The late 90s was ridden with long development cycles that led to the failure of many venture-backed companies like Pets.com, WebVan, and Kozmo. When you look at how they launched and operated, current mobile app startups are starting to look the same.
It’s so common now to get some funding, release a kitchen-sink product several months later, see no real retention, and go bust due to running out of capital.
Have we forgotten all the pitfalls over the last decade?
Here’s how things worked back in the 90s:
Step 1: Raise millions of dollars from VCs or angel investors with just an idea
Step 2: Spend 8 months to a year building the product
Step 3: Launch with a large marketing spend for an initial boost
Step 4: Fail to get product market fit
Step 5: Try frantically to beat the money-left-in-the-bank clock before going bust.
Since then we’ve learned a lot of new strategies to iterate faster on the web, which can also apply to mobile app development. Yet most mobile ventures are still stuck in the age-old loop.
Here’s how mobile app startups are currently operating:
Step 1: Raise millions from VCs or angel investors
Step 2: Spend 6-12 months building the app
Step 3: Launch on the app store with much PR fanfare
Step 4: Buy tons of app installs with ads
Step 5: Fail to get product market fit
Step 6: Try frantically to get retention before going bust.
Looks like the same pig with a slightly different shade of lipstick doesn’t it?
We need to get back to the basics of lean startup principles in the mobile world. Do market research with a quick prototype, iterate quickly to find product market fit, and stick to the core value proposition.
It’s critical for mobile startups to not burn more than 25% of their funding to get to v1 of their product. The hardest climb comes after v1, when you iterate and test out the market to find what works and what doesn’t. Retention is the name of the game at the early stages, not getting millions of installs from people who fall off after one use.
Here are four core reasons startup mobile businesses fail:
1. Trying to manage product, design and engineering resources directly if you’ve never done it before. Don’t fall into the “that doesn’t seem so hard” trap when it comes to hiring and managing your own engineers and designers for a mobile product team.
2. Trying to raise funding too early, before you’ve proven your hypothesis. Many founders make the mistake of assuming VCs will be interested in your business purely based on your idea. The reality is, you will be met with skepticism until you’ve found a way to validate your business hypothesis.
3. Not focusing on your core value prop by rushing to launch with too many features. Launching with too many features that haven’t yet been proven out is always a recipe for disaster.
4. Trying to launch on every single platform for your MVP. Depending on where you live, what your target users prefer and what your app is trying to accomplish, there are likely millions of people on either platform (iOS or Android) that fit your goals. Launching your MVP on just one platform controls costs while proving out your concept.
