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Mobile app startups are failing like it’s 1999 (2012)

andrewchen.co

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Re: Mobile app startups are failing like it’s 1999 (2012)

#41

Post by zmitri »

melling wrote: post #6

I was trying to have the conversation about "real mobile companies" today in this HN thread. https://news.ycombinator.com/item?id=5911728 People don't seem to understand that building a company 99 cents at a time isn't going to work. Real companies have overhead. Sure someone in the Ukraine might be doing great with $1000/month in revenue but that's not going to cut it for most people.

Depends what you mean by real. It's very real for a two man team to build something into an app that brings in a few hundred thousand a year (and there are examples of those for sure), but building a huge company is an entirely different discussion.

Re: Mobile app startups are failing like it’s 1999 (2012)

#42

Post by 2pasc »

The problem described here is partially inaccurate. The problem of the app store market is that it is largely misunderstood by investors, as it is way closer to the CD-Rom market of the 1990s than it is close to the web of the post Google web. Most apps in the app store are games/utilities/social products...and this is what consumers go out and look for.

Games and utilities can be searched, but the Best Buy truth is that only a few actually make some money, and this tends to be the best ones that are featured in the Top 25 rankings (Turboscan, most camera+ or camera add ons, or SuperCell/Minecraft, etc...). Like at Best Buy, where being featured in the shelves triggered more sales (ask Intuit). Some vendors have created niche businesses for themselves, but they tend to be not VC-funded.

Social is a category with a lot of large mobile only players (Instagram, Snapchat, Tango, WhatsApp, Viber, Voxer, Vine, Grindr, Waze, Kik...) and a lot of web players (Facebook, Twitter...). None of the mobile only players monetize their user base right now appart from WhatsApp. What are the odds that another one can emerge from there in a niche? It's tough, and it's not a discovery/search problem, because the day that Facebook launched in 2004, Mark Zuckerberg could not count on search to drive traffic to Facebook as nobody was typing "pictures of my Harvard Econ 102 classmates" on Google.

If you go back to the web, with the exception of a few social products (Linkedin, Facebook, Twitter), which businesses make money online?

ECommerce? They do pretty well on mobile if you look at older models like eBay or new ones like Uber or Instacart.

SaaS? This one is a tricky one, the Apple Store tax of 30% even on SaaS subscriptions discovered on mobile does not help this market to thrive.

Media? Media is already tough to monetize on the web, but on the mobile with lower CPM, it's mission impossible.

Lead Generation? This is a very search oriented field, and the Google search ecosystem will dominate this market until the Google search stronghold disappears.

Overall, I am not saying that mobile app startups are easy - but I think that there is a misconception about what they really are - thus comparing to their web counterpart, when the right analogy might be the software rack at Best Buy.

Re: Mobile app startups are failing like it’s 1999 (2012)

#43

Post by hncommenter13 »

spullara wrote: post #9

Anyone who reads this and thinks this is what 1999 is like didn't live through it. In 1999 all these apps went IPO and the founders and VCs made a ton of money. Many wish it was like 1999. Edit (please read for amusement value): http://www.sandspring.com/charts/cdj0214ipet.html

Yes. As someone who was a (young) VC back then, I can tell you the dot-com euphoria continued during 1999. It peaked in March 2000, when the Nasdaq hit its all-time high. Shortly thereafter, the public consumer-oriented companies started dying off. The bust accelerated in 2001 when the storage and networking companies went under, along with the startup carriers who were buying all of the equipment.

Re: Mobile app startups are failing like it’s 1999 (2012)

#44

Post by zmitri »

2pasc wrote: post #42

The problem described here is partially inaccurate. The problem of the app store market is that it is largely misunderstood by investors, as it is way closer to the CD-Rom market of the 1990s than it is close to the web of the post Google web. Most apps in the app store are games/utilities/social products...and this is what consumers go out and look for. Games and utilities can be searched, but the Best Buy truth is…

Pretty impressive answer, and I agree for the most part.

I do believe there are a lot of apps that do get Apple's approval and get showcased, but never really make it -- which you do address. A great example in the video space is Vyclone which go promoted very much, and still gets front page promotions quite often, but they never really went anywhere.

Re: Mobile app startups are failing like it’s 1999 (2012)

#45

Post by ChuckMcM »

Its a link baity headline and a content free blog post posted by an account that is one day old.

The start-up scene today is nothing like it was in 1999, trust me I was there and I've got the worthless shares to prove it. That said, a lot of people want there to be a bubble so perhaps they were voting the headline rather than voting the article?

Re: Mobile app startups are failing like it’s 1999 (2012)

#46

Post by callmeed »

zmitri wrote: post #40
callmeed wrote: post #21

How on earth is this post getting voted so high right now? How do you write a post and make a statement like this without one single example ? Seriously, give me a list of mobile app companies that failing in this manner and scale. I could rattle off plenty of mobile startups that went the raise-money -> no-traction -> acquihire route. But I don't know what he's talking about here and he offered no data to back it up…

As someone who builds an app, he was essentially noting that: Lots of investors made pre-traction mobile-consumer bets in early 2011. Some even built up teams of 5 or 6 people before having launched a product. In late 2011 and early 2012, savvy investors quickly noticed that many consumer apps started to stagnate around 300-500K total users. Although their total user counts continued to grow, their active user count…

Your comment has more information than the entire OP, but things still don't add up.

Take the Highlight app, for example. It's still in the app store, was updated today, and they have open positions on their jobs page. That makes them a colossal failure that over-hired and burned through cash like a dot-com startup? Please. They probably wont raise another round until they pivot and find a real business model, but it seems they're still in a position to do so.

Re: Mobile app startups are failing like it’s 1999 (2012)

#47

Post by wallflower »

zmitri wrote: post #40
callmeed wrote: post #21

How on earth is this post getting voted so high right now? How do you write a post and make a statement like this without one single example ? Seriously, give me a list of mobile app companies that failing in this manner and scale. I could rattle off plenty of mobile startups that went the raise-money -> no-traction -> acquihire route. But I don't know what he's talking about here and he offered no data to back it up…

As someone who builds an app, he was essentially noting that: Lots of investors made pre-traction mobile-consumer bets in early 2011. Some even built up teams of 5 or 6 people before having launched a product. In late 2011 and early 2012, savvy investors quickly noticed that many consumer apps started to stagnate around 300-500K total users. Although their total user counts continued to grow, their active user count…

> example, Apple has been promoting video apps like crazy

In the early days (2008/2009), a couple people I know got apps featured in the App Store. Basically, they got a call out of the blue from Apple.

Now, it seems that it is back to good old fashioned relationships and community [1] and marketing. Media coverage, for one, being the most important. Media coverage goes a whole long way longer if the editor actually knows who you are (e.g. you met them in person and had a real conversation) and likes what you are doing.

http://realmacsoftware.com/blog/how-to-get-featured-on-the-a...

And they still probably get a call out of the blue from Apple. But not by dumb luck, by doing the work required and getting better and better (at marketing, community building and nurturing, the app, all of the above)

[1] http://www.kk.org/thetechnium/archives/2008/03/1000_true_fan...

Re: Mobile app startups are failing like it’s 1999 (2012)

#48

Post by zmitri »

wallflower wrote: post #47
zmitri wrote: post #40

Earlier quoted context omitted.

As someone who builds an app, he was essentially noting that: Lots of investors made pre-traction mobile-consumer bets in early 2011. Some even built up teams of 5 or 6 people before having launched a product. In late 2011 and early 2012, savvy investors quickly noticed that many consumer apps started to stagnate around 300-500K total users. Although their total user counts continued to grow, their active user count…

> example, Apple has been promoting video apps like crazy In the early days (2008/2009), a couple people I know got apps featured in the App Store. Basically, they got a call out of the blue from Apple. Now, it seems that it is back to good old fashioned relationships and community [1] and marketing. Media coverage, for one, being the most important. Media coverage goes a whole long way longer if the editor actually…

I feel like what you are saying here agrees with the article.

I've had a banner feature on the photo and video section of the app store. It only drives a couple hundred downloads a day. The reality is, the front page in the US is the only section that drives substantial downloads ~50K in a week is possible with 1st or 2nd position. Neither of those things drive great users which is again what Andrew mentioned as building PR hype.

Also believe it or not, our banner feature was more or less dumb luck. I mean, we make a great product, but getting their attention was a lot of luck.

Re: Mobile app startups are failing like it’s 1999 (2012)

#49

Post by zmitri »

callmeed wrote: post #46
zmitri wrote: post #40

Earlier quoted context omitted.

As someone who builds an app, he was essentially noting that: Lots of investors made pre-traction mobile-consumer bets in early 2011. Some even built up teams of 5 or 6 people before having launched a product. In late 2011 and early 2012, savvy investors quickly noticed that many consumer apps started to stagnate around 300-500K total users. Although their total user counts continued to grow, their active user count…

Your comment has more information than the entire OP, but things still don't add up. Take the Highlight app, for example. It's still in the app store, was updated today , and they have open positions on their jobs page. That makes them a colossal failure that over-hired and burned through cash like a dot-com startup? Please. They probably wont raise another round until they pivot and find a real business model, but i…

The reality is, people are taking millions of dollars to build an app, and it takes them many months to push it out. With only one dev, me, my cofounder and I lived off of With regards to Highlight I imagine they will likely die before doing that or give up on the original hypothesis. Statistically speaking that is most likely. I was trying to be helpful, and as you mentioned you can just as well list off a list of startups so I'm not sure focusing in on one example is that useful as I can just as easily name more.

Re: Mobile app startups are failing like it’s 1999 (2012)

#50

Post by 2pasc »

zmitri wrote: post #44
2pasc wrote: post #42

The problem described here is partially inaccurate. The problem of the app store market is that it is largely misunderstood by investors, as it is way closer to the CD-Rom market of the 1990s than it is close to the web of the post Google web. Most apps in the app store are games/utilities/social products...and this is what consumers go out and look for. Games and utilities can be searched, but the Best Buy truth is…

Pretty impressive answer, and I agree for the most part. I do believe there are a lot of apps that do get Apple's approval and get showcased, but never really make it -- which you do address. A great example in the video space is Vyclone which go promoted very much, and still gets front page promotions quite often, but they never really went anywhere.

Sure. Your app can be featured by Apple like Intuit got displayed prominently in Walmart in the 1980s. But on the web, Vyclone would be available on download.com, not get accessed through millions of search terms on google (like Yelp, eBay, Airbnb, Craigslist, Amazon, Trulia, Linkedin, even Facebook ...all consumer web public/quasi public Companies ...)
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