Updated: May 15
If you've ever wondered how Facebook, Instagram, Coinbase, Uber, Spotify, and other apps grew to be multi-billion dollar companies, then you've come to right place. But first, let's understand the new app world we live in.
The Billion Dollar Opportunity
The average American checks their phone every 12 minutes
90% of our mobile time is spent on apps
Mobile Apps are expected to generate $250 billion dollars in revenue by 2025
53% of all web traffic worldwide has come from mobile users
The Billion Dollar Challenge
The average number of apps downloaded and used has flatten over time; On average, people are using 9 apps per day, 30 per month
Smartphone users are spending 85% of their time on their top 5 apps
After reading the book, How To Build a Billion Dollar App by George Berkowski, I learned a couple valuable lessons that I've listed below.
1. Think Big And Validate The App Idea
No billion dollar app got started by thinking small, think big. Question what is possible. Then, build the first version and test & validate it. Your goal is to get feedback from your target user. This is the only way to find out if your app actually solves a problem. You'll discover valuable insights such as;
How are users interacting with your app?
What features are they using most?
How frequently are they using your app? How long are they staying?
2. Build The Team
Put simply, If you want to go fast, go alone. If you want to go far, go together. Every successful company was built with founders who had the vision and a team who executed on it. A team brings a diverse set of skills, thinking, and resources that your app will need to grow for the long term. As they
say, "Rome was not build in a day." and also, Rome was not built by one person.
3. Choose A Business Model
If you want your app to grow, you're going to need resources to feed its growth.
Free, But With Ads: Free to download, but users are targeted by advertisers
Freemium: Free to download, but some features are restricted to paid users only
Paid Apps: Users pay to download
In-App Purchases:Users pay for virtual or physical goods within the app (eg. clothes or in-app credits)
This choice is tricky. If you charge users to download your app, you might not grow fast enough. If you restrict key features for paid users only, your free users may not experience the full breadth or key features of the app and never come back because they didn't find any value. If you price too aggressively or too conservatively, you may cripple your growth. But one thing is for certain, if you don't strategically choose a business model, it'll be difficult to scale your team, platform and gain marketshare.
4. Understand the AARRR Metrics
User Acquisition: the act or process of gaining new users through strategies such as advertising campaigns, promotional offers, marketing, and growth hacking...
User Activation: the moment initial users receive value from your platform and become engaged with its key set of features, functions, and related content.
User Retention: the ability to compel users to regularly revisit or reuse your platform over a period of time.
Revenue: the process of monetizing within your platform
Referral: the act of recommending, advocating, or mentioning your platform to others
5. Raise Capital & Investment
After your startup has acquired and retained real users, generated revenue, and established a team, then, you can start thinking about raising capital to invest product development and traction. This process has become more straight forward with websites such as AngelList that connects investors with founders.