Scaling An App Business: Are You Philz or Starbucks?

On my way to work, I saw this:

Philz

On the Left…

…is Philz Coffee. They are a regional California company and are known for having delicious blends and pour over style service. They focus on customization and experience. 

Here's a closeup of the line outside of Philz:

Philz Line

That line would be approximately 12-15 minutes wait time. It's about 9am on a weekday in San Francisco.

Customers are willing to wait in line and spend their time in order to get this premier product. Philz has 25 total locations according to their website and are valued around $80M. They are looking to expand nationwide and bring their unique, custom product to the market.

Product first, scale second.

 

On the Right…

…is Starbucks. Here's a closeup (minus the weird taxi image from the panoramic):

starbucks

Notice that there is NO line. This is part of Starbucks model, but it also illustrates something else – people aren't WILLING to wait in line for Starbucks coffee they way they would for Philz. I bring this up because they're about 50 feet apart.

Starbucks' product is good, but it's not great. It's consistent and predictable, which appeals to many in some situations….but not this one. Instead, they focused on the stores and the business.

That being said, Starbucks has a market cap of about $81.8 Billion dollars. They're worldwide and one of (if not the largest) coffee shops in the world.

They asked “How do we create something that is good enough for people to keep coming back…so that we can create a highly systematized, no-line situation that can be replicated?”

Scale first, product second.

 

What Type of App Business Are You Building?

The reason I bring this up is because a majority of people in the app business do not pick a side completely. They want the scale, but they don't put in the time to create a system that CAN scale because they're trying to build products at the same time.

OR they want awesome products but fail to invest completely into the development process because they're too busy doing ASO or checking their ad revenue.

Both of these models work very well when executed correctly. Scale focused models make WAY more money but require massive horsepower on the marketing side. Product focused models last WAY longer but require more horsepower on the development side.

My point is this: 

When you're building your app business, make a conscious decision about which side of the fence you're on and execute that side extremely well.

Do you want scale or do you want awesome products?

I know you want both, but you need to choose which direction you're leading with.

If you want scale an app business, focus on growth and commit to building those systems, then either build good products or partner with someone who has a good product that needs distribution. You're the publisher who drives the downloads.

If you want products, build something amazing then focus on marketing later or partner with someone who has an awesome distribution network. You're the app that can be marketed like crazy.

 

Commit to this mindset and you will find the success you're seeking.

 

Over and out,

Carter

 

How to Make An App
 

COMMENTS

  • MO September 5, 2015

    Great insight!

  • Jade J. September 6, 2015

    I am building an app business that aims to serve the people. My first venture is in the infancy stage but needs some help getting off the ground. Take a look! gofundme.com/dreamliftoff
    Thanks for all the great info Carter!

  • Tasnim+ahmed September 6, 2015

    Great blog post!

  • Mike September 7, 2015

    So Carter may I guess this one? You are on the scale side, right?

  • Carter Thomas Carter Thomas September 7, 2015

    @Muoyo + Jade + Tasnim – Thanks!

    @Mike – Actually no. For the last few years I definitely was – my goal was creating systems that could produce lots of 4-star apps that would be ROI positive quickly. Now all my time is focused on high quality stuff, both in the app and non-app world.

    I love making big traffic environments, but I’m not that great at it when I’m honest with myself. This website (Bluecloud) is a good example. I spent year making it a really nice product via content, development, design, experience and almost no time trying to grow the traffic side. Google helped a LOT with that (SEO), but there’s very little paid traffic or anything like that.

    With apps, I prefer creating awesome stuff that solves a very big problem, then partnering with people who can make it go big. I simply can’t manage big traffic systems. This is true both with apps and with Bluecloud, which is why I am focusing on a lot of partnerships right now so that I can get back to what I love doing – writing, creating, sharing, connecting. I’ll let the masters get it to millions of people 🙂

  • Kevin September 7, 2015

    Love this Carter, super solid as always dude 🙂 I also think it’s so important to focus in on your strengths as you mention in the comments – v cool.

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