What is success for consumer mobile apps?

Every startup wants to be successful, and everyone wants to know who else is successful. But what does “successful” mean? How do we know when we’ve made it? How do we know we’re on track to be successful? This is what I want to explore.

One thing you quickly realize is that success not a one way trip. Running a startup is like swimming in the open ocean in the middle a storm. Success is the gasp of air you get as you’re thrown from wave to wave. Eventually those gasps become more regular, and hopefully you’re soon sailing under clear blue skys. Until the next storm comes along and capsizes your boat, or another bigger fast boat takes you out, or your boat springs a leak out of the blue. Or you just drown. Avoiding drowning, getting those gasps of air, and finding that clear blue sky is what we’re after.

I believe there are there are four thresholds for success in the consumer mobile app space:

1. Revenue (e.g. we’ve built a sustainable business)
2. An exit (e.g. you’ve been bought by Google)
3. Third party validation (e.g. investors think we’re successful so we’re successful)
4. A personal definition (e.g. I want to change the world)

Revenue

You’re making money. Maybe you’re even profitable. Congratulations! You’ve now gotten further than 99% of all startups. You’re definitely successful right? Maybe. How much revenue before you’re successful? Must you be profitable first? How profitable? How long must it last? Looking through the lens of our swimming metaphor above, any point at which you’re on pace to be sustainable as a business, where you can breathe, should be seen as success. It may not last, and there are different degrees of success (e.g. a life-style business that is happy with small profits vs. Amazon investing all revenue for years to scale higher), but getting your business over that threshold of long term sustainability (even once) should be seen as having attained “success”. Though as we saw, success if fleeting, and if you want to avoid ambiguity you must maintain that success for a (yet to be determined) period of time. Unless of course  you experience…

An Exit

Someone bought your company! Woohoo! It’s all caviar and champagne from here on out. Success for sure. Maybe. Externally, this is almost universally seen as a success. Personally though, this very much depends on your own definition of success (see below). Often times (especially recently) companies are bought for their talent (not their product) so unless you were starting a company as resume juice there’s a reasonable chance you don’t feel great about the end result. Nonetheless, an exit is an exit, and in the mobile consumer startup space an exist is the most concreate way to measure success. If you’ve made it this far, well done! This is the end of the sailing session, you made it to shore, and now you’re on to the next swim.

Third party validation

If perception is reality, then perception of success if success. Normally, judging your success based on how others perceive you is not a good thing. However in business it’s a matter of life and death. You must appear to be successful, or at least be on the way to success, to raise money, to hire quality people, and to close deals. What makes you appear successful, specifically in the world of consumer mobile apps? I posit that it is a combination of:

1. Users (total, and growth)
2. Retention (cohort-based trending)
3. Revenue (trend)
4. Press/buzz
5. Your pitch/vision

Each of these categories deservers their own blog post, but the reality is that I’ve found very little public data revealing what is good and what is great for each of these metrics. Are you perceived to be successful with 100k users? 10k new users/month? 20% weekly retention? Fred Wilson has an insightful post that described what retention metrics he’s been seeing, and that’s about the best data I’ve found. If anyone has better data, or has heard VC’s discuss their benchmarks for various stages of companies, I would love to see it. As I discover more, I’ll be sure to post it here as well.

A personal subjective definition

The more I think about it, the more I realize this is the ultimate measure of success — your own definition. No matter what happens, you’re only successful if you think you’re successful. This is influenced of course by how others view you (see above), but it comes back to your personal goals. Maybe your bar for success is being able help kids in Africa. Maybe it’s being able to buy your parents a house. Maybe you’ll know it when you see it. Whatever it ends up being it’s important to set that bar early, or risk running a treadmill with no off switch. My personal bar is to create something of lasting value, and to make a (positive) dent in the universe. It’s vague, it may be corny, but it’s the thing that motivates me to keep swimming, to keep looking for those gasps of air, and to hopefully find that clear blue sky.