Mobile app startups are failing like it’s 1999
andrewchen.co
andrewchen.co
We are do a steady 2.5 million in sales per year, aiming for 4m next year.
The problem is that startups in the Valley are extremely narrow minded and aesthetically snobbish in their mobile approach.
1) There are 1 billion feature phone users around the world who have perfectly usable app stores.
2) You need to launch in more languages than just english, and on more app stores than just the US market -- Chinese, Hindi, Spanish and Portuguese at a minimum.
3) Apps that are not SAAS are throw away, impulse buys. They should be developed with that in mind.
4) Apps have a short lifespan and sell based on timeliness.
5) If you want guaranteed profit in mobile, build mobile extensions for established brands, don't try to build the next Angry Birds or Apple App clone.
6) Design matters, but not that much. Touch interface has made UI far more visceral, but the sale happens long before the user judges the design
7) IAP -- its icky but it works
8) Try lots of stuff rapidly and fail fast. 2-3 month cycles. You can get up to about 10 apps a month if you have a larger team and a good process.
Finally, this is nothing like 1999. Companies were failing with no product, spending 1 year + and not even launching. There were late round fundings for companies that literally had products that were figments of their imagination.
Now two guys in their garage can build a hit app with two macs and no funding what-so-ever. Don't confuse a highly active, easy to penetrate market with a bubble.
I don't understand your point (6) - intuition and a small amount of experience tells me that users judge software overwhelmingly by its design - can you elaborate on this?
Regarding (6): Users judge by design, if design is all your app has. If you are providing an enormous amount of content thats of value to the user, design becomes secondary.
For example, 2 of our highest performing apps (about 70-100k per year) have poor interfaces, but killer content that specific users really want access to.
It's important to recognise that we're talking about a shovelware market. If people want to pay $2 for a piece of software, most of that software is inevitably going to be least-common-denominator tat aimed at getting noticed and scoring a quick buck from enough people before it gets lost in a sea of other tat.
It doesn't really matter any more whether it started because of the app store model, or the early developers choosing very low prices like many other new businesses even though they could have charged more, or dare I say cynically pitching instant gratification to a market full of young people with shiny new phones and some but not very much money. The culture today says mobile apps are cheap, and the market will get what it pays for.
It's a shame that making any kind of high-end and higher-priced mobile app is probably a non-starter now. Then again, perhaps that is for the best, and software that solves harder problems or provides deeper functionality or offers large volumes of good quality content is better presented via some other medium anyway.
This. Where $3 are considered a high price you realistically can only produce apps that are worth their low price.
If you try anything different - making a great polished product and trying to strike a hit - all power to you. But then you are playing a lottery and not doing business.
> It's a shame that making any kind of high-end and higher-priced mobile app is probably a non-starter now.
This is what drove us (luckily I must say now) away from mobile to web based SaaS. When we build a mobile app now it's only a complement to our SaaS service and usually is given away for free to get users for our service.
Sadly the geek in me hates the web development stack ... but my inner business guy keeps the geek at bay ;)
Building a XML-based object architecture and then interpreting it into ObjC and Java, then standardizing the data structure it accesses ends up being far better than hacking together a series of poorly performing HTML-based apps.
In short -- native is still best, by far. Put of the contents of an app itself in a standard database that all the native apps can access, to minimize your native code dev time.
Or just use Unity.
I'm curious how you deploy to the non-smartphone devices with Unity, as it only has iOS and Android target support built in.
Do you use the output of some other target's build with your own glue libs for each supported device? Or are there Unity plugins for this kind of thing? Or is it some other kind of wizardry?
Thank you for the post btw.
I believe that currently, the biggest problem in mobile is discovery. I can't remember what problems were prevalent in 1999 but it could have been discovery on the web as well. If you're a startup, life is going to suck for you developing on mobile. You have a name recognition problem on top of developing on a platform where discovery is inherently broken. It will be tough to get those organic installs because on Apple, those are driven largely in part to your placement in the rankings, and there's less to do with SEO on the App Store as there is on Google. So I think success on mobile can be had in only a finite number of ways:
1) You buy your way to the top and hope your customer LTV > acquisition costs (See all mobile games)
2) You spam the hell out of your users on other distribution platforms (SocialCam)
3) You're lucky and you develop a truly great product that thrives on mobile (WhatsApp, Camera+)
4) You can succeed with mobile being a utility, but not the essence of your business (Uber).
If I do want a particular application, I search Google first than the app store. Most probably some one has already gone through the pains of finding an app and has talked about it online.
So discovery problem exists for app consumers as well. And there in lies a startup idea in app discovery but I wonder how Apple/Google would allow that.
After 10 pages of that, I gave up.
Searching the App Store or the Play is a painful experience whether you're just browsing around to find something interesting or if you're looking for something that does a specific thing. The categorization isn't fine-grained enough and the "curators" will pretty much let anything thru without showing any signs of quality or originality.
The desktop software market still suffers from this a little bit, but enough time has passed that some standards for quality have emerged from the general consciousness. You release a desktop app, there are some gold standards to compare to.
If anything, the app market is going to be incredibly painful for quite some time.
From a user perspective, the goal of discovery is to find the best apps that match my interests. This goal is hard to reach because of a poor user experience paired with inefficiencies in search and the download process.
It's this culmination of factors that makes app discovery a headache.
disclaimer: i know these guys
I know that the specific app isn't your point - it's more about the general question of discoverability, but I rarely find too much difficulty finding at least one reasonable example of the kind of app I'm searchig for.
I don't think it's too unreasonable to assume that if you hit product/market fit on Android, you probably hit it for iOS. Launch MVP on Android -> get first 1k guinea pigs -> pivot, iterate, pivot, iterate -> achieve product / market fit -> spend 3 months creating a beautiful iOS app.
"The problem is that all of these different devices require testing for each and every app. They all create a different Android experiences — some in subtle ways, some in big ways. Some run certain Android apps, others don’t. Some apps work fine on one device then are buggy as hell on another one. Sometimes this gets fixed, sometimes it doesn’t. It depends on the popularity of that device and the resources the development team has."
[source] http://parislemon.com/post/29497373610/im-not-sure-fred-wils...
The real issue for fragmentation comes from manufacturers and carriers changing the OS for their purposes in a way that breaks some API functionality in some or all cases. Apps that have to do tricky things with streaming data, multimedia playback, and hardware sensor interaction have this the worst, but just how bad it will be really depends on what you are doing. It should be noted that most devs will never have a major fragmentation problem and that the platform is improving with each major release to make these problems less apparent.
Particularly prescient nearly two years ago: http://news.ycombinator.com/item?id=1675574 (and parent discussion)
> It's really unfortunate that a writer like him gets a voice in an influential
> blog like Techcrunch. I hope he just post things like these on his personal blog.
The main drawback is that all of them (at least the main ones - Scala, JRuby, Groovy, Clojure) all have their own runtime libraries, which bloats the size of the app considerably. I believe most people who go down this route use ProGuard to mitigate this problem.
So how do you get your first 1,000? Do you spend money on some mobile incentivized downloads, or ads, or what?
Who's really 'acting like its 1999' in here?
This would allow developers to iterate more quickly. Insanely more quickly. And would increase the odds of a startup finding product/market fit before running out of funds.
The current 10 days or so of waiting is really killing the iterative process.
Also, app ratings reset for each new update so developers tend not to want to update as often as to not upset their ratings... at least some developers. They need to fix that by not having ratings reset.
FWIW there's some ways of mitigating the iOS review times. For example my apps download a small XML config file whenever they start up or come back from the background. So I can turn on/off features in the app remotely. Of course this requires the features to come bundled with the app. IMO it's worth it if you want to iterate.
1. The audience for the web was very small, in fact most homes were still using dial up in 1999 since cable modems hadn't even taken off yet
2. Launching a startup took quite a great deal of money in 1999, today it's a mere fraction of what it use to cost
3. The economy in 1999 was pretty damn amazing, but the negative side of this is that there was a great deal of dumb money floating around
1. Yes, most startups failed in 1999 and most startups are failing now. This isn't unexpected. Anytime, there is a boom in startups, most of them are going to fail.
If the first 10 startups succeed there will be 100 more. If the first million startups succeed, there will be 10 million more. Ultimately, most of them will fail.
2. imo Andrew is mistaken in assuming that the failures are due to startups having a "super high bar for initial quality in their version 1".
If anything, I'd say that the quality of many apps is too low, Many of the big-name apps are often unstable and crash (not just in the V1 version, but in later versions as well)
References:
1. Main article by David Maloney http://ezinearticles.com/?Small-Business-Failure-Rate—9-Out-...
2. Study 1: Shane, S in the study ‘Startup Failure Rates – The Real Numbers’, 2008 http://smallbiztrends.com/2008/04/startup-failure-rates.html 3. Study 2: Headd, B in the study ‘Redefining Business Success: Distinguishing Between Closure and Failure’, 2002 http://www.springerlink.com/content/u5218354gk84k205/
4. Study 3: Phillips, B. D., and B. A. Kirchoff (1989). “Formation, Growth and Survival: Small Firm Dynamics in the U.S. Economy,” Small Business Economics 1, 65-74. http://grips-public.mediactive.fr/knowledge_base/view/483/fo...
5. Do small businesses have high failure rates? Evidence from Australian retailers. http://www.allbusiness.com/buying-exiting-businesses/exiting...
Accountants and manicurists and dentists and consultants run small businesses they start making money from a very early stage.
Tech startups have a much higher failure rate. The flip side is that these small businesses (accountants, gardeners etc.) don't have the same shot at massive scale/success that tech startups have. Andrew isn't talking about small businesses, his post is about tech startups
For the rest, it seems to me that App Store economics just don't provide enough profit for overhead (personnel and investors needing return on investment) of the traditional startup. One or two-person self-employed shops survive. Great news if you want to be self-employeed and have a good idea; Terrible news if you were planning on winning the startup lottery.
EDIT: Need to point out the above is opinion unfettered from the constraints of fact. I welcome news of facts which refute my guesses.
The other problem is that mobile apps have no "linking" to benefit from cross-linking. WWW spread like wildfire for a reason - it made it so easy to discover new websites and reduced the friction of installation to zero.
When I read the article, I immediately noticed (in the picture) not the Socks.com puppet but the sculpture behind the puppet. The sculpture was called "Puppy" I believe. It was brought to you by Damien Hirst, the brand behind 'Beautiful Union Jack Celebratory Patriotic Olympic Explosion in an Electric Storm Painting’ (2012)'[1][2].
The world's richest artist ($300+M net worth). He is the Madonna, the Material Girl, of the Modern Art world. The person responsible for those inscrutable titles for artwork.
Why is he the world's richest artist? His personal brand. A Marketing Genius (overused, by appropriate here).
He is/was original[3][4].
To be fair, he is using his personal wealth to help create and endow an art museum.
[1] http://www.complex.com/art-design/2012/08/damien-hirsts-flag...
[2] http://www.damienhirst.com/news/august/olympics
[3] http://www.forbes.com/sites/jonathonkeats/2012/07/20/is-dami...
[4] http://www.villagevoice.com/2012-01-18/art/damien-hirst-died...
The reason why Hirst is wealthy is because a bunch of rich people with bad taste think his pieces are the bees knees and will pay absurd sums of money at auction for them.
I'm definitely expecting a pretty big fallout from all the funded startups of the past 3 years, but haven't yet seen evidence.
So, my point is that, its not mobile startups in general that fail, but bad business models. One thing, you can probably be sure of is that, if a startup wants to make the next angry birds, either it will immediately succeed in finding a niche in addictive gameplay or more likely fail a few times before succeeding.
The world is not binary. The market is just fine. Visibility is the only issue with the stores. But other means of marketing always exist.
Other apps like Instagram, Groupme, and a few others have more of a platform feel rather than just a self contained app. Foursquare is another example of an app that is becoming more -- using the acquired data for recommendations, etc.
Do others thing similarly?
[edit] - NOTE - I make the above statement in the sense of trying to figure out how to justify angel/venture backing for what is strictly a mobile app.
A lot of people made outsized returns on the first generation of mobile apps because they were entering a vacuum. And that has encouraged a lot of people to chase the same "easy money". But the market has evolved and matured and the easy money has been taken. So a lot of gold rush mobile efforts will fail. Nobody should be surprised by this.
Is anyone here in that situation?