Startup pivot: from mobile to the web app
A discussion among venture capitalists and angels about the failures of startups, focused on mobile projects. On this subject you can read the posts Fred Wilson and OMA Malik. I, being a co-founder of a startup that was started with mobile app, I want to share my thoughts. At the moment we raised $3.65 M and has launched two free mobile social apps. However our next app we will launch first under web.
Advertising is a digital tax for those users who want to use apps or sites for free. Almost all the free services and apps have embedded ads. The company that lives on advertising, similar to the state in the sense that both of them successfully managed to charge without the obvious attempt at your wallet. The most common taxes are charged automatically based on payroll, so people have not associated the money with her. Similarly here: it seems to us that if we're right for something does not pay, it is free. But it is not!
Unlike taxes, the services with the revenue from advertising aimed at an audience with low income and basic skills of the user, because they make their money. Let's take the most obvious example: Google earns $30 ARPU (Average revenue per user) per year and receives an average of approximately $1 per click. So you get about 30 clicks per year per user. I like you so much don't click. I usually know where the content ends and advertising starts. In part, because they use the Internet longer than others. Moreover, I believe that advertising is aimed at the same audience that Nigerian scammery (on average). You can read Quora on this topic, it is interesting.
But the user pays? He pays his privacy, and likely in the future to lose her as a result of completely. It can cost tens or hundreds of thousands of dollars. Companies with an advertising revenue requires a large amount of data (about the users) to get money from advertisers. Your data is transmitted most often in aggregate form, so no specific personal details are not shown and are not sold directly to the advertiser. Usually lead to an argument that sells your data, which I have no rights. But if this were true, users would have exactly the same rebel, as if they had every year to go to your Bank account and transfer 20-50% of it to the government that it could spend, for example, a program for security in airports (so that you could stand in line and you got pulmonale) (very philosophical metaphor, the meaning of which is that there are things that need doing, even if you directly do not benefit from this. Although I admit that I misunderstood the author. — approx.translator) I Have another argument: because it is a way through which companies with ad revenue can exist and grow, your data is at risk.
To get enough data that would be statistically significant for the advertiser, as well as to achieve the scale necessary for a large enough audience with the lowest income and skills successfully clicked the advertisement, these companies must grow very large user base. They need to increase the database very quickly especially in the beginning, because no one will agree to pay the cost of maintaining slow-growing and expensive, it companies for a long time. To venture to raise money for post-seed stage, you need to show rapid growth. And you will not find many companies with revenues from advertising (in it sector), which would not fail opportunity to raise money for venture investors.
Thus companies with advertising revenue should grow rapidly and widely to provide a “free” product. Now let's talk about “acquisition” of users. If you work in a startup, you must have the data funnel, and you confirm the fidelity of my words. Ultimately this whole process is aimed at preserving the user through all stages of its life cycle. If you're not focused, at every stage of your site or application scenario you will lose a percentage of users. And I think this is the main reason of the failure of the mobile application!
Let me share some numbers of our start-up, launches first mobile app. Of the 300,000+ installs and 250,000 website visitors, 200,000 users have registered. On the spot, cut off 60% of the audience, who came to gawk in the window. By the way, in a private conversation I heard from the developer of the app with more than 100M units, which are 50% of the people didn't even open their app after installation! And that's not counting people who are unable to find your app in the App Store and decided not to download it after I saw the rating (5 stars). Even if he is 4.5.
We had a screen where users can enter their phone and email, to others it easier for users to find them. Out of the 200,000 additional 25% off. They didn't have enough patience or they are afraid that their phone numbers will be sold. We also had a screen to log into social networks to automatically create user groups. Another 25% didn't want to log in to your account. Perhaps because the not found the “ignore” button or just tired by that time. Since then we have put those two screens, but it took some time before we did, because we needed to Refine the process of “adaptation”.
Thus the original 550000 turned into a 100,000 users. Now, when the user is already in the app and created an account, we want to create a group and put your friends or family members. 25% – will not create a group, 25% no add in the created group. Now we want them to be something shared with these people. After that, the people with whom they have something chattered away, see it, understand what is happening, and will go through the above registration process.
In the best scenario, we were able to save 5%. Attempts to correct this resulted in nominal improvements. In this problem we are not alone. Even among other applications, the best “adaptation”.
The most natural way of fighting is to try and increase the number of installations. But it is expensive! If you pay Google $1 CPC, so the people are in your funnel, the actual value of your account is $20! And you will never beat these costs. Just optimize the registration process and “adaptation” will not be enough, because in the case of mobile applications you can quickly deploy updates and to respond to the behavior of the user to check a bunch of things. Inactive users usually download only large updates that take months to develop. And a version with bugs to send not – affected rating. Also you have already lost some potential users who get lost in the funnel, and there is no normal way to ask them to come back and try your new funnel again. And the press will not write another article, saluting your new funnel. Email users have a very low conversion, no matter what clever tricks you use. The user is already figured in mind, how much time it will take to transition in the App Store, find your app, download it, enter the password, start, check, etc. and because it doesn't fucking quickly, he'll just blow it.
Overall, the mobile app was terribly harsh place to close viral loops and win the battle for the preservation of the users. Only a few apps have succeeded in the strategy of “first mobile app”: Instagram, Tango, Shazam, maybe even 2-3. (Games do not count – they are aimed at short term revenue, but let's skip this subject). To take the same Path: one of the most promising mobile startups. I don't want to detract from the dignity, because I love this app, but this is a good example. Or Color is a great example. With 5-10M downloads, Path was able to save only 200K/users per day (according to AppData). You can see for yourself that they went down 5 places to 94 in the category social network. In any case, the “retention” of users at the level of 2-4%, i.e. they now have a couple hundred downloads a day. Even if I was wrong in 5 or 20 times, still this business is hopeless. A sophisticated user of the social network is not the most suitable type, to click on advertising. According BusinessInsider Path is DAU at 20% and MAU – 50%. But this fact does not change.
The web app is totally different story. You can test is painless, cheap and fast enough. You can fix a critical bug which crashes the app at startup, after 15 minutes after detection. You can show 10 different starting pages in real time to decide which of them is best suited. To close the viral loop simpler: the user can click on the soap and begin to use the app. You do not need to specify additional parameters in the link to download and users do not need to download the app from your computer to your mobile device. In the absence of obstacles when downloading and launching the app only to pvtestdriver it, you find it easier to demonstrate its value to users. For example, as Google. Moreover, registration in a web application practical in every sense. For example, there is OAuth. You can tab moves to the next field. Samosamnina forms feature available in every browser. Open eco-system of web, 20 years of innovation has already solved many of the most challenging aspects of registration. Have mobile apps, these innovations significantly behind, because we develop applications for the great condescension of the two companies, none of which is of special interest to help achieve success for the developers of free apps.
As I said, the company's advertising revenue is expected to grow large quickly and thus at the expense of your privacy. Cited a case to show why web projects are easier to acquire and retain users. This is achieved due to the possibility to test and to deliver value service to the user quickly and clearly. All companies with revenue from advertising will innovate again and again to achieve the minimum registration time, a minimum of friction caused by the actions of users, and a maximum viral effect: it promotes growth and increases profit.
To achieve the minimum time of the first launch, the user-designed scenarios will be shown well-targeted lists of prospective friends or not be asked to register. Also shows users interesting and relevant content on the spot, which will require a large number of visible public content. To achieve the minimum “friction” when using the service, like search or sharing, you will offer advanced options for sharing, and in some cases will automatically post on your behalf (FourSquare). And last, to increase the viral effect of the app, invitations will be sent discreetly automatically, and the results and content will be available to any user.
Unfortunately, your privacy is an option, which in most cases prevent implementation of one or all of the objectives of the company. No one wanted to fumble without an audience, to read the news without content, to search and not to search result. In other words, the point is that Google and Facebook need your data, information and content in order to be able to show something to other people.
The cost of this to the user is fundamental. Unfortunately, we do not feel this cost until it is too late to do anything. Blog post can cost you your job, tweet – relations, and does not erase the search results – and of both.
So what can you do if you are an entrepreneur or doing a startup mobile not receiving metrics that deserves? I can't say 100%. We still deal with it in our company. Don't want to promise anything, but talk about what we think we have Labs in Origami and what are working. Perhaps it will bring you to some thoughts regarding your project.
We want to put all our chips where we believe that we have the most chances of success, based on our assumptions and data. And mobile devices – not our bet. That's why our new service will be launched initially for the web (a few months), followed by the launch of a mobile app as a companion Supplement. Yes, we make a big bet on the web and the Internet in General for the reason mentioned above. Also we do not free service, because I believe in privacy. The audience will be smaller and slowly growing. Our new service will cost you money, so you can be sure that other hidden costs there.
In conclusion: I don't think the mobile market will cease to grow. And we did not turn in the direction of the web, because people use them more than mobile apps. I use my smartphone more than any other device. I just don't think that the entrepreneur who is focused on success, you should start to build a business there. Android and iOS platform, help us to fail by attracting us with the illusion of a vast number of users, but in fact you will have to fight for them much harder than it's worth. Yes, you most likely need a mobile app for user satisfaction and competition, but it should only be part of your strategy, not an end in itself.
Комментарии
Отправить комментарий