An App is not a business

This was said to me by one of the start-ups I work with at the Wayra Academy in London. They have had their app out for several months but have come to realise that it is a necessary but not sufficient condition for having a successful business.

The reasons for this break down in to two areas – practical and strategic.

Practically, you just can’t make enough money with an app. 80% of the revenue made on Apple’s App store goes to ten companies. Most apps never even get downloaded. The chances of your app making it big time are virtually nil. In this case, they have a specific market they are aiming for and are focused on a particular problem, so they have a chance of getting a high level of penetration and engagement with their market. Even so, the price that you can charge for an app is constrained by people’s expectations. Even a premium price is unlikely to exceed £100. And then you have to give 30% over to the app store. That’s never going to be enough income to support a business.

Strategically, an app is just a point solution. It does not, in and of itself, address the problem. It is often a key part of the solution but requires a lot more to be delivered. In this case, training, support, documentation, packaging, financing and a whole other load of things are needed to provide a complete solution. All this ‘service surround’ takes a lot more effort than building the app. And it probably requires a completely different set of skills and abilities. Even different people.

So don’t waste your time and just build an app. Put in the time and effort and build a business.

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