Breaking Through
I exchanged an email with a friend who is trying to get a mobile app business off the ground. I told him that he and his team are attempting to do something that is hard and has gotten a lot harder in the past few years. He replied that he is looking for a way to break through. I encouraged him and wished him well.
This morning I did something I do on a regular basis. I went through the iOS and Android app store free app leaderboards looking for non-game apps that have broken into the top 100 and stayed there for months. I could not find any. It’s possible that I missed something. My technique is not scientific. I just browse and use my memory, which is not exactly a foolproof method. There are better ways to do this but I like to do it this way.
I think launching a consumer focused mobile app and getting sustained traction (>1mm MAUs for six straight months), is almost impossible right now. That doesn’t mean it can’t be done. I am sure there will be exceptions that will prove the rule.
What is a bit surprising to me is how many entrepreneurs, particularly experienced entrepreneurs, are attempting to do it right now and how many investors (angel, seed, VC, etc) are backing teams doing this. It just seems like the odds are stacked against these sorts of businesses right now and that there are other more fruitful places to spend your time and energy.
But hope springs eternal in startup land. That’s a good thing, of course. Optimism should be encouraged. And so I am rooting for everyone trying to get a mobile app off the ground, including my friend.
Comments (Archived):
Yup. We may have reached peak attention saturation on our smartphones.I have made a rule to myself. I do not want more than 4 screens of Apps on my smartphone. IF I add an App (even to try out), another one has to get deleted.
Self selection is what the market does as well.Dunno if I buy into saturation as much as natural selection and i question whether this is anything really new.
The concept is not new, but applying it to mobile apps for some users, might be. There is a finite amount of time in the day. If you keep adding to something, you’re not doing something else. I’m talking about applying discipline- some people do it better than others.
I have a similar rule…because my phone’s storage capacity is so small. Time for a new phone. Possibly a new Pixel by Google (aka Nexus). Do you use Copperhead out of Toronto?
No, what is it,?
A security hardened Android OS.
I went back to the iPhone, shhhhh 🙂
I’m looking forward to Android and Chrome OS integration.
It’s about the Apps & what works on iPhone vs. android. I was missing out on apps I needed. It turns out the iPhone is the first OS most Apps support well.
i can see that. it makes perfect sense. i have none.
I do the same but with only two pages. I have another page that contains only folders and everything else goes in there and gets typically retrieved via the Spotlight search.
I have a “Useless Apple Apps” folder where I stash the Apps that can’t be deleted.
Ha
Law of inertia.Cookie cutter apps. Me-too thinking. Cartel distribution channels. Consumer malaise. Install fatigue.Realisation true happiness isn’t found in an app store.
Haha! Happiness… It’s in your heart.
Also believe apps shouldn’t aim for universal appeal. Race to the bottom.
What do you mean, thought staring at a screen results in nirvana?
there are many reasons why this is so of course… but apple’s and google’s continuing prohibitions against app-discovery-apps is a big one, and, imho, an affront against humanity. de facto monopolies on app discovery and marketing (other than paying through the nose for facebook CPD campaigns) and apparantly the world is so intimidated by apple and google that no one dares publicly object
One of the more eye opening experiences I had was training a group of political candidates on our new voter contact software that works with iPhone and Android. Lots of people had not installed an app in months or years and did not know how to do it. Many did not know their password for iTunes. There is a large group of people who might not know that they want/like/need apps but they do not engage with them at all. When I was at PAX East the folks from Lyft were physically walking people through the on boarding process on their phone and then giving prizes to people that did it.Then there is the rampant proliferation of rip-offs, clones, etc. that drive app prices to zero. The result of the popularity of free apps means that most people don’t seem willing to pay for apps anymore. Even if they are priced cheaper than a Starbucks latte.Finally even if there are not rip-offs many apps lack novelty.
The new app store rules should help. Apple is going to be removing apps that don’t meet its definition of ‘quality’. Plus, title lengths are being reduced (so apps that are keyword stuffing will no longer have that crutch). Theoretically, this *should* help new apps.
.Apps are the equivalent of the greeting card business. Kind of cool but one can live without them.People browse around. Look at them. Buy one. Use it once.End of story.JLMwww.themusingsofthebigredca…
Part of the reason for this is that many apps that you buy (I stopped some time ago actually) you don’t use on a regular basis. Hence “out of site out of mind”. The same thing that kills certain types of retail businesses. Sure if something is super special you will seek it out (and remember it). But if it’s not passing by it everyday is a constant reminder that it’s there when you need it.So how can you make an app that someone uses or needs to use several times per week (or better daily).Here is another example. I tape some phone calls. There is a way to do that on the iphone and I’ve downloaded a few apps to do it and even paid for them. But I finally just bought a digital recorder on Amazon (which I use several times per week unlike Walmart which I don’t QED) which just is a better however imperfect way because it sits right next to my phone and is always ready (and can tape iphone calls as well).
“So how can you make an app that someone uses or needs to use several times per week (or better daily).”There are only two real ways to do this:Build something that addresses a pain point people have everyday. ie getting from a to b, eating, dating/sex.orBuild something that is sheer entertainment. This route, of course, is a quick hit…cool one week, forgotten/deleted the next.There simply aren’t very many “pain points” that exist in people’s daily lives.
you’re right Fred, it is nearly impossible unless one of the following1. you have an unfair media or distribution advantage (you re owned or in partner with a big brand that can make noise for you: eg T-mobile and their app mobile tuesdays which pops regularly every week)2. you have or are a known brand and have some sort of trick to generate insane virality: chick-fill-a with their free sandwhich got tens of millions of downloads3. you have, by design or not, a substantial platform support (eg Apple continuously features you or Facebook boosts you for free in their algo)in any case you can still gain major traction as a mobile app without getting continuously in the top 10. you just need to figure a way to be in the top 100, but continuously and constantly with good retention. I know many developers who have 10s of millions of users gained over time doing this.But also in order to breakout it means developers have also to create something outstanding. Good, or great is no longer good enough….I believe it starts with that
agree but you should add enterprise apps here. huge cos with tens or hundreds of thousands of users wanting security, wayfinding, proximity and more will become more common.and even services like weworks are pushing more and more towards their apps.
yeah but those don t need to “break through the top 10” to reach their audience…
you are correct but they will require marketing/mandating in this case and they will hit the top of the leader board.If every user of at weworks has an app (can’t book a conference room or use the snack bar without it) or all factory workers at Toyota you will get to huge numbers fast.
If I could run my store remodel projects from a phone for Walmart that would be awesome. Have a feeling this wont be possible but we will see
.See if you can put a wireless streaming camera on the job.A GC I know, who does a lot of big jobs, does that on every job he has. Four or five cameras on the site and one in the project trailer.Keeps everyone on his toes.JLMwww.themusingsofthebigredca…
There are Walmart remodels bring run with a phone right now using our app Fieldlens. Wadman Corp, a GC out of northern Utah, does Walmart work all over the country – much of it at night – and their management teams never step on site but knows exactly what got done the night prior when they log on to Fieldlens in the morning. Happy to answer more detailed questions – Doug at Fieldlens dot com
Someone I spoke with a few weeks ago says the wework app is the only reason he still belongs to the community (he freelances on top of a regular job)
The brilliance of we works is that at u don’t need to sign a lease.It’s not inexpensive but it makes it possible to have an office in a urban area without signing a commercial leaseThat is their secret sauceThe rest is window dressing no matter how clever
There was an episode of “Cleveland Hustles” CNBC (exec producer Lebron James) that featured a few interesting businesses in the episode that I watched last night that you might find interesting.One was an artisanal bagel maker (that wanted to make frozen bagels) and the other was a hair salon that wanted to rent out stations for $1000 per month so it’s a landlord in a sense to hair stylists.
well there is a lease (or a license like I signed on Grand Street) and a deposit, and notification for termination. Similar to some gym memberships it requires 30 day notification, so I believe, if you notified WeWork today of intention to immediately terminate, you’d pay for September and October….which is more manageable than a yearly, but you can’t just grab your laptop and terminate….
In LA its month to month and there or here (I live here) you simply can’t get a good space that is kept up without what 6-8 months down and 3-5 years?I stand by my statement–kinda brilliant and carved a great hole in the market for themselves.Decent app.If only they could fix the truly horrid acoustics in ever conference room everywhere.
Interesting App (not in LA yet) but promotes WeWork competitors (I think) Croissant: https://www.getcroissant.co… — $99 per month (for 40 hours of office) or $299 for unlimited….
Thnx.Co-working at its core is transformational to how we work.Have meeting in them, present in them but last Spring spent three months working out of the We Works off of Arizona in Santa Monica and was blown away by it as a snapshot of institutionalized new culture.Hip. Dog friendly. Interesting. Institutionalized work space with a positive slant.
In short, any new entrant has to have a pre-existing or parallel business/brand offering on top of which a successful app could be built? That sounds very logical, but excludes a number of truly new entrants altogether.
again, unless you have something outstanding to offer and most apps don t. Now you can be very successful without being in the top 10 or even top 100. Sunrise and Accompli got acquired in nice valuation with a very confidential audience
Btw there was an exception recently. MSQRD. And Facebook acquired it.
Btw there was an exception recently. MSQRD. And Facebook acquired it.
That’s a nice theory but if Fred is correct and there are no break through apps. it’s just a theory
not a theory. read the examples i mentioned above
In class this week (I teach Digital marketing) I asked my 50 students what social media platforms they use daily.1) Snapchat (90 percent) 2) Facebook (85 percent) 3) LinkedIn (90 percent – not daily)Last) twitter (3 students)
I just had that question inserted into a survey of middle school and high school students. A tiny percentage uses Facebook (they are hiding what they do from their parents). The results were:1) Snapchat2) Instagram3) twitter
Forgot to say these are undergrad students at George Mason University.
“It just seems like the odds are stacked against these sorts of businesses right now and that there are other more fruitful places to spend your time and energy.”I’m curious to know what other fields you find more fruitful these days.
Hard until centralised app stores are challenged by decentralised blockchain based apps that have worked out discovery, or are early to the new place of aggregation. It will come.
We’ve reached peak app. That’s a good thing. Everybody’s in and nobody’s in the top downloaded apps.It’s not that it’s too hard to get a mobile app off the ground — it’s that it was too easy to get a mobile app off the ground until now. If you’ve got a solid idea that will be a game changer for your target customer in a way that no one else offers, and you know how you’re going to reach that target customer, the playing field is as it’s always been
Not if the app requires network effects. Which is the hard part of creating such an app.
When I think about building something that requires network effects, though, I still think of who the seeding market will be. The network effects part takes place within the app and isn’t reliant on being discovered in the app store, no? The trick is reaching the initial seed market, and counting on the app store to do that job would be like counting on SEO these days, I would think.
Right.. counting on seo (or app store discovery) is a sure fire way to failure in today’s world imho.
Yup, I agree. It’s so hit or miss. Mostly miss. I think there is room for a dedicated B2B kind of app that is targeted to an industry. But, that’s a very different kind of investment and very different kind of company.
I guess people tend to forget that a mobile app is just another channel and phone is just a tool. Unless a co offers valuable service and value for a user there is no reason to fight and waste money for a leader download score — it won’t be sustainable anyway. So building mobile app is not business, business is what behind the app. And in many cases, especially when the use is not required exclusively via phone due to dependence on a mobile sensor, first comes service and value via different channels where mobile app happens to be one of them. Hence, no reason to fight as an app with other apps. There is reason to build business and try to be leader in the service niche. App is a channel. Not business itself.
Such a great point and touches on what concerns me when I see companies hiring someone to promote the app rather than the brand/service itself. (I’m sure this is valid to some extent.)However, if I download an app, I am more likely to use the service behind it and if the app has great UX I am more likely to use it over a less pleasing app experience.
It’s just marketing channel, touchpoint, and interface. People stick to a service when they need it, not because the app has good UX. The later improves retention, but not guarantees the usage of the service. Most popular services that are being used daily became popular not because of the apps, but rather due to the fact that people use the service–return to it daily, sometime even with bad UX app.When something becomes trendy due to the app hype, the popularity rise fast and dies the same way–fast. That’s the nature of growth hacking–to get spikes, create hype–but only service people really need are sustainable.So I say build something people need and provide mobile app as one of the interfaces. The more people need the service the more they download and use the app along with other channels.
The fact that mobile apps are now so cheap to make contributes to this phenomenon. Just like web sites went from $10K (in late 1990’s) to essentially free using WordPress. Just “trying it” is almost too inexpensive, perhaps allowing people to skip the part where they ask “do we really want to spend this money? What is it going to get us?”. Building a core application with near zero cost isn’t always a good thing.
Plus the measurability of everything creates lots of data porn for management.
Where building apps makes sense now I think is when they facilitate other products. Classic example is you buy a Whithings scale and now the accompanying app gets bumped to your phone’s homescreen. I’ve just bought a guitar effect pedal from T.C. Electronics, and the app that they’ve made for it is *so* useful that it made it to the homescreen and Google + got displaced and ended up in an app folder titled, “Social”, he he! These are more like ‘niche’ breakthroughs, and the UI must be flawless too.
All great points when it comes to mass-market consumer mobile, however over the last year I have strategized apps with several companies that are consumer-focused and by all means successful. In these cases the apps themselves were part of an overarching business model that has a differing definition of ‘traction’.Examples include a niche wearable (product business), an app for car salesmen and an accompanying website that lets consumers easily get in contact (leads generation), and an app for a high-end running shoe company that helps runners track their movement and how worn-in their shoes are (brand marketing).
Astute observation! As Apple rolls out their in-app-store advertising with the release of iOS 10 it will be very interesting to see if this remains true. Because of the new ad network, cash will now be able to more directly and efficiently impact app growth in the place that users are actively discovering apps.One might counter argue that ad networks already exist and money can buy installs but I think this is the difference between poorly targeted double click display ads and Google Adwords search ads.Of course we may just now see Supercell ads no matter what we attempt to discover, but if Apple does good quality control on the ads I hope this will create new opportunities for smaller application developers & studios.
I think the top 100 is too strict of a measure for success. One can build a great web business without being in the top 100 web sites, the same will apply to apps.
I think launching a consumer focused mobile app and getting sustained traction (>1mm MAUs for six straight months), is almost impossible right now. That doesn’t mean it can’t be done. I am sure there will be exceptions that will prove the rule.How many exceptions? Great for an investor, bad for the individual.Which is why you should have just told him that it’s a big waste of time to go down a path and the deck is clearly stacked against you. Sure I understand. You don’t want to be the guy that rains on the parade and then find out later that you were wrong and your friend was right [1].But hope springs eternal in startup land. That’s a good thing, of course. Optimism should be encouraged.Why? While there is benefit to doing anything, and gaining from the experience that you learn while doing, I am always amazed at the stunning qualifications of some of the people that are doing stupid startup ideas (or ‘me to’ ideas) that could have been doing something a bit more concrete (and I won’t even say meaningful that’s none of my business really not like I am out saving the world or anything).Like with the entertainment business that I learned growing up. It’s not just enough to be good you also have to be lucky.[1] A bit selfish perhaps. We all do this.
I’ve been in mobile a long time. In fact I’m trying to transform a business that did great in the Palm and Windows Mobile days but has died in the Android and iOS era.Personally I believe I got caught up in the “consumer” aspects of my business and ignored opportunities focusing on businesses. Instead of just saying “I wouldn’t do a consumer business,” though as some blanket statement, I’d advice others to focus on asking how are they are going to get customers and how are they going to make money?If he or she can answer these questions — or at least have a plan in place to answer these questions — then it may be a consumer business worth pursuing.
Fred: We just performed a similar non scientific view of the top one hundred apps on Android. We have no idea how seventy five apps even appeal to the mass market. Pure time wasting in our not so humble view. So are investors of the herd actually dictating the course of popularity?
Musical.ly seems to be the one of the biggest breakout’s since Snapchat on the consumer side, remains to be seen whether it has staying power, been in top 100 free for a while and is close to 20mm MAU? uniquely based out of Shanghai and targets the US market which is uncommonhttps://www.surveymonkey.co…
There should be a limit on the number of apps on a phone concurrently. Delete a useless one before you can download another. I would download fewer if I could control my genetic download impulses.
I have a ton of apps, but actually use few than 10 regularly.
So what are the candidates for the next platform(s) for delivering application functionality? Chatbots? An opening up of Google Now/Siri/Viv/etc.? A resurgence of mobile web?Is there a viable alternative to building an app?
It looks like at least Musical.ly has sustained top 100 status for 6 months, and it’s a relatively new entrant (July 2015).I think the reason for the investment here is it’s clear that if you DO succeed at creating a lasting network that lives on people’s home screen, it is a minimum $20b win (at least up to this point). If the era where this is possible enough to be investable is over that will be sad, but I wouldn’t count it out yet 🙂
You say “get a mobile app business off the ground” is that a business developing mobile apps for others? Or a business selling and making a special mobile app?3 issues: 1: open source and collaborative with other apps or services. 2: Does it fill some need? 3: Some unique user interface is better, or very attractive?
> It just seems like the odds are stacked against these sorts of businesses right now and that there are other more fruitful places to spend your time and energy.True, but nearly irrelevant.For this whole subject, “odds” or probabilities, obtained however, don’t mean much. Instead, what matters are conditional probabilities.Or, let us denote probability by P. So, for event S success, its probability is P(S), and, right, we know that it is small. But suppose we also have a strong advantage, event A. Then what we will see in practice, what will be relevant in practice, is the conditional probability of the event S given the event A, orP(S|A) = P(S and A)/ P(A)So, in terms of old Venn diagrams, given event A, we are in the set of the trials of event A and THERE we want to know what is the probability of success S. So, we want both S and A so write P(S and A). But we need to scale this by P(A).Okay, right, advantage A might have low probability so that we can guess that obtaining event A will be difficult. Okay, but difficult or not, still what we want to know is P(S|A). We don’t want to assume, as seems to have been done, that just because P(S) is small also P(S|A) must be small. Indeed, P(S|A) might be close to or even 100%. The issue, then is not P(S) but event A.We have to focus on event A, i.e., do we have event A and is it good enough to make P(S|A) large?So, for a successful mobile app, the entrepreneur needs a sufficiently good advantage, to have a sufficiently good event A. So, when appraising the chances, that is, P(S|A), have to focus on the advantage A.Sure, we can guess that darned few mobile app developers have a good advantage. So, sure, we have to guess that for such an event A, P(A) is small. So, as we evaluate mobile apps, first we look for some sufficient advantage A and, second, we understand that because P(A) is so small that usually we will be disappointed and have to conclude that P(S|A) is also small.But, but, but, but, a sufficiently good event A might exist, and seeing it described, might conclude that really do have such an advantage. In that case, again, just even though P(S) is small, we still need to understand that P(S|A) can still be quite large, close to 100%.So, for all concerned, the challenge is finding such an advantage.Here is one approach:(1) Intend that the app solve a problem. Then pick a suitable problem. Pick a problem so that the first good or much better solution will yield the desired success.(2) So, want the first good or a much better solution. That is necessarily something new. So, we are in the land of things that are new.(3) So, the advantage, event A, is the pair of the problem and the first good or much better solution. Or, in common terminology, the solution has to be a “must have” and not just a “nice to have”. In a word, the solution has to be compelling.(4) To get this pair, one approach is to understand that the app will take in data and manipulate it. So, better means of data manipulation are one approach to a sufficiently good solution.(5) One approach to better data manipulation is to realize that essentially all data manipulation is mathematically something, understood or not, powerful or not. Well for more powerful manipulations, understood, and able to produce results sufficiently good, proceed mathematically. Here there are two advantages: (A) Only a tiny fraction of mobile entrepreneurs are ready, willing, able and eager to proceed mathematically. So, for proceeding mathematically, will likely have little competition. (B) Math can yield some astoundingly powerful manipulations, just impossible to guess otherwise. So, we could proceed mathematically. How to do that? Be a math major in high school and college and get at least a Master’s in pure and applied math. Get some experience solving real problems mathematically. Likely do want the core of the math to be new, so need to do some original research. There is a degree for that, the Ph.D.Will there be a lot of cases of people following (1)-(5)? So far, likely not. This means that (A) the thinking in (1)-(5) is unpopular and, thus, likely silly or (B) following (1)-(5) is a great, green-field opportunity? Well, here (A) is a challenge. So, need some quality control, that is, need to know how to judge the math to know if its promise is solid. That is, very much need to review and evaluate the math. Then when pass such a review, for (A), (1)-(5) will still be unpopular but, in this case, not at all silly, and we can start being optimistic about good success from the greenfield in (B).Have to keep in mind that P(S) is so darned small. So, when we find advantage A so that P(S|A) is large, we are working with things that are rare and exceptional. But, again we know this very well — it’s tough to break into the top 10 or even the top 100 apps in the app store.So, necessarily we are looking for something that is rare and exceptional, that is, exceptionally good. Here is a good way not to do that: Look at the successful apps of the past, find a pattern, and try to fit the pattern! And, again, here is another good approach to avoid: Since we know that P(S) is small, guess that no matter what P(S|A) will also be small.So, we are into the challenges of working effectively with things that are new, powerful, valuable, rare, and exceptionally good. There are people in our society that do very well with that: A lot of them are funded by the US NSF, NIH, or DoD. Thankfully for the US economy, US health care, and US national security, the NSF, NIH, and DoD have long been really good working effectively with things that are new, powerful, valuable, rare, and exceptionally good. An app entrepreneur might borrow from some of that effectiveness.
Apple and Google controlling distribution is the larger problem here, although once you get past the need to appeal to absolutely everyone, building an app becomes more possible, focused and meaningful, no?
I think you once said you can raise your seed money on a story but need facts for your A Round (maybe it was A Round for story but B round for numbers).
Until there is better public wi-fi, more robust apps won’t take off. Personal examples of why:1) When I go into NYC for the day, I download the PDF of the NYC subway map rather than keep loading up the MTA app or their website. Why? Uses less data and power. I need my data and power to last all day while I’m out and about. Also, I can actually look up which subway I want to switch to when I’m on the subway with the PDF on my phone (though I hear there’s better wi-fi these days in the subway. I have been driven in by friends the last couple of times I was in so didn’t really need to use subway).2) Pokemon Go! is great, but eats up my data and power fast unless I’m on wi-fi. If we had apps that utilized similar GIS tech for meeting deep needs, people probably won’t use/buy if it quickly uses their data and power.Segue: One thing that’s interesting (to me at least) is that I find a lot of apps aren’t robust enough and don’t go deep enough to give me the features/content I want. Even Facebook removes features on the app that I can get on my computer. Drives me crazy. I want a deep experience, not a vertical one. I can think of a few apps out there that I’d love to tie together into one robust app. I have been wondering lately why there isn’t more consolidation happening. For example, the health/fitness area is one that’s ripe for consolidation.
This suggests three things to me:1. Just as you use your memory and not other, allegedly better ways, to count which apps broke through, entrepreneurs are using poor ways to judge what problems exist, and taking most of their cues from conversations in hyperlocal environments and tech blogs that focus on those hyperlocal environments.2. While it is true that it’s more lucrative, and just as challenging, to focus on a problem that you yourself have, most people don’t have experiences outside of what they have. This seems self-evidentary, but I don’t know many founders who have purposely gotten out of their comfort zones to go live in and experience the problems that other people experience. If they did, there would be more breakout hits.3. The biggest problem facing the world today is a mix of fragmented socio-economic existence, where there are many gaps between the haves and the have-nots, and no clear ways to bridge the distance between them.We just launched an incubator in our secondary school. The entire purpose is to bring in other local students from different backgrounds, in order to reveal the outside inside of our school, and to use it as a kind of lab where we can solve social problems with technology and STEM thinking.Seems like the future is in connecting to people we don’t share economic status with, to understand each other and to improve the way of life for everyone.
1) Getting, keeping, stimulating demand is a bitch. That’s your P&L model right there.2) Apps as silos is a flawed concept. Winner takes all world not sustainable in digital networked ecosystems.3) Robust cross-app information exchanges are required to scale the platforms. This requires east-west settlements which are anathema to the internet (IP Stack) folks who embrace openness which perversely results in closed systems. Net neutrality is a fiction at best, farce at worst.4) The reality is that demand is both infinite and infinitely diverse. Everyone is on their unique demand curve. No two smartphone home screens are alike on the planet.Understanding and dealing with 1-4 provides the answers. It doesn’t have to be a world of near-monopoly silos with high prices and 100% invasion of our privacy. As long as the customer’s utility is served and they know the value bought and sold the ecosystem will flourish.
All valid points, and logically it may seem “there are other more fruitful places to spend your time and energy”, but one of the reasons why so many people launch consumer apps is because they’re solving a problem they personally have, and there’s no better founder than one with purpose, passion, and vision.
Lots of emerging evidence that consumer apps are being superceded by AI from the big companies. I don’t need dedicated apps for specific functions anymore. And there is interface fatigue- I don’t need to constantly learn new interfaces when I can ask a bot to do it for me.
One key element in evaluating a business opportunity is to evaluate the barriers to entry. For most app development, the barriers to entry are little or none. There are kids in a basement that can compete with a VC funded start-up.And the actual app development is ONE PART of building a business. And, in many cases, it is the easiest and most clearly defined part.
you mean that there is needs to be value and you have to work hard to sell that value?what a concept.
Retail stores where shelf space isn’t for sale.
like when the PC software market was largely saturated.But you had star makers, gatekeepers and middlemen back then. And there was a distribution channel which was difficult but also certainly less people capable of making a product that was packaged in a way to get through those channels. Or wanting to put in the effort. The difficulty also of building a product gave those who could do that in my opinion more of an advantage than today with the app store.Also and this is important the price point of software was much higher. People are now conditioned to not pay a lot for apps.Let’s say you developed a software package. You could put it for review somewhere you could attend tradeshows and get a booth and you would be exposed to gatekeepers that would offer your product to customers or buy it themselves. Sure it cost money (not like today) but in a way I’d rather be in that system than the one now. Same system that allowed a small business person to just run a yellow page ad (in a developed category like ‘plumbing’ or similar) and build a customer base completely from scratch.
I know you said largely over which means there are still exceptions. Just pointing out Pokemon go as the fastest spreading app ever recently. Part game but part network and definitely a business.
Which metric – > 1MM MAUs for six consecutive months ?
Meaningful to the VC’s investment model, but not necessarily to the app developer.
Teaching the world about augmented reality, which will be the next wave of crazy good advances.I’d be curious what the non-entertainment advances that are possible with augmented reality.Medicine is one but what are the others?
You are to nerdy for your own good. You have to get down to the simple level of your customers. (First, put the expiration date where I can see it on your packaging.)Second if you want to point out that “The Lancaster Food Company won the Top Organic Manufacturer award and Prevention Magazine’s Best Packaged Bread 2016” then put in on your packaging somewhere where it can’t be missed. That’s pretty impressive. You also need a little takeaway for your display days at supermarkets and to talk about your product and it’s benefits.We do a bad job of that so it would be cool for an app to enhance the shopping experience and provide supplemental branding opportunities to chumps like us.I’ve fallen into this trap before myself (using tech to try and make problem solving fun instead of just solving the problem the old fashioned way).@awaldstein gets this (and disagrees with something in here, I’m sure)Finally, it’s the economy packaging stupid. Attached got my attention…
Don’t have time to wade in here now.Do I think an app can fix this branding issue for you at retail in the near to moderate time frame–no I don’t.Two things we both know.The broader you get the more you margins get whacked till you volumes hockey stick AND the broader you get the more you need to move to marketing and community channels outside of retail to drive awareness.And remember, the more Whole Foods is your prime the more you have to be aware that at the end this is as risky as building a software product that only runs lets say on Facebook.You are there as long as you make money for them, bring in a class of customers.Focusing on that distinction is what keeps every artisanal vendor up most nights.
Not surprised. Food margins for retailers are pretty low, although as you know, far, far better than me, natural and organic products do deliver higher margins. Even so, I presume acquiring shelf space is as competitive as ever, particularly for smaller producers who lack leverage.In college I worked for a food broker representing mostly large national players w/ a smattering of small, regional packers. I remember being astonished at the vast amount of money being thrown about–in FREE cases of product and/or trade allowances–to gain retail distribution. Wasn’t a poor man’s game back then and prob even less so today. Of course, biz objectives do vary. One can carve out a nice niche on a regional or limited basis, but to grow and scale it’s prob unavoidable that you’re gonna bump heads w/ how the big boys operate (re: pay-for-play).Sidebar: I love Trader Joe’s model-Deliver high quality P/L products AND service at a reasonable price (their pricing doesn’t vary by geography). No one has replicated. I’m sure their margins are quite good. TJ’s seems to stock a large amount of organic/natural products, too. (I buy their organic, multigrain breads.) The store on my corner–72nd & Columbus–does more revenue than any store in the entire national chain. 25+ registers cranking all friggin day long! Only wish they were public so I could get in on it.
Are you a whale?
Oh congratulations you broke your cherry.https://www.youtube.com/wat…
It is honestly always there veiled in different clothes.We pay to play with ISS sales, with sell in skus for free in most independents, with special margins with people like Fresh Direct.Is selling bread at WF today different than selling PCs at Frye’s in the 90s?More no than yes.
Slotting fees??? Know them well.
They get slotting fees the same reason a dog will lick his balls. [1] By convention way back someone started with the bribes and it just went from there as a defacto industry norm and acceptable practice. It’s like saying “the reason waiters get tips is because their pay is so low”. Maybe “the pay is low because they get tips..”.My older cousin owned a bunch of supermarkets and when he started he didn’t know the business at all. He was amazed at how vendors would come in and throw money at him also to place vending machines and games at the front of the stores. My Dad was in a wholesale giftware business and never paid anything to get the items into the stores. Either they thought it would sell or not. In the clothing business they have markdowns and so on. Just the way it is. Ditto for the way the book business used to be (might be the same way don’t know currently how that works).Nothing wrong with slotting fees if they didn’t exist in theory the store would have to charge more for what they sold and so on.How many business deals are done as a result of golf? Business is business and it’s not necessarily a meritocracy.[1] Because he can. Crudeness intentional so nobody forgets the point.
The margins for the suppliers are a hell of a lot lower that the retailer, that is for certain.Supplier pays disty, pays merchandisers, pays for sales, pays for outside market, pays for expirations.Every action is an ice cube in the sun.Whole Foods negotiates its margin when you cut the deal. They are always whole.
Good point on pricing. Without charging/securing slotting allowances overall store pricing would likely be higher. Why should a retailer assume all or significant risk on a new product? Shelf space is a valuable commodity. There’s an opportunity cost for retailers when placing a dog on a shelf. No traction and you’re gone in a nanosecond. It’s far, far easier to get distribution on an app than product placement on a retail shelf. Success in both channels is a real challenge though, and quite fleeting.
Well that’s a blunt way to put it.
A saying my cousin used to have is “people gotta eat”. When there was a storm he would get all excited and call the store hourly to get updates. Things were predictable, you could figure out someone’s store volume just by getting (bribing) the milk delivery guy to tell you how much milk he stocked there from what I was told.So that is one big difference between food and the other examples that I gave (clothing and giftware). People gotta eat.Another thing that has changed with the food business is packaging directly as a result of desktop publishing, color, cheaper printing and packaging and electronics. Not the way it was in the early 70’s. Honestly the Macintosh was a big driver of this and bringing costs down and enabling more people to be vendors and, and this is important, for more product to be sold because of attractive packaging and printing. No question people are buying more food as a result of better packaging, presentation and marketing. [1][1] Just like they are dining more at restaurants because of what they’ve become vs. what they used to be meaning that it’s more than just the food it’s the environment that it’s presented in. So add store design as well … as anyone who enjoys shopping in Whole Foods knows..) Electronics and cheap cost effective design done on the desktop helped with that as well.
You want to lead with your expiration why?Whole Foods mandates all labeling. Whole Foods removes all product 72 hours before expiration date.Lead with expiration is simply waisting real estate.
You (and Charlie) certainly know this space better than me, but my sense from exposure years ago is achieving mass distribution is a game of rich man’s poker. Independents have sku flexibility but large chain stores increasingly less so, particularly w/ consolidation. WF’s had to modify their pricing strat to remain competitive and their YOY margins have suffered considerably. Fairway is an example of a chain w/ ambitious growth plans that went awry, thanks to PE investments. The brand since going public has slowly lost its mom and pop feel, while product quality and margins have suffered. Their flagship used to own the UWS.https://ycharts.com/compani…
Sorry to lecture but this fact to me is one that you need to never forget and not get fooled by our spreedsheets.
Charlie is the expert not I as I”m operationally out of this biz now except at a board level.But distribution I know–was raised in it and honestly feels like home with all its flaws.WF is really brilliant and ruthless and manages to do the unthinkable and smart and get away with it.For example, they have killed and owned the low end press juice market pushing all the brands off the shelves.How–they have massive cold pressers in every store and every night take all the produce that is going to expire and press it, bottle it, and sell it under market at below market.Brilliant. Ruthless. Smart.Artisanals built the market and they coopt it. They do this constantly if there is margin. 365 was the primitive start to that.
I can assure you it is.
It costs money. I can see your sales because we run the loyalty program for Whole Foods.If you want to get on their Fair Trade list which costs them double points it costs them money.
I said “put it where I can see it” I didn’t say to “lead” with it.At first Charlie was printing it so light that it couldn’t even be seen. I even asked the WF employee and they couldn’t find it. Charlie then switched to printing it darker where it was still hard to find but at least possible. Except when the workers didn’t put enough ink down and monitor the results. [1] Then he switched to printing it on the twist ties where you couldn’t see it if the tie was twisted a certain way. His competitors either used labels or a plastic twist tie which was easy to find and read. Explain how this is “leading with your expiration”.Whole Foods removes all product 72 hours before expiration date.Not doubting that that is their policy however I have found that that is YMMV as typical anytime humans are involved. Just last week I pointed out some packaged seafood that was well past the expiration date. And in another market he is in (Rastelli based on my suggestion) they frequently don’t tend to the expiration dates.[1] How do I know this? I saw it happen with his packaging when I would spot check it. On a few occasions I didn’t buy as a result. I am sure I am not the only lost sale. Plus it calls into question other issues with manufacturing and control like the time I pointed out that the raisin bread was falling apart after I bought it and he ended up removing the cinnamon as a result of that.