entrepreneurship

Casual games aren’t enduring businesses

The conventional wisdom is not to invest in videogames because of its hit-driven nature. Only a handful make money and it’s difficult to predict which will. A company that produced a successful game may never produce another. Like a music band that’s a one hit wonder.

Videogame companies typically make a bad investment, because you want to invest in a repeatable business model. Not luck.

The traditional console games industry has combated that with franchises. Gamers who love a game will remember the brand and are more likely to buy the sequel. Grand Theft Auto, Halo, Madden, etc. are all examples of this.

Unfortunately, this strategy does not appear to work for mobile, casual games. Casual games, by definition, have simple gameplay. Is it possible for a sequel to feel fresh and new, yet still have the same simple gameplay?

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Microsoft overpaid for Minecraft by $700 million

Microsoft is acquiring Minecraft maker Mojang for $2.5 billion. I’ve got mixed feelings about the transaction.

The strategic benefits are questionable and financially, Minecraft is worth maybe $1.8 billion — a valuation which assumes a sequel is as commercially successful as the original, and which assumes the intellectual property rights founder Markus Persson took out of Mojang is part of the transaction.

A $1.8 billion valuation leaves $700 million that new revenue streams like additional merchandising, a successful movie, etc. are unlikely to cover.

The best possible explanation might be that Microsoft is using its foreign cash reserves to pay for the acquisition — money that would be difficult for Microsoft to use domestically for tax reasons.

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Android One is genius

Google is a smart company and Sundar Pichai is a smart man.

When Android One was first announced at Google I/O, I didn’t fully understand what the program did. New details have emerged in a BBC article, and I have to say, it’s genius.

I’ve consulted for an Indonesian company before interested in launching its own tablet. It was not an easy process. They had to meet many potential vendors in China, test an endless list of components and spend a lot of time haggling over price. Even then, prototypes were often disappointing from a price-to-performance ratio point of view. It was a huge management challenge, especially for a company whose strength is marketing and distribution.

The Android One program makes all that easy.

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Functionality isn’t necessarily usability

As I researched the Search Filter Host problems plaguing my Surface Pro 3 — which results in hot temperatures and low battery life — I am reminded that functionality isn’t the same thing as usability.

The search index is a good idea. Windows builds an index of your files as unobtrusively it can, so when you search for something, results instantly appear. It’s a wonderful thing when it works. This is an example of high functionality; all modern operating systems should have it.

However, Microsoft’s implementation comes at a sacrifice to usability. While you can specify which locations and file types to include in the index, Windows will try to index everything within those specifications. Good, right? Nope.

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Venture capitalists can do dumb things too

How dumberer can people get? Even accomplished investors can do really questionable things. Take Pavel Curda, a venture capitalist, mentor at an incubator and the founder of the API Mashup Contest. His dumb thing is meeting women at tech gatherings and emailing them the following message soon after:

One Woman Finally Calls Out a Tech Investor for Creepy Advances

Yep.

The crazy thing is that this must work sometimes, else why would he keep doing it right? Well, Pavel flew too far near the sun when he tried it on Gesche Haas.

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Most Americans don’t download apps

I’ve written about the difficulty of doing a mobile apps start-up before, and this report from comScore only reinforces that argument.

According to comScore, in any given month, the majority of US smartphone users don’t download apps…at all.

Yet, mobile app usage continues to grow; apps now represent 52% of time spent with digital media.

The conundrum is that while apps are ever more important, users aren’t downloading more of them. It’s a situation where the top 1% of apps rule the roost while everyone else flounders, struggling to get discovered.

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HTC is becoming like Color, the app that raised $41M and then died

Recently, an angel investor asked me to provide advice to a start-up in which he was the sole investor. I researched the space and came to the meeting with a hypothesis on why they weren’t doing well: the product was bad; they scaled too quickly, at one point with 50 people at the company; tried to do too many things, etc.

The founder, investor and I met up at Starbucks and after a couple hours discussion, the investor shocked the entrepreneur and me by declaring that — based on what he just heard — he’s going to liquidate the company. Wow! He later clarified with me that he was already thinking it, and wanted to get my input before he made a final decision.

I just hope I don’t cross paths with the entrepreneur…or if I do, to make sure there are plenty of witnesses around in case he decides to take violent revenge!

I share this story because something in the news about HTC’s new business unit, HTC Creative Labs, which created apps like the ZOE on HTC One, caught my eye.

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Starting a phone company? Here’s a blueprint for success

Xiaomi and OnePlus proved that it is possible to start a successful smartphone company, even with limited resources. Here’s their strategy in a nutshell:

  1. Create a compelling product for tech enthusiasts
  2. Sell it direct as a loss leader
  3. Limit production to create scarcity
  4. Build awareness and demand
  5. Sell profitable related products and services
  6. Scale production once component costs drop

Small Chinese companies like Xiaomi and OnePlus were able to create markets even while competitors like Apple and Samsung spend billions in advertising their smartphones. Their success is a blueprint for others to follow, whether you’re running an established smartphone company or starting one.

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Why hiring freelancers to build your app is a bad idea

I’ve got friends doing mobile app start-ups, and a couple of them rely on freelancers to develop their apps despite my advice not to. What I’m about to write is a generalization — not all freelancers are bad of course, but despite honest intentions, it’s usually not a good idea to hire freelancers to build your start-up’s app.

The reason is this: Incentives aren’t aligned. Entrepreneurs want a high quality product, one that will require many iterations. Freelance developers want to complete the project as quickly as possible. You will get a lot of unhappiness as a result of these two differences.

Prior to feecha, we built digital products for companies, so we understand the pressure freelancers face. The biggest cost is time: the more quickly a freelancer can complete a project, the sooner she can receive payment and move on to the next project. So it’s in her best interest to define the project brief as exactly as possible and deliver not much more. Every time the entrepreneur wants to change something, it comes at the direct expense of the freelancer; unless the freelancer can convince the entrepreneur to pay more. Not an easy conversation.

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Why doing a mobile app start-up is a bad idea

“You have to be in mobile,” venture capitalists will instruct you.  “We have to be in mobile,” tech giants like Facebook, Microsoft and Yahoo will echo.  Obviously, it’s because we’re living in a mobile-first world.

Yet, becoming the next Instagram or Snapchat is insanely difficult and increasingly so.  A hit app is a rarer unicorn than a hit website.  Why?  Unlike websites, apps aren’t linked to each other; you can’t click on a link to discover a new app, you have to purposefully search and download it from the app store.  Then you have to learn how to use the app before finally getting some value out of it.  Some apps — especially on Android but even from bluebloods like Facebook — behave badly and mistreat your phone’s battery or privacy settings.

The result of the above is that, according to Nielsen, most people use only 30 apps on their phone.  What are the chances your mobile app can make a person’s top 30?  Let’s break down how difficult a threshold that truly is.  What are the 30 apps you’d typically use?

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