Celebration Of New Life

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Jason Cohen wrote a great post on newborns versus start-ups. It is beautifully written and wonderfully thought through. His love of his daughter comes through so clearly, and makes me think of my own daughters and the daunting task of raising them and raising Infinity Softworks at the same time. There are many comparisons between start-ups and babies. Jason points out a few:

For example, both spend the first two years of life actively trying to kill themselves. And you spent that time frantically running around doing everything possible to prevent that eventuality.

Both are a combination of your own creation and their own direction.

How much time do they take? All of it.

How much patience do they take? All of it.

But one thing both share is not only important, it’s one of those few things in life which alters your being in a way that can never be undone and forever changes who you are and how you view and interact with the world.

Both are a crucible.

I found myself agreeing with every word. Hope you’ll read the entire post.

The Wrong Meaning Of Web

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There’s been some great discussion over the last few years about mobile first versus web first. Fred Wilson raised a lot of attention to this two years ago when he wrote a post entitled Mobile First Web Second. Then a couple of weeks ago Vibhu Norby wrote an excellent counter-article on why web should be first called Why We’re Pivoting from Mobile-first to Web-first.

I don’t believe this is the right way to think about the issue, though. I think we are using the wrong definition of ‘web.’

The web definition I’m focusing on is as a set of technologies used for storing and disseminating information. I use ‘web client’ as the front-end technology and customer-facing portion of the site.

Today’s best apps are web apps. Consider Instagram, Foursquare, and Google. Calling them web or mobile companies is a fallacy. None of them are web-client nor mobile companies, meaning their businesses aren’t built on the customer-facing portion of the service. All of them are web companies, meaning that their business models rely on the web back-end. This does not imply anything about how we interact with the service. Google search is primarily used in a web browser. But I’ll bet that Google Maps is primarily used on mobile devices. Foursquare and Instagram chose to start with mobile interaction models, but they are really companies whose primary business resides on the web. Neither service is even possible without the web.

Evernote provides a very interesting insight into this, I believe. Evernote has desktop, web and mobile clients for every conceivable platform. But Evernote’s business is not any of those consumer-facing products at all. Evernote’s value proposition is that they make it really easy to save your stuff and see your stuff. It’s a stuff bucket. This really becomes clear when you look at Trunk. There are hundreds of apps for getting stuff into and out of Evernote. In fact Evernote open sourced its desktop client. Anyone can see the source, create a copy and put out their own Evernote desktop client.

So… is it web-first or mobile-first? That depends on the business. But the business model better revolve around web technology itself. From there, we decide what’s the best way to interact with the service: mobile, desktop or web-client.

The 0.0001%

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According to Canalys, 0.0001% of all app store developers (that’s 1 in 100,000) make 50% of the mobile app revenue. That is 25 companies — not 25% — 25 companies, all of which are in the business of entertainment. And Canalys expects their position to consolidate, meaning they’ll make even more of the app store revenues.

“This is expected to ensure that over the Christmas period in the US, the dominance of key game developers will only increase,” added Canalys VP and Principal Analyst, Chris Jones, in a statement.

I took a look the other day. Year-over-year, Black Friday to Black Friday, our powerOne sales are off 73%. There were three dips. The first is when DEWALT Mobile Pro shipped, which killed off most of our powerOne Construction sales. I’m okay with that as we cannibalized ourselves and still think there is plenty of upside on DEWALT. The second dip happened when HP released the 12c for iPad. But both of those dips were barely felt compared to the dip after iOS 6 launched. Whatever Apple did in the App Store, it killed our sales. We’ll see if powerOne for Android revitalizes them.

More On Free Versus Paid Apps

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After I wrote my article last week on the future of apps being free, Patrick Thompson of Inkstone Mobile emailed me some thoughts on free versus paid. Patrick has written a number of ebook reading and audio book listening apps, with a mix of free and paid apps. His thoughts:

  1. 2 app stores: Treat the paid and free categories as separate markets. It is an over-generalization, but assume people either shop in the free store or the paid store, that they don’t do a lot of comparison shopping between free and paid.
  2. Try before buy: There are so many bad apps on the app store, some people are afraid of getting burned. By offering a free app, you lower the barrier to them trying your app. Hopefully they have a good experience, which makes it more likely they will buy from you. (Especially for more “expensive” apps.)
  3. Disrupt yourself: There are surely free apps that compete with your paid app. You are better off getting that traffic than your competitors.
  4. Visibility: It all comes down to visibility. The more people who see your apps the more you will sell. It is just a matter of the conversion rate. The way most people try to get visibility is via high app store ranking or advertising. But you can create your own visibility through your app portfolio. If they have a good experience with your apps they are more likely to buy other apps from you later.
  5. Cross-promote: Use nag screens and push notifications (sparingly) to reach your app audience.
  6. Monetize free: It is okay to monetize free apps. Users expect it. I find no honor in not monetizing your apps, just poor business management.
  7. Advertise: Advertising in your free apps provides a bit of an irritant that helps push people to upgrade, plus it is a bit of extra income; for me it is enough to pay my mortgage. It increases and diversifies your app income.

 

Hippocratic Oath Of Revenue Models

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Fred Wilson’s post today, a precursor post to his Monday series on revenue models, turned up a lot of food for thought. This one is Fred’s:

I strongly believe that entrepreneurs should pick one revenue model to start with and focus 100% on making that work before rolling out another one. It is very hard to execute two or more revenue models at the same time. Better to nail the first one before rolling out the second.

Another comment from Fred, which was picked up by commenter takingpitches:

[Fred] I am a fan of starting with the most native and easiest to execute revenue model first. Ideally it will be one that improves the user experience or at least in no way harms it.

[takingpitches] It’s the Hippocratic Oath of revenue models: First do no harm.

To the question how do you pick just one model and focus on it, awaldstein said:

I sound like a broken record on this already… but the challenging part is discovering the monetizable value, not the monetization model. Sure the model ain’t easy but unless you sell chairs or smoothies, you need to determine what has enough pull (or the pull is increased ) by the model. Charging is the fun part as long as you have something of value to charge for.

And to the question when do you expand beyond the initial model, Fred responded:

When you’ve nailed the first and its [sic] all execution at this point

Fred talked about the idea of an atomic unit for a product a long time ago and I wrote about that here. William Mougayar and awaldstein got into a further discussion:

[William] The best case scenario is when your “Atomic unit” is very monetizable and valuable at the same time. The tweet is twitter’s unit & they can monetize the heck out of it, in more than one way.

[Arnold] Hard goods or services are one thing. You sell something. Marketplaces bring the customers to you and their atomic unit is that transaction. Twitter/Facebook…media models. It’s clear but still not simple to find a smooth way. Most people either ignore or dislike sponsored adds [sic]. Media models are based on tolerance and work when the population is huge. Understanding the atomic unit is one thing, making a transaction a natural part of the process is not always clear especially in early stages. And sometimes the atomic unit is the razor not the blade!

If this post’s conversation is any indication, this series is going to be incredible!