Keith Dawson: Develop in the Cloud
This story was written by Keith Dawson for UBM DeusM’s community Web site Develop in the Cloud, sponsored by AT&T. It is archived here for informational purposes only because the Develop in the Cloud site is no more. This material is Copyright 2012 by UBM DeusM.

Mobile Not First

An entrepreneur argues that mobile is the wrong place to debut a free, ad-supported app.

Only a few comsumer apps have succeeded by going mobile-first. Let's look at some of the reasons why.

Ever since the iPhone first gained traction, the advice from every side of the industry has been: think mobile first. How does this work out in practice?

Say you've got a new app that spreads virally and encourages users to sign up for a free account in order to share stuff: photos, social comments, whatever. Advertising will pay the bills. (Or in-app purchases of virtual goods; the same arguments all apply.)

You succeed if you get a lot of users really fast. Then you have to retain those users and keep signing up more. How many users? The way VC and angel investing is moving lately, a lot. Chris Dixon says that that where you once needed the potential for 1 million users to attract investors, you now need 10 million.

The problem with signing up and retaining a million users is that it requires 20 or 30 million people to visit your Website or otherwise be exposed to your viral message -- to enter the top of your funnel, as the marketers say. Venture capitalist Fred Wilson calls this the "download app, use app, keep using app, put it on your home screen" flow. At every step along the way towards the holy grail of the signed-up, engaged user, you lose some percentage of the people who have made it that far down the funnel. For a typical mobile app, anywhere from 2 to 5 percent will make it all the way through.

Vibhu Norby is a serial entrepreneur whose company has introduced two mobile-first, free social products. They did not do well. For the third product (which is still under wraps) they are pivoting to a Web-first, charge-from-the-beginning model. Norby walks us through the perfect storm of difficulties and obstacles startups face in building a loyal user base.

Norby proposes that it is these difficulties that have been driving mobile advertising-supported companies to encroach more and more on user privacy (with the result that only 9 percent of Americans have a positive view of mobile advertising). His thesis is that this trend will continue to its logical conclusion: "All advertising-based companies will innovate and iterate to approach zero set-up time, zero friction user actions, and a maximum viral factor" -- at a vast cost in user privacy.

Better on the Web
Many of the funnel difficulties melt away if the user encounters your app on the large screen of a Web browser instead of on a tiny mobile screen. As Norby puts it:

"...the experience of signing up for a service is superior in every way. Typing is easier. Sign-up with OAuth is faster. Tab to the next field. Provide marketing alongside sign-up as encouragement. Auto-fill information is a feature in every browser. The open ecosystem of the Web and 20 years of innovation has solved many of the most difficult parts of onboarding. With mobile, that kind of innovation is lagging significantly behind..."

A startup can iterate fast on the Web, fixing things they didn't get right the first time, testing to see which works best. The cycle time on mobile is a killer, and you lose yet more users when they don't upgrade to the new app version.

All of the problems Norby writes about apply to consumer apps. Enterprise mobile apps have a different set of challenges, but the extreme onboarding funnel is not typically among them. Wilson, the VC quoted above, believes that investing has taken a turn away from the consumer side and towards the enterprise that will hold for some time to come. "It is a tougher time for early stage consumer Internet companies than I have seen since the 2001-2004 time frame," he writes.

Norby concludes, "You certainly need a mobile app to serve your customers and compete, but it should only be part of your strategy and not the whole thing."