Freemium apps for our business model

Making money with a mobile application is not an easy thing. Gartner is forecasting that, by 2017, 94.5 percent of mobile downloads will be for free apps. They even predict that through 2018, less than 0.01 percent of consumer mobile apps will be considered a financial success by their developers.

Yes, they forecast that only one (1) out of 10,000 developers will make enough money to survive and stay in business. Slingboards Lab (my start-up company) want to be part of the survivors. This is why, last summer, even before starting the development of our mobile app, we have clearly defined a compelling business model.

Our business model is the fundamental way that we plan to make money from our application. Since we do not have thousands of loyal customers, an established brand or something very special and desirable, we believe that the model of paid apps is not sustainable for our environment. In addition, in 2013, only about 10 percent of mobile applications in the Apple app store have been paid, and this percentage has been declining for years. For these reasons (rational justification), and especially because we liked the idea of offering free software (emotional justification), we opted instead for the model of freemium apps.

Free + Premium = Freemium

Freemium is a business model in which you give a core product away for free to a large group of users and sell premium features to a smaller fraction of this user base.

The goal is to offer a fantastic product with limitations. The basic feature will be satisfying to the point that customers can remain on the product for free. However, because we will offer outstanding user experience, we believe that with time they will be hungry for more – seeking out the paid product to enhance their experience and broaden their engagement with our services.

A common misconception is to believe that all business models that involve the use of free products are freemium models. There are three other business models centered on a free product, which are commonly used; direct cross-subsidy, ad-supported and gift economy. Chris Anderson’s wrote a great post about the four kinds of free.

If you are planning to build and launch a mobile application for the consumer market, attracting users and keep them “hooked” is what you should be concerned with. Business success will depend on raving fans, customers who will buy the premium version of your software.  In 2014, mobile apps with freemium models account for 98% of the revenue in the Google app store and 95 % in the Apple app store. With such facts, and because we will be competing with free anyway, it seems that only a freemium business model can emerge with success.

Getting a sense of fulfillment

I just finished Windows 8.1 UX Design Jump Start online training on the Microsoft Virtual Academy. One of the major learning from this training is to focus on the “less is more” approach. This approach was adopted by the architect Ludwig Mies van der Rohe as a precept for minimalist design.

In the “less is more” approach, it is essential to establish the “Great at” statement.  This involves defining in one sentence what truly differentiates your software from the competition. Your product should focus on the scenarios and features that deliver on that greatness. Nothing more, and nothing less.

For several years, I thought that limiting scenarios and features to support the “Great at” statement was the main justification for creating this statement. A book that I read last spring has totally changed my understanding of what is a “Great at” statement. This book is Hooked: How to Build Habit-Forming Products.

This book provides a fascinating process for creating products and technologies based on human psychology, persuasion, habits, needs, etc. It describes the techniques you can use to keep the users of your software coming back to it frequently. This book covers the psychological side of business, but does so for the modern tech entrepreneur and business owner, not for the modern psychologist.

When building a habit-forming product, start with the source of emotion then build the product around one habit that fulfill this emotion. Hooked is not only about making things into a habit, but it’s also about where to make things seamless, where to give a variable reward, and how to pull people back to your product through action triggers. I’ve never read a book that covers all of these subjects so well.

Cognitive psychologists define habits as, “automatic behaviors triggered by situational cues.” In this book, you will learn that building a habit consists of four parts: the trigger (make the user realize they must take action), the action (should be easy to achieve), a variable reward (keeps them coming back), and investment (leading people to engage and create value, which keeps them coming back).

After reading this book, I changed my approach to defining the “Great at” statement. Now, I start with the source of the emotion (eg, pain, joy, fear, etc.) – then I build the product around it (and not the other way around). I write the “Great at” statement from the point of view of the users, what they feel, and how the product will fill the emotional need they have.

In a previous post, I explained that the concrete measures and tasks presented in this book had greatly helped us during our last pivot. At the end of the pivoting process, after deciding to build a personal task planner, we developed the following “Great at” statement:

• Our product is great at getting a sense of fulfillment.

Our goal is to reproduce the positive emotion that makes you happy when you get an achievement. Our personal task planner provides a sense of fulfillment when a user acknowledges, commits and achieves a task. The scenarios and features must support this emotion. This is the narrative frame of our product.

In closing, I highly recommend reading Hooked: How to Build Habit-Forming Products. It’s a fascinating book, well-written read, and honestly – if you have a startup it’s a requirement on your reading list.

Customer Pivot

In my last blog entry about Slingboards Lab, I explained that through many business-hypothesis-driven experimentations, we discovered over the last twelve months that co-creation is not an intrinsic need for teammates. Creativity is mainly an individual journey.

As lean entrepreneur, this was the signal that we had to pivot our business model. As defined by Eric Ries in his book Lean Startup, a pivot is a “structured course correction designed to test a new fundamental hypothesis about the product, strategy, and engine of growth”. Startups are supposed to pivot 2,5 times average in their live time.

We first decided to apply a customer segment pivot by offering our product to individuals instead of teams. Secondly, we started exploring how we could simplify work decomposition while allowing to easily track tasks assignments using sticky notes.

What was interesting in our approach, now that we target individuals, is that my business partner Erik and me, we were the first customers that we wanted to satisfy. Being the designer and the customer, the pace of experiments was greatly accelerated. Rapidly, by repositioning the product to better meet our personal needs we also applied a customer need pivot .

A reading that helped a lot to our experiments is the book Hooked: How to Build Habit-Forming Products. This is book that every entrepreneur should read. In a future blog entry, I will cover in more detail why reading this book was central to our decision to pivoting.

The final result is the following. We repositioned the product to meet five new requirements:

1. Collect and gather future work in a backlog.
2. Decompose future work in subtasks
3. Assign or share future works
4. Schedule and confirm “daily” commitments
5. Celebrate the achievements of the day

So far, these five requirements  correspond to what we foresee. The journey is far from over. Stay tuned.

Slingboards Lab – Twelve months later, where are we?

Nearly a year ago, I introduced on this blog my new business project. Heavily influenced by our experiences with kanban and task boards, with my business partner Erik Renaud, we founded Slingboards Lab, a software publisher aimed at marketing these collaboration boards to business teams. Through the provision of slingboards, our startup brings sticky notes to smartphones, tablets and the web for empowering teams to better collaborate.

Being familiar with Lean Startup, a method for developing businesses and products first proposed in 2011 by Eric Ries, it was obvious that we wanted to apply this approach. A lean startup invest its time into iteratively building products to meet the needs of early customers in order to reduce the market risks and sidestep the need for large amounts of initial project funding and expensive product launches and failures. Startups begin their journey not by making money but by learning how to build a sustainable business. This learning can be validated by running experiments to test each element of the entrepreneur‘s vision.

In the last twelve months, we have done a wide range of business-hypothesis-driven experimentations. Here is what we have learned about the target customer:

• Programming platform: Our customer is not the programmers who build the collaboration boards. Programmers want to stick with their existing programing platform.
• Teammate: Our customer is not the teammates who use the collaboration boards. Peoples hardly describe themselves as teammate. Nobody gets a promotion or a salary increase because they are “teammate”. Teammate is not an appealing identity.

The more we tried to better define our target customer, the more we realized that our mission targeted a very fuzzy customer – teams. In addition, we were approaching teams on the theme of collaboration. Unfortunately, improving collaboration is not an attractive need for teammates. What we have learned is that collaboration is not a leitmotiv. People want things done, and in order to get things done, they focus on individual contribution, avoiding collaboration with shared accountability.
This learning took us back to square one. Our mission did not hold water. We were wrong when we thought there was a need to improve collaboration among teammates with a visual tool.

For several months we thought about this dilemma. We challenged our original mission. Again, we have done another range of business-hypothesis-driven experimentation. This time focusing around collaboration. By collaboration, we mean the one that’s intended to create “something” in support of a shared vision. It is goal-oriented, is not an individual effort and has a defined team that is responsible for delivering that “something”.

Here is what we have learned about collaboration:

• Collaboration among teammates boils down to the assignment and delegation of tasks.
  • Tasks get done by a single teammate. Co-creation by several teammates is not part of work habits.
  • If a single teammate gets accountable to complete a task, it usually gets done. A common practice is to always assign a task to a single teammate at a time.
  • To ensure tasks are done by a single teammate, tasks are splatted in smaller entities.
• Collaboration is almost synonymous with work decomposition and individual contribution.
  • Organizing and splitting tasks in small entities is an intellectual challenge. It is difficult to break-down large tasks by splitting it recursively into smaller ones until all of the remaining tasks are trivial. A common practice is have only one teammate taking ownership for this duty.
  • Splitting tasks is difficult because the knowledge necessary to do the job is acquired progressively, often shortly before task need to be completed. In many teams, upfront planning is challenging and almost impossible.

This learning teach us that teammates co-produce unit of value as individual contributor but hardly co-create or co-design as a team. Contrary to our hypothesis, it seems that co-creation is not an intrinsic need. Organizing work and splitting tasks takes all the space. This is where there is a need, a real opportunity. In addition, it should be noted that this opportunity is not a team requirement but rather an individual requirement express loudly by the teammate responsible for work decomposition and assignment.

What should we conclude from all this? Obviously, we should redefine our entrepreneur mission and align with what we have learned. Can we? Should we? Is it possible to offer a task board that will speak to individuals (not a team) and will simplify work decomposition while allowing to easily track tasks assignments? This is a stimulating challenge. It is time to make new product-hypothesis-driven experimentations. Stay tuned.

Building software to ensure cooperating teammates

In this post, I explain how a presentation from Simon Sinek has inspired us, my partner and I, to rethink why we create Slingboard. Discover what motivates us to start this new endeavor?

I recently discovered a very interesting presentation on TED by Simon Sinek, the author of the book “Start with why” published in 2009. I know I am late to the party.  This video has been published in 2010 and been viewed 11,742,371 times.

Simon Sinek has a simple but powerful model for inspirational leadership all starting with a golden circle and the question “Why?” His examples include Apple, Martin Luther King, and the Wright brothers.

Simon’s message is profound to say the least! I felt compelled to go back to the drawing board – not just in the work situation, but also in my private life! We need to know why we act as we are, what is our inspiration and motivation, even if it’s just for everyday things, or significant milestones in your life, such as why you marry someone, or why you start a company.

With my business partner, Eric Renaud, we seek to answer the question “Why Slingboard.” What motivates us as a company founder to start this new endeavor?

Here is the result of our thinking:

“Slingboard build software to ensure cooperating teammates”

This vision is the foundation we want to share with the people associated with Slingboard – customers, employees, investors, cooperation partners, etc. We understand that customers buy a product in the first place, but we want more. We want them to understand why we designed the product, in the hope that they will feel inspired by our vision.