how to build an app business.
An entrepreneurial mindset isn’t something that people are born with. Nor is it something they pick up overnight. Entrepreneurship is the gradual chipping away at a piece of marble to reveal beauty within. Mistakes are a part of that process. They can never really be avoided, but they can be minimized by starting correctly.
I recently spoke at Google I/O Connect on how to build an app business. The founder’s journey is much more than just compiling an app and putting it on the store, and I put down a summary of the talk that captures the highlights of building, launching and scaling.
Build
User-centric design philosophy has made us idealistic. We aspire to improve everyone’s lives all at once. The classic “design for the user, and all else will follow” philosophy has made the rounds online for some time now, but it carries an implicit assumption. Our address isn’t 1600, Amphitheatre Parkway, Mountain View.
The philosophy is valid. In theory, it will improve user experience and retention rates. Reality however, is frugal, and we can’t solve everything on day 1, or even in Q1. More often than not, especially in early stage companies, these improvements do not match up with current business objectives. They’re nice-to-haves, not must-haves. The must-have is revenue.
- Very early on, define your ICP - your ideal customer profile - and keep them at the center of your ideation and build processes.
The idea that strikes you in the proverbial bathtub rarely remains the same form when it becomes a product. The journey from idea to opportunity is filled with user feedback, peer review, and constant evolution.
While it may be tempting to lock yourself away for a month or two and then unveil your grand idea to the world, it is more sustainable to adopt a gradual and incremental build process. Feedback from users is early, and often. Tweaks are easy, and part of your weekly release cycles. Pivots are one sprint, rather than a complete rewrite. Burnout is rare, and unlikely to end with a broken screen.
- Start with a minimum viable product, get feedback early, and build incrementally.
As you build your product, you likely have a monetization strategy in place. You know how your app will generate revenue - whether through paid installs, a subscription, or advertising (or even ransomware (for the more depraved). However, it is also important to have a revenue evolution strategy. As your business grows and scales, you will unlock new distribution channels, demographics, and monetization opportunities.
- Have a monetization strategy, for Day 1 as well as for Day 1000.
Launch
Uploading your finished app to Google Play or the App Store, and then sending the link to friends and family isn’t a ’launch’. Launching requires a plan. Are you going to announce your product, build a waiting list, and then bulk email everyone? Are you going to tease something big coming, and go live in a blaze of glory? Are you going to do an invite-only registration process and create hype around getting an invite?
Each of those approaches is a viable launch strategy, but they require thinking through. Plan your launch strategy, target as many launch channels as you can, and have a backup in plan if your initial acquisition spike isn’t as sharp as you’d like.
- Follow an omnichannel app launch plan, but be realistic about it.
Sending the link to your app’s store page to people in your circles isn’t acquisition. It’s closer to collecting compulsory approval. Instead, have a viable plan of how you’re going to acquire users. Where does your target audience typically hang out? What motivates them to try your product? Can an initial incentive help sweeten the deal? Figure out that acquisition strategy for your first 10 users, your first 1000 users, and your first million.
- Have a plan on how to acquire your first 10 users, and your first 100.
Now that you’ve figured out acquisition, your signup numbers are skyrocketing. The graph is rising as quickly as Twitter’s share price is falling. Good job. Time to get introduced to ‘churn’. Every user on your app has a lifespan. For some dedicated users that can be years, and for some it can be mere seconds.
When that graph of user acqusition is done rising, and has plateaued, it’ll start to dip. That is not the defining moment that you start looking up how to retain users. Nor is it the moment you send more push notifications. Retention strategy should be a part of your plans from day 1.
Factor in the average user lifecycle, the personas in your target audience, and the approaches you can take, such as gamification, referral programs, incentives, and yes, push notifications. Within limits.
- Have a retention strategy in place from Day 1 itself.
You’ve probably heard of how there’s no such thing as bad publicity, and any publicity is good for you. Refer to the earlier mention of Twitter’s share price, and you’ll see that unravel. Data however, passes that test. Right from where people are discovering your app and how long are they taking to sign up, to what geography they’re in and what device they’re using - every single data point gives you a new perspective on your audience. People taking time to sign up? Make your onboarding easier. Popular in Texas? Add barbecue chicken wings to your app icon.
- Track everything, and track some more. Data is everything.
Scale
You’ve probably tried all the traditional methods of getting the word out about your indie game: sharing it on social media, sending the link to your friends and family, and so on. But don’t forget about your actual users. They are your most reliable ambassadors! Go the extra mile and make their experience more rewarding by incentivizing in-app shares, implementing a referral program, and more!
- Deploy organic scaling like incentivized sharing, referrals, etc.
Inorganic marketing is often overlooked by indie developers, but it can be a powerful tool for growth. Advertising is a tried-and-tested way to reach a large audience, and it can be incredibly versatile in terms of whom you reach and how you reach them. Consider putting money into digital advertising platforms and influencer marketing, or even physical marketing such as a newspaper or storefront!
It’s important to note that inorganic marketing can be expensive, so it’s important to track your results and make sure you’re getting a good return on your investment. However, if you do it right, inorganic marketing can be a great way to grow your indie business.
- If resources allow it, add inorganic marketing to your plan.
Some of the world’s largest companies use brand cross-promotion at staggering scale. For example, Netflix and Spotify have a cross-promotion deal where Netflix subscribers get a free trial of Spotify Premium. This is a win-win for both companies, as it helps Netflix to attract new subscribers and Spotify to retain existing subscribers.
Indie developers can do the same thing, albeit on a smaller scale. For example, you could make an app that helps people learn to code. You could then cross-promote your app with an app that teaches people how to design websites. This would be a good fit, as both apps are aimed at people who are interested in technology.
Cross-promotion is a great way to get more people to download your app. It’s also a great way to build relationships with other indie developers. So get out there and start making friends!
- Collaborations are a powerful way to growth hack your audience.
A few months later, your business is booming. You’re thinking about quitting your job to run the company full-time, hiring more engineers, and even starting a sales team. But before you do any of that, it’s important to break even.
Don’t raise money until you’re profitable. Money should be used to scale your business, not to cover your day-to-day expenses. Focus on generating revenue and building a sustainable business model. Once you’re profitable, you’ll be in a much stronger position to raise money and grow your business even further.
- Fundraise to scale, not to sustain. Keep a 6-month runway minimum.
Summary
Build
Define your ICP and keep them at the center of your process.
Start with a minimum viable product, get feedback early, and build incrementally.
Have a monetization strategy, for day 1 as well as for day 1000.
Launch
Follow an omnichannel app launch plan, but be realistic about it.
Have a plan on how to acquire your first 10 users, and your first 1000.
Have a retention strategy in place from Day 1 itself.
Track everything, and track some more. Data is everything.
Scale
Deploy organic scaling like incentivized sharing, referrals, etc.
If resources allow it, add inorganic marketing to your plan.
Collaborations are a powerful way to growth hack your audience.
Fundraise to scale, not to sustain. Keep a 6-month runway minimum.