Friday, May 13, 2011

Can a Mobile App be a Big Business?

As of January 2011, there are 350,000 apps in App Store alone, but most don’t get discovered at all. The average shelf life of an iPhone app is less than 30 days.  By 30 days out, less than 5% are using the app. How to emerge from the vast number of apps, and how to capture recurrence is especially critical for free apps.

Travel mobile apps are especially challenging, as most people take trips just a couple of times a year. Besides selling digital guidebooks, can travel apps make money, and become a real business?

One travel app that showed particularly impressive result is GateGuru – initially launched in December 2009, which many likened to "Yelp for airports", and was featured in an Apple television commercial. It has had over 300,000 downloads, featured by New York Times, CNN, The Wall Street Journal, Forbes and many others.

What impressed me was that GateGuru didn’t sleep on the accolades as Yelp for Airports, they have a bigger vision as "day-of" travel platform. While TripAdvisor is for planning, and Expedia is for booking, GateGuru aims to become synonymous with "doing" travel.

Travel 2.0 Meetup invited Dan Gellert, founder of GateGuru, to talk about his founder story at our May Online Travel Startup Roundtable. He was charismatic, honest, and engaging, I took away many valuable learnings:

1.    Socialize the idea with reporters before launch. Leverage the power of exclusives.

A few months before the app launched, Dan started to socialize the idea to various reporters and got them excited. He gave exclusives to top press, and launched with a big bang, covered by New York Times and the Wall Street Journal.  This paved the way when he approached Apple Developer Relations, which ultimately featured the app in an Apple TV commercial. The learning: Don’t wait until the app launches, cultivate relationships with the press way before the launch. Reporters love exclusive stories.

2.    Have a smart pricing strategy.

At initial launch, GateGuru charges $1.99 to recoup development costs. At one time it had both a premium version and a free Lite version. This echoes the Pinch Media report that most free apps don’t get revisited often enough to justify an ad only strategy. When the Apple commercial was about to come out, Dan decided to change the app to free, which fueled the hockey stick growth of downloads. Since then, GateGuru partnered with airlines and OTAs to license its platform and do joint campaigns, which leveraged the power of its data to expand the business model. The learning: initially, consider charge for the app to recover costs, then consider free if growth picks up, and if the long term business model requires capturing large amount of data to achieve network effect.

3.    Take one step at a time with bigger visions.

Many mobile apps started as a feature. Instagram CEO Kevin Systrom believes that ‘the best products in the world start out as features’. Often features solve a specific problem. Once you solve a problem better than anyone else, you have the start of something that can continue to evolve. Chris Dixon also believes that the next big thing will start out looking like a toy.

Yelp for Airports sounded like a simple idea, but the first version of GateGuru solved a clear problem: what places can I eat at airports? It has since added many more features like all the facilities, security checkpoint wait time, wifi options, leaderboard, TripIt integration, etc. It’s innovating ways to partner with various players to become the ‘Day-of’ travel platform. The learning: start small, and rapidly evolve to get steadily better. Partner with other players to grow as an integral part of the ecosystem.

In summary, mobile apps can start as a feature, but do more faster, keep iterating and innovating, partner with other players to grow, and eventually, an app can grow to be a real million dollar business. It's not about the device or platform the product is built upon, but about the vision, the market, and the problem it solves.

Many more great tips about data collection, cofounder, partnership, and SEO were shared at the Meetup. To keep updated on exciting new developments of GateGuru, download the app, follow them on Facebook and Twitter.

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