By Kelly Richardson, co-founder of Infobrandz. She likes to help people build businesses through visual communication & her influential blogs.
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Global mobile app spending in the Apple App Store reached $92 billion in the third quarter of 2022, and the same is projected to reach $161 billion in 2026, with Google Play generating an additional $72 billion. Similarly, global mobile app downloads are also on the rise.
But the reality is something different. The global mobile app exits of developers are also rising.
With each passing day, more developers are walking toward the exit point and selling their apps to cash out their digital assets and move ahead. According to Crunchbase, back in 2008, more than 1,830 founders had exited their mobile apps, and from there, this number rose and rose. A Forbes expert also discussed why over 50% of mobile startup ventures fail.
Let’s get into the darkest corners of the ‘mobile-first approach’ brands that closed their doors.
There are many reasons why developers may choose to sell their mobile apps and digital assets.
Here are some scenarios:
• Developers may simply be looking to cash out on their investment and move on to other projects.
• Developers may be facing financial difficulties and need to raise quick cash.
• Developers may be looking to exit the market for personal reasons or because they no longer believe in the potential of their apps.
So, are there other reasons? Technically, yes. Three fundamental reasons that I have experienced are:
• There are too many apps. It’s becoming harder to find an excellent mobile app in this app jungle.
• Expensive app creation. Creating apps is becoming more expensive for developers and founders as mobile app engines are getting more expensive with their new services and features.
• Growth ceiling. Growing beyond a certain point is extremely difficult. It requires hiring, uniting and leading a big, expensive team of mobile experts. Not everyone has the financial and managerial ability to do so.
• Raising money too early. Founders make these mistakes pretty often. They tend to raise funds for their newly launched mobile apps before these launches cross the line between just a hypothesis to market demand generation. These core financial mistakes propel them to early app closures.
There is another layer to this riddle.
How do developers judge the best time to exit their mobile apps?
Admittedly, the right financial decisions at the right time push developers toward the economic viability they seek from their mobile apps. According to this startup failure postmortem analysis report by Bluethrone, funding has been one of the major players behind early mobile-first startup closures; most importantly, the founders had seen that coming. They sensed it.
Now, this is extremely similar to developers selling their mobile apps after they had sensed that app exit was the best step to take.
So, how did the mobile app developers sense that their exit was near, and what were those early signs?
Let’s analyze the cardinal signals.
• Differences between development and financial success. Most mobile developers are one-person shows. They failed to understand that developing a mobile app and making it a financial success are poles apart. So, they developed their apps. They tried to market them and failed. They saw thin financial growth for a long time. And they understood the whole story that it’s the best time to sell their sinking dreams.
• Even for a group. Let’s say the same thing happened to a group of friends turned mobile app developers. The early sign was the same to them, too. They sensed it and quit.
• User engagement. It’s one of the most significant indicators for mobile app exits. Many developers build mobile apps with great features without proper market research. The result is a feature-rich mobile app without the features that customers are looking for.
• Cash burn. This is also an important indicator to exit your mobile app. At times, the development, maintenance and marketing expenses of a mobile app burn deep holes into the pockets of developers as if they are feeding an elephant. Before you decide what may be happening with you, focus on the mobile app cost. If your app is worth less than your running budget, it’s time to sell it and move on.
The key parameters are:
• App downloads/userbase
• App’s business verticals
• User lifetime value
• Customer acquisition cost
• App’s growth rate
• User engagement
A few more signs to keep an eye out for include your team and adaptability.
• Team
You can not develop every part of your mobile app yourself, especially when it has an array of features that are too heavy to bear on your own. The obvious answer to this is to have a versatile team. Now comes the issue of collective team performance. Are they gelling well? Are they moving ahead like a Ferarri?
If not, then no matter how much you try to push your mobile app toward financial success, it will not happen.
• Adaptability
It’s a no-brainer. Is your mobile app continuously refining its features to address ever-changing customer demands to stay in the race? Is your mobile app adaptable to new technology changes and market demands? Are you stuck there? It may be time you consider the exit door.
So, how do mobile app exits help founders?
According to Ben Kerschberg, a Forbes expert on mobile app development, “failure leads to knowledge, and knowledge in turn leads to smart mobile applications.” There are feasible benefits of mobile app exits for the founders and developers.
Developers/founders can liquidate their digital assets. Founders can move ahead with new ventures. And they can gain invaluable experience from the mobile app acquisition process and understand this market for future transactions and app takeovers.
Takeaway
Undoubtedly, timing is the baseline for success for a significant chunk of mobile apps and startups. Thus, a timely exit is also an intelligent move founders and developers should make to pursue their journey to design products that address the diversified pain points of different user segments.
