5 Options For Building Your App Business

The good news about building a company during times like this is that the companies that do succeed are going to be extremely strong and resilient.”Marc Andreessen

Let’s Build Something Together. Or something.

Over the last 4-6 months, my reputation has become the “app flipper” of the iOS world. It’s a pretty exciting business model – take some dormant source code, slap on some nice graphics, and publish like a pro and…voila – an asset with a nice ROI.
Easy, right?
Not really. The one thing this blog will always do for the readers is cut away the BS, even if it’s not in my best interest to sell you something. I’d rather you all know the truth instead of selling you the sizzle.
The reason I say this is because I’m starting to have a lot of people come to me and say “Should I flip apps? Is this the best way for me to get in the app game?” Often this is from people who have started the process and see the amount of unknowns when trying to build an app and are just looking for the best possible way to use their time and energy (and money!).
I wanted to give everyone a list of different ways you can get into the app store. These are the five I’ve seen, but there are probably others as well. At the very least, I think it will give you all some new perspective on how to tackle the ongoing issue of mitigating risk and maximizing profit potential.

Idea to Store

This is the most basic and most popular form of app development – you have an idea, you hire a developer (or learn it yourself), and then turn that idea into a live app.
PROS

  • Full customization – the most obvious reason to do this is because you can develop anything you want, exactly how you want it. This is awesome for creativity and moving the needle forward for the app market in general. You are in control of everything and can thus create something the world has never seen.
  • Ownership – this refers to intellectual property and everything else that can be “owned.” When you build your own app, you can create additional value on the technology that app has. Let’s say you create a whole new way to integrate video with car systems (maybe?). Not only do you build an app, you submit a patent and maybe even a trademark. By building the app from the ground up, you will have the full rights to that technology.
  • Huge upside – when you build something that’s never been done, you don’t know the potential and it could go viral.


CONS

  • Effort Intensiveanyone who’s been through this process knows how intense it can be to build something from scratch. This is not unlike other non-app projects – you’re responsible for every detail and every decision. What color do you want this button to be? Where does this screen go? What happens when a character wins 4 times in a row? It can be very exhausting and use a lot of your time, no matter how simple the app.
  • Lost in Translation – this is both in terms of language barriers and also in terms of you to developer (even if they’re in your native country). Try explaining that you want the swipe motion in a reference app to be smoother to someone in China and you’ll see what I mean. When you’re building the app from scratch, you need to use example after example in order to explain something that a developer should do.
  • Highest Risk – because your app is brand new (and thus, the business model of that app is new), you don’t know what’s going to happen. There are ways to keep that to a minimum (planning, strategy, partners, etc).

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 App Emulation and App Cloning

This has been pushed by lots of marketers as a way to get into the market that blends the custom solution above and flipping apps (which I will talk about next).  The general gist is that you do market research first, find an opportunity, then build an app that’s very similar to a popular one to fill that opportunity.
To learn how we did it in the Keno niche, read this blog post.

PROS

  • Fast – it’s pretty easy to tell a developer to clone an app, especially when you know what you want the changes to be and have answers for them. If it’s a simple app, you can get it cloned in a matter of weeks (sometimes days) and can spend your time on the testing and iPhone app publishing, then market the hell out of it.
  • Less Headaches – there are fewer unknowns when you’re building a clone because the template is already there. Answers to almost all the developers’ questions can be found in the original app. Chances are you’re going to be changing a few things to make it a unique app, but you’ll be amazed at how little you need to hand hold for this type of project.
  • Cheap – Spinning a project as a clone can drop your price by over 50% on an outsourcing website because developers know the amount of time invested can be streamlined by the example app.

CONS

  • You’ll always be #2 – there is no clone out there that’s better than the original and the market will see that. You’ll be able to ride the coat tails a bit, but be prepared for bad reviews and trouble keeping long term stability.
  • The “good enough” syndrome – dove tailing off of the above reason, when building a clone, you’re probably going to get developers delivering products that are good enough to pass as a clone. It’s not going to have the details and smooth physics that makes the original app awesome, and that can be frustrating.
  • Moderate to Low ROI – this is mostly my own opinion, but I think the more “cloned” an app is, the shorter it’s shelf life. That means that you really need to push it hard at the beginning to milk the downloads before it gets crushed by the market. The cost of cloning apps is still enough to be a concern, so unless you do serious publishing and research, you’re going to have a hard time moving the needle.
  • Clones have competition – if you’re cloning an app, someone else probably is too. You’re not going to compete with the guy who’s got 2M downloads, you’re going to be trying to beat everyone else who built clones. That can get filled up quickly, so remember that you’re only getting a slice of the SECONDARY search market, not the primary off the top app.

 App Flipping


Flipping apps is what I do. It’s 100% exactly the way my mind works and gives me a great way to be an app person. Flipping apps means that you license source code from a game or app, re-skin (re-design) it, and then publish under your own umbrella.
The most important piece of flipping apps is to realize that I’m looking at business models more than I’m looking at apps. Cloning apps looks at volume and getting a slice of that volume, building a custom app is about getting new searches and downloads.
Flipping apps is about creating new searches in existing markets using cheap code and great publishing. I spend nearly all my time analyzing markets and on the publishing of apps (games, mostly) instead of working on the actual app. Flipping apps allows me to drop winning models into markets and let them accelerate.
PROS

  • Mostly design work – when I buy some source code, it works already. It’s a fully functioning app that is ready for upload to Apple. Instead of spending my time coming up with new functionality and development, I just have to switch out the graphics, icon, and splash screen. That can be very nice for someone who’s a designer by trade.
  • ROI positive – I have found that nearly all my apps make their money back. The time they can make it back has been as little as 4 days and as long as 8 months. But they always do. More importantly, after publishing a few apps, I start to see where the real opportunities are. This is important because I started doing this with the intention of building 100-200 games in the next year with the sole intention of being able to predict winning models before I purchase them. If you’re in this for the long haul, this is where it’s at for ROI.
  • Cheap – similar a traditional job hiring, buying code can vary GREATLY. I had two firms offer identical code prices – one quoted $180 and one quoted $2,200. It’s just a matter of finding developers who want to make money. You have to search for it and be prepared to walk away, but there are some serious deals out there. Also remember that you can get deals if you bundle codes together or offer the work to the developer you’re buying them from.

CONS

  • You’re on your own – that’s a little aggressive, but it’s more or less true. When developers sell you the code, then take your money and tell you to have a nice day. You’re sitting at your computer staring at a zip file and wondering what’s next. That sort of autonomy can be VERY overwhelming for a new app star (you) and can cause a sense of panic. It always works out, but just be prepared to be moving the mountain yourself for a while.
  • You need to know something about coding – if I didn’t know the basics of Xcode, I would never be where I am. I still don’t know how to write much of anything, but I can definitely install Revmob or change where it’s displayed and remove certain things from the code. I also know what to tell developers and how to test what they send me. Knowing Xcode also allows me to publish the app via Provisioning Profiles and archiving/uploading to Apple. (If you don’t know what that means, you’re not ready to flip an app). The idea of simply taking a source package and sending it to someone to “flip” without knowing what was inside would terrify me.
  • You’re going to fail more than you win for a while – Like I said, it’s really hard to know if you’re going to make money on your first app. But, think of flipping apps the way you would think about investing in the stock market. You’d never walk into Scottrade and say “let’s put everything on this risky stock”  (at least I hope). You’d walk in and say “in 5 years I want this 3K to be worth 4K” and you’d diversify, understand the market, then strategically invest from there. Flipping apps is like investing in the app market – good investments will slowly pump out money, bad investments will not.

 Buying Full Apps


Buying an app means that you purchase the whole kit and caboodle from a developer. This is not just source code – this is the name, the icon, the code, the keywords, everything.
Sometimes this means you can just take over their developer account, sometimes it means they remove the app from the store, then you re-upload it. There are marketplaces popping up (www.apptopia.com) that handle the entire transaction from start to finish. You can own a very successful app tomorrow with this method. All you need is a credit card.
PROS

  • Good selection – you can be in complete control of your purchasing. You don’t have to settle for something because you only found one developer who will sell to you – there is a full store of options. You can target a niche or category using this model.
  • Turnkey – you don’t need to “add value” the way you do with flipping apps unless you really want to. When you purchase an app, you’re getting everything, so you can just continue using it (if you buy the entire iTunes account) or you can republish with all the same info and continue down the same path.
  • Fast – If you want to own apps as soon as possible, this is it. You can buy 20 apps in a day and be managing them tomorrow if you want. It’s amazing how fast someone can get into this market using this model.
CONS

  • Expensive – this is not always the case, but it’s going to be hard to find a real bargain on these app marketplaces. If you want to buy a really good and proven app, expect to spend a few thousand dollars for it. There are cheaper apps, but typically they’re in the early phases of launch so you don’t know how well they’re going to do.
  • Maintaining After Transfer – if you’re buying one app from a developer, they’re going to take it down and then you’re going to re-upload it. That means you lose all the reviews and users (usually) that the old app had, which can be tough to get back.

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 App Partnerships

It’s easy to think that you need to own an app to be a part of the app market. In some ways you do – you have to know something about mobile and the market before you can expect to be a part of it, but you do not need to actually “build” an app. This is most often the case with marketers or people with access to distribution – if you can add something to the app that has very tangible value, you can definitely negotiate a slice of the pie. Examples may be as simple as you being the sales person all the way to you own a big blog or email list.
PROS

  • You Do What You’re Good At – I’m an enormous proponent of sticking to what you’re great at,then partnering with people that are great at other things. Partnerships allow you to focus on your speciality while the developers do all the app-related stuff.
  • You Can Help Make The App Awesome – if you’re going in as a partner, chances are you have something very valuable to offer. This may be your design skills or marketing prowess, but it’s something that can make the app really take off. That’s a pretty sweet position to be in.
  • Zero Cost – most of the time partnerships are just about equity and time, not money. That means you just invest your time, work, effort, connections, and brain in exchange for the upside.
CONS

  • Very Hard to Determine Worth – it’s very, very hard to keep things black and white when you split on revenue. Think about it – the app is doing very well…is it because it’s built so well, or because of your addition? Similarly, the app is tanking. Does it need an update or are you just not marketing it well? These are questions that can get complicated FAST.
  • Long Term Roles – if your partnership is not necessarily built on a long term strategy, you might become more of a commodity than a partner. Make sure you have something to contribute for the next 12 months.
  • Resentment – If you come into the project after it’s built and have input on certain pieces of the app, you might get some dirty looks. Be sure that you check your ego at the door when you’re working with someone else’s hard earned project.

And there you have it. I’ve seen all these models done and also had experience with all of them in some form or another. You can become wildly successful using any one of these….you just need to choose one. My best advice is to remember that this is a 12 month effort and that apps are a business, just like anything else.
Please leave a comment if you have any thoughts on this or if you have another interesting idea.
Keep rocking!
Carter

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