Smartphones have quickly gone from tech gadget to indispensable for consumers. According to Forrester Research, by the year 2016 one billion people around the world will be walking around with these mini super computers in their pockets. With this explosive growth comes several challenges.

Privacy is a key concern for consumers, while monetizing it is major challenge for the smartest tech/internet companies including Apple (AAPL) and Facebook (FB). Still, neither hurdle is slowing the innovators who continue to release new and potentially game-changing products.

Michael Eisenberg, a partner at Benchmark Capital, is on the hunt for those game changers who he thinks are part of a major sea change. "What's interesting is the innovation that's powered by this mobile device and the way it's changing communication, it's changing emotional connections and changing the way people communicate one with the other," he says.

One of the greatest innovative success stories so far is Instagram. The company's creators took the iPhone's camera software, filled it with features and ultimately personalized the experience. The result is a wildly popular app that increased mobile communication so significantly that Facebook swooped in and bought the 13-employee company for a cool $1 billion. (Note: Benchmark was an early investor in Instagram and reportedly made about $180 million off the deal).