There are quite a few people in the app entrepreneurship world who will tell you, “Ideas don’t matter. Execution is the game.” While it is definitely true that execution is paramount, executing a bad idea won’t get you very far either.
a) Pick a great idea
Your winning app idea must align with your why, as this will feed you when times are lean. Your idea would ideally:
- Solve a significant problem common to a large number of people.
- Serve a universal need.
You have a greater opportunity for massive success if the need is not restricted to particular location, language or culture.
1. Based on passion or frustration:
We discussed that many startups are created based on the founder’s passion or frustration. Answer these questions.
- What are you passionate about?
- What kind of app would you pay for in your area of passion?
- What big problems have frustrated you on a regular basis that you really want to solve?
- What complains do you hear about all the time from your friends and family?
For example, MyFitnessPal founder Mike Lee was on a diet to lose weight for his wedding. Frustrated by the use of pen and paper to track his diet, he decided to build his own solution to his frustration. He launched the website version in Sep 2005, then launched the apps. On February 4, 2015, MyFitnessPal was purchased and acquired by athletic apparel maker, Under Armour, for $475 million. MyFitnessPal had 80 million users at the time
2. Based on expertise:
Your idea may also be based on your professional expertise and experience. Lots of apps are born out of a founder’s experience in an industry, which led to a discovery of a much more effective and efficient way of doing something through the right app.
- What is your subject matter expertise?
- How can you share your expertise with the world at scale?
For example, MyFitnessPal founder Mike Lee was on a diet to lose weight for his wedding. Frustrated by the use of pen and paper to track his diet, he decided to build his own solution to his frustration. He launched the website version in Sep 2005, then launched the apps. On February 4, 2015, MyFitnessPal was purchased and acquired by athletic apparel maker, Under Armour, for $475 million. MyFitnessPal had 80 million users at the time
3. Based on trends:
Your idea may be based on following trends or borrowing ideas. Look at the top apps charts. What kind of apps are making the most revenue? What are the trends and successful apps in other industries? Which successful trend interest you the most? What problems are these successful apps solving?
One thing common to all these methods to create winning ideas is that it should solve a significant problem and add huge value. People often make the mistake of starting from a solution or even worse start from a feature. Start with a problem, a significant one that needs solving to increase your chances of success. Research the solutions available in the market and then refine your ideas.
There are also some websites where you can find good app ideas. http://www.ideaswatch.com/ is one such website.
Once you shortlist some ideas you want to work on, you can then validate them to choose which one you want to work on. The next section shows you how to validate your ideas.
b) Validate your idea’s greatness
How good is your idea? It is wise to assess the demand for your idea before you invest a lot of time and money into your app.
Does your idea have the elements to become a successful app?
What do the world’s most successful apps have in common? I and my research team spent some time digging into this question, and here is what we found. Your awesome app idea has a much greater probability of success if it incorporates these four elements of success.
1. Meet a universal need
A universal need is something that transcends culture, language, location, and time. There are things which make us all human beings, like:
The need for food and shelter
- The need for safety and security
- The need for connection and belonging
- The need for recognition and appreciation
- The need for skill mastery, achievement and freedom
For example, social networking and instant messenger apps are among the most successful because they fulfill the need for connection and belonging. Gaming apps help people feel they are mastering some skills and give a sense of achievement. Sharing apps, like AirBnB and Uber, help people save money and make money, and in doing so, help meet their needs for financial security and freedom.
2. Tap into the habit loop
All successful apps tap into the human operating system by making some element of their app part of a regular routine for its users. In many cases, this leverages the first element of meeting a universal need. Successful apps utilize the habit loop of cue-routine-reward. They know and define the triggers or cues for users to use their app, and include clear rewards for the habit. For example, Facebook notifications to your smartphone when some likes or comments on your posts and photos is the cue. The feeling of being bored also acts like an internal cue. User starts scrolling their infinite newsfeed – the routine. The engagement and the feeling of being liked or recognized is the reward. If you haven’t read the book, ‘Power of Habits’ yet, I highly recommend it. What you can learn from that book is just mind blowing. The author shows how many companies have made their product a habit for their consumers. Another great book about creating habit forming products is ‘Hooked’ by Nir Eyal.
3. Incorporate network effects and viral loops
In the network effect, a product becomes more valuable and useful when more people use it (this also plays an important role in your chosen revenue model; see next element). Facebook is great when all your friends are in there with you. Whatsapp is cool when all your friends, local and international, are using it, as it makes communication quicker, easier and more fun. This motivates users to invite their contacts to use the app.
A viral loop is created when there is a clear need or incentive for one user to invite others. The best apps build incentives for their users to invite more users.
Dropbox offers free storage when a user invites a friend to use Dropbox. Uber gives you taxi credit when you share your experience with your friends and invite them to use it. AirBnB offers hosts money for introducing new hosts to AirBnB.
4. Pick the right revenue model
Your idea increases in greatness when you have a clear approach to making money through the app. Revenue split, subscription, in-app advertising, and in-app purchases are the four most successful revenue models. We will discuss the different revenue models in detail in chapter 9.
- Revenue Split: Apps that make the most money are the ones which create a market place and help others make a lot of money – for a small cut. These app companies help their customers make money, and in doing so, split the revenue. Uber takes a 25% commission of what passengers pay the drivers, AirBnB takes a 6-to-12% commission from the hosts, and Spotify, up to 30% commission from the music producers/publishers.
- In-App Advertising:This is when you build a huge user base (audience) and then charge advertisers for clicks and views by your users. Facebook makes billions of dollars every year in advertisement revenue from businesses publishing their ads in the Facebook platform.
- Subscription:Charge an ongoing fee for the service your app offers. This is a very common model for Software as a service type apps, for example Xero is an accounting software/app for businesses averaging at about $50 a month. With over a million subscribers, Xero’s revenue was US$141.2 million in FY16. However, they are heavily reinvesting all the money and made a net loss in FY16. It could also work for any type of app, for example, Lumosity, a cognitive games app that focuses on improving different functions of your brain, provides access to the app’s 50+ brain games for a monthly subscription fee starting from $11.99. The app claims to have 85 million users across the world with an annual revenue crossing US $24 million in 2016.
- In-App Purchases:In this model, you make your app free to use but have special features within your app for users to buy as in-app purchases. Candy Crush Saga is a multi-billion-dollar app which uses in-app purchases with only a 3% of the customer who pays and the remaining 97% users use the app for free and do not pay a cent. This app demonstrates the power of Human Need (for sense of achievement), Habit Loop, and Network Effects. We will discuss more about this app in chapter 9 on revenue models.
How many of these 4 success elements does your app idea tick?
- 1. Does your idea satisfy a Universal need?
- 2. Can it be habit forming?
- 3. Is there a network effect advantage or incentives to create a viral loop?
- 4. Does it employ one of the 4 top revenue models?
c) Get the timing right
Do you know the single biggest reason why tech start-ups succeed or fail? I don’t believe there is just one reason, may be one of the important reasons. Bill Gross, founder of Idealab, did a TED talk about just this topic.
He wanted to find out what would be the single most important reason why startups succeed, and explored five factors: the idea, the team, the business model, the funding, and the timing.
He defined “timing” this way:
- is the idea too early and the world isn’t ready for it;
- just right;
- or too late, and the field is flooded with competitors?
Bill Gross studied hundreds of businesses, successful and otherwise, and concluded that the #1 contributor to both success and failure is timing. Are consumers really ready for what you have to offer them?
For example, Airbnb began during the height of the recession, when people really needed extra money, and the idea of renting out their own home to a stranger became more acceptable. YouTube didn’t even have a business model when it first started, but it was launched just as 50% of America could access broadband and stream videos fast: brilliant timing.
You’ll know that the timing is right when your target market responds well to your app idea. But building and launching your app just to see the response can be very risky and expensive. So I have suggested some tactics that will allow you, to some extent, to find out if the timing is right without having to build your product.
- A. Use Google Keyword Planner and Google Trends analysis. These tools tell you the demand for different keywords in Google searches, and thus gives you a good idea of the demand for your idea. What keywords would represent the demand for your product? Simply type in the keywords that represents your idea into the below URL’s.
https://adwords.google.com.au/KeywordPlanner
https://www.google.com.au/trends/ - B. Google surveys allows you to get opinions from consumers across the world by simply asking questions. List the assumptions you are making about your target customers, their needs and wants. Define the age and demographics of your target user, and use the Google survey tool to let Google find the answers to your questions about your target market and the real demand for your idea from the millions of users in their database.
https://www.google.com/analytics/surveys - C. Create a landing page with some mock-ups of your app screens, and sell your app before creating your app. You can even simply sell your solution on a landing page without app screens. There are many landing page template websites (Instapages, Unbounce) to quickly set up landing pages. Drive people to the page using ad campaigns. Have users subscribe to receive updates about the app launch, or to receive an invite to use the app when it is launched.
- These methods can help you understand the demand for your idea before you make a significant investment in money or time. Another simple but very effective method is to simply call or meet your target users and talk to them in person. This is what Uber’s CEO Travis did when he first came up with the idea. He cold-called taxi drivers to get their feedback, and when 3 out of every 10 calls showed interest, he knew there was a demand for his idea.
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