Scott Matteson explains how an Android application was conceived, funded, and created in this case study.
According to appbrain.com there are currently well over 600,000 Android apps available today. Each of these applications is like a book in and of itself; it tells a story not only of its purpose and function, but how it came to be. Sometimes the story behind the scenes is just as interesting as the application itself.
In a perfect (and boring) world a developer would get an idea for an Android application early one morning, have it planned out during breakfast, coded by lunch, bug-checked by tea time and released to the public by 5:00 pm. He or she would then spend the next few months enjoying 15+ minutes of fame (along with a good income) as the much-heralded creator of the latest sizzle in the public frying pan. Sounds like how Angry Birds must have come about, right?
Well, things don't work like that in real life (something I often remind my kids, who have grand notions of being video game testers and movie pre-screeners for six figures). Even the story of Angry Birds is a complex one.
The seeds of an idea
I recently spoke with Sohin Shah, who last year came up with the idea for Valuation App, a financial tool for Android which allows users "to perform complex calculations and valuation techniques from their Android devices - to thoroughly analyze businesses and start-ups." Sohin was an investment banking analyst at the time (and is currently the founder of a startup called iFunding) and saw a business need for his app which he sought to turn it into reality.
"Working as an analyst, I spent all my time working on pitchbooks and spreadsheets, trying to build financial models and perform valuations. These spreadsheets were HUGE," Sohin said. "Also, a challenge that I faced was that whatever was taught to me at school was all theoretical. I had never been exposed to a financial model that was used by real professionals. It was completely different from the models we built in our classrooms. There were apps for everything else, but no app for finance professionals to help them with different valuations and startup analysis. So I decided to build custom spreadsheet templates that could be helpful with most analysis. Valuation App was thus conceptualized, with a vision to reimagine spreadsheets."
Bringing the concept to life
Sohin knew what financial content he wanted to work with, but needed to structure this in the form of an application. He also knew he'd have to get a developer to create the app when he'd finished the structure. This would require funding and marketing.
He sketched out the interface he had in mind, with the options he wanted to include:
Sohin then worked out how users would navigate through the application and how to fit the results into a small screen so that they would be readable. During this process he revised the interface further to match the evolution of his idea:
After planning out the app functions Sohin's next step was to figure out which mobile OS on which to develop Valuation App.
Determining the platform
Sohin needed to consider whether the application should be coded for iOS or Android (or perhaps both?). These are the two largest mobile platforms so it made sense to focus on one of these. Research indicated that getting the application to the Apple store would be a much more convoluted process than developing it for Android. He had heard of long delays after people submitted applications for Apple approval, whereby they hadn't received a response for weeks or even months.
"This can be a huge setback if you've raised money from backers; they might start asking for a refund," Sohin said. He found the time to life for apps to be much quicker with Google. Also, since "students were a big part of my target audience, I knew that not all of them could afford Apple products. Android was available on smartphones that had a lower price point, which made it appealing to many young individuals," he stated. He paid the $25 Android developer fee so he could prepare to release Valuation App to the Google Play store once it was ready.
Determining the pricing
Sohin opted to release a "Freemium" version of the application, whereby basic features would be free and more advanced versions would involve a minimal price tag of .99 cents. This makes sense to allow prospective customers to try the product and easily buy it if it fits their needs.
Raising the funding and promoting the product
Appbackr.com is a website devoted to enabling "app developers to find backers who can help fund applications and drive sales." Sohin had experience backing other people's applications, and thus had familiarity with the site and the benefits it could provide. In the summer of 2012 Sohin listed Valuation App on Appbackr as a "concept app" (now called "pre-release app") to build funding for it. This was truly an initiative "from the ground up" and the beauty of this endeavor was that Sohin was able to engage and interact with users in every aspect of the campaign.
Sohin knew that obtaining funding would have to go hand-in-hand with marketing Valuation App, since each initiative would drive the other. He had observed that games and social apps tended to get funded very quickly, but knew the task would harder for a financial application and thus would have to go all out.
"I had no screenshots to share, nor did I have any content to present which could help individuals envision what the app would look like. So I pitched my campaign around the potential for such an opportunity and got a cheap video made for $5 to make my campaign look more credible," Sohin said. "The benefit of a platform such as Appbackr is that it allows individuals to participate in opportunities that they believe in, and not have to risk a lot of capital (the minimum amount required for my campaign was only $11). This is what is referred to as 'Crowdfunding'."
Sohin also used LinkedIn Groups to advertise his concept, came up with another video featuring a likeable puppet character (who turned out to be a hit; from a sociological perspective using a funny or endearing spokesman is often a great way to get audiences to remember your product). He created t-shirts and tote bags to market the product, and even posted physical ads nearby such as in a Laundromat.
As Sohin began gathering funds he discussed the concept with many developers and eventually locked in an agreement with one of them to build the app. "The first thing we did was to get designs made for the app, feedback for which was provided by the product's Facebook page. The designs were thus "Crowdsourced." It took two weeks to complete the designs and after Sohin uploaded them to the campaign page he saw the funding start to gather steam. He even received a sizeable financial backing from the CEO of Appbackr himself! Appbackr later formulated a case study based on Sohin's campaign on their site and also discussed the subject in an article titled "Backing Valuation App to Buildout Your LinkedIn Profile."
All told, Sohin raised $1100 in 10 days, and totaled $3400 in two months. Backers of Valuation App shall receive a 54% profit on their investments.
Getting the app up and running
Finally, the easy part came (well, slightly easier anyway). It took a few weeks to build the application, and then the testing phase took a bit longer - five weeks total, in fact. As is always the case with software, each iteration had bugs and issues which needed fixing before the product was ready.
At last the final version of Valuation App was unveiled.
The free version provides access to Beta, Capital Asset Pricing Model (CAPM), Weighted Average Cost of Capital (WACC), Free Cash Flows (FCF) and Time Value of Money (TVM). The other features are provided in the $.99 paid version of the app. There is a Glossary of terms included with the application and the ability to save results as CSV files.
Within sixteen hours of submitting Valuation App, it was available in the Google Play store!
What lessons were learned?
Developing something from the ground up leaves you with an array of new skills. Sohin states: "The experience taught me a lot and transformed me from a 'wantrapreneur', to an entrepreneur. There were things I didn't know, like marketing, blogging, etc. But as an entrepreneur, 'not knowing' is not an option. Since my app is so technical, it was crucial for me to educate the audience to be sure that I could reach out to a wider pool of people. The best way to do so was by blogging about different topics. I also learned how to interact with investors and understand the criteria they look for. Best of all, 'Crowdfunding' was all over the news just around the time I crowdfunded my app, and I was approached by numerous individuals to work with them. I was even offered part-time jobs as a crowdfunding consultant."
Sohin is currently working on improving the Valuation App interface for Android, adding some more features, and also releasing the app on the Apple store in coming months. I wish him the best of luck, and thank him for his participation in this discussion of how his Android app was born and raised.