Startups · Mistakes

What are the main reasons of failing mobile app (Tech) startups?

George White Technology Enthusiast & Entrepreneur

August 24th, 2016

I am thinking to start a tech startup, but before that i wanna know about the reasons of failing startups to avoid them. I have done homework on that. Read many blogs, articles but i am not satisfied, so to be completely satisfied i am posting here to find the best answer of my questions.
A great idea is 1% of the work. Execution is the other 99%. In this course, we’ll teach you how to conduct market analysis, create an MVP and pivot (if needed), launch your business, survey customers, iterate your product/service based on feedback, and gain traction quickly.

Joe Albano, PhD Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.

August 24th, 2016

Biggest reason that startups fail: building a product/service that no one wants. 

Best way to prevent: build, test, and validate your business model. 

Remember your idea is not your product and your product is not your business.

Jason Gibb Real Estate, Director & Business Development, MBA, CMA

August 24th, 2016

During my days working in Hollywood on writing scripts at Warner Bros. one of the rules of writing action sequences was to never say, "John starts running."  In this case it is "thinking to start a tech startup."  As the grand philosopher Yoda says there is only "Do. Or do not, there is no try." The correct action is "John runs."  Best to be and do, focusing on success not on avoiding failures.  Failures will come, they are unavoidable, but necessary on the road to success.  There is no hero without a process of obstacles, challenges, friends, enemies and allies. The only reason for failing is mindset and other people screwing you, so pick your partners, employees, customers, etc. well.  Good luck.

Nicholas Head Founder at AdSwirl Inc.

August 25th, 2016

Apps fail because:
1) There are countless trolls/competitors out there watching for new apps and apps that are gaining traction. Unless you have some strong IP, expect copy cats to start showing up in as little as a few weeks. Don't underestimate this. They'all knock off you app name and everything, and the app stores do little to protect you.
2) Keep development costs as low as possible as you don't want to dig a whole making break even impossible. Start with an MVP just like with startups and add features later. This let's you validate early before your funding dries up.
3) Learn how the AppMarket works. You need reviews and downloads to stay ranked.
4) #1 reason apps fail: marketing budget. Most developers create an app and expect it to go viral on its own. It won't. Ever. You need a serious marketing budget or access to lots of eye balls to drive users. The key here is to be able to acquire users for cheaper than your customer lifetime value. With apps this can be hard as most apps are free or 99 cents. This really is the secret though. All the bugs apps that are making millions, they're all doing affiliate marketing, media buys, or they have access to eye balls (media mentions, social media influencers, etc.).

Hope that helps! I've been in the app development game for several years and recently founded an app cross promotion network to help app developers get their apps noticed. Best of luck!

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

August 24th, 2016

I don't think you can avoid failure, but the goal here is to experiment heavily so that you fail early, fail often, and fail cheaply.

One thing that's important is to have enough capital to do what it is that you are trying to do. As long as you can conserve cash, then if you fail, you can put that into a learning experience and keep moving forward. If you run out of cash, then that's it.

Just one lesson for me which I learned today. I was talking to a company that I had seen a year and a half ago. When I saw them 18 months ago, I took one look at figured out that their business model simply was not going to work. It turned out that I was completely correct in my assessment. However, it turned out that once they figured out that their business model was just not going to work, they discovered a market niche that I hadn't thought of, and by tweaking their failed business model a little, they seem to be doing well.

So I think the lesson here is that the important thing is how you react to when things to wrong, than if you get everything right.

Also if you want something more relevant to mobile apps. One problem in mobile apps is that you end up with network effects, so in the end "there can be only one." Google wins. Facebook wins. Twitter wins. The problem is that if you can only have one winner, then everyone else has to lose.  A related problem is that a lot of the strategies that you use against category killers don't work. 

For example, in the off-line world, you can go local or go guerilla.  You might not be the supreme tire retailer of the world, but you can be the supreme tire retailer in Jackson City, Mississippi.  Also you can in the offline world find something out about Jackson City, Mississippi that the king of tires doesn't know about.  The trouble with mobile apps is that 1) you can't go local.  The google of Jackson City, Mississippi is google and 2) you can't really go guerrilla, since anything that you do gets quickly found out and people that have access to big data can run rings around you.

Trevor Heisler Master Storyteller and Builder of Brands. PR, IR.

August 24th, 2016

Sometimes an app developer may have a great idea but it never gains traction. Sometimes this is due to not giving enough thought to marketing, or more specifically, properly developing an online presence. It seems odd that a tech-focused start-up would have a poor online presence, but I have seen it happen several times - enough times in fact that I decided to write a blog post about it several months ago (http://www.heislercommunications.com/blog/get-more-social-media-followers-for-your-mobile-app).

Joe Albano, PhD Using the business of entrepreneurialism to turn ideas into products and products into sustainable businesses.

August 24th, 2016

I put together a blog post with a few thoughts on market discovery: http://www.logika-usa.com/markets-developed-or-discovered/

David Albert Founder & Principal at GreyGoo

August 25th, 2016

First, consider that failure is a relative term. If you personally create an app and are able to get it to provide some meager supplemental income, that's not a failure if that was your goal. If you're looking for the app to fuel and grow a startup or earn a living from it, that's a different story.

I agree with Nicholas and others that marketing is often grossly underestimated. Whether your app is something people want or not, you're clawing your way into a saturated market.

Lack of user engagement and subsequent retention is another HUGE area of failure. Let's assume you've made an app that people want, you validated the idea, solves a problem, blah, blah, all the stuff you should do before launching an MVP. However, people who install the app are not returning to it. Statistics show only 25% of users return to an app more than once. You've got an extremely short window to hook them and get them to keep opening and using your app. There are tons of great articles on mobile user engagement out there (and I even wrote a book on it, I'll send you a copy if you want--not a shameless plug--will send it to anyone on FD who asks) but here are a few things to always consider when launching an app:

  1. Personalization: give them a personalized experience--tailor the experience to user location, preferences, behaviors and information you've collected or obtained about them.
  2. Onboarding: make it so they know what they should/can do and make sure they can interact with the app within milliseconds of opening it. Don't make them think, "what am I supposed to do here?"
  3. Use push notifications and email wisely. Don't spam your users--but send notifications and emails based on event triggers that are relevant to them. So many apps abuse push and forget about using email entirely. Use them both wisely.
  4. Embed social networking components--introduce the ability to connect and share in every aspect of your app--this isn't to suggest you should create a social network, but simply use the best components of social networking to augment your user experience in ways that make sense in the context of what people do in your app.

There are lots more--just remember--it's not just about having a great idea and marketing it well--you have to engage your users. Retention is the key to gaining traction once you get installs--engaged users translate to revenue. A great read on the subject in general is "Hooked: How to Build Habit-Forming Products" by Nir Eyal. Search for it on Amazon.

Brett Gentry Program | Product | Operations | SaaS/IaaS Engineering

August 24th, 2016

Read Lean Startup.

Michael Hartzell Entrepreneur, Addicted to "Yes" - When Everyone Wins

August 24th, 2016

Hi George

I imagine "read about all the failures" is a long rabbit hole. Consider the number of failures that are never written about. Consider the failures written about by a 3rd party - who only get a small piece of the puzzle.

The potential customer(s) will be a source of feedback, joy, wow, complaints or disinterest.

"I have a tech idea to conquer the world and change the community."  "I have built a prototype to help those in need."

Joseph Wang said it well - it is difficult to avoid failures.

Rely heavily on those who will buy products/services.

If you are about to climb Mt. Rainier, it is better to hire a guide vs going it alone.
Who do you know who has climbed a mountain to buddy up to help you with your mission?

Sherman Sall Founder at Startency

August 24th, 2016

Please have a good read:

http://startency.com/funding-early-stage-startups/