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7 Winning Strategies For Smartphone App Startups

Posted on the 09 October 2015 by Martin Zwilling @StartupPro

apps_smartphonesOne of the quickest ways to become an entrepreneur these days is to develop and publish a smartphone app. The price of entry can be less than $10,000, so the competition is huge and growing rapidly. According to Tim Cook at Apple, there were over 9 million registered developers in 2014. Yet according to other statistics, vanishing few of these ever generate a significant profit.

We all hear about the big winners, such as the game Clash of Clans, which still pulls in over a million dollars a day, and the smartphone version of Skype, which is making money through credits as an extension of the website version. We don’t hear about the remaining three million apps that are mostly free, and garnering only trivial revenue through advertising.

Yet I still recommend apps as a good starting target for aspiring technical entrepreneurs, since they don’t require a large initial investment, and you can learn an incredible amount about the realities of business, without risking a lifetime of effort and several investor fortunes.

I also recommend the app development strategies outlined in a new book, “Vaporized: Solid Strategies for Success in a Dematerialized World,” by Robert Tercek, who has lived on the digital edge for many years. Here are some ways we both recommend to beat the odds and thrive in today’s app ecosystem:

  1. Sell a digital service through your app. The ideal business model is to establish a direct-to-consumer service that enables you to bill the customer directly. You provide the free app in the App Store that gives subscribers mobile access to your service. After this connection, you need not share the 30% of all revenue collected by the store platform.

  2. Make your app support all platforms. Port every app to all the popular platforms – IOS and Android. Compensate for low profit by aiming for maximum reach. Cultivate a preferred relationship with Apple, Amazon, Facebook, Microsoft, and Google to ensure the best possible placement of your offering.

  3. Offer premium services after user is hooked. Through a free base product, you give the first taste of the service or game away for free, get users hooked, and then convert as many as possible to paying customers. This freemium model has been used for years by web apps. Even a conversion rate of one percent can build a healthy business.

  4. Build your own marketplace platform. This is a tough one to accomplish, but it has paid off handsomely for the first to win in other categories, such as Amazon Kindle and Netflix. To accomplish this move, you must remain studiously neutral on all contributors, and be prepared to fight to preserve your direct relationship with the customer.

  5. Commoditize complementary products. Complements are products that must be bought together in order to be useful, like apps with mobile phones, and fitness products to go with your fitness app. If you want to drive up the demand for your core product, one smart tactic is to drive down the price of all complementary products.

  6. Look for value points to control. No company has more value control points than Google, which spans advertising, e-commerce, social media, video and mobile, as well as a full suite of hardware products. But there are a wealth of other categories, new ones are constantly appearing, and the ecosystem is always shifting. Be aggressive and alert.

  7. Position yourself to capitalize on the next frontier. Information is certain to grow faster than anything else generated by humans, and the Internet of Things (IoT) is a huge contributor. Apps are adept at collecting information and condensing it, whether it be for healthcare, home control, or gaming. Be there intentionally rather than randomly.


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