How I Wasted 5000$ In The App Business - Thomas Mondel

How I Wasted 5000$ In The App Business

It took me 6 months and about 5000$ to learn these 13 TOUGH lessons about what you should do and what you should NOT do when you are starting out with making money with apps. Read them, learn from it and don’t make the same (expensive) mistakes as I did! I guess they apply to any other startup business as well.

People always say that you have to fail hard to succeed. But when I first started out with my very first startup (for whatever unreal reasons) I thought that I am the exception!:) Maybe it was plain positivity, maybe I was just naive. Whatever it was, I thought that I will get it right the FIRST time. I spend money on making my first startup grow although it wasn’t even established yet. I spend money on advertising and I spend money on growing my project team. All of that without making any profits yet. (Again, because I thought that I cannot fail anyway, so all this money is coming back multiple times!). But as always it happens a little different than we all expect life to work out for us! Read my 13 lessons about this life experience of mine! :)

 1. My delusional concept of getting rich.

I first got into making apps when I read Chad Muretta’s book App Empire: Make Money, Have a Life, and Let Technology Work for You. I never wanted to make apps in the first place, I just somehow ended up there. I remember when I was working 16 hour work days. 8 hours for my job and then another 8 hours for my private projects that (so I imagined) could allow me to give me the freedom I wanted so desperately.

After months of exhaustion and endless work days, I still didn’t have any results. At least not the results I hoped for. Disappointed and frustrated too I somehow gave in. I went to work the next day and by some coincidence I made a wrong move and hurt my back. It was just a little “crack” sound and it didn’t feel like much back then. I didn’t spend much time thinking about it either. I finished my work day and went home. But as soon as I arrived at home the pain somehow increased. It even went so far that I somehow couldn’t even move anymore. There I was lying in my bed in pain. And I said to myself: “Well, maybe I loaded a LITTLE bit too much on my shoulders! Maybe it is time to cut back…”

It took me a whole week of painfully lying around and getting treatments from my doctor until I finally recovered. In that week I did nothing but reading books (My Reading Adventures) and watching YouTube  videos. And somehow… me being a huge Anthony Robbins fan, I stumbled upon one of his videos here where he interviews Chad Muretta about his story and his way to becoming an app millionaire in the Apple app store. Me lying there in pain watching Chad talking about his car accident and how he found his way to making money with apps somehow resonated with me! I immediately ordered his book and told myself: “This is it!”.

I read the book like 5 times in a row, soaking up all the knowledge out of it I could. I prepared myself to walk a similar path as he did. And I was CERTAIN that I cannot fail (isn’t it funny that you see other people fail but yet you don’t wanna believe that this could be you?). I had this delusional idea of making money in the app store is super easy. I just pop out some apps and they will work for me. 0,99$ per app and there are millions of people buying endless amounts of apps every day! If only a tiny percent of all these people buy my apps….? I don’t want to know how many people started with the same faulty attitude in mind!:)

(Back then I didn’t know how stupid this mindset was, and I also didn’t know that even getting 0.01% of the market is still PRETTY tough!)

Although Chad mentioned in his book very clearly that the app business is not for the getting-rich-fast kinda stuff, I still didn’t waste ANY thought about this being relevant for “special” case.

Well, that cocky attitude costed me a lot of money!:) And yet I am not really disappointed because it taught me so many valuable lessons I would otherwise missed out upon. Success really does not come from one day to the other. It takes time. Oftentimes much much much more than you want it to take. It takes time! Really… But when you stick to it, eventually it will become inevitable.

Learnings: 

  • There is nothing like “overnight success”. It is hard to master ANY skill and it takes time.
  • You WILL get there when you stick to it. But most people don’t.
  • If you put the pressure onto yourself, you will raise to the top pretty easily.

2. Don’t scale your team too early on. 

Oh my freaking god. Everybody talks about scaling. And I guess a lot of these people just like to talk about it because the word sounds so fancy. Still, what I didn’t know about all that scaling stuff was WHEN and HOW to scale your business correctly. So, basically, I knew nothing!:) I was getting my first sales in the app store and making my first money and the same moment I was thinking about hiring a virtual assistant and a second project team to outsource even more app development, hiring freelancers to update the app that is in store for one single day, and all the fancy stuff that I could imagine.

I know that this might sound weird to other people, but I just didn’t know better. I thought that this is how a business grows. And I thought that you have to invest something first and “this is just how it is supposed to be”. I didn’t know better, so don’t judge me!:) Lean startup was nothing I heard of until I read The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, which was like a good year too late. I had no knowledge about how to successfully test a market before you create the product. I didn’t know how to evaluate a business idea and how to “survey” your future customers. I was just blindly making stuff and paying money for it.

And then I was also scaling in a very risky and boldly manner. Again, this cost me a lot of money. But you know what they say: “When a person with some knowledge meets a person with money, the person with the knowledge ends up with the money and the other one with the knowledge.” Kinda true in my case as well. So I wasted another couple of hundred dollars for inappropriate scaling to learn some fundamentals about how to successfully grow a new startup. Sounds like a good trade to me!

Learnings: 

  • Don’t scale your business when you can also do it by yourself too.
  • Scale it, if you are blocking yourself from achieving more by doing all by yourself.
  • General rule of thumb: if you can generate more “revenue” by outsourcing the stuff to new team members or freelancers, do it. If it is “cheaper” to do it yourself, just do it. (= the time you need for completing the task should be cheaper than outsourcing it to a suitable freelancer that works on a lower hourly rate). 

2. Picking right team is crucial. You are nothing without a good team.

When I was starting out making apps and I had no idea of app development. I was a total newcomer and had little to no knowledge about anything that is going on in the app store. Yet, I had a clear vision and an idea about how I could make this work.

I knew that I had to get somebody who can help me with the app development. I looked up different freelancer websites (there are a lot out there) and I found that there is an endless supply of skilled and experienced people out there who are willing to help me out with making my ideas come to reality. I was browsing Elance, oDesk and all the other pages I found out there trying to find my ideal team partners. I posted a quick job description and only some hours later the first people from all over the world applied to my “special job”. I was thrilled and also a bit of surprised. Until then I really thought that I have to do ALL the stuff by myself. It was a big learning and also turning point for me when I realised that there are people out there who can really help me get ahead in less time than by me following this crazy plan of trying to get everything done by myself.

I interviewed my first freelancers and talked with them over Skype. I was still so thrilled to get this all started that I somehow (looking back) still spend too little time interviewing and picking the right people. I just had no idea on what to look at. I didn’t know what is important in finding a good team member. I didn’t know what to look at in the qualities of a freelancer. Everything was new and everything was just unknown. 

After making the first bad decisions and hiring some freelancers who didn’t serve me the quality I desired I felt disappointed. But it was totally my fault. I didn’t k now what to look at and therefore I also evaluated the skills of my freelancers enough to make great decisions. I should have tested them before hiring them. And the fun part is: even as soon as I knew that they are not the kind of people I want to work with, I somehow stayed with them, wasting another hundred dollars. My inner barrier for letting go and cutting the costs was just too high, I was committed to making this happen. I just spend too much money already I told myself. So I ended up investing even more money in a bad decision!:)

Learnings: 

  • You are the boss, act like one! You are hiring and you are the one who is selecting. Therefore YOU have to know what you are looking for. Spend enough time thinking about how you want your team to be like and then filter the people applying having these guidelines in your mind.
  • Test your employees first. Don’t hire people you are unsure about how they can help you achieving your goals.
  • Don’t be nice!:) It is not about doing somebody a favour by giving them the job. It is about a getting a mutual benefit out of the cooperation. A win-win situation for everyone. They are happy to work for you and get paid and you are happy they help you out with realising your visions and goals.

3. Don’t be afraid to change your team again: hire slow, fire fast!

As soon as you know that a team member or one of your employees is not keeping up with your expectations, cut the costs. Just fire them, try to minimise the losses and move on. There is no sense in staying attached to people who are dragging you down or holding you back.

Learnings: 

  • Hire slow, fire fast!
  • Spend a great amount of time into getting new team members, don’t rush it.
  • When you know that somebody is not living up your expectations let them go, shake it off, and move on! (There is an ENDLESS supply of other people out there who can support you in achieving your goals).

5. Not enough knowledge, read a lot of stuff about it.

When I was starting out with  my first startup I had no idea about anything. So I tried to change that and just simply read a lot of books about all relevant topics I could find. As I said, I read Chad Muretta’s App Empire: Make Money, Have a Life, and Let Technology Work for You like 5 times and again some times in between to look up some new techniques or hints on what to do to bring my business to the next level. I read Appillionaires: Secrets from Developers Who Struck It Rich on the App Store by Chris Stevens. I followed different blogs and read about how Angry Birds got into the store rankings. I learned how to split-test different keywords, how to track user-behaviour in the app, tweak user-interfaces for optimal outcome. I educated myself how to publish new apps to the app store (not even that easy with all the certificates, provisioning profiles, bundle IDs, app store guidelines,etc.). I just educated myself in a lot of these areas to be prepared.

Just follow and bookmark My Reading Adventures page and you can follow me on what I put into my brain on a daily basis. The knowledge you get out of books is just priceless and you should never miss out on that. It is the cheapest form of self-education and still so many people don’t utilise this. Argh!:)

Learnings: 

  • Knowledge is key. The more you know the more value you can provide to others. The easier it is for you to be helpful and also get paid for being helpful!:)
  • Know your territory: get yourself familiar with the tools is so important. Whenever you don’t know something you need somebody else. The more you can do yourself the more independent you become.
  • Don’t shy away from letting other people help you with certain areas. I for example have no idea how to make iOS apps in xCode on MacOS. I also don’t have to. I have my freelancers who do the job for me. What I do have to know though is, how I can bring the app to the end-users. How the marketing should look like, how to get the people who make me the graphics for the ad banners, how to recruit the write people, how to create a effective network of multiple apps, how to cross-promote with different partner apps and publishers, etc.

6. Do your daily homework = research the market

In my case I was working on growing my very own app business. This would also have included to do the daily homework, which means sitting down and doing the research! Whatever niche or business you are in, you have to get to know your market. You have to get to know your customers and even more important their needs. Only when you know what your customers need and want you can make meaningful decisions and lead your startup the right way. The problem is most of the time people don’t KNOW what they want. That is why you have to see for yourself. You cannot just ask them what they want and then build it. They can’t even tell you themselves.

When it comes to making money with apps you have to look at the Apple app store everyday and see for yourself, which apps are working out (people buy and use them) and which are not. Just make it a habit to look into the app store every day and look at the charts. The numbers don’t lie. They tell you WAY more about customer behaviour and their REAL needs than any survey or blind guess. Sadly I disrespected that idea at first!

Learnings: 

  • Don’t trust customers when they tell you what they want! They don’t know!:)
  • Look at some reliable sources for your evaluations (e.g. app store charts and rankings. I never make an app without seeing a real NEED for it. I now always make a research FIRST before implementing it).
  • Now your tools: use www.topappcharts.com or similar tools to evaluate your app ideas. I didn’t do that at first and wasted a lot of money building apps that I found “cool”, but for which was no need for.

7. Stay away from the games category

The Apple app store is huge. And the games and entertainment category are probably the biggest part of the app sections. There is so much competition and so little visibility for “small” people starting out.

Check out this chart from an article of techcrunch.com and see for yourself.

paid downloads

(Photo: chart)

According to this chart the number of paid downloads to hit top 25 in the games category is at about 2280 per day. If you instead focus on making a sports app you only have to get 50 paid downloads per day to reach the top 25 spot in that category. So you would need roughly 45 times more downloads for your game to get the same visibility as a sports app in the app store. This is huge! Of course I didn’t know that before and my first app was a game!:)

8. Read the guidelines (rejected apps)

This should have been a no-brainer. But I was too busy getting rich, that I didn’t respect the rules. Since it is Apple’s store they are in charge of what they want to offer there. They are working hard to keep the app store clean and value-packed for their customers. They do not allow poorly developed apps and are very focused to deliver quality. Therefore they will just reject your apps if you do not fulfil all requirements.

Because I was so in a rush and so excited to get my first apps out into the big world I was not concerned about all these guidelines. And of course my first attempts of publishing my apps got rejected. Because I was outsourcing all the app development and graphics design, this process cost me additional money and time, although this whole stuff could be so easily avoided. Don’t make the same mistake and check the guidelines at least once!:)

9. Use the proper tools.

There are so many helpful tools I didn’t know about when I was first starting out. Here are just some of the tools that make such big difference and yet I didn’t know about:

  • AppAnnie: Tracks your app’s metrics, charts, rankings, sales, downloads, and all the other stuff you might need and sends you daily and weekly reports and your progress!
  • AdMob: Google mobile advertising tool and SDK to integrate banners ads into your apps. Super easy to integrate and also supports a huge amount of ad networks.
  • RevMob: Very common ad integration SDK. Typically I use it for fullscreen ads because I found they convert the best. It is also possible to cross-promote your own apps and build a very sustainable app business where your own apps push each others downloads all by themselves!
  • Flurry: THE app tracking tool I found so far. With only 2 lines of code you can integrate all the user tracking you need: from session lengths to retention rates, durations, page views and even custom events for button clicks and other statistic metrics you would like to track it is my number one choice on understanding customer needs!
  • SensorTower: Find keywords used by other apps. Very helpful when you want to understand how customers find similar apps and what keywords you should use of your own.
  • TopAppCharts: Very powerful app rankings and charts service that allows you to see ranking of all apps in the store. It gives you the unique possibility to see if there is a certain demand for an app idea or not and helps you to save money.
  • Read books on that topic! I can certainly recommend you Chad Muretta’s: App Empire: Make Money, Have a Life, and Let Technology Work for You. It helped me out a lot and I got so much valuable knowledge out of it, it is quite a shame I didn’t know about it some months earlier!

10. Keywords are key!

In the app store people are searching apps by putting words that describe what they are looking for. These words are called keywords. For example: when you put into the search field something like “kids game” apps like “Angry Birds” might pop up because the developers used these keywords in their description. Because the amount of keywords you can use per app is limited to 100 characters you have to carefully select them.

Keywords are everything when it comes to get the visibility in a huge market like the app store from Apple. And oftentimes just one word can make a huge difference. For a wallpaper app of mine I just added the keyword “lock” (lock for lock screen) to the current ones and my downloads nearly tripled! I am still impressed by this!

A very nice “trick” is to use FREE services like sensortower.com to analyse the keywords your competition uses. You just type in the app you are looking for and it will present you the keywords used of this very app. This little, neat trick is priceless when it comes to picking the right keywords that give you the most profit!

Again, I didn’t know about this until I was already a half year into the business!:)

11. Lean startup: start small, grow big.

Read The Lean Startup and integrate everything you learn from that value-packed book into your daily routines. It teaches you how to go away from the idea of creating something big and powerful and instead teaches you how you can literally baby step your startup business. You become more agile and flexible when it comes to changes regarding your product and you learn to understand your customer needs WAY better. I truly believe this the future of modern business and product development. 

12. Test your programmers first.

If you decide to outsource all the development and graphics design work to freelancers, just like I did, when I was starting out, you might listen to my advice here and test your programmers before you contract them. You should test them very carefully!:) This is not because I am super cautious, instead it just saves you a lot of money later on. There is nothing more annoying than finding out that the freelancer you gave the 3000$ contract to is not capable of truly fulfilling it. Then you have to cut the costs and re-arrange everything. It just saves you a lot of headaches and gives you a better sleep when you can feel assured that the freelancers you hired are worth their money and also are capable of doing the work you assigned them.

Oftentimes it is better to spend an additional 100$ on a small test project (say “Hello World”) or let your designers draft the logo of your app first. As soon as you see the first results you can evaluate if you want to work with them and it is way better than spending the whole budget on them just to find out they are not truly fulfilling your desires. Cut the costs right from the start and make good decisions in your picking process!

13. Don’t rush it – time is your ally.

Just enjoy the ride. I know that it is very easy to fall into the trap of just wanting to finally “arrive”. To finally be at a point and time where you can say “I made it!”. I definitely wanted to rush there too. But what I found is that success just like everything else in life takes time and you better enjoy the process. (I know pretty cheesy but yet quite true). You have to understand that you will never “arrive”. Your requirements for “success” will always just rise with your achievements and therefore there is always the next level to reach, the next income increase to get, or the next big hit to land! You will never be at a “destination” because there is none. Do what you love to do and learn how to enjoy the process and ups and downs in life. I guess that is pretty much the secret to reach anything…

(Photo: Flickr)

Save