Apple Buys TestFlight

TechCrunch reported rumors (re/code confirmed) that Apple bought Burstly, who among other things, runs TestFlight. TestFlight is one of the popular tools (Hockey is another) for developers to distribute beta versions to testers.

Oh, a developer can dream, can’t he?

A simple way to go from XCode to beta testers without all the insanity…
Knowing who will get the beta before you send it to them…
Raising the limit of 100 beta testers or eliminating it completely…
A/B testing…
Analytics that tell us how our apps were found and search terms used…

Oh, yes. I’m certain I’m reading waaayyyy too much into this acquisition.

Whatsapp And The Stories Behind The Story

If you missed it, Whatsapp was purchased by Facebook yesterday for $19 billion ($16 billion now plus $3 billion in stock to keep the employees around). Whatsapp had 33 engineers serving 450 million active users. That’s amazing and shows what the Internet has done to the structure of businesses. If you aren’t familiar — and I’m amazed at how many industry people admitted as much yesterday — Whatsapp is a mobile messaging service. (I have not used it but am familiar with the company.)

There are some great articles on the acquisition. I’m not interested in recounting those so here they are:

  • Jim Goetz, Sequoia Capitol, recapping the investment by focusing on four numbers
  • Benedict Evans discussing that the winner-take-all mentality of social on the desktop does not appear to be the case in mobile
  • Michael Arrington on failure before success
  • Om Malik on rational decisions that appear irrational
  • bedhead, HackerNews, in his second paragraph discussing wealth inequality

What I am interested in is how the history of each of these two founders shaped the way they created and presented their service. Whatsapp does not store any data on their servers. Once the message is delivered to your phone, it is deleted from the server. Authentication is with a phone number, which means no login or password even. And the service is free the first year and a dollar per year after that. (Absolutely amazing if they figured out how to be profitable at that amount.)

Each of these are grounded in the founder’s personal stories. Jan Koum and Brian Acton both were laid off by Yahoo previously. Both hated ads and decided to go with a very inexpensive subscription, rejecting the standard way (ads) most of these messaging services made money. Jan was born and raised in a communist country. He is fearful of spying and oversight and thus made sure that they didn’t keep any information around. They rarely drew attention to themselves, apparently on purpose, letting their app speak for them instead.

These stories rarely ever get told — our personal narratives and how they are interwoven into the companies we found. It is amazing to see Jan’s and Brian’s stories so boldly displayed for the world with this acquisition. For whatever reason this acquisition feels less like the normal, faceless big dollar acquisitions we so often hear about.

Instead I felt like I got a sense for the people behind the company. I smiled at their success.

The “Blah Blah Blah on Steroids”

Great post from investor Bijan Sabet. In short, less is more:

Over the years I’ve seen pitches for YouTube on steroids, Flickr on steroids, WordPress on steroids, yahoo shopping on steroids, google search on steroids and many many more.

But here’s the thing. Steroids aren’t good for you.

The best way to deal with YouTube is Vine and Snapchat.

Flickr on steroids is a mistake. Instagram was the answer.

Less is more is a powerful notion. But it’s deeper than that. Redefining an experience in a unique way is how you beat the market leader. 

And that’s when you put a dent in the universe.

I, too, like businesses that carve out a small piece of a larger one, redefining it in the process. I heard someone recently say that the only way to kill Excel is to build something bigger and better than Excel. I disagree. The only way to kill Excel is to peel off a small part of Excel and do that better than Excel can. In the process, hypothetically, we make customers who would never use Excel use the new service. Snapchat and Instagram, for instance, peeled off a small subset of Youtube and Flickr, made those pieces better, and in the process made creators out of non-creators.

Here’s another way to think about. Every political poll conducted always queries likely voters. And in every one of those polls, any independents are trounced. But here’s the thing: if an independent wins election it is because he or she appealed to unlikely voters.

I can’t win by attracting the power users of Excel, the equivalent of die-hard Republicans and Democrats. I win by making those without allegiance — the independents — vote with their dollars for my products and services.

A Personal Transformation

The last few years have been the hardest of my professional life. The entire world I grew up in — one of software development and sales — had transformed into something completely different. I realized that to stay relevant I needed to rethink everything I knew.

It’s hard to explain to someone who didn’t live through this change how hard it really has been. In my personal life, the only comparison I can make is the upheaval of having my first child. I went from ignorantly self-centered one day to having a dependent the next, one that required nurturing and training and food and time. It changed everything.

The software world I grew up in was pretty straight-forward. I wrote an app, I sold an app. I made changes to the app and sold those changes. We gave people time to try it. It was my relationship with the customer. I took direct orders and orders through resellers, all of whom shared that customer’s information with me. Retail sales, while slightly different, still meant the customer was my customer as much as it was the retail store’s customer. I gave the customer a little card in the box and asked them to register. If they filled it in they got discounts and upgrades. And no one told me what my product could and could not do. That was between me and my customer.

This world existed long before I started selling software myself, of course. When I bought AppleWorks in middle school, we went to a store and bought the discs (floppy!). In college I ordered software through company’s websites and online outlet malls. When I started Infinity Softworks in 1997 there was little question about the business model. I charged a price and sold our software to customers. That’s how all software was sold. Outside of AOL there was still little conversation about subscriptions and ads in apps.

While the Internet world was causing upheaval, the Mobile world remained in ignorant bliss. For the most part we still couldn’t connect to anyone anyway so business models mimicked the previously disconnected desktop market. In the Internet world entirely new business models were being explored. Advertising, two-way markets, three-way markets, networks effects, subscriptions, freemium, servers, bandwidth, space … it was an orgy of possibilities. But in mobile? Give away trials, sell a product, sell an upgrade. Yes, we did freemium, too, but I’m not certain anyone thought of it in those terms. It just meant the trial was indefinite.

My personal transformation began a few years before the iPhone and App Store. In 2006 we had spent two years developing a new education product — my first specifically developed for the web — and upon release found no buyers. I’d never had that happen before. Every major product I had ever created was met with love and at least a little cash. But not FastFigures. It was met with crickets.

When FastFigures fell apart I knew the company was in trouble. We had nothing else. Our dominant platforms — Palm and Windows Mobile — were stagnant at best and our sales had fallen 80% in the previous two years. So I started talking to a friend about an acquisition. His growing web-based education company needed product management help and was considering moving from grades 2-4 education into higher levels. I had technology and experience that could help.

During the acquisition discussions we had many conversations about web apps and education on the Internet and how that world was different from mobile. I also started exploring lean startup concepts. My transformation had begun.

The deal eventually went south and my lessons eventually went to the back-burner when the App Store launched and the gold rush ensued. It was so easy! Just build an app, put it in the App Store, and let massive volumes take over. Never mind that prices had dropped below the cost to market them. Never mind that connected devices meant different products. Never mind that English-speaking nations were no longer the dominant markets. Never mind that no customer information was being shared with us and we had no insight into how we were discovered.

We did okay for a while. Our sales grew and then the iPad happened and they grew more. We started experimenting with all the new-fangled ways to sell a product: freemium, in app purchase, multiple apps, multiple platforms, white labeling (developing our software in someone else’s name).

I knew we were in trouble, though, when everything we tried meant no increase in sales, just stagnation. We needed to do something else. We needed to get back to basics. Build a company, I told myself. So I started to reconnect with what that means and had meant on the web. I revisited my lessons. I researched the companies and businesses that were making it work and what they were doing right. I read about the failures and where they went wrong. I re-read Moore and Christensen and Blank and tried to digest old learnings with new eyes. We began re-thinking everything we knew, including the very product that had been apart of my soul for almost two decades. What does this mean in the modern era? What job are our customers trying to solve? Is it still relevant?

I won’t sit here and tell you it has been an easy journey. I have made many wrong turns that needed to be retraced. I ran into more than my share of walls that I have had to walk around, tunnel under or climb over. And I’ve done all this while trying to stay in business, doing anything we needed to fight another day, taking deals that helped pay the bills and other deals that helped teach us the technology.

I’m certain I hurt myself. I talked about Equals too early to certain people who I thought could help. I sent emails to customers far too long before we were actually ready. But I tried to learn from every one of these situations, striking up conversations with customers and engaging others who could help over and over again to expand and improve my thinking.

It’s been three years since I started this process in earnest, this transformation. And while I haven’t spent every waking moment on it — and not certain it could have been faster if I had — I feel that the corner has been turned. I have this theory that businesses move slow until they move fast. The whole point is to be ready to move fast when the business is ready.

I’m finally ready for the business to move fast. My transformation is complete.

Editorially and Disruption Theory

I received an email yesterday that the web service Editorially is shutting down May 30th. Editorially was a collaborative word processor with markdown support. I played around with it a few times but would not consider myself a regular user.

There are too many thoughts here to organize coherently — from a pendulum swing between bundling and unbundling to jobs to be done theory — but today I want to focus on disruption. This is the realm of Clayton Christensen, who was one of the first to write about how disruption occurs. In short, disruption is the act of small companies taking away pieces of a big company’s business a little bit at a time and how that big company is so busy trying to make profits that it is willing to go upstream and let the little company have those small pieces. Eventually, there isn’t enough left to sustain the big company.

What does strike me, though, is how many companies are attacking the Office suite of products in this way. Editorially was attacking the collaborative editing (track changes) capabilities of Word. In this case disruption didn’t work.

Others have attacked pieces of the calendar, email, contacts, memo pad, presentation, spreadsheet and database applications with varying success. Even obscure uses have been peeled off and made their own categories. Once upon a time, if I saw something interesting I wanted to save and read later, I’d save it to a Word document. Now I use Evernote.

Sometimes it works. Quickbooks, I’d argue, is a very fancy database application, one I could have written at the time I started. Now services like Freshbooks are attempting to disrupt Quickbooks by focusing on one aspect of that business — billing — and peeling that off into a new service.

A few years ago when it became obvious to me that the old way of developing and selling software would no longer work [1], we started designing and prototyping all kinds of ideas. In almost every case I was employing disruption theory, looking at how each of the Office products were being used (what job it was hired for) and attempting to imagine ways in which web, connected devices and modern technologies could improve those processes. Ironically the one I didn’t originally see as disruptive — Equals — is the one we chose to pursue.

[1] One-time sale at a sustainably high price with upgrades. See my Mobile Portland presentation for details.