Legendary venture capitalist Stewart Alsop of Alsop Louie Partners sat down with BIA/Kelsey analyst Matt Booth here at MLM SF to offer a glimpse into the fertile mind of a leading tech investor. Interestingly enough, one of the first things Alsop said was that he wasn’t investing in mobile, since it has already attracted enough investor interest. As an early stage investor, Alsop is forever after the next new thing. Here are a few highlights from the dialogue.

What do you look for when you fund a start-up?

We are risk oriented. We are early stage. Most investments do not succeed. We are looking for the outlier to pay off the entire fund. A lot of venture capitalists today only invest in demonstrated traction. We are not interested in mobile; everyone is already investing in it, though we do have some mobile investments coming to fruition now. Mobile is still early, just not early enough.

A lot of venture guys are saying “I need the next Instagram” something that pays off in 18 months. Is this realistic?

The ability to predict an Instagram is difficult. We try not to participate in momentum investing.

Why did Facebook buy Instagram? And for so much money?

Faceboook doesn’t have a mobile culture; their apps suck. It is their weakest point. The Instagram team is the only app team that figured out how to organically grow usage. Facebook paid them to come in and build a separate culture around native mobile development around the Instagram team to lead Facebook to a more powerful position with consumers.

Do you think the mobile app market will disappear?

The mobile app business is a temporary condition. It came about to solve problem of multiple platforms that didn’t have functionality in the browser.

Will there be an all new monetization ecosystem?

The future business model will not be the same as the last business model. It has to be blended monetization between phone and Web. The Web is the place for configuration, storing data. Mobile is the delivery platform. Monetize through the integration.

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“Mobile is a big part of our business,” said Mihir Shah, Groupon’s VP-Mobile, in an interview this afternoon with BIA/Kelsey analyst Peter Krasilovsky at the Mobile Local Media event in San Francisco.

Shah said that 30 percent of Groupon’s transactions in April occurred on mobile devices. That figure was 25 percent last December.

Mobile customers spend 50 percent more than those who redeem deals on the Web. “When they get on mobile, it increases their engagement,” Shah said.

Products (Goods) and travel (Getaways) are two key initiatives taking Groupon beyond local deals. Mobile factors into both, Shah said.

With Goods, people purchase at the same rate on mobile as local via the mobile phone. The same is true with Getaways, which is a high ticket item, a fact that might suggest against mobile usage.

“This speaks to the Groupon brand,” Shah said. “They are willing to do more than just a local deal.”

Groupon is also focused on using mobile to help its merchants manage their deals. At the end of Q4 2011, 12,000 merchants were using Groupon’s merchant mobile app for redemption, to scan bar code and redeem, track overages (the amount a customer spends above the value of the deal). Lots more merchants are adopting it on their own devices.

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Here in San Francisco at BIA/Kelsey’s Mobile Local Media conference, a panel of three young companies offered a glimpse into the leading edge of mobile shopping and loyalty marketing.

Moderator Peter Krasilovsky walked each panelist through an examination of his business model, framing a conversation about the evolution of the hyper-competitive mobile payments and transaction marketing space.

Some common features include using loyalty points to drive behavior — store visits, meal purchases and so on — and a seamless experience, where no phone or coupon or loyalty card needs to be presented at the point of sale by consumers. For merchants, the incentives range from higher customer intake, more frequent in-store visits to higher average purchase value.

Josh Capilouto, director of sales operations at SCVNGR/LevelUp

LevelUp is an alternative payment system. The model is users download the app, link a credit card and pay at the point of sale using that card. The LevelUp business model is pay for performance via onboarding and loyalty campaigns. For example, a new customer might be offered two free dollars as an inducement to come into the store. If that money is spent, LevelUp gets a piece of that offer redemption. The same works with loyalty offers. If an offer is to spend $50 for a $5 credit, LevelUp gets a taste of that $5.

LevelUp is in 25 cities via the remove sales channel and is live with direct sales in eight cities, with three more expected by the end of summer or early fall.

Doug Galen, Chief Revenue Officer, Shopkick

Shopkick is a loyalty platform that works with partners to offer points of “kicks” to reward in-store visits. CRO Galen offered his view on the key trends driving mobile shopping.

He cited two key trends:

1. “There will be more change in retail in the next five years than there were in the last 100.”

2. “The mobile impact on shopping is happening faster than expected.”

Two minor supporting trends:

1. Retail is losing walk-ins and needs a solution to drive in-store traffic. Retailers want walk-ins and will pay for them. They have 25 percent to 50 percent conversion rates.

2. Consumers have too many loyalty cards — fragmentation hurts everyone.

Galen was asked about the restaurant chain Denny’s, which built own app. Why should a company work with Shopkick rather than build its own app? What did they miss out on? Galen said they missed 85 percent to 90 percent of their customer base. Most consumers will not use 40 different apps, Galen said. At best, 10 percent of a company’s most loyal users will.

Jon Carder, CEO, Mogl
The name dropper of the day was Mogl CEO Carder, who talked about a recent invitation to Richard Branson’s private island for dinner.

The Mogl model is to use game mechanics to build a network of restaurants, sign up consumer who synch a credit card, earning the chance to win cash back (10 percent for each visit), accumulate points that are redeemed as meals for charity or win a large jackpot.

Carder said the beauty is that different users are there for different reasons. Some people like to give to charity, others like cash, others like points.

One notable feature of Mogl is the cost to restaurants. The company charges restaurants 15 percent of sale. Carder said this isn’t a challenge. “As long as restaurants see ROI, they don’t care.”

he said the average restaurant pays $400 a month and experiences little attrition. “They will pay for value,” he said. “They are tired of cheap but valueless services.”

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As mobile usage reaches ubiquity and revenue generation becomes the much-debated next frontier, Pandora finds itself at the nexus of this movement — rapidly accelerating its mobile usage while iterating on its ad platform to monetize that base at a similar pace. At MLM SF, VP of Audio Sales Doug Sterne noted that the company is now monetizing mobile at a 4x clip compared with a year ago. To continue that growth, it is making a strong move down-market to capture local business dollars.

Pandora now employs about 150 local premise sellers across major metros, in addition to national and telesales teams. It is further expanding its local footprint through recently unveiled media reseller partnerships with newspaper and TV groups in secondary and tertiary markets.

Sterne believes that Pandora’s mobile revenue growth with businesses big and small is a byproduct of its platform, anchored in its Music Genome Project that allows listeners to build their own channels. “We’re a super-personalized experience, which positions us as a very hyperlocal strategy for an advertiser to employ.”

The company continues to expand the opportunities for brands to connect with users experientially in new ways. As an example, Sterne offered Chase, which sponsored a custom-themed music channel to introduce its rewards program to targeted listener segments.

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