How to Build a Billion Dollar App: Discover the Secrets of the Most Successful Entrepreneurs of Our Time

411 Pages·2019·2.72 MB·English

by  George Berkowski

‘A practical guide on how to start your mobile app company. A must read for
anyone who wants to start a mobile app business’ – Riccardo Zacconi, Founder
and CEO King Digital (maker of Candy Crush Saga)

‘The first book to take a detailed, insightful behind-the-scenes look at the mobile
app world. A must read for anyone who wants to know what it takes to build an
app into a successful business’ – Hugo Barra, VP, Xiaomi and former VP
Android Product Management, Google ‘George Berkowski knows from the front
line how to build fast-scaling digital businesses. Don’t start one of your own
without taking his advice’ – David Rowan, Editor, Wired magazine ‘A
fascinating deep dive into the world of billion-dollar apps. Essential reading for
anyone trying to build the next must-have app’ – Michael Acton Smith, Founder
and CEO, Mind Candy (maker of Moshi Monsters) ‘I loved this book. It
provides an entertaining and rigorous yet very practical guide to success in the
brave new world of mobile technology. I will never look at apps the same way
again’ – Bill Aulet, Managing Director of The Martin Trust Center for MIT
Entrepreneurship and author of Disciplined Entrepreneurship

‘George has combined his own experience at Hailo with a thoughtful study of
the iconic mobile companies of this era to provide a helpful guide to
entrepreneurs and investors trying to understand the emerging mobile economy’
– Adam Valkin, Managing Director at General Catalyst Partners

‘Distilling lessons from the leading mobile internet startups, George offers
unique insight into the app economy, the biggest and fastest wealth-creating
opportunity in history’ – Paul Forster, Co-Founder and former CEO, Indeed ‘In
his new work, George Berkowski delivers a compulsively readable business
book; it’s a rollicking yet rigorously detailed ride through the process of creating
a breakthrough app-based business. Berkowski’s engaging account of the rise of
the app economy provides an insider’s view on entrepreneurial best practices, as
illustrated by first-hand insights into the people – and their ventures – who have
triumphed by exploiting the mobile revolution. It’s a richly rewarding read’ –
Jeffrey F. Rayport, Faculty, Harvard Business School

Copyright

Published by Piatkus ISBN: 978-0-349-40138-6

Copyright © 2014 George Berkowski The moral right of the author has been

asserted.

All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, without the prior

permission in writing of the publisher.

The publisher is not responsible for websites (or their content) that are not

owned by the publisher.

Piatkus

Little, Brown Book Group
100 Victoria Embankment

London, EC4Y 0DY

www.littlebrown.co.uk

www.hachette.co.uk

To my parents, and Kasia

Contents

Copyright

Dedication

Acknowledgements

Preface

Part I: Think Big

1 The View from the Inside

2 Mobile Genetics

3 A Billion-Dollar Idea

Part II: The Journey

4 It’s Bloody Hard

Step 1: The Million-Dollar App

Building a Founding Team, Validating Your Product and Raising Seed Funding

5 Let’s Get Started

6 Solving the Identity Crisis

7 Getting Lean and Mean

8 App Version 0.1

9 Metrics to Live and Die By

10 Let’s Get Some Users

11 Is Your App Ready for Investment?

12 How Much is Your App Worth and How Much Money Should You Raise?

Step 2: The Ten-Million-Dollar App

Achieving Product–Market Fit and Raising Series A Funding

13 HMS President

14 Make Something People Love

15 New and Improved Version 1.0

16 The Metrics of Success

17 Getting Your Growth On

18 Dollars in the Door

19 Seducing Venture Capital

Step 3: The Hundred-Million-Dollar App

Tuning Your Revenue Engine, Growing Users and Raising Series B Funding

20 A Colorful Lesson

21 Tuning and Humming

22 Getting Shedloads of Users

23 Revenue-Engine Mechanics

24 Keeping Users Coming Back

25 International Growth

26 Growth is a Bitch

27 Money for Scale

Step 4: The Five-Hundred-Million-Dollar App

Scaling Your Business and Raising Series C Funding

28 Shifting Up a Gear

29 Big Hitters

30 Scaling Marketing

31 Killer Product Expansion

32 Scaling Product Development and Engineering

33 Scaling People

34 Scaling Process

35 Financing at a Big Valuation

Step 5: The Billion-Dollar App

The Promised Land

36 Unicorns do Exist

37 People at a Billion-Dollar Scale

38 Advice from Billion-Dollar CEOs

39 Getting Acquired

Notes
Index
About the Author

Acknowledgements

I’d love to thank the following people for all their help, input, opinions and
support throughout the process of creating this book: Tina Baker, Niqui
Berkowski, Samar Chang, Brad Feld, Jay Bregman, Steve Brumwell, Poppy
Hope, Michael Varley, Matthew Osborne, Dominika Dudziuk, Anthony Gell,
and my editor Zoe Bohm.

Preface

In early 2011, I had just completed the sale of my startup (a video-dating site
called WooMe.com) and was relishing the chance to take a few months off in the
sun, when I saw a cryptic post on a tech website from the entrepreneur Jay
Bregman and couldn’t help but get in touch. I shot him an email, met him in
person and found myself intrigued by his idea for a new mobile startup – an app
that allowed passengers to hail a taxi from their smartphone. But his approach
was fresh and disruptive (and in this book I’ll be using ‘disruptive’ to describe
something that brings about a step change, shakes things up a bit). It directly
solved the problem of how to build up a community of drivers before any
passengers were using the app.

From my very first conversation with Jay I realised that his vision for the

company was global – an app that any person could use in any language to catch
a taxi in any city in the world. I was sold. Jay needed someone with my
experience to translate his great vision into a concrete business strategy, to refine
the business model – and build the technology and software to turn it into an
app. And so, in early 2011, only a few weeks after the company was
incorporated, I joined the tiny startup as the Head of Product. The company was
named Hailo.

Since then it’s been a meteoric trajectory, growing from a handful of people on

the HMS President (an old warship transformed into budget office space which
bucks, rolls and creaks with the River Thames traffic) to more than 250 people
in 7 countries and hundreds of millions of dollars in taxi fares.

My experience at Hailo taught me a huge amount about what it takes to

achieve success on a huge, global scale and proved that anyone with a great idea
for an app-centric business has the potential to turn that idea into reality – and a
global success. This book is the first step to making that happen.

PART I

Think Big

Chapter 1

The View from the Inside

‘Until 1916 we didn’t even have any billionaires’

#BILLIONDOLLARAPP

Why This Book Is Different

This book will help you get inside the head of people who have built

billiondollar apps.1 It will help you to see the world as they see it – and take you
on the journeys that they have been through. It will share my insider’s view of
this world with you – along with the interviews and conversations I have been so
lucky to have with these amazing ‘mobile’ entrepreneurs.

As an entrepreneur – and an engineer – I want to tell you the way it really is. I

want to talk about what happens behind the scenes and behind the computer
screens. I’ve read enough stories about the glamorous side of technology
startups, where billionaires are created overnight as if by magic – but, to hit
billiondollar heights, there is a huge amount that goes on behind the scenes that
your ultimate success will depend on.

I have been lucky enough to work with and meet some of the most talented,

passionate – and lucky – entrepreneurs out there. I have also had the chance to
work with some of the most experienced mobile-technology investors in the
world – including Accel Partners, Union Square Ventures, Atomico, Index
Ventures and Wellington Partners. This book is a distillation of countless late
nights, years of hard work and a great adventure.

Whether you’re a newcomer to mobile technology, a gifted developer,

seasoned entrepreneur or just intrigued by what it takes to build a billiondollar
company in this day and age, this book is for you.

It’s not just a theory

My bookshelves are piled high with books brimming with great advice about
how to build a great business, about how to cross chasms and be an effective
executive. Biographies of Apple cofounder Steve Jobs, investor Warren Buffett,
Google cofounder Larry Page, Microsoft cofounder Bill Gates and
businesswoman and Facebook chief operating officer Sheryl Sandberg peer
down over my desk. But, as I reread these books, I keep finding business
strategies that no longer work, or principles that, although only a few years old,
seem to be already outdated in the fast-moving world of mobile technology.

Today, the most successful new technology businesses are rewriting the rules

in real time. A new wave of companies is rocketing to success in mobile
technology, and a new type of entrepreneur is driving them towards billiondollar
valuations faster than at any point in history.

I’ve read numerous accounts of how to build a world class technology

company – but no one has yet attempted to package practical, actionable advice
about how to build an extraordinary, billiondollar, mobile-centric business into a
single book. Over the last few years building up my own mobile startups, I
yearned for such a resource, something that would aggregate all the best lessons,
and pitfalls, of fast-growth mobile startups. I found nothing. But I did start
collecting all the information I could. I asked for introductions to other mobile
startups, and I talked to and interviewed countless people. That formed my own
personal guide about how to build a mobile company today.

How to Build a BillionDollar App is not based on theories. It is not an

academic research paper. It isn’t a collage of pithy business stories crafted by a
journalist. And it is certainly not a guide that promises success and happiness for
a four-hour-per-week commitment. It is about reality. It is based on hard data.
The advice and information is based on what it took for a select group of
entrepreneurs – a group of people not unlike you – with varied backgrounds and
experience took to transform their ideas in global, billiondollar companies in just
a few short years.

Combined with my own experiences at Hailo, this book will also capture the

very best thinking, experience, insight – and mistakes – from that select group of
entrepreneurs who have followed similar billiondollar paths in the mobile world.
My journey building Hailo has given me amazing access to some incredible
people and has been indispensible in guiding the decisions that will open the
gates to the BillionDollar App Club. Now I want to share that information with
you.

Inside information

In writing this book, I wanted to draw on advice and insights from only the best
companies and the best entrepreneurs. While advice from any source can be
useful, the best and most powerful advice is from those people who have
actually achieved billiondollar success in the mobile-app world.

But getting meaningful inside information from entrepreneurs is exceedingly

difficult. There are two main reasons for this. The first is that the people building
great mobile businesses today are spending every moment of their time doing
just that, leaving no time for anything else. The second is that many great
entrepreneurs (but certainly not all) are rather coy about sharing too much
information about their businesses in case they divulge something that might
help their competition gain the upper hand. Personally, I think there is a lot more
insight to be gained by actively sharing and soliciting advice than protecting any
individual insights I’ve come across. It’s hard enough building an average
company, let alone a billiondollar one.

What I’ve sought to understand – and distil into this book – is what

differentiates the truly great companies from run-of-the-mill, good companies. I
focus on the most spectacularly successful apps – those that have achieved
billiondollar exits, or have undisputed valuations at the billiondollar level.

If you’re an Android or iPhone user then you’ll already be an avid user of

some or even all of them: WhatsApp (the messaging app), Viber (another
messaging app), Square (the payments service), Angry Birds (the now
ubiquitous game), Uber (your on-demand chauffeur), Instagram (the social-
photography app), Waze (the mapping and social-traffic app), Clash of Clans
(the ridiculously popular game from Supercell), Candy Crush (the ‘sweet’ game
from King), Snapchat (the messaging app where your messages disappear after
seconds), Flipboard (the app-based social magazine) and Tango (yet another
messaging app).

This list is growing all the time, so for the most up-to-date information, visit

mybilliondollarapp.com.

While their missions, businesses and stories are very different, they do share a

remarkable number of similarities that have propelled them to great success.

In this book I focus primarily on mobile-first companies – ones that have pure

mobile DNA. Why? Because being mobile-centric is a different and entirely new
way of thinking – and is possibly one of the biggest business opportunities in
history.

That being said, there are a number of other billiondollar technology startups

that began as websites or even desktop applications. There’s clearly a huge
amount to learn from them, not only from the way that they have adapted to the
mobile world, but also because they are great examples of modern companies
that have grown from ideas to billiondollar powerhouses by developing better
products, great leadership, constant innovation – and, above all, superb
execution. Companies such as Google, Facebook, Skype, PayPal, eBay,
Amazon, Pandora, Dropbox, Box, Groupon and Evernote fall into this category.

Concrete steps

The world of mobile technology is exciting – and daunting. The mobile
landscape is constantly changing: every week seems to herald the arrival of a
new mobile device – from smartphones to smart watches, to tablets, to phablets
(that’s a combination of phone and tablet).

We’re also bombarded with new flavours of mobile software – Android’s

candy-store options include KitKat, Jelly Bean and Froyo. Apple’s iOS software
is yet different and based on numbers – iOS 5, iOS 6 – and the latest one (at the
time of writing, anyway), iOS 7, seems to adopt a rather candy-coloured colour
scheme as well. It’s all a bit much to keep track of.

No need to worry, though. I’ll lead you through all the things you need to

know.

Part I starts by exploring what has caused technology to become so mobile so

quickly, and why the biggest, most exciting opportunities in commerce,
communications and gaming are happening on mobile apps. I’ll look at why this
shift was inevitable – and the social, cultural and psychological impacts it will
have. It will demystify mobile technology so that you can grasp why these
changes are happening – and be in a better position to anticipate what the near
future will look like.

Part I will also consider what it means – and takes – to think big. Entrepreneurs

don’t trip over and fall into billiondollar businesses: they see big problems, very
big problems that frustrate lots of people, and then create elegant solutions. They
do this through a combination of disruptive thinking, solid execution and
management of complexity. These solutions are the basis of businesses with
huge potential. This section will give you the tools you need to validate whether
your idea has billiondollar potential (and how to adjust it if it falls short).

Part II will guide you through the journey of building a billiondollar app. There

are five key lifecycle steps. The steps map to challenges that need to be met and

solved to create a great product, a great team, a great business model and a great
company overall. I loosely align these steps with valuations and funding rounds
to help you along the journey as, in its broadest sense, the model I’ve used
reflects how venture capitalists have been looking at technology companies for
the last decade.

The model I’ve used is not meant to be perfect – or definitive – because the

trajectory of every company will be different. However, it is meant to provide
clarity and structure – and distil the key challenges you will meet. There is no
one-size-fits-all approach in the world of mobile startups, but, by following, or at
least being aware of, the steps mapped out at each stage, you will make sure that
all the foundations necessary for building a great, billiondollar company have
been addressed. Let’s look at the steps in more detail:

STEP 1: THE MILLION-DOLLAR APP. Now that you’ve got your head around a
billiondollar idea, how do you get all the basics into place? I’ll walk through
defining and designing the app you’re going to build, finding a cofounder and
core team and thinking about how to raise the funding you need to get to the next
stage.

STEP 2: THE TEN-MILLION-DOLLAR APP. Your top priority is creating an app that is
going to wow people. This is when you focus manically on building the best
product for the right audience – something called product–market fit. This is a
tough stage, but, once you have created an app that people are happy to pay for,
your business will take off.

STEP 3: THE HUNDRED-MILLION-DOLLAR APP. Now that you have product–market
fit, it’s all about attracting users, and refining your business model to ensure
you’re a proper, profitable business. It’s also time to get a proper company
structure in place – including seasoned management – as your business grows.

STEP 4: THE FIVE-HUNDRED-MILLION-DOLLAR APP. Armed with a great app and a
reliable way to make money, how do you grow your company quickly and
profitably? How do you keep users coming back? And how do you attract users
from the four corners of the globe? This stage is all about scaling your business.

STEP 5: THE BILLIONDOLLAR APP. The Promised Land. I’ll talk about exits and