Since leaving ConsumerBell I get approached weekly with offers to be the co-founder of the next great idea. One would think after having been an entrepreneur I would be eager to help build next thing from the ground up but that couldn't be further from the truth. Now that I work at a software design and development company I probably see more app pitches than the average VC. Having experience as a technical project manager, I help with idea scoping, user experience mapping, and other early-stage product planning. I understand what it will take to build these ideas and I am shocked to see how many startups are destined die in the idea phase.
There is nothing more satisfying than building a successful app that people need, but if it can’t grow fast enough it can be leapfrogged by a cheaper technology in just a couple years. Eventually when all the apps start to consolidate on particular platforms (Facebook, Google, WhatsApp), and once common mobile device types get trumped for another set of mobile devices (iPhone to Samsung, for example), you have to ask, is this app still relevant? How much would you pay for their users? How likely are the users to stay with whatever channel they are moved over to and what is the Long Term Value (LTV) of that?
Like a VC I see right away the market hurdles ahead of a passionate entrepreneur and try to arm clients with wisdom, including similar mistakes that others have made or immature markets that are not ready for disruption. When I was a founder fighting in the trenches I remember what it was like to focus on one feature for days at time. However now as a non-founder I can see the forest for the trees allowing me to give clear and level-headed advice on what will succeed and what probably won't.
Here are some things to consider when deciding whether to pursue an app idea:
Raised Bar for “Minimum Viable Product”
Having a "web mobile version" of your site is no longer enough. The mobile version needs to be fast, clear, look good and function able, and if you are a location without wi-fi? Forget about it. The good news is that the original cost of “Minimum” Viable Products gets lower each year. The bad news is the quality levels are increasing, so be ready to make a beautiful app and have a true product owner on staff.
Raised Bar for “Transactional Experience”
Thanks to Square and Uber, consumers expect real-time transactions with completely accurate email receipts. Before accepting credit cards was luxury, now it’s a given, and the app needs to run data, store billing information for future use, and email exact receipts of goods and services. All of this needs to be done and done seamlessly when in fact it is not automatically seamless in most apps.
The App Store Is Dead
Last winter Apple announced it had over one billion apps in the store with an average of 138 apps being added each day. With so many apps in one place the App Store is no longer a place to easily find an app, nor is it a place where consumers will stumble across apps to download. Once consumers are in the store they usually already know what they want either from Googling a phrase or via a referral from a current user. The App store is where consumers go when they are ready to buy and know what to look for. Most come from a web homepage that links to a mobile app or its mobile profile page in an app store. Having a centralized marketplace for Apps is helpful for reviewing competitors and doing business research related to a particular space, but the real user acquisition wars will be fought in other places. It also means if you launch as a hot app and get featured in the store this may not provide enough of a bump to really speed growth.
Targeted Mobile Advertising Is Dead... for Now
Five years ago advertising was about figuring out how to connect to Facebook and use Facebook user data, now all those algorithms and placement strategies and image tags will need to be structured in accessible databases and applied quickly. Many adjustments will happen to this space around how to apply logic to mobile-advertising, as well as new pricing models around this new “real estate.” How advertising prices user acquisition is important for everyone as it will set the cross-industry bar for what users are worth.
Ecommerce Is Saturated, but Everything Is Ecommerce
Converting technology and getting it right on mobile has been presented plenty of challenges but now those industries that were forced to work in mobile early on are showing their edge. Retailers have the ultimate advantage in understanding ecommerce and transactions -- except the bar is being raised here too. Consumers expect check-in, customizable experiences and loyalty for past customer experience. Industries like hospitality and health are still working with data sensitivity and restrictions while the original players in ecommerce lead the way.
Overall consumer expectations will continue to increase and leak into other industries that will have to adjust technology accordingly, as well as their margins of business profitability. For example, in medical we might see business costs decrease with technology, while in hotel and lodging costs could increase as users demand wifi and data on-site while also using travel apps to find cheaper options. All industries will essentially become ecommerce.
What are trends are impacting the viability of app ideas?
About the guest blogger. Ellie Cachette is VP of Product Marketing at Koombea (@koombea), a design and development firm based in Barranquila, Colombia with offices in San Francisco and New York. You can find her on Twitter @ecachette. Image credit: Phil Campbell via Flickr.