
Mobile app startups are failing like it’s 1999 (2012) - lordgeek
http://andrewchen.co/2012/08/15/mobile-app-startups-are-failing-like-its-1999/
======
callmeed
How on earth is this post getting voted so high right now?

How do you write a post and make a statement like this _without one single
example_? Seriously, give me a list of mobile app companies that failing in
this manner and scale.

I could rattle off plenty of mobile startups that went the raise-money -> no-
traction -> acquihire route. But I don't know what he's talking about here and
he offered no data to back it up.

~~~
zmitri
As someone who builds an app, he was essentially noting that:

Lots of investors made pre-traction mobile-consumer bets in early 2011. Some
even built up teams of 5 or 6 people before having launched a product.

In late 2011 and early 2012, savvy investors quickly noticed that many
consumer apps started to stagnate around 300-500K total users. Although their
total user counts continued to grow, their active user count did not (often
only reaching a few tens of thousands monthly active users) – some even had
exponential decay.

Good examples would be something like Highlight (Sorry guys) or Mixel (Very
well done app, but never grew that big, and got acquihired) or Cinemagram
(Fellow Canadians, raised money, but with Vine and Instagram for Video are now
getting trounced).

Another poignant statement is his closing statement on the closed garden App
Store model, which seems to be having problem creating big hits now, or as
Marco put it the other day, "the rich are getting richer." For example, Apple
has been promoting video apps like crazy, stuff like Vyclone, or Directr get
lots of love from Apple, but you just can't control the masses.

~~~
wallflower
> example, Apple has been promoting video apps like crazy

In the early days (2008/2009), a couple people I know got apps featured in the
App Store. Basically, they got a call out of the blue from Apple.

Now, it seems that it is back to good old fashioned relationships and
community [1] and marketing. Media coverage, for one, being the most
important. Media coverage goes a whole long way longer if the editor actually
knows who you are (e.g. you met them in person and had a real conversation)
and likes what you are doing.

[http://realmacsoftware.com/blog/how-to-get-featured-on-
the-a...](http://realmacsoftware.com/blog/how-to-get-featured-on-the-app-
store)

And they still probably get a call out of the blue from Apple. But not by dumb
luck, by doing the work required and getting better and better (at marketing,
community building and nurturing, the app, all of the above)

[1]
[http://www.kk.org/thetechnium/archives/2008/03/1000_true_fan...](http://www.kk.org/thetechnium/archives/2008/03/1000_true_fans.php)

~~~
zmitri
I feel like what you are saying here agrees with the article.

I've had a banner feature on the photo and video section of the app store. It
only drives a couple hundred downloads a day. The reality is, the front page
in the US is the only section that drives substantial downloads ~50K in a week
is possible with 1st or 2nd position. Neither of those things drive great
users which is again what Andrew mentioned as building PR hype.

Also believe it or not, our banner feature was more or less dumb luck. I mean,
we make a great product, but getting their attention was a lot of luck.

------
spullara
Anyone who reads this and thinks this is what 1999 is like didn't live through
it. In 1999 all these apps went IPO and the founders and VCs made a ton of
money. Many wish it was like 1999.

Edit (please read for amusement value):
[http://www.sandspring.com/charts/cdj0214ipet.html](http://www.sandspring.com/charts/cdj0214ipet.html)

~~~
damian2000
Don't forget this bastion of the dot com crash ... f##ked company's hall of
fame -
[http://web.archive.org/web/20011217223423/http://fuckedcompa...](http://web.archive.org/web/20011217223423/http://fuckedcompany.com/hof/)

------
melling
I was trying to have the conversation about "real mobile companies" today in
this HN thread.

[https://news.ycombinator.com/item?id=5911728](https://news.ycombinator.com/item?id=5911728)

People don't seem to understand that building a company 99 cents at a time
isn't going to work. Real companies have overhead. Sure someone in the Ukraine
might be doing great with $1000/month in revenue but that's not going to cut
it for most people.

~~~
Steko
I don't think moving the goalposts from $30k/month to $1k/month out of thin
air makes your argument more convincing.

"building a company 99 cents at a time isn't going to work"

Except when it does. You could say the same thing about any price point.

From your earlier thread:

"It doesn't sound like the economics are there to build the next EA, id
Software, etc."

Is Rovio not many times bigger than id software?

~~~
ryanhuff
How much of their revenue comes from the initial purchase, versus in-app
purchases? 0.99 is great if you can do it over and over again, and get the
customer LTV much higher.

------
2pasc
The problem described here is partially inaccurate. The problem of the app
store market is that it is largely misunderstood by investors, as it is way
closer to the CD-Rom market of the 1990s than it is close to the web of the
post Google web. Most apps in the app store are games/utilities/social
products...and this is what consumers go out and look for.

Games and utilities can be searched, but the Best Buy truth is that only a few
actually make some money, and this tends to be the best ones that are featured
in the Top 25 rankings (Turboscan, most camera+ or camera add ons, or
SuperCell/Minecraft, etc...). Like at Best Buy, where being featured in the
shelves triggered more sales (ask Intuit). Some vendors have created niche
businesses for themselves, but they tend to be not VC-funded.

Social is a category with a lot of large mobile only players (Instagram,
Snapchat, Tango, WhatsApp, Viber, Voxer, Vine, Grindr, Waze, Kik...) and a lot
of web players (Facebook, Twitter...). None of the mobile only players
monetize their user base right now appart from WhatsApp. What are the odds
that another one can emerge from there in a niche? It's tough, and it's not a
discovery/search problem, because the day that Facebook launched in 2004, Mark
Zuckerberg could not count on search to drive traffic to Facebook as nobody
was typing "pictures of my Harvard Econ 102 classmates" on Google.

If you go back to the web, with the exception of a few social products
(Linkedin, Facebook, Twitter), which businesses make money online?

ECommerce? They do pretty well on mobile if you look at older models like eBay
or new ones like Uber or Instacart.

SaaS? This one is a tricky one, the Apple Store tax of 30% even on SaaS
subscriptions discovered on mobile does not help this market to thrive.

Media? Media is already tough to monetize on the web, but on the mobile with
lower CPM, it's mission impossible.

Lead Generation? This is a very search oriented field, and the Google search
ecosystem will dominate this market until the Google search stronghold
disappears.

Overall, I am not saying that mobile app startups are easy - but I think that
there is a misconception about what they really are - thus comparing to their
web counterpart, when the right analogy might be the software rack at Best
Buy.

~~~
zmitri
Pretty impressive answer, and I agree for the most part.

I do believe there are a lot of apps that do get Apple's approval and get
showcased, but never really make it -- which you do address. A great example
in the video space is Vyclone which go promoted very much, and still gets
front page promotions quite often, but they never really went anywhere.

~~~
2pasc
Sure. Your app can be featured by Apple like Intuit got displayed prominently
in Walmart in the 1980s. But on the web, Vyclone would be available on
download.com, not get accessed through millions of search terms on google
(like Yelp, eBay, Airbnb, Craigslist, Amazon, Trulia, Linkedin, even Facebook
...all consumer web public/quasi public Companies ...)

~~~
zmitri
Do you think that exposure makes the marketplace more attractive or actually
has a role in helping make hits?

Even though app search services do exist -- like Quixey
[https://www.quixey.com](https://www.quixey.com) I'm not sure if they make
sense for most consumers. How do you currently search for apps? Is it by
functionality or because you hear about it from a friend?

~~~
2pasc
Exposure helps make hits for sure... AppGratis was the best proof of that.

The problem of App Search is that app search is a small fragment of the
overall search market, and that most searches on the web are for one data
point (e.g. search for Chez Panisse restaurant in berkeley or weather in
Cupertino). If you have a frequent use case (Yelp, Uber) or an infrequent but
very important one (Opentable, Trulia), you are going to download the app. But
otherwise? You are going to keep searching on Google, not on the AppStore or
on Quixey.

The only way around that would be to index the content of the web content of
the app themselves. It would be great, but only Apple can really do that right
now... and they are not even trying to. That would be in my mind the only way
to make app discovery a reality.

Now for productivity apps/games, they correspond to highly used or niche
applications...but are people really looking for them? In the early days of PC
games, people were reading review magazines and going to their local Best Buy
to discover the best games, and the app store is no exception. I don't see how
Quixey would help me there since most of the best games I have played on the
iPhone are impossible to describe and you would never have searched for them
if Apple had not showed them in front of you...

------
pg
This article would be more convincing with examples.

~~~
zmitri
Here's my take on the situation as someone who bootstrapped a mobile app, got
some traction, and did not end up raising a seed round (We even had a YC
interview). I tried to use some real numbers/examples:

[http://blog.zmitri.com/startups/2013/06/14/you-need-a-
millio...](http://blog.zmitri.com/startups/2013/06/14/you-need-a-million-
users-to-raise-a-seed-round.html)

I can give you lots of specific examples if you send me an email, but I feel
bad calling them out in public, because it's a grind and I don't think it's my
place to do that.

You guys see so many companies that you probably have a fantastic, if not the
best, take on this. I scoured around looking for data and statistics to figure
out what was going on, but you can just ask your companies I imagine.

We're still going either way.

------
gfodor
Startup or not, you need a plan and a real value proposition. Most people
building apps don't have much of either. You need:

\- To understand what pain you are solving, and have a compelling reason to
believe a mobile app is a suitable solution and not a solution in search of a
problem.

\- What competition there is, and how you will beat them or at least compete
on level footing. If there is no competition there is probably no market.

\- Understand who your audience is.

\- Understand how to message your audience. And understand out to get that
message out.

\- Have a way to get feedback, and have a conversation with your audience.

\- Have a way to leverage your early adopters to drive more usage.

\- Have a way to put money and time in one end and get positive App Store
reviews out the other. (Pre-requisites: a product people really like.)

\- Understand your fixed and variable costs. Understand your margins.

\- Have a way to measure success or failure. Have a way to A/B test and
iterate. Be able to see what people are doing in your app and where they are
falling off.

\- Have an plan on how to do all this quickly and objectively.

\- Be able to tell the difference between a doomed idea and an app that just
needs product refinement.

\- Make calculated risks that can be measured. Throwing a giant PR launch over
the fence and saying a prayer is not a calculated, measurable risk.

------
lancewiggs
I got brick walled by a request to sign-up to get posts emailed. That's a
terrible way to welcome new readers.

------
thiagoperes
Since comments on the blog post are closed:

What we need to solve this problem depends exclusively on Apple / Google,
since they chose to follow the native / app store path.

\- Change App Store discoverability, removing the emphasis on Top ranks \-
Decrease delay times between approvals \- Provide a way to discover from where
your users come from

We're also locked to the native approach, which slows down the whole process.
This is also a huge drawback for mobile as a whole. For instance, there isn't
a easy way to crawl apps like Google crawl's pages.

In mobile, we're basically 'recreating the wheel' in many areas. All this
effort could be directed towards supporting web technologies the best way
possible, like webOS was doing in a great way.

~~~
cclogg
I agree 999999999999% with the discoverability problem. Seems like if you were
first on the app-stores you just made money because there wasn't much around
you... but these days they are incredibly saturated (with good stuff and with
crap), so we definitely need a new way to discover stuff.

The stores themselves are really the gate-keepers to installs/sales. Right now
it's just about paying to get to the top of the chart (with a product that can
stay there I guess).

There has got to be another way other than top ranks, and maybe that lies in a
community-driven model of some sorts. Who knows ><

------
victorology
I agree it's difficult on mobile having to support two platforms with many
resolutions.

We have iOS and Android apps but our service is 100% web views from launch ->
registration -> usage. We did this since we are still in the prototyping
process and are not concerned about optimization/conversion rates.

It's been very useful for us. UX has been terrible but we've been able to
gather valuable feedback, make a couple of big changes and a lot of small
tweaks.

Now, we are on the cusp on rolling out to making everything native and
starting heavier marketing.

~~~
brittohalloran
Like this approach

------
ChuckMcM
Its a link baity headline and a content free blog post posted by an account
that is one day old.

The start-up scene today is _nothing_ like it was in 1999, trust me I was
there and I've got the worthless shares to prove it. That said, a lot of
people _want_ there to be a bubble so perhaps they were voting the headline
rather than voting the article?

------
credo
This was previously discussed at
[https://news.ycombinator.com/item?id=4389061](https://news.ycombinator.com/item?id=4389061).
My comment

Two points

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)

------
soheil
It'd be true what's he saying only if you asked one question; what's the point
of agile development? Is it to just release a better product faster? Don't
startups need to do something that others aren't doing? Imagine a world where
somehow, everyone is doing agile development on mobile; so we'd just get
better quality apps faster but how would a startup become successful in a sea
of otherwise also high quality and rapidly iterative apps? The very vicious
cycle that he's warning us against, in another form, is exactly what he's
advocating.

------
durkie
Is this not a symptom of the app standard set by the app store? It seems like
your app store submission is going to be judged largely in light of the the
other apps in the app store, and the design/interface standard there is
already so high...

It seems like getting a "big" app in to the app store is a huge risk because
it requires hiring the type of people that can polish an app to the point that
it's app store acceptable, and those are expensive people. Going in to such an
expensive process with a murky idea/business plan/value proposition seems
suicidal.

------
Zigurd
I write about Android app development and consult to developers of mobile
apps. It is still a tough business to make money selling mobile apps at app
store retail prices. All of my clients have some other business model.

BUT this is changing. The number of app customers is growing very quickly.
Eventually, perhaps soon-ish, volume will overwhelm the currently crappy
economics of selling apps and collecting ad fees.

Ubiquity of smartphones is more than just more customers. Once penetration
gets high enough you can actually buy advertising and PR and expect it to
work. More users drive a virtuous cycle that cures most of what's wrong with
trying to sell mobile apps.

------
greghinch
I don't know if this is true. But.

One mistake I see a lot of companies making is treating mobile like a sandbox.
And I say this having gone through a 3 month accelerator that was for
companies doing mobile apps. The ones that succeed, or even have a chance of
succeeding, build a platform, into which mobile is a conduit. Outside of
games, there are very few mobile apps I can think of that wouldn't be better
built in this way. Call it "the cloud", a platform, or whatever you like. The
point is, mobile is hot right now, but a solid business is more than an
interface, it's a service.

------
FallDead
The author of this article is obviously someone who doesn't see the bigger
picture of mobile apps. The problem is inexperienced developers who drop out
(programmers) think they can 1. Write an Instagram clone or some one hit
wonder app and expect it to help them build a business without any science
behind what they do, obviously those will tank, its a not an app that supports
a company, its shown time and time again that it is the web back end that
supports a company and all those services. btw I am not a web developer, I am
an native developer.

~~~
kalleboo
> its shown time and time again that it is the web back end that supports a
> company and all those services

Saying "it's the web back end" sounds a bit code-centric. Twitter originally
had an extremely broken back-end that didn't scale at all, they were down half
the day. It still got extremely popular.

It's about the gestalt - the service, novelty, differentiation, virality,
targeting, marketing, etc etc.

~~~
FallDead
Yeah I was being to specific but having a service is and a scalable back end
is core if anything to get to marketing etc..

------
pnathan
One thing that I think might be an interesting gamechanger is Mozilla's HTML5
approach to apps. It would be stupendous if FFxOS enabled a much better mobile
app world.

------
epa
What do people really expect though.. I don't understand how all of these
people can just say i'm building an iPhone app! then try and start a company
based around this basis. Come up with an original business model and maybe you
can get somewhere. Instagram was an app, but the app was just the medium for
the service. Think of an app as your store front, what really counts is the
products you sell on a daily basis.

~~~
sliverstorm
_I 'm building a calculator app! We're going to be the next Microsoft!_

~~~
rajeevk
best of luck! :D

------
chmike
My feeling is that this return to waterfall development model is induced by
the app validation process imposed by Apple.

I don't call back in question it's pertinence and efficiency. I just point out
that publishing an app has again become a significant milestone you need to
prepare and be ready for.

So it's not a matter of culture or free choice of developpers. It's a
consequence of particular constrains.

------
boomtest
Thanks for the practical feedback on managing workflow. It's useful to me as a
person who's just getting into developing mobile apps.

------
anuraj
One mobile app seldom makes a business (unless it is instagram, whatsapp
etc.). Sound business model or massive user acquisition will be key.

------
redbluething
It's a false premise that App Store approval = 6 month deployment cycle. Sure
you can move faster on the web, but not that much faster.

~~~
shuzchen
Considering you have to go through the app store approval process _every_ time
you push an update out (so sitting in queue for a week even for bug fixes),
building for web or android first gives you much more agility.

------
31reasons
This blog post is 10 months old, if it matters.

------
jmspring
single app != startup in most cases

