The gig economy continues to provide new opportunities for people to earn money, either from what can become a fulltime occupation, or a number of side hustles, from what they already own. One is an opportunity from Mode Mobile to earn money from your smartphone. Mode Mobile is the tech company behind the world’s first EarnPhone. Their vision is to transform the seven billion smartphones owned throughout the world into income-generating assets. Smartphone users spend a quarter of their waking hours on their devices, and can earn up to $1,200 a year from a range of 16 activities including reading the news, watching videos, checking the weather, completing surveys and listening to music on their smartphone.
To accelerate growth, and build stronger traction with its users, Mode Mobile recently raised over $2 million from 11,000 retail investors in a Reg CF community investment round. We were fortunate to catch up with CEO and co-founder Dan Novaes, and we’ll let him tell you more about the business in his own words.
Dan, could you share with us the inspiration behind creating Mode Mobile?
We started with a really simple idea of rewarding people for the things they do, and we began with music streaming. We noticed that there was a really large subset of people that liked that concept, and moved into other activities that people do on their phone. Before we knew it, we had created what we called an earning operating system for the gig economy, and tapped into everything that someone does in the 40 hours that they spend on their phone every week. Then a couple of years ago we had the idea to actually launch a phone that’s catered to that mechanic, that model, and that’s where the idea behind EarnPhone was born.
We’ve been able to scale it thus far to about $150 million in earnings and saving back to consumers, and had tens of millions of people around the world utilize our product.
I guess like Uber did with cars and Airbnb does with homes, you’re transforming people’s smartphones to become an asset. Can you tell us how, and what’s the business model behind Mode Mobile?
It makes sense to turn cars and homes into income-earning assets, though they’re also very expensive. But everyone has a cell phone, and it doesn’t really matter whether they are scraping by or very wealthy.
The way the business model operates is we work with a variety of advertisers. When you’re streaming music, or when you’re on social media, if you’re using a product for free, you become their asset. Those companies are making money out of you using them by trading your usage data. All we’re doing is aligning a portion of that advertising revenue back to users.
We do so in a really intentional way. An example may be that you play Candy Crush, which is a very popular game. We’ll work with Candy Crush, and they’re willing to pay $5 for each new user. We pay new users a portion of that for playing Candy Crush, based on per minute of play or per level that you get to. They get a new gig economy income stream from playing games.
What we do for games we can also do for a bank account or a trading app. We may work with an app like Robin Hood, and what they want is people to open up a trading account. We establish how much they’re willing to pay for that. If we agree on, say, $100, then when someone signs up and deposits $5, we’ll give them $50 they can use to trade. We do that across all verticals, so whether it’s shopping, reading the news or playing games, that’s how the business model operates, and how we’re able to provide value back to consumers.
Ways that Mode Mobile users can earn from using their smartphone
You’ve called this a trillion dollar opportunity? How did you come up with that number, and what do you see as your company vision?
The average amount of screen time today on the phone is approaching 40 hours a week amongst the entire population. Among younger people it’s even higher, Iet’s call it 50 to 60 hours a week. So if you have 7 billion smartphones in the world, and say 6 billion of those people are in our target market, then we’d see the opportunity of being able to unlock that future usage and the lifetime value of that usage.
Although we are the first, I don’t see Mode Mobile necessarily being the only EarnPhone brand in the gig economy. We want to create a new category of devices of sub-$100 phones. The cost of these devices keeps going lower and lower with Moore’s law, and phones will continue getting better. The internet will keep getting faster, and when you combine these factors you really have a technology that can enable earning on devices for billions of people around the world. There is a trillion dollar opportunity between the digital ad markets, the apps, and the smartphone industry.
That’s why we see massive potential in this market. It’s ironic that the two most valuable companies in the world also happen to be the smartphone duopoly of Apple and Google.
You mentioned you’re the first mover in this market. Is there anyone you see as a competitor, or are you pretty much alone in this space?
We approached it in a frame of mind that it’s a very hard business to make work. It’s not trivial to create income from just attention and time, and doing so in a way that’s sustainable. I don’t see a lot of people delving into this space, which gives us a very large market opportunity if we can get it right.
When I look at what some people might consider to be our competitors, they’re usually focused on one thing, like, cashback and stores, coupons, surveys or gaming, whereas we’re doing a little bit of everything. What the user cares about is getting the most value, and they don’t know or really care whether money comes from me as Mode, or comes from a partner. If I can help them save and earn more, that is value added to everyone.
I don’t really see the reward apps as competitors, I see them more as complementary solutions to what we’re already doing. That’s why we haven’t really seen a competitor in the space that is going after this gig economy idea in the same way that we specifically cater to the mobile market.
I assume your revenue is coming mostly from US advertisers. Do you have users outside of US?
Historically, we’ve had a lot of international Android users because of the closed nature of the Apple ecosystem. Android penetration is 95% in emerging markets like Brazil or Mexico. So we have a lot of people from those countries downloading our product even though it is still in beta. However, in order to have a sustainably rewarding experience in each country, you have to have a sales team and run advertising. To pay for that we need revenue, and the most robust and advanced market where most of our revenue comes from is the United States. The 80/20 rule definitely applies here: 80% of our revenue is coming from 20% of users who are in the US market. That allows for expansion opportunities.
Your recent round of equity crowdfunding started with a $1.25 million target. How has it performed?
The reason we set $1.25 million, which we achieved 20 days early, came down to the audited financials we had at the time. We now have new figures, and have agreed to extend the round to $5 million. We gained 11,000 shareholders within a month, and we’re going for the $5 million through Reg CF that will keep running until Q4. We’re also in the process of filing the process to get Regulation A+ in place. That will be our next focus. [Regulation A+ allows companies to use equity crowdfunding platforms to raise as much as $50 million from both accredited and non-accredited investors.]
Last question. Entrepreneurship is a journey of learning – what advice would you give to aspiring entrepreneurs looking to venture into the mobile technology sector?
In the mobile technology sector I think the number one factor if you’re new to the space is aligning yourself with people already there that you can learn from. If you’re able to be useful you will learn and excel much faster.
Then when it’s time for you to build your own company you’ll have learned the ropes. This will give you a tremendous head start. That applies to any sector or anything you’re going to do in life, not just mobile technology, or entrepreneurship.
That’s a great note to end on, thank you Dan.
Have you got any gig economy stories to share with us?