Probably the biggest up-front decision for starting an appreneur business is deciding on what type of app to build first. When I built my last software company, I found that I needed software to track requirements, bugs, test cases, and project deliverables. At the time, very few software products did this in one tool. Sure, you could buy several tools to accomplish this but they were not tightly integrated and were pretty disparate. That triggered the idea for the product — I would create a web-based product that did all of those things and could be rented (SaaS) instead of purchased. Since I was a major client of my own software, it made all the difference as to how we continued to improve it.
Trust your instincts, and make judgements on what your heart tells you. The heart will not betray you. ― David Gemmell, Fall of Kings
Be the Customer of Your App
Keeping with my past successes, I decided I should create an app that I desperately needed and would use on a daily basis. In other words, I should build an app that I would actually be a customer of. I came up with the idea of becoming an appreneur in January 2013 and at the time, my wife and I were traveling a lot and needed a way of tracking hotel loyalty cards on my phone. That way when we went to a Holiday Inn or some other hotel, I could quickly give them my loyalty card account number and they would give us credit for the stay.
At the time, I was using a Windows program for keeping track of passwords for the different websites I use, my loyalty card account numbers, and just about anything else I needed quick access to. The Windows version worked great when I was sitting at my PC but it was not accessible when I only had my phone in my pocket.
This spurred the idea for my app. I will create an app that allows me to track passwords, loyalty card accounts, credit card accounts, and the other hundreds of things that are hard to remember yet important to track.
Does this App Exist Today?
The next thing to do was to determine if there is already an app that does what I need. After doing a few Google searches, I found that this app does exist and in fact, there are a number of competitors already doing it. Many people would stop there — it has already been done, someone beat me to the punch. But this tells me that there is already an established market, so there must be lots of people like me that need an app like this. I will not be deterred by the fact that competition already exists, I just need to find some competitive advantages that will allow me to compete well.
I personally believe that trying to create a totally unique app is much harder because you don’t have an established category or market to pull data from. It is a crapshoot as to whether the idea will be marketable. So creating a competitive app is not a bad thing.
Sizing Up the Competition
After doing multiple Google searches, it was clear that about 6 companies were capturing most of the market. Looking at iTunes, I found that there were another 15 or so companies with competitive apps but very few seemed to be selling much. How did I know that? I used http://xyo.net to determine how many mobile downloads each of the big 6 competitors were getting per month.
Note: http://xyo.net provided free analysis of app downloads when I first did this research. They have recently sold that business to https://prioridata.com and it appears that they charge for researching this data now.
It was easy to estimate the amount of revenue each of the 6 companies were making because I knew how much each app was selling for and XYO told me how many monthly downloads they were getting. Here were the results (I won’t use the competitor names since that is confidential to my analysis):
- Competitor 1 – They had a really good website, they had apps sold for Apple, Android, Windows, and Web. According to XYO, they were generating 236,000 downloads a month. However, since they have both a paid ($9.99) and free app, it was hard to determine how much revenue they were generating. But if we assume 20% of the downloads were paid downloads, that put their yearly revenue at $5.6 million per year. Wow!
- Competitor 2 – They were getting about 31,100 downloads a month and the cost of their app was $9.99, equating to a yearly revenue of $3.7 million.
- Competitor 3 and 4 – One of these were getting about 14,050 and the other about 13,300 downloads a month at $9.99 each, equating to about $1.6 million in yearly revenue.
- Competitor 5 – They were getting about 11,450 downloads a month at $9.99 each, equating to $1.3 million per year.
- Competitor 6 – They priced their app less than the others ($4.99) and were driving about 2,050 downloads a month, equating to $122,754 per year.
Based on this initial research, this app idea seems promising. Even if I could generate half of the revenue that the 6th competitor generates, it still meets my goal of creating an app that can produce revenue of $50,000+ per year. And if it is able to do even better, I may have a lucrative app on my hands. But to be competitive, I know I will need some competitive features that allow my app to shine over some of the others. That will be the next analysis — understanding the things each of the competitors do well and not so well so that I can capitalize on it.
This is the early stage of business plan development, I will continue upon this theme in upcoming blogs so you can see how I developed the business plan.
The app I am creating is slated for production in the App Store around July or August 2014. However, the web edition is already available at http://www.aMemoryJog.com. Once the app is done, it will seamlessly sync with the web version. Download a free trial and check it out!
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This is interesting stuff Steve. Thanks for sharing your process and approach.
Thanks Bob, lots of more good stuff to come…
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Bob- I just checked out your latest pictures of Cambodia at http://www.wherewebe.com. The floating homes are incredible. I love the small bamboo bungalows you guys stayed at next to the beach. Looks like a memorable trip.
Yeah, those bamboo bungalows for just $15 a night were a joy! And the floating homes made for some irresistible photo ops. We’re halfway down the coast of Vietnam at this point but are still posting webpages for Cambodia, so I’m quite far behind. Ah well, it’s hard working on webpages when you’re having so much fun!
Cool idea Steve. I wish I could have one..
Have you considered authentication integration with Google, Facebook, and other common providers that allow for 2 factor authentication?
I assume you mean adding 2 factor authentication within aMemoryJog? Yes, I have considered it but not everyone has Google or Facebook. We will have a self destruct feature where it will delete the database on the device if they enter their password wrong 5 times. It will obviously do a cloud backup before deleting it so that it can be restored later.
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