I'm not a marketing expert, so correct me if I'm wrong here ...
Let's assume an iphone app gets CPM of about $1 [1,2]
So if their first app grossed $100k, that means about 100M impressions. That sounds insanely high to me - 100 impressions each for 1M users? 10 impressions for 10M users?
When I then see that they're trying to sell books for $99 a pop so you can cash in on their winning techniques [3], it rings of late-night infomercials telling me how to get rich buying foreclosed homes.
I don't have hard numbers, but my impression is that @tferriss took the same approach - making the bulk of his money off of book sales (and his prior supplements business), pitching virtual assistant techniques that never would have made that kind of money for him.
So the real 4-hour work week strategy they're copying is to give the impression of success with little effort, and then sell people books detailing your special technique.
Less than 10% of our sales numbers are from the ebook. The ebook was just a side project to see if we could share some information and make some extra money at the same time. You'd be surprised at how much ad revenue these apps make. Check out how much the paper toss guys make with just 5 apps - http://www.develop-online.net/news/36155/Paper-Toss-dev-make...
If you go to the freetheapps site it is _so_ used-car salesman. When you go to leave the page it has a Javascript popup that begs you to stay with yes/no dialog.
My already very low view of Andrew Warner just got even lower. slimy get-rich-quick guys give me the shivers.
Freetheapps is not Andrew Warner's site. Mind explaining your low view of the guy?
It seems to me he provides a great resource to the tech entrepreneurship community in Mixergy and hardly deserves to be called a 'slimy get-rich-quick' guy.
When I interview someone who wasn't referred by someone I know or when I'm unsure of the numbers before an interview, I often ask them to log into their affiliate or paypal or bank account to show me activity using Skype's desktop share. Or I ask for their accountant to confirm their numbers. Or I ask to see their tax returns. I always keep what I see private.
In this case, I didn't need to do that because: a) $80k per month for iPhone makers isn't shocking -- as other have said in the comments -- b) anyone who checks out the app store on a regular basis will recognize the apps these guys made because they're often the most popular in their categories. You can check on this right now, and c) the big part of this story was that they outsourced everything and elance confirmed that.
Finally, I can't be 100% accurate with every interview I do -- not even close. I count on readers to point out when I get my data wrong and when I let my interviewee get away with lying.
I don't think that's the case here. But when it comes up, say something.
I respect readers' opinions and feedback. Anyone is welcome to call me "slimy," but there's no need to do that to get my attention.
Just to correct the impression. I was calling the interviewee's slimy for their sales page tactics.
My opinion of you (already low) dropped through association.
I understand you're trying to keep up the pace, but sometimes the right thing to do is give up quantity for quality.
As mentioned, his primary interest here was that the guys had outsourced every aspect of creating the apps and had created a business doing it. Sure it may not be the most high quality business but it's still interesting to look at by virtue of the success.
He made his money from this, and busted his butt to build that business.
4 hour work week is about how he was able to continue to live off that business, while devoting only 4 hours per week to it. It was an alternative path to selling it off or continuing to burn himself out as a hands on manager. There's also a lot in there of various things he tried and failed.
Overall, it's similar to the YCombinator ideal of busting your butt while you're young to solve the "money problem" once and for all. 4 hour work week is a different approach to the same goal.
I don't know what to think about stories such as these to be honest.
My inner entrepreneur says "Wow, great job guys! I wish you every success".
My inner software developer winces, and fears, both professionally and personally, that the ever-growing number of such low-quality apps will eventually make it pointless for developers to invest in creating a ConvertBot or Instagram.
(FWIW I currently make $15k a month from sales of apps $1.99 or higher)
I just wanted to bring up a point about free-app/knock-off vs. paid quality app.
I would draw a parallel with the fashion industry. Louis Vuitton, for example, will never go out of business because of Chinese knock-offs. Why? because the person who buys the knock off/cheaper product is not their target customer.
Same I think is true with iPhone/iPad apps. Those users who only search for free apps and put up with disruptive ads (let alone click on those ads) are not the target audience of a premium application maker.
Where the cheaper app maker has to churn out dozens of products to make decent revenue, a single app maker who focuses on quality and sustainable business model can really build a meaningful business in the App Store.
- You're conflating a medium (the web) with an action (selling). An excess of crappy websites do not compete with a subscription to Dropbox for example, and there are not hundreds of Basecamp alternatives. A more accurate phrasing for your analogy would be "... made it pointless to charge for access to higher quality webpages". And I would say that yes, there are few examples of pay-walled webpages being sustainable businesses.
- Placing ads is great, providing that a) you can accurately target competitor products and b) the sales you gain are greater than your per-user cost of acquisition. If you have experience of making this work in the mobile space it'd be great if you would share.
I'm just talking from my bingo experience, where I've been told many, many, many times that the instant I have free competition means my lunch gets eaten. (I have free competitors, and they're essentially outsourced customer acquisition that work for peanuts.)
I don't have any experience with mobile. Anecdotally, the CPM rates I've heard for mobile make customer acquisition seem prohibitively expensive for cheap apps, but an explosion of CPM inventory from a wave of free applications lacking in quality means that prices must come down eventually. Increase in supply tends to decrease prices, just like Demand Media exerts a downward influence on my CPAs (while shifting more of my spend away from quality sites and to Demand Media outlets).
"My inner software developer winces, and fears, both professionally and personally, that the ever-growing number of such low-quality apps will eventually make it pointless for developers to invest in creating a ConvertBot or Instagram."
Gimp, OpenOffice, and Linux didn't hinder the popularity one iota of Photshop, MS Office, and Windows (or OS/X) respectively. In fact, the free stuff augments the consumer need for high(er?)-quality alternatives to the free stuff.
That said, I don't think Dash of Color from FreeTheApps even dented Color Splash, which has been cemented in the top 20 overall paid apps for as long as it's been released. Nor has their FilterFX Free app displaced Hipstamatic.
There is _absolutely_ room for low and high quality apps in the App store, as there is room for quality software applications and repackaged GPL apps ported to Windows sold to people who don't know it's available free. Or, for that matter, the Big Mac and the $25 Kobe beef burger.
It definitely creates a lot of noise and worries me as someone who is just about to enter the mobile app market.
I just finished some iOS training and am working on my first paid app. What would you say is the key to getting where you are? Apps with true utility–or something else?
1) Create one app to throw-away - something that's simple, useful to you, and which you are confident you can create. Don't worry about there being hundreds of similar apps. This is your Learner app. Get it together in a few weeks and put it on the app store for $1-$2. Make sure you have some "please leave a review / send email" link that makes it a no-brainer for people to give you feedback. Read them all, but learn to distinguish between genuinely useful suggestions, and comments from people who feel your app really needs their pet feature.
2) Find a need that you think people would pay $3-$5 for, preferably a need that you yourself have, and work on that app using everything you learnt in #1. Get something basic but polished out, then iterate.
General tips:
- Polish is more important than features.
- Ensure you get 6 friends to buy & rate your app (5-6 is the minimum you need for a visible rating).
- Launch at $1 for a week, and cut the price to $1 for a week for every update. It does make a difference IME.
- Read the descriptions of top apps and see how they sell themselves.
- Read the reviews of apps similar to yours and see what people are missing.
- Make it easy for people to send in-app email for support questions. Be the best support person they've encountered. Happy users recommend your app and leave very nice reviews (particularly if you ask for the latter after helping them).
In the early days of the AppStore you could drop your price to $0, then switch to paid, and retain your ranking. Apple quickly quashed this, so perhaps these apps are looking to benefit from word of mouth, or to gain a number of reviews. As I mentioned earlier you need 5-6 reviews before you even get a rating and having more certainly doesn't hurt.
On a similar note, I believe Apple's charts may now be weighted to take price into account, at least in some form. I occasionally play around with app prices to see how sales/revenue/in-app purchases change, and last week I upped the price of one app from $1.99 to $2.99. Sales dropped from ~400 to ~250, but my chart placing was virtually unchanged (I think I dropped once place). I don't believe the ranking is based on sales over a period of days, though it may be a factor, since my ranking does increase/decrease with normal sales fluctuations.
$80k a month in ad revenue by making the following apps for $2k a pop on Elance?
Record Video for Free
911 Police Radio Free!
Battery Box 3-in-1
Find Sex Offenders Free!
Dash of Color FREE
MovieFX for Free
Convert Units for Free
FilterFX HDR Fisheye in 1
Fisheye for Free
FilterFX for Free
Flash for Free
HDR for Free
Convert Units Free HD
I know people are saying the gold rush is over, but that is ridiculous.
For me, this interview wasn't about creating another "iPhone gold rush" story. It was about understanding how they could build an app business without coding or designing. They even hire someone to write their descriptions for a few hundred bucks.
And they weren't afraid to make a slutty business. For every startupy person trying to 'change the world' and 'make a dent in the universe' with a me-too social network, there's five with a slutty free app business banking it each month.
This is a great point. Looking at these apps, they're certainly not anything like ConvertBot or Instagram. As an app developer myself, I think I could have easily made most of these apps in my spare time without a ton of design skill, yet they're really successful. Definitely food for though.
What food for thought? Choose to throw your life away on meaningless shit so you can say you made some money, or do something you care about?
Most of us here could easily make a $200k consulting a year.
Does it make you happy?
No.
Would making shite apps and essentially scamming people make most of the people here happy?
No.
You gotta remember that the kind of person who does this kind of shit is basically a bit of a social pariah, a social retard. They're no different from the internet 'marketers' or the online pharmacies or any of that crap.
They don't care a bit about supplying shit and calling it gold.
To me there's not even a moment's thought about this kind of stuff, I have no respect for people making crap like this, only pity. To waste your life conning other people is a tragedy, not a triumph.
I think making massive money on crap that enables you to spend time on things you actually do value - be they other apps, a family, hobby or passion to save the world - is a perfectly valid way to live life.
Your post sounds like nothing more than sour grapes.
Well, have fun doing your human exploitation startups. It's not for me, I can't do it.
It's just not in me. It's not sour grapes, it's just utter incomprehension on why anyone would spend their life exploiting others. I just don't understand the motivation behind it.
I actually do not think it's a perfectly valid way of life, I think it's evil and sociopathic. But that's my opinion and you have yours.
Depends... making money on crap (that the market and people want) is OK as long as you use it to spend time on things that you think would be useful for people, the society. Spending this time (i.e. money) on yourself (family, hobby, whatnot) is not ethical.
Photo cropping, unit conversion, and medical dictionary apps were some the examples mentioned. They don't misrepresent their offerings, they fulfill a legitimate need, they aren't spamming -- you have to search out and install it -- and the apps are free. If you aren't happy with the product you can readily delete it. I have a hard time seeing how anyone is being 'conned' here. Clearly it's not a huge contribution to society, but what's the injustice that has got you so riled up?
There's a wide yawning gulf of difference between $17000 a month and $80000 a month. One is the average for a senior SW rockstar in the Valley and can afford you a nice 3BR/2BA "meh" house in SF that may very well be on the border of Sketchytown; the other (if consistent and/or repeatable) is Burj al-Arab 3000 square foot suite on holiday, owning condo a short walk to the Marina and the Palace of Fine Arts, FU money.
And, what makes you think they aren't doing something they care about? They are attacking niches within the app store with extreme prejudice. And, that in itself is allowing them to do whatever they feel like doing. The ultimate goal of building a business is to gain the resources to help you manage your _time_ the way you see fit, whether that is through philanthropic causes, building lasting businesses in other areas, self-actualization, focusing on the family, or examining the finer things in life. The #1 goal on DHH's and Zuck's and Ballmer's mind-- the double super secret final endzone fat lady singing goal-- is money. Let's _never_ forget that.
And, how is making derivative apps and giving it away to make ad revenue "shite"? It's simply another avenue to success. I guess patio11 should just hang his head in shame for working on "yet another work scheduler app". This line of thinking is just lazy and supremely pompous.
Moreover, how does conducting a very public and financially candid interview merit being called "a social retard?" That's just such a vicious and insulting attack that I can't even begin to see why anyone would upvote it. Pathetic. And, the envy in you is so deep and bile-ridden as to be wading in it.
With all due respect, I think you need to step off of your high horse and realize that there is value created, even in crappy apps that spam. Sure it's not as "beautiful" as a well done app that took many man hours of creation/polishing, etc. but it gets the job done and gives access to some people who may not otherwise have it.
Also, making cash in order to buy the freedom to do the things that make you happy I believe is righteous.
Further, I fail to see how their actions are "scamming people"? They are creating FREE apps. If the user doesn't like it, they can delete it. It is not as though they are SELLING subpar apps and then giving people the finger when they as for a refund. There is no scam in a value for value transaction and, by downloading a free app, it seems to me they ought to expect them not to be of the highest quality and/or to have ads.
As a college student juggling far too many small contracting jobs, a 15 hour/ week part time job, and a relatively intense courseload, I find myself saying similar things. I could drop out, quit my part time job, and probably make significant money consulting/contracting. Yet something inside me says that would be meaningless.
Have you tried the apps? Clearly, a lot of people found them useful. So, on what basis are you calling it crap? Just because they outsourced the development and a made a lot of money?
I think they are more likely to be scamming advertisers than people. I get what you mean, many many people around here could make these kind of apps if they were so motivated to.
It's the same with online ads, should I just fill my site with mobile phone charging ads because they give me the best CPM or should I put ads there that actually may benefit a user?
At a glance, for sure- there's a few where they didn't, but for the most part they did a solid job of it.
For the ones where they didn't, I'd guess (based on nothing but a glance) that they depended on cross-selling to get rank traffic, instead of search to get rank traffic.
Yeah, the most interesting takeaway for me is how far these guys got with a relatively small amount of effort by picking the right apps to work on. For example, there are literally hundreds of unit converters in the App Store right now, and they shipped another one anyway to great success, because the demand for such apps are still so high.
It does illustrate that there is still tons of money to be made in the App Store for building the right apps.
FWIW, I have the myConvert iPhone app and am very pleased with it. I've looked at the free unit conversion that go by, but haven't found one that shows multiple conversions on a single screen like myConvert does.
It is. One of the reasons I posted this interview is that on top of doing $80k in monthly revenue, the founders are big Tim Ferriss fans and only spend an average of five hours per week on this project - one of the founders still works a full time job.
Doesn't matter if I like my job or not, if I am making 80k/month from my side business, I am definitely going to quit my day job and concentrate on my full business.
These guys struck me more like frat boys than SW Devs. They both said they are SW Eng but they totally shied away from going into any details about that. They didn't know any of their stats. Andrew had to walk them through their profitability numbers, wtf?
Used to be SW devs. I used to do .NET programming for a big DOD contractor, then worked for a local internet startup for while, but why talk about my old career? That would have been boring. Plus as we tried to explain, at some point you have to let go and not micro manage every individual stat and app. I'm sure if we did that we could make some more money by optimizing, but that's not what our business approach was about. We wanted simple, stress free which gives us time to do other things. We're not experts, we don't have a degree in business or anything like that. Just 2 27 year old guys from San Diego who wanted to make a couple iphone apps.
I've actually been doing development since senior year high school. Started with ASP then PHP, .net, c#, java with gwt. I don't know if I'll ever do any of my own development again though. I do enjoy programming, but I enjoy doing other things more honestly =).
Did anyone actually ask them to verify these numbers? Did a third party do so?
Extraordinary claims ($80K a month) require extra-ordinary evidence.
They don't even really seem to know what their revenue is like, but their fairly certain about the large size of the numbers... normally, that's the smell of bullshit.
Tom Vu's girlfriend wants to see the proof of these claims.
Ahh, Tom Vu. Whatever happened to him and his late night infomercials? I remember his great quote - "Do you think these girls like me? NO, they like my money!"
After posting the interview I realized that the guy I was emailing about an interview was probably a virtual assistant. I assumed he was working in their office because he responded to my interview request so quickly.
Dude, stop by the HN DC meetups will ya? People are gouging their eyes out looking for startup marketers. Email is in my profile if you want me to pass your contacts around.
I tried timesvr.com last year. They were usually quite quick, even with the standard account. If you throw more money at them, you can probably get arbitrarily good response times.
Regarding the outsourcing thing, it's clear that even they aren't getting high quality. I'm checking out their Convert Units app, for instance, and the drum scrolling and selection is totally broken, although it works just enough to still function.
It's interesting, however, that the poor quality apparently isn't stopping people from using it. Part of it might be that people don't expect much out of a free app, so if it's broken they just deal with it.
Even the functionality of the drum is iffy. It seems like maybe a quarter of the time it will somehow mysteriously wind up on something other than what you selected.
Anyone know any articles from people that run ads in these kind of apps talking about returns? They don't seem like the kind of apps that would drive any high quality traffic. Interesting to see if it's just an advertising bubble where because it's new there is many companies trying it out pushing up prices or there is actually a sustainable business here for advertisers.
This sounds like some good advice to help prevent ideas from being taken:
"We get that question a lot. It was kind of concern. So what we usually do in our first bid, in our first description we’re kind of vague. We say, ‘We’re looking for a developer for a simple photography app.’ And from all those people we’ll choose three to five that look kind of trustworthy, seem like they could do the job and then we’ll give them the wireframe bid. So we start off really vague so not everybody sees it. We’ll pick three to five people, we’ll give them the full details and then they’ll give us a more detailed proposal."
It makes sense that they seemed somewhat reserved at certain points of the interview, they don't want to give away too much and make their e-book less useful.
Is it me or does it sound like they are just winging the whole business? Andrew had to pretty much coach on what to do, and what to answer.
That said, they still get A+ in my books for just doing it. That's the biggest differentiator between people who find success and people who don't. Kudos.
We are and have indeed been winging the whole business. We're no business experts, we've learned a lot going through the process. It hasn't even been 2 years yet. This was our first "face to face" interview. We're not great public speakers either haha. Just going with the flow and we've been very fortunate so far.
Andrew I love you. I sent you an email a few months ago asking if you could get more videos about the mobile space and you have totally come through. I've seen a hearty amount of mobile interviews this month. Thanks.
1) Release a bunch of free apps.
2) Take the holiday season - the single month with the highest sales and traffic.
3) Round it up a little bit to get to $80K a month.
4) Find as many people as you can who're willing to believe the story.
5) Don't lie - just let people extrapolate - Say $80K in a month and let people assume that means $80K per month.
Their website is the classic long form sales letter.
Make it long so people get invested.
Offer $2600 worth of value for just $300.
Then knock another $200 off.
Appeal to the total idiots who think a 'free' ready to go app that is included will start making them $5,000 a day.
Quote examples like iShoot + kitchen table without telling the whole story i.e. the guy's programming experience and the actual number of months spent and the strategy he used.
A fool and his money are soon parted. These two gentleman are taking upon themselves this painful task.
If we set aside ethics it's just a strategy - One guy builds a super valuable product and sell it at high price to smart people who value it.
Another person builds a house of cards and targets people's greed and laziness.
Notice a few things -
1) Their insistence that they spend just 5 hours a week on this.
2) Their focus on showing earnings from a single month - the month in the year that has the most sales.
3) If you were to wish for a easy, no hassle way to make lots of money - You'd dream up exactly what they are claiming. It's absolutely perfect - you don't have to know coding, you need just 5 hours a week, and you'll start making $5,000 a day within 60 days.
Right, but as it turns out they didn't just make $80,000 in a month. They made ~$800,000 over a year and a half, and clearly said they have had dud apps as well
I'm curious about the ad networks that are used in these apps. I read the interview transcript and it says that AdMob was used at first and then they switched to "AdWorld" (which I assume was a transcription error and it meant AdWhirl). If Mike or Quoc are reading, or if anyone else has any insights, I'd be interested in hearing more.
It would be interesting to see more people chime in here about using sites like Elance. Have you had good/bad experiences with this approach?
Outsourcing seemed to work great for these guys (good for them!) Is it because the apps were fairly simple, or did they get "lucky" with picking the right developer(s)?
When I started 39 (my company) I was outsourcing my iPhone development via Elance to a firm in Ukraine. We got some good simple apps out and made some money. But quickly they weren't reliable; they fit your job in a pipeline with other jobs, so you can't just tell them "today just stop whatever you are doing and work on this important stuff". Also you need to be very lucky with the people you hire.
I hope it didn't come as a surprise. What you do when you outsource is not only you hire cheaper workforce from the other end of the world but you also spare on not having a permanent employee/consultant. It's cheaper because you only pay for what they do and not their availability (i.e. you don't pay if you don;t have anything to assign to them). Now on the other end of the business there are people who can only make a living if they are highly utilized. So they'll have a pipeline for sure. (I.e. they won't pay what you don't pay, the availability.)
So if you want an employee or permanent contractor then hire one, even from the other end of the world. Most freelancers will be more than happy to have a longer term contract with a fixed income. But you have to pay the bill...
I think outsourcing a simple $2k fart app is workable.
A complex internet service with multiple technologies, web, multiple mobile platforms and your valuable IP is another matter and probably not advisable for outsourcing.
Hey Andrew! Curious why your podcasts don't show up in the iTunes feed until a few days later. I'm having to manually download this one because I'm so excited about it. :)
I don't know what the RSS feed for the podcast is. The advertised one http://feeds.feedburner.com/Mixergy-blog doesn't seem to have audio information, but I could be wrong.
I'm a little surprised at the relatively negative responses on this. Is this story not consistent with hacker culture and working smarter, not harder? [Pointing out to a bunch of programmers they can be outsourced is unlikely to be well received though]. The execution and success of their apps was brilliant. Sure they lose marks for immaturity, which is even more of an achievement, and their contribution low-quality apps which now plague the internet.
Why is the screenshot on the ebook page Adsense? Are they advertising in their mobile apps using adsense? Is that possible? I thought Apple disallows this.
Let's assume an iphone app gets CPM of about $1 [1,2]
So if their first app grossed $100k, that means about 100M impressions. That sounds insanely high to me - 100 impressions each for 1M users? 10 impressions for 10M users?
When I then see that they're trying to sell books for $99 a pop so you can cash in on their winning techniques [3], it rings of late-night infomercials telling me how to get rich buying foreclosed homes.
I don't have hard numbers, but my impression is that @tferriss took the same approach - making the bulk of his money off of book sales (and his prior supplements business), pitching virtual assistant techniques that never would have made that kind of money for him.
So the real 4-hour work week strategy they're copying is to give the impression of success with little effort, and then sell people books detailing your special technique.