There’s a new pot of gold at the end of the rainbow and it’s called a tech start up. Governments and first-year IT students alike believe that billions of dollars are just a groovy name away. It could be Wavr – an app that tells you where the best waves within 50km are breaking in real time. Or it could be MoovnIn, which links up your calendar, rental properties, desirable locations, local removalists, your electricity and phone companies – even the weather forecast – then tells you exactly where and when you should move. You create these tech wonders, go through a few rapid iterations, then sit back and watch the money roll in.
It’s a nice idea. But some pundits claim 90% of start ups fail, and that’s because after the fun of the initial idea wears off, there’s not much substance left behind. Start ups can be like fairy floss – it smells good and looks nice, but ultimately it’s just a teaspoon of sugar. Here are four things people believe about tech start ups that seem right but are plain wrong.
1. Customers will find you
Sure, traditional business models have crumbled in the face of the internet and the free distribution channels it offers. But just because you have 5,000 friends on Facebook and more followers on Twitter doesn’t mean those contacts are going to translate into customers. It might be much easier to distribute a digital product, such as one of the apps mentioned above, and you could get lucky by creating a viral video that gets liked by Bill Gates. But there are millions of people around the world just like you who are hoping to do the same thing. Don’t rely on the internet to do your work for you – think carefully about how your product stands out from the herd.
2. You have created something everybody wants
You invest your savings in MoovnIn, only to discover that most people don’t want their choice of dwelling taken over by an app. It catches on with a handful of inner-city uni students and hipsters, but there’s not enough interest to keep updating and developing, and eventually the project folds. There’s a difference between you and your friends thinking something is a great idea for an app and the general public thinking the same thing. It’s like the difference between The Beatles and The 13th Floor Elevators. The former made music that appealed to everyone, from teens to hipsters to grannies. The latter specialised in psychedelic trip music that included someone playing the ‘electric jug’. Enough said.
3. You will make money straight away by selling your app
The most successful apps are freemium, which means you offer them free, but to get better functionality buyers need to make in-app purchases. In other words, it’s a try before you buy approach that lets customers explore the app before deciding whether to make it part of their lives.
What this means is that your dreams of making billions in the first year will have to placed on hold as the returns will come slowly as people pick up on the app’s usefulness and begin to (literally) buy into the concept.
4. Your app will connect with the real world
You believe in your app wholeheartedly, but that doesn’t mean it will automatically connect with people and they will ‘get’ its usefulness straight away. Concepts work best – and sell best – when they are familiar to people in some way. For example, cloud-based online faxing that takes over from the familiar office fax machine in a 21st century way, and also allows users to send large files online. Or an app that allows people to fax from a smartphone, so that they can send and receive a fax from literally anywhere there is an internet connection.
By making familiar technology new, researching a need, developing a customer base and allowing customers access to your product for free, you can take part in the tech start up revolution – as long as you don’t simply assume your pot of gold awaits!