Apps are the new black. WIRED (in)famously concluded in September 2009 that the web is dead - all hail the new king: Smartphone apps. Apple’s iOS claims 1,000,000 apps in their iTunes app store. Google recently announced their own Play store reached similar numbers. And even Microsoft, lagging third in the mobile OS wars proudly touts 100,000 apps for their Windows 8 platform.
But is this all good business? Or to be more precise: Is this good business for developers and software companies?
On the surface it looks like it - Apple announced that they paid out more than $5BN to their developers. Sounds like big business. But once you dissect the numbers a bit a different image appears.
The problem has multiple facets: Apps are a strongly hit-driven business; the numbers of users (and thus revenue) drop dramatically when you go beyond the top 100 apps. There are a few winners and lots and lots of losers. Then you have to deal with a market where the average selling price is less than the price of a cup of coffee. It might be okay to sell only 1,000 copies of your app if you make $100 on each copy sold. In the app stores you make somewhere in the $1.50 range. And then you mostly don’t ‘own’ the customer. Usually you have no way to engage with your customer beyond your app. Which means you have little leverage in cross selling other products or services.
This makes for a pretty dire picture all in all. Ben Horowitz from the Silicon Valley VC firm Andreessen Horowitz recently told a group of entrepreneurs that he doesn’t invest into app businesses - as they don’t make enough money and are at the mercy of the respective app store operator.
If you want to dig deeper into the topic I highly recommend reading Loic Le Meur’s blog post on “How much can you really make developing mobile apps?” (and note that this post is now two years old!) and the Vision Mobile report “Developer Economics 2012” (free download). Quote from the report: “One in three developers lives below the app poverty line.”
So now - is this all bad? Well. It depends. Personally I don’t believe that the current app store model is sustainable over the long term. Having said that - more and more time is spent on mobile devices of all shapes and forms. Which means that there are clearly opportunities for monetization and exciting new business models. Which is what I believe we will see over the next 1-3 years: People trying things out, experimenting with new models, many of them failing - and eventually we will find ways to build sustainable business on the mobile infrastructure.
Time to get going and experiment!
Edit: The New York Times recently ran an article “As Boom Lures App Creators, Tough Part Is Making a Living” which comes to similar conclusions.
In April of last year I embarked on a journey to extend Mozilla’s reach into the wonderful world of startups and entrepreneurship. Together with our intern Didem Ersoz we created WebFWD, Mozilla’s accelerator program.
In the ensuing 18 months we built out the program, created a robust process, hired Diane Bisgeier as our Program Manager, recruited dozens of amazing mentors & subject matter experts and scouts from all around the world, ran more than 20 teams through WebFWD and finally brought Didem back as a full-time Program Manager.
Now it is time for me to move on.
I am extremely excited and stoked to take on a newly created role as Director, Office of the Chair at Mozilla. In this role I will work directly with Mitchell Baker, Mozilla’s Chairperson, focusing on expanding the scope of Mozilla into new constituencies and supporting Mitchell with her ongoing work of modernizing Mozilla project governance structures, raising Mozilla’s visibility globally, and generally governing the Mozilla project.
A few weeks ago I had the honor and pleasure to talk at TEDx Orange Coast about a topic very close to my heart: The shift in our culture towards true participation.
Here’s the video of my talk:
The full text of my speech including the slide deck can be found here.
And now for a participation challenge: TED will promote my video if we get some meaningful viewer numbers. Help me, participate and spread the video! :)
This summer I had the great fortune and pleasure to stay and mentor at the incredible Unreasonable Institute in Boulder, Colorado. During my weeklong stay I met, talked to and mentored some of the most amazing entrepreneurs I have ever encountered - all of them on a mission to quite literally change the world for the better.
During my stay I had the opportunity to sit down with Daniel Epstein, one of the founders of the Institute, and talk in a series of video interviews about my past experience as an entrepreneur, investor and mentor to startups of all colors.
You can find the complete series of videos here.
Here’s a little teaser - the first part of the interview series on “Why do Startups Fail”:
Fun fact: It was so unbelievably hot in the room (Boulder had a heat wave when I was there and the room was full of lights, easily turning up the temperature in the room to 100F/40C) - see if you can see the sweat dripping of my face. ;)
I keep saying this - you have to follow up with the people you meet and magic will happen.
Pretty much every time I am on a stage I mention the weird “law of following up” - I can guarantee you that only around 10% of the people I (or someone else at the conference) meet will ever follow up. This stuns me - you meet someone interesting at a conference or in a social setting and you miss the one opportunity to turn a chance encounter into a lasting relationship.
Up to this day I don’t have a good answer as to why this happens - the best I’ve come up with so far centers around the notion that people feel they don’t necessarily have anything to say or contribute in a follow up conversation. That’s BS! Here’s the deal - even if you have nothing to say/contribute at this particular moment in time, just be nice and ask to stay in touch. That’s the first step towards a relationship.
Today you are functioning in the context of your environment. You are your network. So better start building. And follow up for christ sake! :)
This week I had the amazing opportunity to speak at TEDx Orange Coast about one of my deep rooted passions - the participation culture, chaords and the principles which allow people from all around the world to connect, share, collaborate and contribute to make things better.
While the wonderful folks at TEDx are preparing the video of my talk, here is the full speech plus the slides I shared on stage.
It is important to note that I am merely the storyteller and literally stand on the shoulders of giants. My work is based on the amazing and visionary writing and actions of Dee Hock (founder of VISA), the thoughtful and inspiring leadership and work of John Lilly (Mozilla’s former CEO and currently partner at Greylock VC) and Dia Bondi, the best speaker coach the world has seen. Thank you!
Let me ask you a question. Do you recognize this logo? Did you buy your TED ticket using one of these? Do you have one of these?
Did you know that per year VISA processes 4.4 Trillion Dollar in payments, handles 64 Billion transactions and operates in well over 200 countries.
Do you think VISA is a financial institution employing more than 20,000 people worldwide?
In truth, VISA is an established, trusted global company that until just a few years ago, employed only 3,000 people in 21 offices across 13 countries. Strangely small for the impact they’ve had all over the world.
They’ve had that impact through delivering their service using an intricate web of a small core and a vast network of tens of thousands of connected local banks. A model of connected but sometimes distant nodes agreeing on core principles and yet fiercly competing for customers.
A model that functions in something VISA’s CEO Dee Hock named a “chaord” — the unity of chaos and order.
VISA’s model was prophetic. It was developed and proven nearly 40 years ago and right around the same time the Internet was born. And, when mapped, these two systems are nearly identical in their structure. Grown separately, but a reflection of each other.
Enter the age of participation. The action of taking part.
Germinating and growing on and through the Internet, the participation culture is its own “chaord” with a set of rules unique to itself.
It’s decentralized, open and inclusive — and not controlled by a single gatekeeper. It connects talents and passions all over the world.
So how can we define the participation culture? Participation culture is a culture in which private persons (the public) do not act merely as consumers, but also as contributors or producers.
Last year a Stanford professor opened his entrepreneurship course to the world. He invited students to not only listen to his lessons but also to openly share and collaborate through an online platform.
Literally thousands of students from all over the world joined this call — often coming from places far away from Stanford’s campus and from walks of life which would never be able to attend this institution.
These students not only learned how to be entrepreneurs — but became entrepreneurs. And went on to create dozens of companies which set out to change the world for the better.
These students were nodes interacting with distant nodes.
Today Stanford opens up more and more of its courses — instigating change all over the world.
But there’re more — and all without permissions granted by a gate keeper: The 99% movement, the Arab spring, fashion and sporting good manufacturing practices changed for human good, food handling, consumer product safety, child education, higher education, encyclopedias, flash mobs, crowd funding, micro loans - even car design or superbowl commercials… those who participate are the ones who begin to make the decisions — from politics to how our food is grown.
But it’s not only about revolt, only about political revolution. Like we saw from the Stanford class, it’s about participating in making things “better”. Solving problems that we’re compelled to solve, it’s about coming together and truly collaborating. But this kind of working together, participating requires us to show up ready to play but it’s rules.
To participate in a “chaord” we must tolerate that tension between chaos and order. For some of us that’s easy, for other’s it’s hard, and for some — it’s just plain confusing. So, let me share with you the “rules” of the system and help you engage. Whether you’re an organization, a single human or a cause — and either to participate or to attract participation.
Here we go:
Rule #1 – Make something magnitudes better than the status quo. Build superior products — as mediocrity is boring and exhausting.
People will participate when the stakes are high and the vision is clear and ambitious.
Nobody roots for something which is only marginally better. So be bold.
Rule #2 – People can’t just feel empowered, they must be empowered. That means that the decision-making process must be pushed to the edges. Allow people to make decisions. And allow the nodes in your system to route around the structure. Sounds simple and obvious but to some it’s a real switch: Nodes don’t ask permission.
Rule #3 – Allow participation and participate. Be open about your decision making process, allow people to participate and become part of it. If you let this happen, you turn outsiders, supporters and bystanders into committed insiders.
This is how you grow organizations build on the principle of participation.
Rule #4 – Treat and expect to be treated as a community of citizens. They are you — and you become them. This is the essence of participation.
It is these four simple mechanics which, when combined with the power of technology and networks will turn into unprecedented opportunity.
Adopting these principles is hard. If it’s not what we grew up in, it can take some letting go to engage in a meaningful way. And as we’ve all experienced one time or another in our lives, letting go of something to make room for something else, is a cornerstone of transformation.
So what do we have to let go of to lean into this participation culture - to leverage our own passion and the talents and passion of other nodes far across the world or right next door?
First, let go of command and control, it dies in the face of the participation culture. It can not survive.
Second, let go of perfection. Don’t wait for something to be perfect before we share. Set the vision, the big hairy audacious goal, and let participation happen.
Let go of hierarchy. This is a tough one — because it means that YOU are the one to grant permission and WE are fully empowered to insert ourselves and act on the vision or change we believe in. WE act on it. WE are the ones to work on the HOW the problem gets solved. There is no one to ask, no one to give you a key, no one who says you are either in or out. And, no one to take the “blame”. No king to behead if things don’t go as planned.
Let go and you’ll be nurturing and accelerating the evolution of new way of being.
Let me leave you with these last thoughts:
The participation culture is here. It is thriving, growing, emerging.
And like the Internet, it is connecting people and movements in a way we haven’t seen before.
Soon there will be too many examples to point to. Too many to say it is the exception, instead, it is my belief that it will be the rule.
So, today we have a choice to say “yes” to it and lean in, or say “not yet” and be dragged into this new way of being.
A global society of humans connected in a “chaord” participating, empowered and validated by hearing our own voice in this new world.
Yesterday I had the great honor and pleasure to present (on a very high level) Mozilla’s approach to Open Innovation and the lessons we learned along the way at the OPTIMIZING INNOVATION conference in New York City.
It was a fun experience talking to a group of absolutely amazing innovation practitioners from such amazing companies as KRAFT Food, Danone, DHL, Goodyear or Mattel. I definitely learned a lot and gained some very valuable insights into the innovation process at huge companies.
Here’s my deck:
This summer I spent a week mentoring the awe-inspiring startups at The Unreasonable Institute in Boulder, CO. During this time I toyed with the idea to create a mentor network of some of Silicon Valley brightest and match them up with social enterprises and budding social entrepreneurs. The aim is to help, accelerate, open our networks, inspire and provide hands-on support.
Jane and I have been doing this for a while now - literally from our kitchen table, working with such wonderful organizations such as Aunt Bertha, CASH Music, Goldie Blox and One Leap. Now is the time to give this effort more structure and prepare it for scale.
So it is with great pleasure and pride that Jane and I are launching Mentor for Good! Check out the website, help us spread the word, refer your friends to us if they do something amazing and want to change the world and get involved.
This is the first step along a long journey.
The German business magazine WirtschaftsWoche (essentially the German Businessweek) recently published a list of their 100 Internet thought leaders (the German headline is “Welche Menschen die deutsche Internetwirtschaft bewegen”).
They kindly added me to their list at position 55 - which was surprising (especially given that I haven’t spent pretty much any time in Germany for the last couple of years). But there you have it.
I feel honored. Thank you!
Head over to Fast Company to read my article on “5 Lessons For Using Open Innovation To Maximize The Wisdom Of The Crowd” - it’s one of my better ones (I think). :)
And please know - I wouldn’t have been able to write this article if not for the superior work of some of the smartest people I know. I couldn’t give them credit in my article, so I do it here:
I stand on the shoulders of giants.
My dear friends at Pollenizer recently asked me if I could write a guest post on their blog discussing the lessons we learned at Mozilla, which are particularly interesting for entrepreneurs and startups.
Head over to the Pollenizer site for the article and do let me know what you think of it!
Last week I was invited to speak at Stanford’s E-Bootcamp event about… myself. The invitation to the event read:
The event will feature 100 of the best entrepreneurial students around the world and over 50 of the most successful and inspiring Silicon Valley leaders. As an E-Bootcamp speaker, you will share your personal story and entrepreneurial spirit with our student participants. You will give two 20 minute presentations to two different groups of 10 students, leaving 10 minutes each for questions and answers with time for transitions. I believe the students will be excited to learn about your personal experience and insights from having worked at Mozilla and other startups.
It was an intriguing and interesting experience. Usually, even if I talk about my career and the lessons I learned along the way, I weave this into a broader discussion about some aspects of creating and running a business.
I decided to do a quick screencast to record the talk - probably it’s interesting for you. You can find the slides on Scribd as well.
A few weeks ago I talked at the inaugural tl;dr conference about “platform wars”. I recently was asked by the organizers of Russia’s Internet Forum to give the same talk to their audience. As we had to work with some nasty timezone challenges, we decided to go with a recorded version of my talk. Here it is:
Are you also wondering about the sky-high valuations and exits some Silicon Valley companies are seeing for a little while now? Well, consider this a black swan - they are anomalies, outliers - but not the norm.
In Inc. Magazine’s latest issue you find this neat little infographic - which is eye-opening: Only 2% of all private companies being sold in the time-period from 1995 to 2012 fetched more than $2 million. A whopping two thirds got sold for less than $250,000. And this doesn’t take into account that a whole bunch of companies never make it.
Now - this is all not bad news. The challenge is - human bias is to believe that your startup can be the next Instagram. Which leads to behavior which values user growth over profits - and, unless you win the startup lottery (and your chances are probably as good as playing the lottery), will bite you in the backside.
So - just focus on building an amazing product which users love. The rest will come. Don’t fret an exit. Ever. It will happen - or not. And if you do things right, it doesn’t really mater.