Hours, the Apple Watch, and turning an app into a business

I think I owe everyone an explanation.

Our time-tracking app, Hours, has done really well for itself. It has sold tens of thousands of copies as a $6.99 app and has earned six figure revenues in less than a year on the market.

Today we are celebrating the launch of the Apple Watch version by making Hours completely free — no strings attached…

Huh?

I know, it sounds pretty nonsensical from a business perspective. So I thought it would be helpful both to our users and to the indie app community to shed some light on our thought process and overall strategy for Hours.

Making a big part of our current strategy public (competitors included) is a little risky, but I have always appreciated entrepreneurs who exercise a level of transparency. It almost always inspires ideas and valuable discussion that benefits everyone. I hope this does the same.

Building a business, not just an app

Not all apps lend themselves to becoming businesses that generate millions in revenue and support a team. But some apps do.

Based on the response to Hours, we think we would be short-changing the product if we continued thinking small about it.

So we’ve started thinking big.

The end game

What could Hours look like a few years from now if we started looking at time tracking across all businesses. Businesses lose billions of dollars a day due to poor time-tracking. We believe that is primarily because most accounting systems and services can’t or won’t provide great time-tracking interfaces (for most accounting systems, it is just one feature among a hundred). We’ve found that nailing time-tracking is really hard because a good interface needs to solve the human problems of forgetfulness, laziness, and bad habits. That’s why Hours has had such a great response so far — it at least attempts to solve those problems.

What does the end game look like if we do our job? It is a world where Hours is ubiquitous for time tracking just as Slack is becoming ubiquitous for business communication. It shouldn’t matter if you report to an individual client, a third party service like Freshbooks, or some proprietary back-end your company uses — there should be no reason you aren’t using Hours to do the actual time tracking part during the day.

Eventually, we will not make most of our revenue from individuals tracking their time, but from businesses who want to collect that time and accounting providers who want to subsidize that collection (look forward to some big news on the latter soon).

That is the vision.

Cracking the enterprise nut

How do you break into business and the enterprise? We like Slack’s bottom-up approach. Start by making the best solution for individuals, who in turn advocate adoption for their team, who in turn evangelize to other teams…and up the chain it goes. If startups can make this strategy work in the Enterprise, as Slack has, then they can focus on creating a great experience for the end-user instead of a bloated feature list to pass a corporate approval checklist.

The bottom-up strategy requires mass adoption on the ground floor — by individual time-trackers. We want millions of users tracking their time with Hours in hundreds of thousands of businesses. Most of these users will be evangelists without even knowing it because when you are tracking your time, you are generally reporting it to someone. Employees who use Hours will have an inherent motivation to get their team to use Hours for time collection because reporting time with ours will make their lives easier. So the individual time-trackers become the door to team adoption.

In order to get as many evangelists as possible, we are making all the basic time-tracking functions of Hours completely free, no strings attached. I highly recommend this talk by Box.com CEO Aaron Levie, talking about how they used the bottom-up approach to break into the enterprise.

How we get paid

We will have ways to monetize power users and reward users who have already paid for Hours, but we imagine most individuals will use Hours for free. Then we focus on taking every ounce of friction out of Hours spreading from an individual to a team and eventually to an entire company. Get a few thousand teams paying a monthly subscription and now we have a real business.

A peek into the future

We have a lot in the pipeline to put this strategy into play this year and it all starts now with the Apple Watch.

The Apple Watch

It is kind of an awkward time to make Hours free because we don’t yet have features that justify charging a subscription. That means we are sacrificing tens of thousands of dollars of potential download revenue by making Hours completely free. So why start now?

One factor overrode everything for us: the Apple Watch.

For some apps, an Apple Watch extension is going to be a novelty. For others, it will be a nice-to-have. But for Hours, we think the Apple Watch will be the primary way Apple Watch owners will interact with Hours every day. The primary usage of Hours is around starting, stopping, and switching timers. Being able to do that with just a glance and a tap makes the Apple Watch the best possible way to track your time during the day. It is so convenient that even the worst time trackers (like myself) may actually remember to do it, with a friendly tap on their wrist to remind them if they don’t.

Now is the time everyone is wondering what the Apple Watch can do better than any other device. We want Hours to be the obvious answer for anyone who tracks their time. From the ground floor of the Apple Watch software boom, there couldn’t be a better time to try to make Hours go viral. The multiplier added by going free gives us a better shot at doing that.

Both Tapity and our partner Five Pack Creative are prepared to take the risk right now, and we hope it pays off as we start implementing our full monetization strategy in the coming weeks and months.

And that is my long-winded explanation for why Hours is going free today. As always, I look forward to your feedback.