Kleiner's pick for the killer iPhone app

Peter Burrows
02 Jun 2008

Apple won't crank up the hype machine about all the new things an iPhone can do until its Worldwide Developers Conference on June 9, but here's a small taste of what's in store: finding things to do in the neighborhood when you're at a loss.

That's the idea behind Pelago, the first company funded by Kleiner Perkins Caufield & Byers as part of the $100 million iFund the venture capital firm announced in March at Apple's last big iPhone event. Pelago's software, called Whrrl, ties the mapping capabilities of the iPhone and other smartphones with the ability to find information about places where you, your friends, or anyone has been. Say you're lost in Las Vegas and need a restaurant recommendation. With iPhone in hand, you can scan the locations of nearby restaurants, just Italian restaurants, or just those recommended by foodie friends. Or you could search for the highest-rated bars or kid-friendly activities recommended by friends from your social network. There's going to be a 'what's going on around me right now' button, says Kleiner Perkins partner Matt Murphy. 'You're always one button away from that immediate context.'

Given the iPhone's unique capabilities and the flexible software tools that Apple (AAPL) released for the device in March, it could be difficult for any Web 2.0 startup to stand out from the crowd of applications on the way. For example, the iPhone's accelerometer means programmers have been free to dream up interesting ways to take advantage of the iPhone's ability to respond to motion, much like Nintendo's (NTDOY) Wii video game console. Cisco Systems (CSCO), for example, recently demonstrated a vision for one possible use during an annual conference for business partners: the ability to transfer a call from an iPhone to another device, such as a laptop or one of Cisco's Internet-based office phones, with a flick of the wrist.

Creating applications for smartphones has always been a difficult, time-consuming process. Typically, developers have to be expert in the geeky tools required to build software for a particular device, then work out details to make them work with a particular carrier's service. But Apple's approach was to make it easy for any Mac developer"”and there are millions of them"”to create iPhone applications. While Kleiner Perkins is encouraging its iFund companies to create apps that run on many kinds of smartphones, Murphy says Apple holds a huge advantage in this regard. 'Good luck finding a platform that has the same rabid developer base,' he says. Better yet, Apple will distribute developer's creations to the iPhone-owning public via the soon-to-open AppStore. While Apple will keep 30% of every dollar in sales, that's a better deal than many carriers give, with far less hassle and expense in landing one-off deals.

Location, location, location

Murphy thinks that, among the many iPhone application possibilities, location-based services may be 'the biggest breakout opportunity.' The venture firm has received submissions from 1,700 startups that hope to raise money via the iFund. So far, it has only funded Pelago and iControl, which makes a home automation application that would give iPhone users remote control over air conditioners, lighting, window shades, and so on. He says the venture firm has extended an offer to one more startup, and is seriously considering another 10.

Location-based services have long been a holy grail in the wireless industry. But the rise of social networking and the addition of GPS satellite receivers in cell phones as a standard feature means the quest may finally be getting somewhere, says Charlene Li, an Internet analyst with Forrester Research (FORR).

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