the ad for dogvacay, perhaps you hadnt even considered leaving your pet with strangers. they never took you away from craigslist, they perhaps 'unbundled' you from the petstore, or from calling grandma.

Union Square Ventures, Fifty App (http://fiftyapp.com)

I agree with "what many folks call 'unbundling' is just bundling".

One of the points I tried to make in my original post (that I had to scrap) was that it's too narrow a view to think of unbundling as "one app spinning off a feature from another app"; rather, it's that an "unbundled" product encapsulates a real-world object (e.g., as I wrote about with Tinder and the unbundling of flirting: http://whoo.ps/2013/04/15/an-ode-to-tinder).

You can look at the cable company example this way. Cable companies bundle together a collection of visual stories (television programs), where "stories" are the real-world object. Content owners were once forced to *deliver* their stories through cable TV pipes because there was no other access to consumers. Now the internet is here - an alternative to the cable TV pipes - and each channel has been "unbundled" into a new app. Another way to put it is that content owners have unbundled their own collection of stories from the cable TV bundle.

So it's not really "features" that are unbundled, it's real-world-entities-as-apps (e.g., messaging) which are unbundled from more amorphous platforms that represent the real-world at a grosser level (e.g., Facebook as your social universe).

i realized after the fact Casey Winters said this much more eloquently than i - http://caseyaccidental.com/mobile-unbundling-niche-marketplaces/. great post, only thing it ignores is that in this future where everything is unbundled, we don't have to be stuck with the current paradigm of app delivery and discovery. even now u can search for anything you need and if the business knows what it's doing you're met with a mobile site which can within a few clicks get you where you wanted to go.

Union Square Ventures, Fifty App (http://fiftyapp.com)

I see what you mean now Roham and I agree that Casey's post is a great one. While I like how Casey focuses on the actual physical and conceptual restraints, I think it's something of a short view.

- App discovery is hard, but need-based search isn't too far away. With less data than Apple has at their disposal, we've made significant progress with this at Appsfire via our search UI and App Score system: http://cl.ly/image/2A053Z2t1f1y/ClouDrop%20May%209,%202013,%2010%3A15%3A56%20AM.png

- The big PITA of need-based (i.e., the app I need right now) is the time it takes to search > locate the app you want > download > launch. The speed of that will continue to increase, and for one I don't feel that it's much less of a cost in cognitive load than having to remember and bookmark human-unfriendly URL's.

- For as much as it can be painful to learn the ins and out of a new app, it can also be painful to squeeze a big, sprawling service into a mobile-device-size screen. The LinkedIn app, for one, feels like a week's worth of groceries stuffed into a single plastic bag.

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Startup Edition, Product Hunt

Fascinating discussion. More thoughts on unbundling by Tom Tunguz this morning: http://tomtunguz.com/unbundling-of-social-networks

Union Square Ventures, Fifty App (http://fiftyapp.com)

Damn, I need to publish soon :-)

Union Square Ventures, Fifty App (http://fiftyapp.com)

@rrhoover @onecaseman @jim_shook and @rohamg, thanks so much for your comments. I've reformulated some of my thoughts and broken up the post into more digestible parts. Here's Part I which I'll publish soon: http://whoo.ps/2013/05/10/searching-for-a-theory-of-unbundling-part-I

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Product Manager at Directi

A few thoughts on reading your's and Casey's posts – Unbundling seems to occur due to one of 2 reasons:
1. When the delivery mechanism used by a product shifts towards one that the user has more control over. (E.g., newspapers that control circulation vs blogs that rely on the internet.)
2. When a product has niche segments that see increased AND frequent demand from users/customers (E.g., Craigslist -> AirBnb + OkCupid + Elance +...)