What App Ideas Like Uber, AirBnB, and Seamless Have in Common

In Steven Johnson’s book Where Good Ideas Come From he explains how platforms function as springboards for innovation.

Take for example the Global Positioning System (GPS). GPS was originally invented for a singular military use, but now powers global innovations like Google Maps, shipment tracking, weather reports, and more.

Smartphones are another such platform. Just like GPS, smartphones have allowed for innovations like Uber, Seamless, Venmo, iMessage, Podcasts, and even the Apple Flashlight. Mobile startups are using the intrinsic connection between smartphones and man to create systems that couldn’t have even been imagines 20 years ago.

1. They Start With Why

The foundation of every great app idea begins with “why,” not “what.” Startup founders have to regularly make tough decisions without anybody there to give them advice on what the best choice is. It is important for them to have a framework of reference that keeps them aligned with their core belief system. Questions like “why are you starting this business” give entrepreneurs the ability to build companies around a central vision for real change.

Making money can’t be that framework of reference. If it is, you’ll probably end up making less money in the long run. Companies focused solely on making money just repeat moves already tried and tested in the market. You cannot dominate an industry if you are just doing things other people have already done. Game changers like Facebook and Uber have become some of the largest and wealthiest companies in the world, but they were not built to become such. They were founded by people focused on a vision of what they can do to make the world a better place. People do not buy what you do; they buy why you do it.

This concept originated from Simon Sinek in his bestselling book, Start With Why — How Great Leaders Inspire Action. His Ted talk will give you more details.

“I have an idea for the next big social media app! I have told my friends about it, and they love it!” This is the wrong approach to starting a real business.

Here’s a quote from one of Mark Zuckerberg’s Facebook posts in 2006.

“When I made Facebook two years ago my goal was to help people understand what was going on in their world a little better. [The Why] I wanted to create an environment where people could share whatever information they wanted, but also have control over whom they shared that information with. [The How] I think a lot of the success we’ve seen is because of these basic principles.

We made the site so that all of our members are a part of smaller networks like schools, companies or regions, so you can only see the profiles of people who are in your networks and your friends. [The What] We did this to make sure you could share information with the people you care about.”

– Mark Zuckerberg

He didn’t dream of building a Facebook while he was sitting in his Harvard dorm room. He started with his “why”, from there he moved on to the how, and eventually the what.

2. They Focus on Value

Long term businesses do not create products; they create value for their customers. They spend time and resources on making some aspect of their customer’s lives better.

“Successful companies create value by providing products or services their customers value more highly than available alternatives. They do this while consuming fewer resources, leaving more resources available to satisfy other needs in society. Value creation involves making people’s lives better. It is contributing to prosperity in society.”

– Charles Koch

Look through your phone right now. How would you react if someone forced you to delete your favorite apps and told you that you could not re-download them? You would probably be devastated because those apps have become a pretty integral part of your day to day life.

Mobile game companies can make a lot of money by creating addictive apps. Their gamified rewards keep you playing for hoursー just so you can unlock the next arbitrary feature or skin. This gamification doesn’t create real value, only the illusion of value. Illusory value is not a sustainable business model. It will not be long before people get bored and move on to another game or app.

How long do you keep a game on your phone for before you delete it to make space for a different one? Ten levels? A couple of weeks? Eventually, you realize there is no actual benefit to your life that comes from the game, and you move on to something else. No business can survive long-term if they do not make a real world part of their user’s life better.

3. They Solve a Shared Human Need

By nature, all humans are hardwired with the same basic needs. Companies that build products that help satisfy one or more of these basic human needs are the ones that stick around long enough to get adopted by the mainstream.

The pyramid above is an updated version of Maslow’s Hierarchy of Needs. He says that every human being shares each of these needs. Needs on the bottom of the pyramid like physiological and safety are a higher priority than needs higher up like aesthetic and cognitive. This pyramid lets businesses identify product opportunities that are both necessary and timeless.

Here are a few real-world examples:

Uber

• Needs: Safety, Aesthetic, and Cognitive
• Existing Problem: Public transportation is unpredictable, dangerous, and unappealing
• Novel Solution: An app that lets you order premium black cars to pick you up in minutes and drive you to your destination

Mint

• Needs: Cognitive and Safety
• Existing Problem: It is difficult to stay on top of all of your finances, especially when you are on the go.
• Novel Solution: A simple dashboard that gives you a snapshot of your finances, and guidance on how to spend wisely

Tinder

• Needs: Love and Esteem
• Existing Problem: Finding new people to date is difficult, awkward, and hurtful if they say no.
• Novel Solution: An app that instantly connects you with others looking to date in your area.

4. They Differentiate Themselves

Entrepreneur, Trevor McKendrick, wanted to make some extra money to help cover his rent. One day he decided to look through the App Store for apps that were making a lot of money but were low quality. Numerous paid Spanish Bible apps had many downloads but were all poorly designed and full of bugs. Trevor knew he could do better, so he hired a development team to make a higher quality version of what was already in the app store. His new Spanish Bible app did okay, but it barely gave him enough money to break even from his development costs. When updating his app to version 2.0, he decided that instead of making it the same as every other Spanish Bible app, he would include an additional audio feature.

This version was so successful that after one year he had made $73,404. To this day the app still makes thousands of dollars every month. What made this app such an overwhelming success? Trevor did not just improve on already existing apps; he added an entirely new feature that nobody else had done yet. He differentiated himself.

Read more: The Story of an Atheist Bible Salesman

How Forest Beat Pomodoro

The Pomodoro Technique is a time management method developed by Francesco Cirillo in the late 1980s. The technique uses a timer to break down work into intervals, traditionally 25 minutes in length, separated by short breaks. If you search the App Store for a Pomodoro timer, you will see many versions of the same app. With such a crowded market it is hard for any of them to stand out.

Forest was able to completely dominate this market and become one of the highest-grossing productivity apps in the app store. So how did they beat every other Pomodoro app?

They completely differentiated themselves, not even use the word “Pomodoro” in their product description. They added gamified features that would let users grow virtual trees for every session — eventually creating a forest of productivity. To put the icing on the cake, if you “grow your forest” for long enough, Forest will plant an actual tree somewhere in the world.

This combination of gamification and social good, allowed them to set themselves apart from all of the other Pomodoro apps. Instead of competing with these apps they defined a new product category of their own.

5. They Start With a Niche Market

Mobile entrepreneurs always want millions of people to download their app, so they think they need to make a product that everyone wants. This is a common misconception.

Facebook did not start out being the global social network that they are today. At first, they were just a small social network exclusive to people at Harvard. Only after a significant percent of Harvard students were on Facebook would they expand to another school.

From Harvard, to the Ivy League, to all colleges, Facebook maintained exclusivity at every level of their growth. This evolving “niche product” allowed them to create a tailored product made for whoever their current target audience was, not what they wanted their audience to be in the future. This strategy increased customer satisfaction and was a significant factor in the explosive growth they saw in their early days.

The Long Tail

Before the internet, it was tough to reach and distribute products to smaller groups of people, so companies sold mass-market products almost exclusively. The internet made it easier for businesses to reach virtually any subset of the population, soon many more companies were started that made products specifically tailored for a particular niche. Instead of designing products so that the largest possible groups of people would like them, businesses began to make them with specific consumer sub-groups in mind. These niche products felt like it was custom made just for you. Eventually, the success of this business model gave birth to the idea of “the long tail.”

Long tail business models allow companies to start small, build products tailored for their audience, and grow quickly. Only after dominating that niche do they expand to bigger audiences or other niches. Even if you want to create a mainstream product eventually, build something for a small group of people first. After you build a loyal user base in a smaller market segment, you can always expand out to other features and target audiences later.

6. They Have an Exponential Mindset

According to Max Ventilla, CEO of Alt School, the three questions every entrepreneur should ask themselves before they build a product are:

1. Am I building something that scales?
2. Does it get exponentially better with scale?
3. Does it get better over time at an accelerating rate?

Companies can answer yes to the above questions in a variety of ways. Here’s a few that work especially well for mobile apps.

Network effects: [Houseparty] Make inviting friends to your app a primary feature. If each person that downloads your app invites three friends to download it too, you will be able to grow your user base at an accelerating rate.

Big data: [Facebook] As more people use your product, you can collect more data. If advertising is how you plan on monetizing, the more data you collect, the easier advertisers will be able to target the right audiences to see their ads. Big data was Facebook’s competitive advantage over Google when they allowed advertisers to use their platform.

Economies of scale: [Zipcar] Setting up your initial infrastructure could be wildly unprofitable. Zipcar had to buy hundreds of cars before they could even launch their app. They could not grow a user base if they did not have the vehicles needed for people to use the app. They knew that purchasing these cars was a fixed cost and that with enough time and a large enough user base, in the long run, this fixed cost is minuscule compared to the revenue they could make.

Exponential companies invest more resources, in the beginning, setting up these systems, but it pays off in a big way after they can get to scale.

7. They Get To Work

“To me, ideas are worth nothing unless executed. They are just a multiplier. Execution is worth millions.”

- Steve Jobs

If you have found your radical new app idea based on these principles, then get started today! The next step after you find your idea is to validate it.