Start date: Saturday 18th of October 2014
Chapter 1: The View From The Inside
Introductory material. Generics. Nothing really to extract
Chapter 2: Mobile Genetics
This chapter goes through the history of computing and the evolution from desktop computing to mobile computing.
Some Mobile Stats
- The number of mobile phones exceeded the number of people today: 7 billion!
- The number of smartphone users will exceed 1.75 billion in 2014.
- In 2013 people spent $25 billion on apps - a 62% increase on 2012.
- Smartphones are 15 times faster than the Cray-I (1979)
- Smartphones users are spending 2 hours and 38 minutes a day on their phones (17%)
- The most popular revenue stream for mobile apps are paid-for apps, followed by in-app purchases (projected to equal paid for in 2017,) then advertising which is miniscule (10%-15%)
Apps Make Us Feel Good
In 2013, Facebook conducted a study. Smartphone users were asked “How do social and communication activities on smartphones make you feel?” The two strongest sentimets expressed were ‘connected’ and ‘excited.’
Leading apps capitilised on this by focussing on design, usability, performance and things like the tone of voice used in their copy.
A 2013 study by Harris Interactive found that 75% of people are always within 5 feet from their phones, and 10% have used one during sex.
Chapter 3: A Billion Dollar App
According to Dr. Donald Brown from the University of California, there are 67 human universals that all people share:
Age grading, athletic sports, bodily adornment, calendar, cleanliness training, community organization, cooking, cooperative labour, cosmology (study of the universe,) courtship, dancing, decorative art, divination (predicting the future,) division of labour, dream interpretation, education, eschatology (what happens at the end of the world,) ethics, ethno-botany (the relationship between humans and plants,) etiquette, faith healing, family feasting, fire making, folklore, food taboos, funeral rites, games, gestures, gift giving, government, greetings, hairstyles, hospitality, housing, hygiene, incest taboos, inheritance rules, joking, king groups, kinship nomenclature (the system of categorising relatives,) language, law, luck superstition, magic, marriage, mealtimes, medicine, obstetrics, pregnancy usage (childbirth rituals,) penal sanctions (punishment of crimes,) personal names, population policy, postnatal care, property rights, propitiation of supernatural beings, puberty customs, religious rituals, residence rules, sextual restrictions, sould concepts, status differentiation, surgery, tool making, trade, visiting, weather control, and weaving.
If your idea resonates with a human universal will maximize the appeal of the app. This is a good checklist and worth checking to see if you can match apps that correspond to each one.
150 Times A Day
Tomi Ahonen publishes the Mobile Almanac, and according to his research, people check their smartphones 150 times a day. Here how it’s broken down:
- 1 Messaging, 23 Times Per Day: Facebook, Google, Tango, Whatsapp, Viber, Snapchat.
- 2 Voice-Call-Related, 22 Times Per Day: Skype, Viber, Google Hangouts.
- 3 Clock, 18 Times Per Day: Huge market opportunity. No killer clock app yet.
- 4 Music Player, 13 Times Per Day: Discovery, purchacing, playback. Tricky market because of record labels. iTunes, Pandora, Spotify.
- 5 Gaming, 12 Times Per Day: Huge potential. Tricky because very competitive and gamers higher standards. Candy Crush, Angry Birds, Clash of Clans, Hay Day.
- 6 Social Media, 9 Times Per Day: Twitter, Facebook, Instagram. Very hard to break into now, with all the different integerations these apps have on mobile and desktop.
- 7 Alarm, 8 Times Per Day: Big opportunity. No killer app. iOS alarm clock is good enough?
- 8 Camera, 8 Times Per Day: Oversaturated market. Over 5000 apps in the Apple’s App Store. But fast-changing, might have a billion dollar app in the near future.
- 9 News and Alerts, 6 Times Per Day: Massively fragmented. But Flipboard.
- 10 Calendar, 5 Times Per Day: This space is crying for attention. Nothing really stands out here (from a mobile perspective.)
- 11 Search, 3 Times Per Day: This refers to actualy searching content on the phone. Difficult to compete with native OS search.
- 12 Other Random Web Browsing, 3 Times Per Day: How will this evolve? How will future browsers challenge current?
- 13 Charging Phone, 3 Times Per Day:: Nothing in terms of software/apps. For now.
- 14 Voicemail, 1 Time Per Day: Meh. Spinvox ended in tears after burning through $100 Million.
- 15 Misc. 10 Times Per Day: What new markets/ideas are here?
People love to share. It gives us a small jolt of dopamine everytime we share according to Diana Tamir and Jason Mitchell of Harvard.
Companies that leveraged sharing: Instagram. Groupon took something that is not inherently shareable and capitalized on social media.
Saudis lead the chart with over 60% of its population share. The world population is 23%. China at 33%. While the USA at 15%.
Disruption Comes in Many Flavors
It’s about being innovative, fresh, and disruptive. Taking it to the next step. Mere enhancements won’t cut it, as current apps are already well positioned to do that. Look for the WOW factor. Captivate your audience with your wow.
Chapter 4: It’s Bloody Hard
0.07% of funded startups become billion-dollar companies
What about the other 99.3%? Here you go:
- 11% Exited Startups: Average successful startups raised $41 million at a valuation of $242 million. There is a coorelation between amount of money raised and value at exit. Suggesting that raising more money indeed creates more value. (Me: coorelation does not mean causation) Here is how they exited:
- By getting acquired: Raised $29.4 million and sold for $155.5 million. It takes an average of 7 years to build a company to this level.
- By IPO: Raised $162 million and generated $467.9 million in IPO. It takes an average of over 8 years to build a company to this level
- 25%-30% Complete Failure: i.e liquidation
- 40%-50% Just Barely: Profitable enough to keep going, but not enough to be aquisition targets.
Of all startups, 60% make it to 3 years old, and only 35% make it to 10 years old.
Billion-Dollar Secret Sauce
What are the common factors in the 43 (or .07%) billion-dollar companies?
- It Takes 7 Years: Minimum was 2 years (Youtube and Instagram.) Maximum was Pandora (11 years.)
- 5 Business Models That Work:
- Gaming, virtual goods and services
- Advertising (or consumer audience building to advertise to later)
- Experience Matters:
- Average founders age is 34 years old. Despite all youngsters media hype; it’s not true.
- Founders known and/or worked with each other for many years. 90%
- Only 4 companies had one founder
- All but two companies had a technology experienced founder
- 80% had a co-founder that at least started a company before
- Most CEO’s Stay For The Long Haul
- Education Gives You An Unfair Advantage:
- Only 8 were college dropouts
- 33% went to Stanford
- 8 went to Harvard, 5 to Berkeley, and 4 to MIT
- Location: 27 companies based in San Francisco, 3 in New York (distant second.)
What Does This All Mean?
Start with a big problem, a novel solution and a huge market ready to adopt it. Then build a great product that users love, and then prove they love it with data showing they are willing to pay for it. Combine that with a robust strategy that attracts users systematically and at a cost that is less than what users will potentially generate in revenue for your app
Combine all of this with a diehard team sprinkled with people who have built companies before, and you’re going to maximise the chance of building an app business that is going to last. The formula is not magic, it is simple, and it’s about how religiously you adhere to the tactics and the calibre of people you attract to join your journey.
Chapter 5: Let’s Get Started
5 Business Models
Discussed earlier. See above.
Attracting The Best
What to look for in a cofounder: Chemistry between you, complimenting skills, and passion.
Where to find cofounders?
- Developer meetups
- Tech conferences
- Startup Weekend
- Techcrunch Disrupt Hackathons. Hackathons in general.
Once you found a potential cofounder, go out for dinner, hang out, create a proof of concept together. Ensure that there is chemistry, complimenting skills, and passion.
There are two types of snake-oil cofounders that you should be weary of:
- The ‘expert’ that wants to charge you upfront: They seem to be knowledgable, claim to have connections and having a sense of what’s hot. They get very excited about your idea and start throwing ideas at you. They talk about deals they helped facilitate for others. Basically a sales pitch. Then they proceed to recommend to book a session to formalise the deal. Hint: The real movers and shakers of the Internet offer help for free if they think you have the motivation and motivation. BEWARE: snake oil!
- The professional business advisor or coach: They often have a website, a big network of other ‘business coaches’ and have a couple of deals in their name. They start by offering their business coaching skills, and throw in legal and investment advice. However they don’t ask for money upfront, but ask for equity. Don’t fall for that. Invite them to your board. The running rate for top advisors in Silicon Valley board seat is 1%. These guys will be asking for 10, 20, or maybe even 30 percent. Don’t fall for that. BEWARE: snake oil.
Chapter 6: Solving the Identity Crisis
Creating a robust name and brand is very critical but damn hard. 1000’s of apps are vying for attention. You need to stand out!
First impressions matter. Your brand should be:
- Short, catchy, and memorable: Waze is about finding ways. Snapchat is about chatting rapidly.
- Distinctive: Uber. Make something up, like Etsy.
- Clever, and makes people smile: Square, allows people to ‘square up.’
- Can it be a verb? Google a word. Hailo a taxi. You can’t force this, but should be conducive.
Finding A Great Name
Get together with friends, make a drinking game out of it. Shots for good ideas. But if that is not your thing, here are some other options:
- Namestation: A powerful combination of word generation tools.
- Sedo: Largest premium domain seller on the Internet.
- Domain Name Soup: A fun name generator.
- Instant Domain Search: Simple and quick domain check, no refresh.
- Domize: Similar to Instant domain search (Added by me)
Chapter 7: Getting Lean and Mean
In 2012 there were about 4,000 unique devices running Android; in 2013 it was around 12,000. About 600 companies manufactured these devices.
Key takeaways from this chapter:
- Read Eric Ries book The Lean Startup.
- 73% of purchases in app stores came from Apple users.
- 1.9 billion Android phones vs. 700 million iOS in 2013.
- It might be viable to have your app paid-for on Apple, and free on Android.
- Only one platform at a time. Perfect it and move on to the next. iOS or Android. Not both together. (me: how viable is this especially with the interdependent nature of the apps I am developing now? i.e Haweee and Currrva.)
- Do not copy the design of one platform to other. Build from the ground up.
- Android is severely fragmented. Try to have the top 10 Android phones to test.
Chapter 8: App Version 0.1
At this point you want to focus on the MVP (Minimal Viable Product,) the most basic features that will make your app unique. For Hailo it was focusing on how a user would could see nearby taxis on a map, then hit the ‘Pick Me Up Here’ button and have a driver accept the hail. Hailo also added the ability to see the driver come towards you.
Hailo knew that they had to build two apps, one for passengers and one for cabbies. They started with cabbies app because if passengers because if there wasn’t a large enough supply of cabs, passengers would lose interest.
After a long debate, Hailo team agreed on three features:
1- The ability for cabbies to report bursts. For example at the end of a concert where there is clearly a shortage of taxis. 2- Statistics. How much taxis have driven, and how much time they were occupied. 3- The ability to process business cards.
Every week they hosted 15 drivers for breakfast at a restaurant and shared with them paper prototypes, iterated the designs, recieved more feedback, until they got to the actual developed app.
They cut many corners. They faked the credit card processing. The card reader wasn’t working. Just recorded how much the passenger paid using the fake credit card reader. Eventually they delivered credit card processing. Instant revenue. Profit!
Same thing happened with the passenger’s app. They faked it, they cut corners, but got their wow!
The point is to get to the wow as cheaply and effeciently as possible. Using paper designs to to get real data, real validation. The opposite would be spending three month and a lot of money on something that will not attract your target market.
The data generated, and seeing it in action will help prompt existing and potential investor to invest more for version 1.0.
Wireframes and User Journeys
Wireframes are blueprints of your app. It has the following goals:
1- To illustrate what each screen of your app looks like
2- To explain how your app behaves
They will be used to communicate with potential users, your designers, your developers. All stakeholders.
Some wireframe tools:
Good design is as little design as possible - less, but better - because it concentrates on the essential aspects, and the products are not burdened with non-essentials. Back to purity, back to simplicity
Dieter Rams 10 principles of good design:
- Is innovative
- Makes a product useful
- Is aesthetic
- Makes a product understandable
- Is unobtrusive
- Is honest
- Is long-lasting
- Is thorough down to the last detail
- Is environmentally friendly
- Has as little design as possible
Design is important because compeition in the app world is high. 26% of users will open your app and never open it again. You need to make the first impression count.
Learn from the best
Download the top apps: Snapchat, Flipboard, Angry Birds, Puzzle and Dragon, Uber, Candy Crush, Instagram, Square, Waze, Whatsapp, Viber, Tango, Pandora. And of course Facebook, Dropbox, Evernote, Amazon, and eBay.
Discover and collect screenshots
Keep a folder in your Dropbox where you collect great designs. Frequent pttrns.
Functional versus beautiful
Try to get both. But functional is always the priority. Always!
Behance and Dribbble are the way to go. Also check out the the Dribbble section of designers looking for full-time and part-time jobs. Try to think how you can recruit this amazing designer to work full-time with you.
Use tools like proto.io to link screens together and have a prototype on your phone. This is important because real estate on phones is valuable, these prototypes will help you get a ‘feel’ of your app. Also you can communicate easily with your team and users this way.
You are either developing it yourself, or outsourcing it. If you are doing the latter, you should be thinking on how you can recruit a developer to your team.
Your app shouldn’t be super polished. Remeber you just want to put it in the hands of your users. Shoot for a few hundered, ideally a thousand.
You MUST measure. Here are some tools:
- Google Analytics
- Flurry it’s free, has a bigger footprint, lacks powerful segmentation and geograpaphical segmentation is weak.
- Localytics very good. Though lacks the wide and robust feature set of Mixpanel
- Kontagent a bit behind, more focused on sales rather than product and engineering
Chapter 9: Metrics to Live and Die By
A simple framework developed by Dave McClure of 500 Startups. The AARRR. Each app is different, you will need to define the metrics. Set the bar high, avoid non-actionable metrics or vanity metrics. Try to bake this even in your MVP. A useful way is to framework your AARRR around the user lifecycle.
- Aquisitions: Users downloading your app from multiple channels. Set the bar high, not just a download, but perhaps launched the app and tapped a button or spent at least 10 seconds.
- Activation: Users enjoying their first ‘happy’ interaction. Minimum threshold of engagement. Created an account, clicked X amount of clicks, or spent 60 seconds in your app.
- Retention: Users coming back to use your app. This is critical. How many times a user launched your app, and how many times they launched the app and used it for its main function. Maybe even look at emails, how many times does the user click on the emails you send them.
- Referral: Users recommending your app. Tricky, but promo codes can be helpful if your app allows it, or how many invites they sent out, or how many shares.
- Revenue: Users completing an action so your able to monetise. Aim to make this work from the beginning. Also measure discounts, gross margin, and refunds.
Chapter 10: Let’s Get Some Users
How will Users Find Your App?
####Percentage of App users Who Find Apps Via Each Channel
According to Ankit Jain, Google Play’s head of search and discovery:
For the average app, search makes up the majority of installs, and 12 per cent of daily active users on Google Play search for new apps daily, with a further 50 per cent search for apps weekly.
- App store search 63%
- Friends/family 50%
- App store top charts 34%
- Pre-installed apps 20%
- Social 19%
- Websites-general 16%
- Web search 14%
- Websites-blog 7%
How to be Found in the App Store
- Your app title: Similar to the title tag in HTML. Include both what your app does and branding. ‘Whatsapp Messenger’ and ‘Square Wallet.’
- Description: This is Android specific. Break down to two sections. Above-the-fold and below-the-fold. Above-the-fold includes 1-2 sentences describing the app and its primary-use case. While below should have a clear and engaging feature set and social proof. An example:
Open Square Wallet to find great local businesses anywhere you are. Square Wallet puts your credit card, loyalty cards and receipts into one app
- Keywords: This is Apple specific. You have 100 characters to tell iTunes which keywords your app should show up for searches. Focus on relevant, high-volume, and unique words. Don’t use spaces, commas are enough.
- Icon: Have a clear memorable icons. You have about 11 characters within the icon. Don’t ever go over 11. Take this into consideration when choosing a name for your app!
- Screenshots: Tune them to communicate the details of you want about your app. Clear communication of functionality and features.
Your App’s Website
Ideally you want to focus on helping people download your app. Crispy, snappy description, clear download button on the top. Responsive website, check the device type and show relevant app store icon, use Bootstrap (me: Foundation!)
Domain Names: Grab your domain as quickly as possible. Grab obvious misspellings. Grab co.uk, .fr, and .cn. And any other country you think is pertinent. You don’t want people grabbing these when you become popular and charge you $1000’s!
Alexa: Guage your ranking
- Backlinking to yourself
- Create a sitemap: So web crawlers can find you
- Image Descriptions: Fill up your alt tags with relevant keywords
- Fresh Content: Blog. Ideally once a week
- Make it social
- Link, Link, Link
- Have a great press kit: Make sure you have at lease a mini section for press. Include all info about your app and company: photos, logos, screenshots, ‘about us’ pages. Make it easier for journalists and bloggers to write about you. They are lazy.
How Mobile Advertising Works
Three synonymous acronyms: Customer Acquisition Cost (CAC), Cost Per Acquisition (CPA), Cost Per Download (CPD). Optimize this. CAC is $1 and making $2 per customer, you got yourself a business! Otherwise you have a big challenge ahead of you.
Mobile ad platforms: Most popular for Google is AdMob. Others are Millenial Media, iAd (from Apple,) Flurry, in Mobie, Chartboost, MoPub, Amobee, HasOffers, and Euclid Analytics.
Chapter 11: Is Your App Ready For Investment
People who provide that initial injection of cash to get the first version of your app off the ground (quite often friends and family.)
You can find angels at Angel List. Generally Angel groups are very localised. So do some research.
They are like normal bankers. They will lend you money. Unlike bankers, they won’t charge you interest! For every 10 companies that a VC invests in, their goal is to have one company make a tenfold return, three companies to return five times the investment, three or four to break even, and two to three no return. At this stage, it’s probably too early to talk to VC’s.
Shark as Friends
Try to befriend VC’s even if you are not looking for their money, as they see the inside of many successful and failed companies. If you know anybody at the very best investors (Accel, KPCB, Sequoia, USV) they can give you a very good steer and brilliant advice.
Accelerate or Incubate
These are popping all over the world, yet only a handful yield any kind of meaningful results. Here are some worth looking into:
- 500 Startups
Chapter 12: How Much is Your App Worth and How Much Money Should You Raise?
Cash flow is more important than your mother
If ou are a small team with little experience and need 13 months of runway, $200k might get you there, with a lower-end spectrum valuation of $700k
However if you team is more experienced/has a track record, and you need a bit more runway. You might need to raise $1M with a $4M-$5M valuation.
According to Angel Capital Association, median pre money valuation of companies that are not yet generating revenue:
- 2012: $2.75M
- 2011: $2.1M
- 2010: $1.7M
This means the valuation of a typical Silicon Valley startup is $2.75M. On average, they raise about $750K, meaning they are worth $3.5M and investors own 21.42%.
A convertible loan is a loan that has to be paid back with interest. The difference is the conversion feature gives the investor the option to convert into equity into your company.
Convertible loans avoids the valuation discussion and the potential of ‘getting it wrong.’ In exchange for the the flexibility offered, investors will end up getting a discount when they convert the loan amount into equity in the next funding round (typically 20%.)