The Underlying Impact of the “Apps” Phenomenon on VC-Backed Software Startups


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enthusiasm and creative energy is to have them work on a product for three years and then kill it before releasing it to the marketplace—something which happens with unfortunate frequency at the large enterprises. That kind of thing stings a developer’s sensibilities even more than bonuses or stock options foregone. For entrepreneurially-minded developers, the prospect of working on a project with 3,000 other developers is almost as numbing, and hence so many find the startup path undeniably more attractive. Under normal market conditions, anyway.

This developer’s “itch” needs to be scratched above all else. The desire to get a product into market that people will use and love. Along with that, the desire to get immediate feedback so that improvements can be made. Self-publishing a rapidly-deployed app scratches this itch faster and harder than anything you can do working at a big company with process-loving product managers, the goons from marketing and finance dictating the features they want you to build, and a board of directors detached from the day-to-day reality of the company.

The apps phenomenon has created a nearly-Utopian business world in which you don’t even need to build a “real” company with a sales force, funding, and an accounting department—things which are often beyond the capabilities and passions of the software creator type. With an iPhone App Store, your creations can be downloaded by thousands of users within days of completion. The entire creation cycle may be only days or weeks, occasionally months. In any case, an effort measured in two- or three-digit man-months and five-digit funding from Credit Card Venture Partners, not four-digit man years and requiring eight-digit VC funding rounds.

Often developers don’t even bother to incorporate or raise any capital to launch their apps publishing companies. Launching an app company is practically as easy as watering your plants. No interviews or negotiations, no office politics with the sales team, no commute, no office hours, no arguments over what kinds of snacks to stock the kitchen with—no fuss, no muss. A savvy, entrepreneurially-motivated developer can be in business, scratching the all-important itches in a matter of weeks. And thanks to the efficient marketplace distribution mechanism of the App Store, making a living off this becomes a possibility. The more apps you code the more money you make, and coding is what you love to do.

As every Girl Scout learns at the cookie sales table, “if you want to make a million dollars, come up with something you can sell for $1 and get a million people to buy it.”

So, among the many contributing factors to what’s broken with venture capital has been … Next Page »

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Ron Wiener is a six-time serial entrepreneur and an angel investor, best known for founding Earth Class Mail. He is currently “Chief Mechanic” at Seattle incubator Venture Mechanics. Follow @

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