The quarter of a trillion dollar app bonfire
‘Build it and they will come’.
‘They’ being users and customers. This is the conviction that has led many start-ups and established companies to launch hordes of lifeless mobile apps to an indifferent market — in direct opposition to the long-established principle of first striving for, and then achieving product/market fit.
A solid product/market fit is something that is required in order to enable a successful transition to growth. Product/market fit was introduced as a concept by browser pioneer, entrepreneur and hugely influential VC Marc Andreessen back in 2007 on his blog (now only available via archive.org here).
It’s a fairly abstract concept, and one that is isn’t exclusive to mobile software, but it seems to me that it is in this area that Andreessen’s advice continues to be ignored.
The evidence to support the idea that people building mobile products are ignoring the p/m fit concept is readily available. Before examining this evidence, we’ll first posit some approximate costs in order to help sketch out the bigger picture.
Last year Clutch surveyed a dozen mobile app developers to determine the average cost of building an iPhone app. They found that the median cost is between $37,913 and $171,450, but could climb to $500,000 or higher.
Using these figures, let us for the sake of argument say that median year 1 cost for an app developed by a software house or agency is $85,000 US Dollars, which is roughly £60,000.
In 2014 Adjust published a report claiming that nearly 80% of the 1.2 million apps available in Apple’s App Store were the software equivalent of ‘the living dead’ — sometimes referred to as ‘Zombie Apps’. This is the term Adjust coined to describe an app that does not attract enough measurable attention to regularly receive rankings in the Apple App Store top lists.
A year or so on, Apple has over 1.5 million apps available, Google Play, overtaking this figure in 2015, holds 1.6 million downloadable Android offerings. Add to these two figures the apps in Amazon’s Appstore, the Windows Phone Store and Blackberry’s equivalent and you are looking at a total figure of around 4 million available apps at the start of 2016.
Nobody out there is suggesting that the quality and popularity of available apps has made a significant enough change to make us question the lasting accuracy of Adjust’s 80% from 2014, so for the sake of argument we’ll stick with that figure and focus on the App Store’s situation at the time Adjust analysed it.
If all of that 80% went to an agency or external software house, an ‘if’ as we don’t have the data to suggest either way, then an astonishing £192 billion (or $275 billion) would have been wasted on launching mobile apps that went nowhere.
You could (theoretically, at least) buy Facebook for that! Coca-Cola and Disney too. It’s also more than the U.S national budget deficit. You could also pick up a whole stack of airlines or a thousand Playboy Mansions.
Fun aside, almost a decade on from Marc’s blog post, the figures about the sheer amount of lifeless apps give added support (not that more was needed!) to many of the things that Andreessen was suggesting that start-ups (in particular) pay attention to. ‘Build it and they will come’ is not product strategy, it’s a recipe for failure.
Back in 2007, Andreessen pondered what correlated the most to startup success — team, product, or market? Or, more bluntly, what causes success? He eloquently reasoned that “in a great market — a market with lots of real potential customers — the market pulls product out of the startup”.
This is important for all the product teams behind some of those apps in the forsaken 80%. Teams from start-ups and established companies who probably thought that their ‘killer app idea’ would lead to success all on its own. That if they just built it, customers would come knocking.
Andreessen was clear that the product doesn’t have to be great, or even complete — it just had to work, and that the market didn’t even care for how good the team behind said product was, as long as that team could produce a minimum viable product to get out there and learn from.
“in a terrible market, you can have the best product in the world and an absolutely killer team, and it doesn’t matter — you’re going to fail.
You’ll break your pick for years trying to find customers who don’t exist for your marvelous product, and your wonderful team will eventually get demoralized and quit, and your startup will die.” Marc Andreessen (2007)
There are of course exceptions. New markets can be created from scratch by transformative products. Marc Andreessen referenced VMWare, which I remember back in 2008 (when I was a Technology Consultant at HP) totally changing everything for everyone in infrastructure by opening the door for the movement towards mass virtualisation. In 2016, we can add Twitter and the iPad (and a small handful of others) to that list of rare market-making exceptions.
How many product teams in that 80% thought that they were that exception?
The glut of ‘Zombie Apps’ is an undead army of evidence that supports the idea that the only thing that matters is getting to product/market fit.
Lots of teams fail before product/market fit ever happens, but their lifeless corpse is visible for all to see in the App store. Enough to make product teams at start-ups and elsewhere think twice, or so you would think, but it doesn’t seem to be a powerful enough tonic to combat the entrepreneur’s Achilles’ heel: conviction.
Andreessen’s conclusion on this topic back in 2007 was that product teams fail because they never get to that crucial product/market fit. The evidence in 2016 suggests that many teams don’t even try to get this far, or if they are, they don’t know when to reach out for help. The thousands of blog posts, books and talks that Andreessen’s concept has spawned is evidence that there are a lot of people out there that understand the importance of achieving p/m fit, but the various app store figures suggests that there are an awful lot of people whose entrepreneurial conviction led them to bypass this crucial concept entirely!