The opening of the Studio mobile development "from scratch" in St. Petersburg — 3.5 years later. Reincarnation. Part 3
Hi again... continuing long read about our experience, without "embellish". The picture above is only for attracting attention.
Part 2 and Part 1 mandatory reading. No, of course, can not read, and only then safely skip this article :). In part 2 launched the survey, it is necessary to continue or not — the vast majority endorsed, and therefore meet part 3... by the Way, here's the paradox, for the sake of curiosity I placed a piece of material on pikabu, and you know what? Anything except "-20" for there karma. Afraid to do hasty conclusions, most likely there are people waiting for other material. I remind you that telling our experience of creating a company to develop mobile applications from scratch, remembering the 2 year experience and adding it to (upd.2016 — new look).
I in the review wrote that such knowledge sometimes pay 15K per hour. Holy smoke, apparently did not do so. It is necessary to go to business coaches-mentors-consultants-speakers. But I will be glad if this helps someone to succeed, not afraid of competition and in the last else — everyone has their own way, and a good path of entrepreneurship. We have a youtube channel, every day (work) we record a short video, sometimes even at the end of the day, our experience, without imagination, guile, etc. Subscribe, I will be pleased :) and you, hopefully useful.
So, let's go...
Financial results of work a few months after launch.
If you look at p/l until September 2013 to see a rise in the cost of payroll and purchases of fixed assets (administrative expenses — repairs, notary fees, office supplies, some operating systems not related to it, buns in the office, water, etc). But there is a portfolio on our website (humble of course).
(upd.2016 — here friends, honestly — well, never would do it again how we did 3.5 years ago, when we opened the business. Like children, really. We were just lucky that not being in the "store" key of the client (and preferably two), we managed to grow to 19+ people today. I want to write — we were smart, we clearly understand what the client needs, we conducted an analysis of the market, we worked 14 hours... crap. Complete crap. Yes, we worked, we tried, but the market was empty. And we were able to gain a foothold on it. But the market was empty in the part of competitors, since mobile app 3.5 years ago, the mass business segment was not needed as I do now. To create a similar business today? No. I would not. And then we just lucky. Tips I generally try not to give when not asked, but he would do now with other projects — for example, blockchain, bitcoin, VR/AR etc. Although it was too late, there is a huge trap in such promising projects is too long "valley of death". The market at the end of 2016 for the development of mobile applications has been formed, there are a lot of companies, they have a portfolio, etc. And even (!) there are ratings of mobile development studios — will speak, will speak about these ratings, but later. There is still a part of the opus in my mind :)
Legal costs — one-time, we engaged third-party organization to verify our agreement for the development of applications. The main emphasis was made on exclusive rights to the work result. Our working model does not involve the transfer of exclusive rights to the source code. There are several reasons, and most important — we have a Central server part, which is common to all projects, plus we are very "generously" teragyroid achievements one client to other. Transferring exclusive rights, we put ourselves too high a risk of possible disputes with customers. So we are providing non-exclusive rights and under the contract to do applications all that he pleases. For the time our work was not yet specific disputes with the legal departments of customers, because we are positioning the solution as a platform, to which you can connect.
(upd.2016 — let's face it — in Russia not yet established a clear practice of source code analysis software assessment — you used the following fragment of the previous works or not. Now we are giving exclusive rights for all customized developments, if they are not built on the basis of industry solutions for the trade. In the latter case, we transfer non-exclusive rights. But even in this case, the team develops best practices and code snippets that simplify work in the future. For all the time we have never been to court with clients and it plays a role in major tenders is essential)
The contract provides a clause according to which, if our company is unable to fulfill the obligations (bankruptcy), we are committed to give all the source codes and perform training of customer's specialists. It is noticed that most of non-exclusive rights you afraid of a little online shopping, while large companies are very calm about this. There have been requests for the source codes, and we have come to an interim solution that you can rely on the experience of the company 1c-bitrix: source codes for sale. But for a year and still never bought that allows to make a conclusion — the majority of companies only in words need the source code and exclusive rights to develop, and in fact they just need a working solution quickly and inexpensively. In fairness it should be noted that for a number of major projects with well-known brands, we, for some parts of the development, prescribe the exclusive right to the result. After a year of work, we have developed quite a loyal contract which is a contract for the maintenance of the underlying functionality. To him, there is additional agreement on the revision, which is documented in forms-order. This approach is quite convenient and clear to customers.
(udp.2016 — the contract had to be redone 10 times. But the latest project to build a Federal network of beacons iBeacon/Eddystone made me doubt that we have reached ideal :). Here's an example — if you have selected a team that is working on a project, then it's advisable to pay a tiny premium separately these people, for example at 1000 p per month and if the payment clearly indicate that the prize for participation in the project *** under contract ***. Why? It may be fatal in the event of litigation, the participation of various experts in a specific project and determine the right receiver of the work results. I do not think it is true that 90% of customers are fundamentally... Conclusion? There is no perfect contract and will always be adjustments. Well, nothing wrong with that. Why be afraid? I personally do not sign the contract with huge penalties that exceed 50% of the cost of development, especially if we are talking about the NDA. Have recently launched a major project, most of all "butted" with the NDA agreement, in the original version which sounded fine in 5, 000, 000. in fuzzy conditions of its imposition and the oral transmission of confidential information... I was thinking, but you can do business on such contracts!.. signed, and then filed a lawsuit, saying divulged my business information... why? A good business should be — very "majority"... in the case mentioned, the guys are perfectly adequate and we agreed on all the nuances of the NDA in the amount of fines, but I strongly advise you to agree to weighty fines in excess of your rate of return on a project or equal to the cost of the project. After all the work you can do, and then get sued and fined. Some customers ask to leave a "tail" in the amount of 10-20% of the contract value at the end of the project — this is normal, though it increases your risks. In General I will say this — the "drobne" will be able to cover all the project pieces, the better for you and the customer).
Early fall 2013 clearly crystallized the concept of our business. We take in only projects for companies in the retail segment, which sells via Internet and / or having a range that is available to order for pickup (that's me of course too clearly paint a portrait of the customer, there are different clients, but the basis — the range around which is built for the logic — loyalty, payment, push, etc.). We have developed apps for free, including design (of course, trying to rely on our experience) and the proposed 3 basic platforms: Apple iPhone, Apple iPad, Google Android. Quite unusual, but even considering the free development for Windows 8 and Windows Phone, customers rarely asked to do them and these applications. Support was 15 000 RUB. per month (excluding VAT, because we are on simplified taxation system) for all platforms.
(upd.2016 — that's nonsense what, in retrospect. Rather, it can be justified only on the stages of business if you have investment money. We were and the market was empty... and we were lucky and we stayed on it, and has grown to current status. But for myself, I have learned one rule — never can't do nothing for free. As for the support, now it is higher but worth it — the client ask questions constantly, frequent updates, ios/android there bring errors that you have to edit the Microsoft Azure cloud resources rising in price, etc. And Yes, we almost stopped making the Apple iPad and Windows apps — customers is simply not necessary. )
Gradually, we even ceased to actively offer these two platforms (Windows 8 and Windows Phone), because at that time, for us it would be quite prohibitive burden for developers, because there are deadlines prescribed in the contract (40 working days is naturally with a stock). By the way, I'll tell you that at the moment of writing these lines we follow the same approach to development, only made small changes, because the portfolio and developments already allow bit to improve conditions for us: the support is 18 000 RUB per month for all platforms, the development remains free, and the design, if we make ourselves — 18 000 RUB. for every single platform. In this way, customers don't really want to do the design yourself, though, seemed to be you can save. The conclusion is quite simple — the price issue is not so critical that the company has diverted internal resources to this work. To be honest, these figures are not the result of some thoughtful mathematics and market analysis, and empirical evaluation of the comfort level for the customer. But this approach only works if you are engaged in a narrow segment of the market and have experience in software code and in the General understanding of the processes of the customer.
(upd.2016 for 3.5 years have not seen, so that the client could make a prototype and design your own. Many have tried, but none did. This is understandable — not their job, they have a core business that diverts internal resources. In addition, we have 3 designer, who non-stop talk with developers in the design process interfaces to design a deliberately false story. The average project duration on two platforms ios/android now leaves about 5-6 months, not a very complex project. I want to note that in 90% of cases the client has no specification. And we propose to make a graphical prototype application and website, that, in fact, and which is the best job on the project. Recorded video describing this approach. It just saves us and we used for nearly all projects...).
Is a little to say that there is "basic functionality", which we offer for free. In fact, is all that is needed to launch the first version of apps for retail companies with delivery or pickup. And we are gradually expanding the basic functional capabilities, adding, for example — the output of related products, reviews, ratings of products, managing banners, push notifications (with my account), etc. of Course, no functionality will not close all the client's needs and often we ask a one-time payment for integration with back office (registration, authorisation, personal account and other "charms"). How much please? Here is just based on the experience of the figure is in the range 70 — 90 000 p. If that sounds familiar (1C-Bitrix, for example) is cheaper. Soon we will add in basic functionality interesting things like: geofencing a push notification when you log into the specified radius of the shopping center, payment cards directly from the application (bypassing the Apple Store with their Commission), etc.
(upd.2016 — working now. People don't want to take risks and willing to accept a proven solution on the market that works for others. The psychology of decision-making is very simple — it works *** on the same market segment, so it should work for me! Reduced time for decision making, increases the probability of making a successful project. And by the way this is absolutely normal practice of this approach strongly approve. Moreover, he offered the customer to make first version of the application is simple, without complex integration aspects and rich functionality, and then calmly develop, when it will be visible impact. The more complex the project, the longer it goes the greater the risk in it. I do very much like industry solutions with ready-made components that can be easily adapted to the customer. I think that the mobile apps market for trade and services will move exactly in this direction. Was at Web Summit in 2016 in Lisbon and noticed that a lot of designers websites that offer ready-made and easily combinable components for quick launch of the site. And it is claimed! )
Just want to disclose our business model, to show its pros and cons. First, the cons. There are two sources of monetization: improvements from existing clients and payment support (18 000 RUB per month). So we need to expand our customer base, at the same time as trying to convince the client to make progressive applications, using our expertise, not "falling" in any complex, multifunctional projects. Mostly it works, but there are exceptions. Any exception hampers our work, and we risk to go into the plane of pure custom development. Custom work will allow you to get a larger one-time payment, but it is very disruptive developers, that means the other projects will "SAG". But! Surprisingly, for a client of progressive work is a big plus too! Reduced risks, reduced time release applications in sufficient basic functionality that is beginning to gain customer base, there is a feedback, etc., Minus, natural, in the fact that we need to do the work, often without receiving any money that requires investment to fuel business. So I do not recommend this model work for the team, which is developing on its own.
(upd.2016 — twice already noted, that it is impossible to work without payment. It is possible to agree with the client the translational start of any complex project that he saw the results. We don't work in 100% post-pay at all. Recently lost the bid large trade company in a very a lot of work on mobile apps, as the company was not even willing to post on several milestones! Only in total surrender of the whole project. Lost, but was 3-ke selected companies, but I refused these obligations Is extremely risky and I would not recommend it to work "eat" all you want now, not when you do what the client wants. It so happens that the client asks to start work as soon as possible and promises to pay on the day. And these "days" last for weeks, and you work and work and then... the client apologizes and says "I take a pause to think again" :) — and you spent your time, and time = money. In any case — the more customers the better, that's the simple truth, which is confirmed by our practice. Why? There are constantly improvements and it generates a steady cash flow. And this "stream" will be your salvation in the hard times that must come.)
The pros? Concentration on one business segment (retail sales) allows you to feel at negotiations fairly confidently, because in the process of getting a real competence as the same app can help (or can't if the business is too lazy to promote them). Free development of the basic functionality — a definite plus and quite weighty. Often the client, not knowing the value of applications that are willing to try, that it is easier to budget 18 000 RUB. per month marketing than "knock out" the leadership of the one-time payment of hundreds of thousands of rubles, knowing that if it doesn't work with us, refuse. We are no obstacles to do that and the contract we have more than loyal. And I think the most important plus the company's retail segment have similar processes and any improvements (as they are regularly) can become part of the base functionality in the future, and the present — offered for little money to other customers (adaptation, in fact). For example, one company was asked to make a geofencing functionality. What's the point? We, through personal Cabinet on our website that allow you to configure push notification to different platforms if the person is entered in a given radius from your selected stores (say 500 m). To send push'eat? For example, a reminder on the promotion or mobile coupon... so little is that come up with a business. The company paid for a one-time revision of order 45 000 RUB., which is not so much because we understood the value of the functional for other clients. And Yes, indeed, many liked it, and people are asked to implement (we call this adaptation). Can't say that the improvements for one company always applicable for others, but roughly half of the cases it works.
(upd.2016 — looking back support — industry solution and the concentration of doing their job. We are now 90% of the projects in mobile application development do for the segment trade b2b/b2c and services. Projects are becoming more complex, but we have almost no tasks in the field of Telecom, AR/VR, video-streaming, TV, etc. — they go to other teams. And this is perfectly normal, because the customer is trying to reduce their risks. The more similar projects in the portfolio, the your position in tenders and negotiations more confidently. The main thing that was wide enough market. We are trying to enter the Western markets, the challenges get a lot, but there are a lot of specifics, which is still there prevents to be a successful company).
It is worth noting one feature of mobile apps which, I am sure, to readers of Habra familiar applications you need to promote. If we talk about the retailers that they, as a rule, with the channels of promotion not all bad. Typically a popular website where you can place different kinds of banner with calls to install apps, and most importantly a retail network with visitors. Even simple stickers with a QR code and brief information on the box office, can give good returns facilities. Paradoxically, often faced with the fact that the company received the mobile app, just too lazy to engage in active (and free) promotion, we then lamenting the small number of orders (even though we write the instructions with tips and how to do that). In General, analysis of the behavior of retail customers in mobile applications — a separate issue and a great post, now I note that the orders are for different categories of goods (preferably in the horeca segment, then, fashion and end Btie), and their amount varies from 20 000 p per day (fashion, average bill small, but high profit margin) to 600 000 RUB and higher for businesses shipping products (sushi, pizza) at home. Now through all of our released mobile application we see the turnover over 30 000 000 rubles per month, which isn't much for a good strong online store, but not bad for a young, in General, the industry called "mobile application retail companies."
(upd.2016 — we made a special website info.notissimus.com where are the figures for all our mobile trading applications. The aggregated indicators, because we can't disclose data of each individual client. So, the amount of money all sent orders for all of our mobile applications is 712 million rubles!!! These are honest numbers, we don't decrotive-fasten. Yes, of course, sales via mobile apps are still behind sales through the sites, but they are growing and this trend will continue. I saw the turnover in the amount of 5 000 000 rubles per day in a single project for shopping fashion network from mobile apps. On this site there is a lot of interesting generalized performance... really interesting to know more — what happens after the application will become ubiquitous? What technologies will define the vector of development for the next 5-7 years?)
Thought I would fit into 4 parts, but I see that their will be at least 6. The next part will tell you how we are looking for customers now and compare with how we were looking 2 years ago. In General — stay tuned, subscribe to the video channel at the time these lines posted a video about my trip to Web Summit 2016 in Lisbon... what makes interesting in the it field, the world!
p.s. For those who want to get much more information on the different tools on the Internet, we suggest you contact publications at http://startup.today
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