In our previous article, we talked about the ways in which you can test and improve your business idea for a mobile startup with an MVP. If your MVP passes muster on the market, congratulations. Now it’s time to take the next step.
Lots of startups think that this is when you can head towards monetization in full gear. However, focusing on making money rather than growth may doom an early-stage startup from ever achieving scale.
Had Facebook applied an advertising business model early on, I doubt it would’ve reached the universality that it enjoys today. Instead of focusing on money from the outset, they
- grew a larger user base
- collected detailed demographic information
- invested in building a powerful platform
And only after that did they start displaying highly-targeted ads. Facebook’s experience suggests that you need to focus on your product and its users.
In order for your startup to truly generate worth for your users and yourself, your product needs to be developed further.
Iterate to monetize your startup effectively
The ultimate revenue model, when you create a mobile startup, may differ greatly from what you planned.
Before launching our countdown app, My Day, we intended to profit from the pro version for unlimited events. However, this idea didn’t work out. After our attempts to monetize My Day failed, we made the app completely free and started working on its improvement. As a result, our users stayed with the app, which led us to consider other monetization strategies like advertising and in-app purchases.
A defunct startup called Springpad, which was once considered an Evernote rival, has an interesting story to tell. The app was designed as an organizer for recipes, movies, home improvement projects, and interior design schemes and was expecting to monetize just like Pinterest — through an affiliate program.
On Pinterest, if you pin an item from a site with an affiliate program such as Amazon, Pinterest modifies the link and adds its own affiliate tracking code. Every time somebody clicks on your pin and makes a purchase on Amazon, Pinterest gets paid. Pinterest’s visual discovery tool does great using this strategy, but Springpad could not reap the same benefits. They launched in 2008, before the mobile app economy fully bloomed.
Springpad arrived on the scene too soon, and after Pinterest entered the market it was already too late for them. You need to offer something your users want now.
Keep up the growth rate
A lack of determination to lead a startup through to the end, which is often called an “exit”, is not rare. Unless you grow, you are not a startup. However, growth can be deceptive if you measure the wrong metrics.
We suggest you to stick to the pirate AARRR startup metrics model developed by Dave Mcclure. AARRR stands for acquisition, activation, retention, revenue, and referral.
But you should also figure out what exactly it means for you to grow. Does it mean increasing your user base, making the loyal users happy, making a larger profit, developing your technology, or is it something else?
According to Paul Graham, a good growth rate during Y Combinator, an American seed accelerator, is 5-7% a week. He says if you can hit 10% a week, you’re doing exceptionally well. If you can only manage 1%, it’s a sign you haven’t yet figured out what you’re doing just yet.
If you don’t feel like you have a good handle on what it takes to develop an MVP for your game — changing idea, reach out to the Yalantis team. We offer consulting services to startups looking to make a splash.