Photo by John O’Nolan
In the nearly 1.5 years since leaving RescueTime (still growing and profitable– woot!), it could reasonably be said that I’ve flailed about with my career. I’ve done a few gigs at existing startups, ranging from discreet projects to try-before-you-buy gigs that could’ve led to leadership positions. I helped build Cubeduel.com (read about it on GeekWire or TechCrunch) with the eminent Adam Doppelt (it was a blast) and helped build TouchBase Calendar, a part-time effort to learn iOS development. As far as flailing goes, I suppose I’ve been pretty effective (in terms of learning and effective hourly rate), but I failed at what I was really shooting for: To find my muse. To find something BIG to really sink my teeth into.
I wanted to find my next startup mission– something I think that gets more difficult the smarter you get about startups (and the smarter you get about what drives you). I’ve learned that I’m mostly driven by “give-a-fuckness”– I get excited by software that I’m going to use, that’s going to make people happy, and that’s going to make the world (in some small way) a better place. If you think about it, that’s a pretty limiting litmus test by itself. But as a guy who has been around the startup block a few times, I have a few other tests that I care about. Here’s a quick list:
- Tractability – I blogged about this years ago– I like business ideas where you run meaningful experiments in the first 6 months. There are great ideas out there that require 2 years of deep geekery before you can come in contact with the market. Not for me.
- A Big idea – This is a new one for me. I’ve built and sold a mess of companies and projects. I’m pretty confident I can get a business off the ground and profitable. I want to aim bigger now.
- Early & clear monetization – pure-consumer startups where you have to rely on ads (or “we’ll figure it out”) aren’t for me.
- Cult-able – Besides me, are there a subset of people who dream of working in this market? If you can imagine a truly passionate core of users, it makes it easier to find users and employees (see Justin Kan’s epic TechCrunch post: Trouble Hiring? Create a Cult!)
- Fundability – While I’m generally wary of early funding (I like to prove a thing or two first), I do believe that raising money makes sense for big opportunities. I’m honored to have a mess of people who have already expressed a desire to bet on me, but they wouldn’t if I was going to open a bakery or taxi company.
So what makes the cut? First, it’s got to be Mobile.
We started with the “Mobile First” assumption. The mobile internet is going to make the old Internet look tiny by comparison– as Amir says, you’ve probably underestimated how big this is. If you’re a free-floating entrepreneur who is still flexible enough to learn new skills, throw yourself into the mobile maelstrom. Skate to where the puck is going to be.
But as you start sizing mobile markets, you learn a few ugly truths.
- First, the App Store is dominated by games. Absolutely dominated. I have a post written about this that I’ll post in the next week, but here’s a tidbit of data: The #150 ranked top grossing game makes more money than the #5 top grossing app in any other category (if you want to catch the post when it comes out, subscribe via RSS or follow me on Twitter).
- Second, the App Store is dominated by free apps. I’m not just saying that people prefer to download free apps. I’m saying that free apps are dominating the Top Grossing Charts (yep– free apps make more money!). As of this writing, 16 of the top 20 grossing apps on the App Store are free (19 of the top 20 are games).
- Third, single-app strategies are extremely high risk. The best bet seems to be a “portfolio” strategy– plan on having a stable of apps. I’ve watched extremely high profile, venture-backed apps that were lauded by critics fall down the rankings charts into oblivion. The Top 25 charts are dominated by incumbents (who’ve spent months or years getting the marketing flywheel turning), web giants (who have massive traffic they can push towards their mobile apps), featured apps (Apple tries very hard to get new folks visibility, but that only gets you in the spotlight for a week or two), and “Unicorns” (new apps that catch fire entirely on a combination of merit and luck).
- Winners have solid ARPUs (avg. revenue/user) to bolster customer acquisition. In almost any category, you are competing with people who are making real money from their users (again, with free apps) and are spending that money to buy more users (which artificially drives them up the charts). Unlike the web, you don’t have much in the way of SEO opportunities, viral channels are less open and users are more reticent to create most content (typing on the phone is a pain in the ass, right?). So unless you have an amazing customer acquisition hack that no one has thought of on mobile, you should expect to supplement your organic downloads with paid acquisition.
- There are a few great apps that are making great revenue driving offline revenue. Look at Uber, Hotel Tonight, or Postagram. Their ARPUs can support paid acquisition (they are also all great apps who’ve earned organic downloads).
So, after a lot of hand-wringing, we settled into a belief that our mobile ideas should be limited to either games or driving offline revenue. We should have a credible story how our users could result in a sustainable ARPU. If possible, we should be able to imagine a stable of complementary apps. And most of all, we needed to actually give a fuck about what we were building.
Where did we land? Mobile Apps for On-the-ground Travelers!
Strangely, we landed on an idea that’s been bouncing around in my head for years. Like a lot of good ideas, it wasn’t really that good until it collided with our mobile thesis (bonus footage: I love the idea that great ideas come from the collision of lesser ideas– check out this video).
For more than a decade, I’ve been a voracious traveler. And I’ve watched startups grow up to help travelers with their efforts. But if you look at where startups have focused, it’s always on the holy trinity of pre-trip decisions– airfare, hotels, and rental cars. This actually makes a lot of sense. The internet actually sucks for helping you with decisions you have to make while on your trip– largely because you don’t have the internet with you. Normal people don’t, anyways. So we all dutifully buy a Lonely Planet guide ($20 for a book– which is probably the worst form factor I could imagine for what is largely a curated catalog and a series of maps). Or we rely in digging up local wisdom at our destinations. Or we sift through the SEO’d muck looking for credible information and print it out. We’re still printing web pages in 2012?
With the growing ubiquity of smartphones, there is a new opportunity for software to help the on-the-ground traveler (where, incidentally, more than 50% of travel spending occurs). And, while our focus is on being an awesome resource for travelers, we believe that mobile allows for elegant monetization beyond simply selling that content or slapping an ad on it. More on that soon. So here it is– a public declaration of intent. I haven’t been this excited about work in, well, forever. World, meet Tomo. Tomo, meet world.