Jason Ball was at his gym in west London in 2011 when he first encountered Blippar in the wild.
The augmented reality startup was running a campaign with Tesco, the UK’s largest supermarket, in which customers could point their phone at an advert and see an overlaid animation meant to represent falling prices.
“I thought that was the dumbest thing I had ever seen in my life,” said Ball, who is a partner at the venture capital arm of Qualcomm, the semiconductor giant. “Why on earth would I download a Tesco app to look at the prices falling? I just thought it was the most ridiculous thing ever.”
The penny soon dropped. Though the advert was Tesco’s, the app was Blippar’s. “It was like, whoah, got it,” he said. “You have just hijacked your customers and they’re giving you free marketing and free installs. This is genius.”
Ball was so impressed by the ability of Blippar’s co-founder and chief executive, Ambarish Mitra (pictured above), to do deals with big brands that he became the startup’s first backer. He wrote a small cheque, less than £1m, in December that year. The company was barely a year old.
It was an auspicious start for Blippar, which has since raised $100m and achieved a reported valuation of over $1bn, making it one of Britain’s few technology “unicorns”, the term for billion dollar startups. The company has been lauded as one of the world’s most “disruptive” ventures by CNBC and its chief executive was named the UK’s top entrepreneur by EY last year.
But despite its early promise and the accolades that followed, Blippar has struggled to build a sustainable business. Its active user numbers appear to be far below its stated userbase of 65 million and it has been forced to cut costs, closing offices in Amsterdam, Tokyo, Istanbul and most recently San Francisco. Its most recent accounts show losses of £26m in the 16 months to March 2016, with sales of just £8.5m in the same period.
The pressure on its business has been accompanied by scrutiny of boss Mitra, who was forced to apologise after FT Alphaville revealed in March he had lied about attending the London School of Economics and exaggerated other parts of his backstory.
Last year, the startup raised $54m in its largest funding round to-date. Accounts filed in January said the company would need further funding by November 2017, giving the startup just four months to raise yet more money as it tries to turn the grandiose vision of its chief executive into reality.
Mitra’s ambitions go beyond AR. He wants to build a “visual browser” that can identify every object in the world. If he can persuade investors to fork out the tens, if not hundreds, of millions of dollars needed to achieve that feat, Blippar may one day be viewed as a triumph of British innovation and entrepreneurship.
Augmented reality, or AR, is an area where the opportunity is apparently huge but the execution to-date has been underwhelming.
The term refers to products where information is overlaid in real-time over real-world images and some analysts claim that by 2024 the sector will be worth $165bn. The likes of Alphabet, Google’s parent company, Facebook and Apple are investing heavily in augmented reality products they believe could revolutionise the internet, shopping and business.
The biggest success yet has been Pokemon Go, a viral sensation that mesmerised millions of consumers across the world and then fizzled out. The AR it deployed was fairly basic, with animations appearing on screen with little relation to the environment around them. But last month, Apple unveiled an augmented reality platform called ARKit, which lets developers create advanced AR experiences for iPhones and iPads. Come autumn, it will be rolled out to hundreds of millions of devices, putting Blippar and its own developer tools in direct competition with the world’s most valuable company.
Blippar entered this fiercely competitive world after being conceived in a pub in 2010. Ambarish Mitra had joked to his co-founder and chief technology officer Omar Tayeb that it would be cool if the picture on a banknote could come to life. A few weeks later, Tayeb had created an augmented reality app that could do just that by overlaying an animation. The pair left their jobs at Swiftcover, the online insurance company owned by Axa, and launched Blippar in 2011.
Although the company is today regarded as a technology disruptor, its app did not initially represent a great technical leap forward, according to Ball, the Qualcomm Ventures partner.
“At the time the [first] cheque was written, Blippar did not have a technologically differentiated product,” he said, noting it was using AR software developed by another company, Vuforia, which Qualcomm had also backed and later sold.
Eventually the company built its own software, but at its heart Blippar was a creative agency, working on advertising campaigns for big brands. Its competitive edge was in marketing. “The company’s commercial acumen just outstripped everyone else,” said Ball, pointing to the more than 1,000 brands Blippar has worked with over the years, including Coca Cola and Nestle.
But while Blippar boss Mitra proved adept at doing deals, he had less success in building a user base, instead finding that users come and go depending on which campaigns are running, a problem made worse by some brands moving on once the initial novelty had worn off. For example, Jaguar, who are listed on Blippar’s website as a brand partner, told us “they used Blippar briefly” in 2013 and 2014 and that it was “a one-off partnership”.
According to Quintin Schevernels, who was the chief executive of Layar, a rival AR startup that Blippar acquired in 2014 for £3.9m, the first time you partner with a brand on an augmented reality campaign, you can wow them with a product they haven’t seen before. But that argument gets harder over time if the partnership is not also resulting in a influx of new customers or sustained engagement, he said.
“If numbers show that usage is not really strong then it’s difficult to get repeat sales,” he noted, adding that it was common for users to try an augmented reality app once and then never return to it again.
On the surface, Blippar appears to have cracked this usage problem. It has said it has “65 million users“, a healthy user base which would be equivalent to the number of Americans who use Twitter in the US each month. But Blippar’s number is the cumulative number of downloads over its history, rather than current active users, which it doesn’t disclose, and also includes downloads of non-Blippar apps the company has acquired, including Layar’s.
Four former employees told us the number of downloads and active users for Blippar was much smaller than 65 million. Two said the number of downloads was less than 5 million and one said the number of people using the app on a given day could sometimes be as low as a few hundred.
On the Google Play store, for example, the Blippar app has between 1-5 million downloads, and on the Apple Store there are just 500 reviews. By contrast, Layar’s app, which came preinstalled on Samsung’s Galaxy S smartphone, has between 10-50m downloads on the Google Play Store and over 2,600 ratings on the Apple Store.
SimilarWeb, an app intelligence company, said in a 2015 blogpost that the retention rate for Blippar appeared to lag behind other entertainment apps, with only a small proportion of people continuing to use the app months after they downloaded it. Updated charts for 2016 show a similar trend for retention. In the blogpost, SimilarWeb suggested Blippar was more likely to be “a self promoted pony rather than a unicorn”.
Blippar said it did not claim to be “a daily usage app”, and pointed to server costs of £2.2m in its last financial year as a sign of its traffic.
Danny Lopez, a former British diplomat who joined Blippar as chief operating officer in 2016, said advertisers were not using Blippar to find an audience, but instead “because we provide the technology that allows them to develop those experiences for their consumers”.
“The audiences are brought to us by the brands that we engage with and this is no surprise to the brands,” he added.
Others have been less kind about Blippar’s offering. Last year, the then chief digital officer at ZenithOptimedia, a subsidiary of the French advertising agency Publicis, likened Blippar to the England national football team. It was “well financed but ultimately never delivers on its promise,” Stefan Bardega told The Drum, saying Blippar had struggled to gain traction with advertisers “because of the clumsy user experience and resulting lack of scale”.
A spokesperson for Blippar said it had “consistently delivered for brands, as demonstrated by the multiple awards that Blippar campaigns have delivered for clients.”
Today, Blippar has moved away from the creative agency business and towards a more lofty goal than making just adverts. Though Blippar continues to work on campaigns with brands, Nandu Nandkishore, a Blippar board member who previously worked at Nestle, said the startup has decided “to stop being an advertising agency in order to start being a tech player”.
The aim now is to build a sort of Wikipedia for the real world, a visual browser that can identify every object on the planet. Blippar is now not just an AR company, but also an artificial intelligence company. “Doing AR only without understanding the world itself just didn’t make sense to us,” Tayeb told us.
It’s an ambitious target and in some areas the company has had success. The company claims to be able to identify “the exact make, model and year of cars in the US more than 94% of the time”. It also has a facial recognition system, currently applied only to celebrities, that Tayeb says is one of the most advanced in the world.
But the company is far from achieving its Google-esque desire to “index and catalogue the world”, as Lopez puts it, and it’s up against sizeable competition from Silicon Valley’s giants, whose vast data sets and resources give them an advantage in developing artificial intelligence. It also has to compete for talent with well-funded arfiticial intelligence and virtual reality companies in London, including DeepMind, which was acquired by Google in 2014, and Improbable, which raised $500m from Japan’s SoftBank earlier this year.
So far, Blippar’s investors have been willing to fund Mitra’s ambitions, though they are not names typically associated with big investments in artificial intelligence. They include Nick Candy, a property tycoon and close friend of Mitra, Malaysian sovereign wealth fund Khazanah, and hedge fund manager Lansdowne, as well as Qualcomm, though the semiconductor company has not invested in Blippar’s last two funding rounds.
Although the company lacks top-tier technology investors, it points to the 80 engineers it employs, “including some of the industry-leading [artificial intelligence] and deep learning experts”, as well as the “deep partnerships that global brands have developed with us”, and argues that its singular focus will give it an edge against better resourced rivals.
“We have always been very clear that a full-scale visual discovery platform will take time to build. We are proud of the steady progress we are making towards this vision and our technology stack reflects that,” the company told us.
“Blippar is in a financially strong position with a world-class team developing highly innovative products that are driving growing revenues”.