It’s a boom year for tech exits. This month, Facebook IPO’d. Last month, Instagram successfully exited to Facebook, making multi-millionaires of the small team. Both events have garnered much mainstream press coverage. Charles Arthur in the Guardian newspaper said of the $1 billion Instagram acquisition that “this sort of thing could only happen in Silicon Valley”.
Perhaps that is true, but I believe this is a strong defensive move by Facebook, even if the numbers are bubble-sized. Had Instagram’s rapid growth continued, they might have been well placed to launch other features, possibly becoming a significant threat to Facebook as a new social network.
Going forward, the question in my mind then is not, as argued by Hugo Rifkind in the Times whether photo-sharing is a fad (with five million photos a day uploaded on Instagram and a camera on every mobile phone, photo uploading is not a fad), but whether Facebook will be able to maintain Instagram as the leading tool of choice for users. Perhaps even that doesn’t matter now they’re no longer a rival app, but it’s important to note that Instagram’s success was built on simplicity.
Like so many start-ups, Instagram began life trying to solve too many problems. The company provided too much functionality in the app. For example, it originally included a check-in function, the photos and filters were just one part of the app.
The difference with Instagram’s founders and many of the founders that I meet who are building mobile apps is that Kevin Systrom and Mike Krieger had the good sense to dump any functionality which wasn’t popular, and laser-focused on the bit that was. Of course, this is difficul if none of your functionality is popular, however. (Most of us who have run a start-up have been there!)
I’ve been guilty myself of building too much functionality into an app. With hindsight, it’s fairly obvious that at Rummble (when it was a direct-to-consumer app which helped you find places nearby you love) we should have focused on getting just one platform right along with a drastically simplified functionality set. An all-new version two was to deliver this, but economics forced a pivot to B2B with the added novelty of a revenue stream, before we had time to launch it.
It’s all too easy to build something too complicated. And this is a disease which seems to be almost universal – especially amongst first time entrepreneurs.
Those of you who have been in ear shot of my pontificatations on “mobile” over the last few years will have heard this before, but I believe the mobile revolution is still very early. By this, I mean that in web terms we’re circa 1999, or not far off. This, in turn, affects the type of apps which will be very widely adopted on smartphones today, versus what will be used in three to five years’ time.
Smartphones have, of course, crossed the chasm, but until recently, large sectors of society have been poorly catered for even in developed countries.
At Mobile World Congress this year, Swedish company Doro revealed an adapted Android operating system designed for the older generation, which Jerome Arnaud, the company’s chief executive, said “is overall becoming more tech savvy and are demanding a smartphone they can use.” It’s somewhat condescending in my opinion, but then again my 75-year-old father is an anomaly: he upgrades his phone more often than I do and along with a PC, laptop and tablet is rocking the latest Android O/S.
Depending on which statistics you accept, only 35-40 per cent of the population in the UK and US have a smartphone. And nearly 50 per cent of those smartphone users only acquired their fancy handsets in the last year.
Friendster was the first widely trumpeted social networking service. Its demise has been well documented, but it was as much to do with it being too complex for the available online audience at the time to understand, as much it was the technical problems they ran into executing on the software. When I was using Friendster and running “playtxt” in 2002 (a mobile location based social network) one of the biggest challenges was that no-one understood what a social network even was.
Today, most people (ie none of the people you know in the tech community) use their phones for very simple tasks: phone calls, text messages, email, navigation, instant messaging, taking photos and games. Not for searching for location-based tweeted reviews of sushi restaurants, using augmented reality.
Shopping, web browsing and other areas are seeing healthy growth, but while Facebook is popular (an existing and understood user experience squeezed onto a small screen) most people do not regularly use many new and arguably more exotic mobile applications.
Even relatively well-known press darling Foursquare seems to be struggling with user engagement and signups have slowed. I have a lot of respect for Dens (having run Playtxt while he ran Dodgeball4) but I can’t help feel that Foursquare still tries to do too much at the same time, leaving users unclear on its primary purpose.
Nearly half of UK smartphone owners have never even downloaded any additional apps to their handset. So my point is that your start-up’s mobile phone application is going to have to be surprisingly simple and your message to market incredibly focused for you to capture large scale adoption on mobile in 2012.
When Facebook was launched in 2004, web access was around 50 per cent of the US population. By 2008, when Facebook opened up outside of colleges (and its real growth spurt began) penetration was well above 80 per cent. The mobile services adoption curve in online terms then, hovers around the Friendster era circa 2002, pre-dating both MySpace and Facebook.
I’m not suggesting that we are not in a period of transition. On the contrary, mobile is the internet of the future – there will be nothing else – and the psychology around how people use their smartphones is evolving. No question about that. But right now, many entrepreneurs still greatly under-estimate the difficulty of creating an instantly understandable and enjoyable user experience on a mobile device.
If your app is not incredibly simple to use and if it does not deliver on the promise you’ve promoted, people will both not understand where it fits in their lives and feel cheated that it does not do what you promised it would.
“My app IS simple!” you cry. No it’s probably not. The acid test of whether any app is ready to have more than a few pennies of marketing spent on it is not giving the thirty second pitch to another tech founder at Silicon Drinkabout and showing them how cool your app is.
The real test is to hand the phone to a random 34 year old in a café outside of EC1 (and certainly outside of Silicon Valley) and to tell them in just one sentence why he or she should use the app. You should then watch them in complete silence, while they try to work out how on earth they do whatever it is you think they are going to be excited about doing, every day, with your app.
It amazes me how many early stage entrepreneurs continue to reply “for marketing” when I ask them what the proceeds of their investment round in their yet-to-get-traction app are going to be spent on. The answer should be: “Whatever it takes to iterate our service and solve the problem of why we only have 10 downloads a day and a 1 per cent retention rate”.
Don’t invent Twitter
I still have people ask me what the point of Twitter is. Instagram, in contrast, was a success because the company got traction early on, after boiling down the app to do a great job of something simple. And it then achieved a trade sale at a high valuation not only because the company is based in Silicon Valley – the best place in the world to build, fund and sell direct-to-consumer start-ups – but because it was a product simple enough for the relatively unsophisticated mass market smartphone user to enjoy. It enhances and improves a behaviour which already exists in their daily lives: taking a photograph with their phone.
Modern handset capabilities (NFC, LBS etc) are still some way ahead of what the average Joe-public smartphone user understands or feels obliged to do with their handset. That is slowly changing, but many mobile start-ups I meet are either solving supposed problems which are in fact not painful enough to be worth solving, or are creating apps which are too fiddly to use.
This translates to poor traction, which translates to difficulty in raising funding, which translates to eventual start-up #fail.
As entrepreneurs, we often look optimistically to the future and the amazing vision we have for our product. The problem is that if you don’t build something today which is simple, and thus self-explanatory (and, consequently, has user-paths which are uncomplicated enough to be measurable, so you can refine and optimise them) your start-up will die before you ever get the chance to execute on that bigger vision.
It’s taken 10 years for the UK to go from 36 per cent of the population owning a mobile phone to over 90 per cent. Smartphones will reach saturation far more quickly, but we’ve still got a couple of years to go yet: Goldman Sachs estimates that by 2015, 81 per cent of US cell users (not 81 per cent of the population) will have smartphones. And even once people have the handsets, it then requires a change of psychology and behaviour to start using them to their full extent.
If you’re running a mobile start-up today, don’t be scared of solving just one problem really rather brilliantly, on one mobile platform. This will prove to investors you can create something amazing and that with more resources you can grow successfully to take on the world and the other three mobile operating systems, none of which are disappearing any time soon.