Your app likely won’t make you rich

January 11, 2011

— Paras Chopra is an entrepreneur and the director of online analytics startup Visual Website Optimizer. The views expressed are his own. —

Sorry for crushing your dreams but your Web app for tracking happiness levels (or for “social-aware” to-do lists) is probably not going to make enough money to let you retire in Hawaii.

Many programmers and developers find making a Web app very satisfying and there is nothing wrong with that – as long as you are doing it for fun, it’s OK.

Making apps is the trivial part. Afterall, most are nothing more than a slick interface for CRUD (create, read, update and delete) operations. The key to making money is to find a market where people are willing to pay for those simple CRUD operations.

The usual approach for making apps (or “startups” as some like to call them) is this:

  • Have a “cool” idea
  • Implement it in X number of hours
  • Try to justify its need by finding users who may use it

I am just making up a statistic here, but I have seen nine out of 10 efforts losing hope after the third step and the Web app just languishes with the creator giving up on it after his initial euphoria.

That is the wrong approach.

If making money is the objective, I suggest going with the market-first approach (as opposed to idea-first approach). If you’re confident that you’ll be able to make a good product/prototype, I suggest taking the following approach:

  • Find an industry (ideally, an old fashioned one) where people are making money
  • Find the single differentiator which will put your app apart in the already established industry (read or research what pain points are still not addressed by top 3 solutions)
  • Make a Web app, market it, refine it based on feedback and monetize the app
  • Slowly incorporate all standard features expected out of a solution in that industry so you can shoot to be a market leader

Note that I never talked about the idea here. That’s because I believe in a market-first approach. Any sufficiently big market will give you tons of interesting ideas. Why do you need to come up with one of your own?

As far as finding industries that make money is concerned, look at the survey industry: did you know Survey Monkey makes $45 million a year in this (boring) industry? Then there are other players who are most likely profitable: Wufoo, Survey Gizmo, Kampyle, etc. So, instead of an image-gallery app, why not make a survey software specifically targeted at, say, event attendees?

Once your app is “ramen profitable,” fire all your engines and pivot as full-blown survey software.

The aim is to make money, not to justify your “cool” idea.


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Posted by Entrepreneurs: Locate the Market Needs, Then Create the Solution/Idea « ASPIRING FOR MORE… | Report as abusive

Great post. What resources would you recommend to start researching the most profitable industries and uncovering the pain points ?

Posted by kelraie | Report as abusive

Great article. Along these lines, the Idea needs to match up with an opportunity. Essentially, finding the market need as you mention. I would one additional step to your list. Prior to “Make a Web app, market it, refine it based on feedback and monetize the app”, I would suggest you conduct a feasibility analysis of your proposed app to your target audience. Validate that the direction your want to go and the problem you want to solve meets the needs of your intended audience. If so, then put the effort into app development. You are exactly right in this article. “Cool” does not sell – or pay the bills – in this market. People buy to satisfy a pain or a demanding need.

Posted by IdeatoExit | Report as abusive