May 4, 2017

Why Bother Making An App?

I have an idea for an app. According to startup literature, I'm supposed to get initial fundraising from small-time investors, or "angel" investors, possibly with help from an incubator. Then, after using this money to build an MVP and push the product on the marketplace, I do a Series A round with actual venture capitalists. Now, the venture capitalists probably won't give me any money unless I can give them a proper financial outlook, user growth metrics, and a solid plan for expansion, along with a market cap estimation. Alternatively, I can just use enough meaningless buzzwords and complete bullshit to convince them to give me $120 million for a worthless piece of junk.

Either way, venture capitalists usually want a sizable 10-30% stake in your company (depending on if it's Series A, Series B, or Series C), given how much money they're pouring into a company that might fail. That's okay though, because my app does reasonably well and sells lots of copies on the app store and journalists write about it. Unfortunately, soon sales start tapering off, and ad revenue declines because customers either purchase the pro version or block the ads entirely. While the company is financially stable and making a modest profit, this isn't enough for the investors. They want growth, they need user engagement, they need ever increasing profits. Simply building a stable company isn't enough for them.

So the investors start pushing for you to be bought out. You get lucky, and your app would make a great accessory to Google Assistant, or Cortana, and you get huge buyout offers from Microsoft, Google, and Amazon, because they have more money than most small countries. Investors immediately push for you to take the most lucrative offer from whoever is willing to give you the most cash for fucking over all of your customers. You can push back, but your power is limited, because those investors hold a significant chunk of your company. At best, you can pick the offer that is least likely to completely destroy your product.

If you get lucky, your cross-platform app that worked on everything gets discontinued and re-integrated into one device that people have to buy due to vendor lock-in. If you aren't lucky, your app gets discontinued and completely forgotten about, until someone else comes up with the same idea and the process repeats. Maybe this time they'll get bought out and actually integrated into something.

Either way, your customers lose. Every time. They are punished for believing that a new app, by some new company, could actually survive long enough to be useful to them without being consumed by the corporate monstrosities that run the world. If the company founders are nice, maybe some of the employees walk away rich, but most of them will probably just end up trapped inside a corporate behemoth until they can't take it anymore and finally quit. In your efforts to make the world a better place, you've managed to screw over your company, your customers, and even your employees, because investors don't care about your product, they care about milking you for all you're worth.

But hey, at least you're rich, right?

3 comments:

  1. Now that I'm rich, I do it again, but out of pocket this time. Victory achieved.

    ReplyDelete
    Replies
    1. Then Google sues you for copying the idea they now own. Oops.

      Delete
  2. Hi Blogger,
    Blogs are competing for awards.
    A total of $30,000 cash prize-winning inter-blog competition has started. You have a great blog! So join you now. We will be honored to welcome you to this beautiful web-activity, which will be awarded to many bloggers. You are invited to the blog writers competition for May-June 2017. You have absolutely visited to get detailed information and to apply.

    Web : http://www.bloggercontest.com
    Mail : contact@bloggercontest.com
    Pbx : +441012950166

    ReplyDelete