What I Learned Spending $300,000 in My First Mobile App Startup
This past weekend, we had the agent of an up and coming DJ come to the bumpn office to meet with us. He’s an old friend and very well connected guy in the music/artists scene. He’s on a first name basis with top artists such as The Weekend, Drake, Ariana Grande, Wiz Khalifa and French Montana. We invited him in because we wanted to show him a demo of bumpn, get him excited about it and take it back to the boys with a “we’ve got to be part of this” angle. As the convo continued, it boiled down to him saying “give me something I can give them or show them that’ll convince them to be a part of bumpn.”
…..and that’s when it HIT ME! Holy shit, we’ve been going at this startup for over 8 months now as a team, 14–18 hr days, sacrificed relationships, compromised others (one of our co-founders got in a tangle with 2 girls on bumpn lol) and we’ve been in this zone that has emerged not only myself, but our entire team as experts in our relative domain. And when you look at the financials, you’ll see that we’ve burnt through over $300,000 in cash!!
……and that’s when it HIT ME the second time.. Holy shit, we’ve burnt through $300,000 in cash!! Fuck me.. and how do we justify that? So I’ve turned to medium to write my thoughts in my very first blog post right before we do our public beta launch of bumpn and get input from the community on what you think of this and hopefully (maybe) this can be helpful insight for others…
1) How you structure the company matters
At the end of the day, how you structure your company is the biggest variable for how much money your’re spending. Variables such as who you hire and how much salary/equity ratio is given to each. The amount of bootstrapping that goes on etc can all be tweaked and optimized to ensure that your financials meet your end-goals.
For us, we are a team of 4 co-founders, 1 employee and 3 contractors who are all, except for one, on salary (fair market values for our positions). We also have a beautiful startup office in the outskirts of Ottawa.
This alone = ~$$$ 2/3 of our spend.
2) The faster you get your product out and iterated the better
The pivot into bumpn started in September 2014 and by December 2014, we had our first MVP ready for iOS and in iTunes. It was quick but when you consider 1) above that’s over $40k spent. This required 2 of our guys full-time (80+ hrs per week).
After releasing the MVP we learned the initial UI/UX needed work. After analyzing the data and surveying our 1600 users we were back to the drawing board for the new UI/UX which we are releasing this week. We also learned that we should not have put the MVP on iTunes and Play Store initially and should have kept it in a more controlled environment (closed beta).
3) It’s all about making data driven decisions!
Without data, it’s called speculation. When you speculate, sure it’s your best guess or assumption but there’s a high probability it will lead to inaccurate and/or incomplete information.
Make changes based on your analytics and the surveys gathered from the users. Not based on “what you think!” For example, when we launched the bumpn MVP we noticed that 50% of the users that download the app only make it through the “Facebook oAuth connect” …guess what that told me? 50% of the target demographic that wanted to install it got turned away because of that feature or lack thereof. That’s why in the new bumpn release which is available for public beta (link is at the bottom) you can sign-in with Facebook, Twitter or email.
4) There’s never a “right time” to release the product but there’s always a “best time”
In the last few weeks, I’ve seen some new apps that have come out and started to make noise. Just look at Meerkat for example right before SXSW. Do you think they really just popped out of nowhere? No, of course not. If you dig deeper into their story, they have been going at this for over 2 years and have had a few pivots along the way. After iterating, collecting data, pivoting, growing, building relationships etc you’ll know you’re approaching your “best time” because everything starts to line up! Some key questions you must answer are:
- How long was your alpha/beta, what data did you collect and learn from and was the sample size big enough?
- Who are the target demographics and do you know them and what they want like you know your own family or spouse? (surveys, relationships etc)
- What problem do you solve and are you the best at solving it?
- Is your “messaging” down perfect. Can you communicate clearly what this product does and it’s value proposition to others?
- What does your data tell you? (user acquisition, retention, engagement, attrition, MAUs, DAUs etc)
- Do we have a solid GO TO MARKET strategy and execution plan in place? Beta sites, PR, influencers, socialites, bloggers, tech events..
- Does your product have solid UI/UX that meets a specific market fit? Smooth, friction-less, easy to use and navigate etc
- Is it scalable? Can you handle tens of thousands of downloads at any given time?
- Is your app setup for a viral co-efficient of greater then 1?
- Do you have a pitch desk and Investor package ready for when the calls and appointments come in?
If you can’t answer these questions or if even one of these questions is a “no” then the best time to launch is not right now for you. Why? It puts you into a much higher risk situation. If you haven’t heard of what happened to the Color App back in 2012 (they raised $41 Million and still failed) let’s just say that more then 1 of these points wasn’t answered and thus it wasn’t the “best time” for them.
5) First, it’s all about the product. Then, it’s all about the marketing.
It’s never too early to start building relationships but of course the best way to build relationships is with an initial product to show and hype up.
After all that’s been said and done about the product it’s now time to hustle and move the needle! You’ve perfected your product, it’s in the hands of thousands of internal (closed) beta users, you’ve collected all your data, you have a SOLID product and you’re now ready for a public beta launch.
When you reach this point, you need to have a solid GO TO MARKET strategy and execution plan. YES, it costs money to make noise! You’re only as strong as the marketing dollars you have available. Heck, if I was at this point and I had a 7-figure marketing budget like many of the top gaming apps then I will easily acquire users through some of the top ad platforms like Facebook, Apptap, Appflood, Fiksu, TapJoy and Airpush, hire the best PR agencies around (we actually already have this) and have some top celebrity endorsements and outfit a coach bus with students traveling across the country doing campus tours! But, when you don’t have that kind of marketing budget in place (for now) it’s straight hustle and bumpn’ grind and building relationships the old-school way!
All that being said, I would like to invite you to our public beta launch where you can be one of the first to download and try bumpn, the app we’ve been working hard and long on and we’re really excited to show you what we have. It’s the easiest and fastest way to share photos with buddies, discover what’s popular and meet people nearby.
Most importantly, please let me know what you think! You can either comment here, add me on twitter (@MontyElsabbagh) and facebook (Monty Elsabbagh) or send me an email at email@example.com
One thing I know for sure is that our team is one of the best I’ve been a part of and we’re on a mission to do one thing:
Build a product our users love.
Join our Beta Program here and help us make bumpn better!