Under the Radar

56: Surviving the Winter


00:00:00   Welcome to Under the Radar, a show about independent iOS app development.

00:00:04   I'm Marco Arment.

00:00:05   And I'm David Smith. Under the Radar is never longer than 30 minutes, so let's get started.

00:00:10   So today we wanted to talk a little bit about how the gold rush days for the App Store and the Apple ecosystem seem to be probably over.

00:00:21   What's different now, how we need to change the way we do things as a result of that, and maybe how we can look towards the future, what's likely to happen in the future. What do you think?

00:00:33   Sure, yeah. Because it's a funny thing to call it a gold rush, where obviously that's harkening back to the days when someone would find gold somewhere in a valley out west or wherever.

00:00:47   And everyone would rush in and try and grab all the gold as much as they could before it all went away.

00:00:53   And there's some parallels to that in the sense of the nature of a gold rush is that it's this very sort of temporary thing.

00:00:59   But it's interesting to me with the App Stores where, and well, first it's amusing that I remember Apple actually even referred to the App Stores as gold rushes.

00:01:09   I have this flashbulb memory of Scott Forstall in the intro video for the iPad with the way he can get really intense with big eyes saying, "We're expecting a whole new gold rush!"

00:01:23   It's also a little bit funny that it's also in San Francisco.

00:01:27   That's true, their sports team is the 49ers, and it's all very relevant. But it's even there, like Apple embraced it, that this whole big thing was part of the marketing of trying to get people onto the platform and developing for it.

00:01:41   There's this feeling of, there's all this opportunity and all this capability that is time limited, so you need to get in there and you need to grab as much as you can.

00:01:51   And in many ways that was true, they weren't lying about that I don't think, but it's weird now because they've launched three App Stores subsequently, or I guess four if you can count the Mac App Store.

00:02:03   I'm not sure that you should.

00:02:05   But for the purposes of this discussion, they've launched three that are relevant to iOS, where they launched the TVOS App Store, they launched the Watch App Store, and they launched the iMessage App Store.

00:02:18   And I can't think of the only example out of any of those that I can think of where someone had this big public, like, the store you see in Wired or you see on The Verge or somewhere where it's like, "Developer makes $200,000 in two weeks with five minutes worth of work" kind of stories.

00:02:35   And other than the app Phonies, which was an iMessage app that lets you trick your friends into thinking that they'd said things they didn't, which eventually got pulled from the App Store, which did reasonably well.

00:02:48   That's the only one out of those three stores.

00:02:51   Which is not to say that there's no money being made on these stores, but it's a very different mentality I think.

00:02:56   It's also just a very different type of thing that succeeds in these different stores.

00:03:01   So in the case of iMessage, I think the promise of iMessage apps that aren't sticker packs, just apps in iMessage, has mostly been shown to not really be a thing after all.

00:03:13   Maybe that'll change over time, but when Apple was announcing all this stuff this past summer and then launching it in the fall, you know, whenever Apple launches something new, some kind of new ability for an app or a new type of App Store or a whole new device that will have an App Store,

00:03:29   we've said in past episodes, we've talked about how there's usually a good chance of success if you are there on day one doing the new thing that wasn't possible before.

00:03:41   And I think that's still true, but I think what we're seeing is that even Apple doesn't know before they launch these things which ones will be successful and which ones won't.

00:03:51   Even Apple is just guessing about that. They made this entire App Store ecosystem for the watch, and it turns out that the Apple Watch really is not a hot place for launching new apps.

00:04:06   You can, and some apps have done okay on the watch, but it's not really like this gold rush the way it was back for the iPhone and briefly for the iPad.

00:04:16   And the TV, I think, we can look at the TV and we can say pretty similarly, you know, the Apple TV, we all thought when it launched, you know, now that we can make apps for the TV easily for the first time,

00:04:31   now there will be all new kinds of apps, new types of things that we can't even think of.

00:04:37   And I think it turns out that we haven't thought of them yet, and you know, a year and a half or whatever it's been in, we still haven't thought of them.

00:04:46   And it's unfortunate that what succeeds on the Apple TV is basically stuff that makes sense would succeed on Apple TV, which is like video apps for different providers and occasionally a game,

00:04:58   but even then the gaming market for it I think has largely not materialized, and we can talk about why, but it doesn't really matter. The facts are basically the Apple TV app market is really not a place where indies have much action to be had.

00:05:13   And most people with Apple TVs are not really browsing the App Store regularly and finding new stuff and downloading it and paying for it and everything else. That's not really happening.

00:05:21   And you know, same thing I think with the watch, and I think the iMessage store is just the most recent example of this.

00:05:29   When the App Stores were launching back in 2008 and then later when the iPad launched in 2010, when that was really beginning, when things were really hot back then, this whole market was like totally untapped.

00:05:43   It was like the fresh green ocean, whatever business people call it. There you go, whatever. Some oceans are green. So the fresh blue field.

00:05:54   And it was easier back then to succeed because there was less there, there was less history there, and people were actually really excited to get these new kinds of devices and then browse around and throw money around and see what can they now do they couldn't do before.

00:06:11   Or what can this new device that they just got for the first time do. And then what we've seen since then basically is that every additional platform or store or capability that has launched since then and that has provided us opportunities that didn't exist before since then,

00:06:28   every one of those is seemingly smaller than the last one or has less potential for indies than the last one. And it's not because Apple is some corporate sellout or anything, it's not that at all.

00:06:41   It's that just the nature of these stores and devices and abilities, like the low hanging fruit was picked long ago and now we're going into these more and more specialized areas, more and more specialized markets and adding these kind of like niche abilities and niche demands to the various product lines and to the various app stores and SDKs.

00:07:01   So I think this was inevitable, I think this kind of cooling down of the gold rush, I think this happens to most gold rushes, that's usually why they're called a gold rush and not like a gold forever age of stability.

00:07:15   No, when things cool down and the markets mature, this just happens. So I think this was largely inevitable. I think there's not a lot Apple could do to really change it and instead it's our job as the developers, as people trying to make a business in this ecosystem,

00:07:36   it's our job not to just yell at Apple to change things that they can't really change, but instead to adapt what we do to basically be more compatible with this new market and to be more likely to succeed.

00:07:50   And that's partly been what this entire series has been about. This whole podcast that we do for like the last year, it's basically been all about this.

00:07:58   It's basically been how do you succeed in today's market, not in the gold rush of 2008, but how do you succeed today in the realities of today's market?

00:08:08   And that often requires changes in the way we do things, changes in our expectations, and just kind of a more realistic and pragmatic view of how we operate and what we should make.

00:08:21   Yeah, because I think in a lot of ways these things come down to the balance of supply and demand. Anything, even vaguely related to business, always comes down to supply and demand.

00:08:34   And I think especially of how the reason that there was so much value to be taken from the early days of the iPhone and iPad app stores,

00:08:47   is that there was a strong demand for these things and the supply was almost nonexistent.

00:08:54   And in a weird way it makes me think of how, like when you take, if you divide something by a very small number, you end up with this just massive number.

00:09:03   But as you divide by a bigger and bigger number, very quickly you start to shrink as a result, like the result, which I don't know why that comes to mind for me.

00:09:12   But it's that kind of impact that because the number of apps in the app store was a few thousand, tens of thousands, all of the demand was concentrated on those.

00:09:24   And so the ability for a developer to stand out from that, or even if you didn't even stand out, the ability to just exist and make money was substantial.

00:09:35   And whereas now any of these things are coming into an environment where the demand is arguable whether it's gone down or not.

00:09:44   I'm not sure, because I think if, say something like the watch, my guess is Apple has sold more Apple watches in the first year of its existence

00:09:57   than they had sold iPhones in the year after the app store launched.

00:10:03   The install base for the Apple watch is bigger almost certainly than it was for the iPhone back in those days.

00:10:08   And yet, there's just, I think, the reality is the supply of things is just so much bigger proportionate to what it was that that kind of easy,

00:10:20   what I think draws people to a gold rush is the promise of easy money that you don't have to work that hard to strike it rich.

00:10:33   It's sort of this, going all the way back to the mining, right?

00:10:36   It's not that you need to invest the hundreds of thousands of dollars into building this huge big mining operation and going deep into mountains to pull out gold.

00:10:45   It's like, no, no, no, you imagine a gold rush, there's just gold lying on the ground and people just walking around picking it up.

00:10:51   And I feel like there's that same difference where there is still money to be made, but it's increasingly difficult.

00:11:01   And in a weird way, I feel like that's both good and bad.

00:11:04   I like the feeling that in order to succeed now, you have to work in a more concrete way, and it's harder to do.

00:11:14   And there's fewer people who are able to do it.

00:11:16   And so if you're somebody who has the skills and the patience and the intuition to be able to navigate that, you can still do it well.

00:11:26   And it's harder to do, so there's less competition for it.

00:11:29   But on the flip side, I also do remember quite lovingly the days back in the early App Store where doing anything would get you a reasonable amount of income.

00:11:39   And you could very easily get attention in the press or in all these types of places.

00:11:44   I mean, it was never easy, easy. It wasn't like literally just reaching down and picking up gold off the ground.

00:11:48   But it was so much easier than it was then, and that was nice, but it was also probably just really unsustainable because that attracts so much attention.

00:11:58   And in many ways, too, probably creates a lot of bad habits and perspectives as a developer.

00:12:06   If I had structured my business, assuming that those days were always going to continue, I was going to be in for a sore surprise when it turns out that's not the case.

00:12:17   And I've had periods of the App Store since then where my income year to year has dropped by a half or two-thirds or things.

00:12:27   That's a pretty substantial, robust change to have to adapt to.

00:12:31   And especially if you had gone the other way, I've always generally speaking been the one-man, low overhead type of developer.

00:12:39   But I imagine it's got to be really crazy if you were a developer who had sort of staffed up as a result and had a big team and had kind of been assuming that those salad days were going to continue forever.

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00:13:39   So I thought maybe we'd talk about, you know, in the first half we basically covered things are worse. Here's maybe why basically things are worse and harder now.

00:13:50   Now I think it's worth talking about strategies and specifics about how we exist in a sustainable, healthy way in this new environment, realistically.

00:14:02   And you mentioned right before the break that you've always kind of kept things low overhead and just you for the most part.

00:14:09   And I think it's worth going more into this. You know, you in particular I think are basically like the, I think you are the most pragmatic and prolific developer I know.

00:14:22   Because you try lots of things. And I think this is a key survival skill in this market. In a tough market where there's lots of competition and lots of changes and it's generally kind of cooling.

00:14:36   This to me is the key. Is basically to try a lot of different things. And also critically I think the way you do things is you tend to try things without putting a massive amount of budget and time into it before you know whether it will succeed.

00:14:55   You know, I don't know if you subscribe to the minimal viable product thing or not but I think what you do is close to that in the sense that not that you put out crap because you don't but that you put out 1.0's that you didn't spend three years making.

00:15:11   And like you know, $300,000 worth of resources. You're not pouring all that into a 1.0 because you don't know whether it will succeed yet.

00:15:19   And by doing it that way you're able to launch a whole bunch of different stuff. You know, over a few years you launch tons of apps and then you can see what succeeds and then build on that.

00:15:30   Yeah, because I think the thing that's probably best to point out too is the reason I take the approach I take is because of what my goals are. And for years now, like when I got into this business, you know, I used to be a consultant and like there's lots of problems with consulting work.

00:15:53   But in general, like the nice thing about consulting is it's very straightforward. You do a certain amount of hours of work, you get a certain amount of money for that work and the uncertainty comes in can you have an ex-client.

00:16:04   But if you're a consultant of a reasonable quality, like finding work is usually, and it becomes a natural relatively straightforward process.

00:16:13   And that for me didn't appeal to me about that is that I felt like I still always was sort of, I never felt secure in where I was because if I didn't find an ex-client, suddenly my income drops to zero.

00:16:29   And so for me, when I got into products, my goal was always like, can I take the approach of being self-employed, which is in both cases was what I was going to do because it fits better for my mindset to be self-employed.

00:16:43   And I was like, can I be self-employed in a way that provides consistent, predictable income into the future, not just predictable income in the present, which is what consulting was.

00:16:54   And so I got into products in the hopes of creating the mythical passive income thing where you make something and then it creates income into the future rather than doing work in the present that creates money in the present.

00:17:08   And because that became my goal, I didn't go set out with the goal of striking it rich in a way that you kind of, I get the impression this is a lot of what a lot of game development or things or movies are another example of an industry where this is kind of the expectation or venture capital even.

00:17:27   Where it's your goal is to have this massive runaway success and that's what you're gearing and aiming everything towards. It's sort of like more like you're going for the lottery approach.

00:17:39   Whereas with me and with the way I've structured my business and why I've done so many apps over the years and why I keep doing this over and over again, like I'm working on another app, I'll be putting out hopefully by the end of the year.

00:17:50   And it's because the reality of having lots and lots of things is that you end up with tremendous diversity that both you create opportunity for any of the various products to do well, which is the simple version of that.

00:18:05   And then also, just in aggregate, five kind of not so great results from a revenue or business perspective add up to maybe one good result. And if one goes up and another goes down, you end up in the same place.

00:18:21   And that in a weird way is kind of boring. I want my business to be as boring as possible. In some ways I love when I look at my revenue graphs and they're just completely flat. That's not what classic business wants you to do.

00:18:36   I want to say, "Oh, it should be like, what is it, up into the side. I want a hockey stick. I want all these things." It's like, "No, no, no, I want flat. I want boring. I want an approach that doesn't really grow over time." I mean, growth is great, but I'll take flat over up and down, up and down, up and down, up and down.

00:18:55   And so for the approach I take, and this is why I think it works reasonably well in the modern app store, is that things are mature to the point that things are kind of predictable.

00:19:06   If you are able to get a certain volume of downloads every day for the last six months, it's very unlikely that tomorrow that number is going to go to zero.

00:19:17   That's just not the way the app--you end up with all of these structural advantages in this modern system.

00:19:25   And I think that is at its first, if I was talking to somebody who was trying to get into this, it's like making sure that you understand what is your goal.

00:19:32   What would an ideal business be looking forward to? What would you like your business to look like? And then are you making choices to structure it around that?

00:19:40   And for me, I want dead, even boring, flat revenue. So diversity is absolutely the only way you're ever going to get that kind of predictability in your results.

00:19:50   And that's especially important, and it leads into a larger theme for me, which is even in the good times, even back with Instapaper, especially when the iPad launched, that was a great time for me.

00:20:02   That was the most money I've ever made from anything in a year. And everything I've done on the App Store since then has not reached that level.

00:20:11   All of Overcast, the whole time, everything after that, like Instapaper during the first couple years of the iPad was really probably the peak of my app sales career that I will probably ever see.

00:20:23   And even then, I knew, in the back of my head the whole time, this will not last. Everything goes up and down in the tech business, in most businesses, but the tech business seems to just happen faster.

00:20:36   Everything goes up and down. And when you have something good, when things are succeeding, it's very important to always keep in mind this will end.

00:20:48   And plan for that. That's just an expected part of your process then. So that way when it does start to decline, or take a sharp drop off, then you can be sad about that, you can try to reverse that, but at least you know, you shouldn't be surprised that it happened at all.

00:21:06   You should know everything goes up and down. And so what that means is, when you're in the up periods, plan for the down periods. So that goes through very basic things. First of all, obviously, save money.

00:21:19   All the money that you get during the up periods, bank as much of that as you can. And that will help you tremendously down the road when you're in a down period and you might need something to clear the gap or whatever.

00:21:32   Or to start a new project. Also in the up periods, when things are going well, leverage that success into things that might help you during the down periods.

00:21:43   So for instance, you mentioned diversity. That is number one. So in the up period is the time to start spreading your wings, to start building a platform.

00:21:52   So when you have a popular app, that's a great time to start a podcast or a blog or a YouTube channel or something else. Spread out when people are looking at you.

00:22:02   Build new audiences, build new places, build new products, start looking into new things. And then when the thing that boosted you up in the first place starts going down, you have this other network of other places or products or apps or audiences that can help you into the next thing.

00:22:21   Or that can become the next thing themselves. And you can do that anytime and you should do that whenever you can. But the best time to do it is when things are good.

00:22:30   Because that's when you have a little bit of extra money, a little bit of extra time maybe, but you should be spending it on that because that's important.

00:22:37   That is really the best strategy I can possibly give for beyond just what we've already said, which is try lots of things and see what succeeds and have diverse income streams.

00:22:50   Besides all that, best thing I can say is assume every good thing will end and while it is good, hoard as much, save as much as you possibly can and then spread your wings into new things then.

00:23:03   So that as those things are building, they're building with your success and then when the success in that first thing starts to dwindle, you have something else to fall back on or to build up.

00:23:13   Yeah, and I think the key thing to what you're pointing out is that diversity, like for me diversity mostly means having lots and lots of apps.

00:23:22   But it doesn't have to mean that for everybody. I mean, the same way like you in general have been like an app monogamous.

00:23:29   Like you've generally just sort of had this one app after another that you've sort of, you've tuned.

00:23:35   But as you've been developing and over the last eight years, you've always been diversifying out into different things. You had your blog for a while.

00:23:43   That was where your energy was going into and that's where you were sort of expanding out into.

00:23:48   And then you went into podcasting or finding those, whatever that is for you, that makes sense.

00:23:56   If you're a good writer, maybe blogging is great. If you like video or audio, podcasting is great. I know a lot of people who diversify out into education.

00:24:05   You start doing training or book writing or whatever. There's no money in book writing.

00:24:11   Yeah, that's not a great plan.

00:24:13   But training I think is a reasonable thing. Or finding ways to take small successes and sort of turning them into other embroidery things is a great way in an environment where you're not going to necessarily be able to just have a runaway hit in the app store itself.

00:24:33   To find a way to make a bigger and broader living. And that's where you can grow in a lot of ways.

00:24:39   And it is kind of this strange and delightful cyclical pattern too where the more you're able to do that, the easier it is subsequently to launch successful apps.

00:24:51   And it's the building enough of a reputation for yourself that when you launch something new, people at least take a look at it.

00:25:01   There's no guarantee. It doesn't make the thing an automatic success. But it gives you into the door in a way that it wouldn't otherwise if you just threw things out over the wall into the app store and then walked away.

00:25:13   Exactly. And as you try more things, you get better at doing them.

00:25:17   Now it's a lot easier for me to start a new podcast now than it was four years ago. Because I've done a lot of podcasts since then. I know how to do it now. I know what works and what doesn't to some degree. And so if I launch a new podcast now, it's way less risky than it used to be. Just because I've done it a lot.

00:25:33   If you launch a new app today, you can be pretty sure roughly what it will take to get it done, roughly what it will take to get it in the store, and an approximate estimate of how much you think it might make in the first X months or whatever if things go well.

00:25:47   You've launched so many apps that now you've just gotten good at launching apps. So any skills you can build along the way in that kind of way, it helps to just build up your confidence over time.

00:26:00   Again, the more you try, the more you put out there, the better it will be. And then as things kind of take seed or whatever, I don't know anything about growing things, but as the plants that you plant take root, some of them will.

00:26:15   And then you're just building up this career over time, this slow growth, trying a whole bunch of stuff, and eventually some of it will work. And then as that works, you keep building. You keep spreading out even further. You build up what you have as much as you can. You save when the times are good. This is how you survive in this climate.

00:26:38   And I think it's also probably a good place to point out that more likely than not, you want to have a strategy that is going to work for your career in the long term. It's like taking the approach of, "Okay, what I want to do is I want to start off by winning the lottery, and then I'm going to live on my lottery winnings for the rest of my life."

00:27:02   If that was your approach to life, it's interesting, but what does that look like five years into that plan? Even if your plan worked, even if somehow your plan magically worked, five years in, you have this pile of money that you're gradually chipping away at.

00:27:19   That, A, doesn't sound healthy from a mental health perspective of what you're doing. People like to have a sense of purpose and direction in their day, and that you're accomplishing things. But it's also just not a good approach to take.

00:27:37   The goal is to have something that is going to work years down the road. There are certainly things that I wish I had done eight years ago compared to now, but I think increasingly, and maybe this is a wisdom as you get older kind of perspective, but increasingly I look at these things and it's like, "What am I going to be doing in five years?"

00:27:55   And while I don't know the specifics, I don't know what that's going to be, what platforms I'm going to be on, if I'm going to be still developing, if I'm going to be still an Apple developer, who knows? That kind of thing is unknowable. But I look at what I'm doing now and I'm saying, "Am I doing things that are going to give me options in the future, that are going to open doors and give me skills and abilities that are going to be worth valuable in general, not valuable in specific?"

00:28:20   Because technology is going to change, platforms are going to change, economics are going to change. Everything is always going to be changing, but I'll be the same here as I will be in the future.

00:28:32   And so am I doing things for myself now that are going to benefit? Future me is going to be thankful that I was making these choices now, rather than just going crazy like, "Hey, if you hit it big in the App Store, awesome, good for you."

00:28:45   Like, "Maybe don't go buy a Ferrari, because your future self is probably unlikely to be super thrilled about those car payments for the years and years to come."

00:28:55   And the first time you need to replace the clutch. And also, I would end with one more thing too.

00:29:00   That as you spread around and as you start things and explore new options, it's very important to explore and invest in things that are on their way up, not that are kind of in the past.

00:29:12   And it's hard for me to say that because I like a lot of things from the past, but today is probably not a great time to start making a Mac app.

00:29:21   As much as it kills me to say that, it's probably not a great time for that market-wise.

00:29:25   It's a decent time to be working on things like YouTube and I don't know what else, but other people can figure that out for me.

00:29:36   But the point is, invest in things that are growing and things that have a likely future bigger than their present, which is what growing means.

00:29:43   And try to minimize how much you're assuming that the past will continue to exist, basically.

00:29:51   So anyway, with that said, thank you for listening everybody and we will talk to you next week.

00:29:56   Bye.