6 steps to make your billion dollar app
If you want to create something truly innovative and disrupt the market through app development in a significant way there are a number of underlying principles that are valuable to keep in mind.
Here's a list of six we use personally at M5859 Apps.
1. Choose a large market to disrupt.
One of the principle reasons why venture capitalists (VCs) don’t back many startups or app developments is because they are not going after a large market (or in startup lingo, "TAM" meaning "Total Addressable Market"). Total Available Market, is the total market demand for your app calculated in annual revenue or unit sales if 100% of available market is achieved. Good examples of startups that tackled the big markets are AirBnB (sharing economy for rental) and Uber (sharing economy for taxi cabs).
2. Choose a conservative or ageing industry.
The whole point of app development is to build a technological edge or what Google refer to as “technology insight”. You are building a Troy horse, that once released, can go viral and disrupt an established industry that is entrenced in doing things “the old way”. Your unique advantage is your mobile app, but it’s much more effective if the industry you are looking to disrupt is still operating in the old world. Hot startups like Stripe (mobile payments), Flexport (international logistics) and Transferwise (global transfer of payments) are becoming billion dollar startups by choosing to tackle “unsexy” industries, where there is little competition and technological challenges by existing players. This gives them valuable time to build their Troy Horses (their apps) so by the time it is finished and released on an unsuspecting industry, it’s more or less too late for existing players to catch up. The time required to ramp up their own app development is too steep. In summary, go for apps in markets that no one else is looking to go for apps.
3. Study a little bit on neuroscience.
App success isn't about luck, it's about science. One of the great sciences that app development teams and entrepeneurs should get to know is the habit of addiction. Why addiction? Because when go into app development, most startups and founders have very little funds for marketing in the traditional sense. There’s usually only enough to build an app (and that can cost often over $100K) and some small funds for grass roots marketing. The app is loaded onto the appstore, where it subsequently sits in the cloud, waiting for customers to download it. If you haven't built a product that is engaging and habitual, than there won't be an sustained explosion of downloads.
Why? Because consistent downloads is a sign that users are addicted to your platform. If you don’t have it, it’s very hard to keep valuable users on your app and turn them into paying users. App development is about building an app, but the science behind why your customers stay on your app is whole another ball game. Study a little bit on neuroscience and addiction, it will pay off in a big way. A good book we recommend is Hooked: How to Build Habit-Forming Products by Nir Eyal.
4. Choose a great app development studio or team.
Your product is only as good as the team that built and designed it. Many first time entrepreneurs who get into app development don’t spend enough time on the due diligence of choosing the right team to build your billion dollar app idea. It’s not just a matter of building an app, it’s more a question about how fast does the app perform (latency)? Is it designed properly so that the intended market can actually use it simply (UI/UX)? Does the app contain elements of the neuroscience of addiction and habit forming behavior? After all, once you finish an app and upload it to the appstore, it’s the stickiness that will get customers retained. This leads to high engagement rates and monetization. Nothing else matters more than addictive behavior. But in order of all these fundaemental structural pillars of app devellopment to work they must be built by a world-class team that have done it consistently, have achieved enormous market success and know how to release apps onto the market (not just build them).
5. Be a learning animal.
The best entrepreneurs in app development that made billion dollar apps became, by their very nature, what we call “learning animals”. That is, they would listen to what others have done and how to make world-class apps that go viral but then they would read books on apps, technology leaders, neuroscience and blogs. Because all great technology entrepreneurs treat their career as a marathon, they see the entire journey as an opportunity to learn. The first one or two apps, could be the step to the third app, which could be the bilion dollar app. But this would never have been possible without a thirst to continue to learn all the time. So skill up, be avid readers of tech blogs, listen to podcasts, watch videos, or choose a book to read regularly. Your greatest strength compared to other app and technology entrepreneurs is not how deep your pockets are, but how intelligent you are, your reputation and your social currency.
6. Have grit, spark and determination.
App development is highly competitive and it seems that everyone in this age is chasing the next billion dollar app idea. There are plenty of winners and success stories both here in Australia and overseas. Take for instance Melanie Perkins the 26 year-old female founder of Canva ($385 million valuation, Aug 2016), who famously pitched to over 100 investors when she was on the hunt for seed investment in her early-stage design startup. Pintrest, one of the largest social media platforms in the world, only had 5,000 users after 12 months but persevered with grit because they believed in the product. “Grit” - The Power of Passion and Perseverance” by Angela Duckworth is a great book for inspiration.