Podcast Summary
Significant Opportunities in the Mobile App Market: The App Store has generated over $320 billion for developers and the top apps in 2022 were primarily social, with new apps emerging and staying at the top crucial for success.
The mobile app market presents a significant opportunity for entrepreneurs to build, monetize, and potentially make millions. According to Olivia Moore, a consumer partner at a16z, the App Store has paid developers over $320 billion since its inception in 2008. In 2022, the top apps in the US App Store were primarily in the social category, with BeReal, TikTok, and Gas App leading the way. These apps spent the most number of days at the top of the US App Store rankings. The rise of new social apps suggests a potential new age of social media, with 3 out of the top 5 apps not even existing two years ago. The key to success in the App Store goes beyond just reaching the number one spot; staying there is crucial. Founders can learn valuable insights from these trends and examples to take advantage of the opportunities in the App Store market.
New social apps offer authentic experiences: New social apps like BeReal, Gas, and Linen succeed by providing unique, candid ways for users to interact with friends, contrasting the heavily curated feed-based platforms of the past. Reaching the top spot in the App Store requires significant daily downloads.
Consumers are constantly seeking new and authentic social experiences, as evidenced by the success of apps like BeReal, Gas, and Linen, which offer unique, candid ways to interact with friends. These apps differ from the previous generation of social media platforms, which were often feed-based and heavily curated. Staying on top in this rapidly changing landscape is challenging, with new apps emerging frequently. According to data, reaching the number 1 spot on the App Store requires around 100,000 daily downloads in the US on iOS, a significant number for a new product to reach. This underscores the importance of effective marketing and user acquisition strategies for new social apps.
Building a successful app involves delivering consistent value and encouraging network effects and user sharing.: To build a long-term successful app, consistently deliver value, encourage user sharing, and incorporate hooks that bring users back.
While it may be easier to break into the top of the app market due to the reach of short-form video platforms like TikTok, staying at the top is more challenging than ever before. Many apps that reach number 1 only last for a day or a few days, and to build long-term success, a product must deliver value day after day and encourage network effects and user sharing. Creating such a product involves building something that delivers value consistently, ideally with network effects, and incorporating hooks that encourage users to return and share their behavior. Examples of successful apps with such hooks include Be Real, which creates a real-world moment for users to engage, and Gas App, which encourages positive social comparison among friends.
Word-of-mouth growth: The most valuable form of acquisition: Creating a genuinely exciting product inspires word-of-mouth growth, but the opportunity for organic growth may decrease on saturated platforms.
Word-of-mouth growth is the most valuable and lasting form of acquisition for consumer products. The discussion highlighted the difficulty of replicating the impact of organic word-of-mouth through traditional marketing channels or paid growth. The examples given, such as Gas App and Talking Ben the dog, illustrate how user-driven viral moments can lead to massive growth. However, as new platforms like TikTok become more saturated with ads, the arbitrage and opportunity for organic growth may decrease over time. Ultimately, creating a product that inspires genuine user excitement and encourages sharing is the key to successful word-of-mouth growth.
Tech shifts drive new app categories: widgets, AI, and anonymous social apps: In 2022, Apple's iOS 16 update led to the rise of widget apps, while AI models enabled the development of AI-powered apps. Anonymous social apps also gained popularity by tapping into timeless human emotions.
Tech shifts and consumer behavior can significantly impact the success of mobile apps. In 2022, two notable tech shifts led to the rise of new app categories: widgets and AI. Apple's change to iOS 16 allowed for the creation and popularity of widget apps, such as Note it and Livin. On the other hand, the availability of models like Stable Diffusion enabled the development of AI-powered apps, like those offering art creation and avatar generation. Anonymous social apps, which tap into human emotions that don't change across generations, also continued to emerge and gain popularity. However, the question remains whether these apps can build lasting social networks or if their success relies on their novelty and the core group of users. For potential founders, understanding these trends and the underlying human emotions they cater to can provide valuable insights when considering app development.
Revenue Opportunities for Mobile Apps: Mobile apps are generating revenue earlier due to the rise of mobile payments and younger generations' comfort with online purchases. Examples like Gas and LENSA illustrate this trend, but founders must consider their goals and monetization strategies, such as notifications and new offerings.
The app market has shifted, and there's an increasing opportunity for founders to build and monetize mobile apps quickly, even if they don't reach the size of a FANG company. With the rise of mobile payments and younger generations becoming more comfortable making purchases online, apps are making significant revenue at an earlier stage. Examples like Gas and LENSA, which made millions in just a few months, illustrate this trend. However, it's essential for founders to consider their goals and how they can continue to monetize their user base through notifications and new offerings. The resistance to paying for apps that once existed seems to be waning, and the willingness to spend on digital goods is growing. Yet, it's essential to understand that monetization strategies vary, and founders must determine which approach works best for their app.
Monetization strategies for apps have shifted towards in-app purchases and subscriptions: Free users contribute the most revenue, but 'whales' generate significant income through in-app purchases. Gaming apps have led the way in this model, and subscription pricing is becoming more aggressive. New revenue streams for subscription apps include targeting businesses and offering clinical services.
The monetization strategies for apps have evolved, with a focus on in-app purchases and subscriptions. Free users make up the majority of revenue, but a small percentage of users, or "whales," generate significant revenue through in-app purchases. The success of gaming apps in monetizing through this model has influenced other app industries. Subscription pricing is also becoming more aggressive, with developers testing higher prices for premium features or tiers. The success of this approach remains to be seen, but it follows trends in other industries where the cheap and expensive options tend to resonate with consumers, leaving a "messy middle" that doesn't serve anyone. Additionally, subscription apps are exploring new revenue streams by targeting businesses or offering clinical services that insurers will pay for, further expanding the subscription pricing model.
Effective use of technology and consumer understanding: Leveraging consumer behavior trends and new tech features can help apps succeed, even as late entrants in the market. Gamification, reward systems, and innovative use of Apple's technology can drive user engagement and revenue.
Understanding consumer behavior and effectively utilizing new technology can lead to significant success in app development, even if later entrants to a market. Gamification of good behavior through apps, such as reward systems for reducing phone usage, is a growing trend. Apple's technology changes, like widgets and detecting car movement, can be integrated into innovative applications. For instance, Lenza's focus on mobile avatar creation and enabling push notifications propelled it to success, despite earlier web-based competitors having similar quality images. The ease of use and convenience of mobile applications, along with effective marketing and user engagement, can result in substantial network effects and revenue.
Apps reflect the times: Surprising chart-toppers in 2022: Apps integrating real-world events and offering gamified commerce experiences saw significant growth in 2022, with 7-Eleven, Starlink, and a period tracking app leading the way. This trend is expected to continue, with Temu already showing strong growth in 2023.
Mobile apps continue to play a significant role in our daily lives and can reflect cultural moments and real-world events. Surprising apps that topped the charts in 2022 included the 7-Eleven app for Slurpee day and free food promotions, Starlink for satellite internet launches, and a next-gen period tracking app following the Roe v. Wade verdict. Looking forward to 2023, Temu, a new commerce app, is already showing strong growth with deep discounts and friend invitations leading to a large number of downloads. This trend of gamified commerce and real-world event integrations is expected to continue shaping the app market.
Invisible AI infrastructure in apps: In 2023, companies will focus on using invisible AI algorithms to understand user interests and serve personalized content, reversing the trend of virality and creating engaged users.
In 2023, we can expect to see more companies utilizing "invisible AI" infrastructure in their products, following the success of apps like TikTok and Temu. These apps use strong AI algorithms to understand user interests and serve them personalized content, creating a high level of engagement and user stickiness. This trend reverses the wave of virality seen in 2021 and 2022, where companies were overwhelmed by the sudden influx of users from viral videos on TikTok. As users become more aware of the addictive nature of these apps, some are even limiting their own usage. Companies will need to adapt to this trend by focusing on converting downloads into engaged users and managing their virality effectively. Overall, the use of invisible AI is a game-changer in creating sticky apps and reaching users in a personalized and effective way.
Vertical social networks cater to specific interests: Users are moving towards vertical social networks for more meaningful interactions based on specific interests, offering real-world data and connections beyond the digital realm.
As social media continues to evolve, users are seeking out more meaningful and focused interactions, moving beyond the traditional hyper-curated, influencer-driven feeds. Instead, there's a growing interest in vertical social networks that cater to specific interests, like Strava for fitness enthusiasts or the recent squishmallow tracking app for collectors. These apps provide a healthier and more fulfilling way for users to engage, offering real-world data and connections that extend beyond the digital realm. The trend towards vertical social networks also reflects the reemergence of collecting as a popular pastime, with digital elements adding a new dimension to the experience. Overall, these vertical social networks can serve as a welcome respite from the broad-based networks that can be all-consuming.
Apps enhancing relationships and driving engagement towards real-world businesses: Next-gen apps like TikTok and Instagram are blurring lines between digital and physical worlds, helping small businesses boost revenue through viral content and organic engagement with targeted creators.
Digital apps are increasingly blurring the lines between our digital and physical lives. While early subscription apps focused on optimizing individuals, new apps are focusing on enhancing relationships and driving engagement towards real-world businesses. For instance, TikTok has emerged as a platform where people discover new places and businesses, leading to significant revenue boosts for small businesses through viral food reviews. However, not every business needs a huge following on TikTok. Instead, engaging with smaller, targeted creators organically could be a more effective strategy. The future of the next-gen Yelp-like vision is still uncertain, with Instagram and TikTok being strong contenders.
Globalization of App Market with Viral Success: Apps from anywhere in the world can gain mainstream adoption through viral platforms like TikTok, and trends like widgets and avatars contribute to this shift. Example: Travelboast from Russia and Subway Surfers from 2012.
The app market is becoming more globalized, with a significant increase in apps from countries outside of the US rising to the top. This trend is driven by the democratization of viral success through platforms like TikTok, which allows apps from anywhere in the world to gain mainstream adoption. A great example of this is Travelboast, an app that originated in Russia but gained over 500 million views on TikTok, despite being a solo developer app. Additionally, apps that fast follow trends, such as widgets and avatars, are also contributing to this shift. An interesting case study is Subway Surfers, a gaming app that was first launched in 2012 and only recently cracked the top 10 most downloaded apps worldwide, demonstrating the longevity and continued growth of apps in the market.
Social media users multitask with apps and games while watching videos: App developers could create engaging platforms for pet owners, tapping into growing industry and strong consumer affinity
Creators and users on social media platforms like TikTok are finding innovative ways to keep viewers engaged, such as multitasking with other apps or games while watching videos. This trend highlights the decreasing attention span of users and the need for more interactive and dynamic content. An intriguing area for app development could be creating a digital platform focused on pet ownership, as the industry continues to grow and people's affinity for their pets remains strong. This app could offer unique features for showcasing and sharing information or images of pets, potentially tapping into the popular trend of pets as influencers. The potential for growth in this sector is significant, as the pet industry consistently shows strong sales and consumer interest.
Exploring innovative pet apps: There's a market for apps that allow people to engage with their pets and express their love in new ways. Ideas include live footage of puppies playing and a resemblance comparison app.
There's a potential market for innovative and engaging apps that cater to people's love for pets and their desire to connect with them in unique ways. During the discussion, the idea of creating an app that streams live footage of puppies playing was suggested, which could be a popular genre on platforms like TikTok. Another idea was an app that compares users' photos to those of dogs to determine the percentage of resemblance, which could be a fun and entertaining concept. These ideas show that there's a demand for apps that allow people to engage with their pets and express their love for them in new and creative ways. Additionally, the conversation highlighted the importance of understanding consumer behavior and preferences when creating apps, as they can provide valuable insights into what people are looking for and willing to engage with. Overall, the discussion emphasized the potential for innovative and engaging apps that cater to people's love for pets and their desire to connect with them in unique ways.
