Joseph: Typically, where you want to start with your app idea is: how do you validate that the market exists for your product? There could be a gap in the market and there could be a gap in the need, but you want to find a product that has both a marketing opportunity and a need that exists–if you can identify those two things and validate them for the lowest possible cost, that’s the place to start.
Richard: I think a key there is making sure that gap in the market is also something that people are willing to pay for. There are a lot of interesting ways, like freemium models and all kinds of different business models, but ultimately, there’s got to be money somewhere.
Joseph: Sometimes to find out if that exists or if that idea is viable, you have to build something small–something that you can take and test with. There’s a concept where you can test a market, but it’s possible to have a false negative or a false positive. You want to be smart about how you’re testing the market so you can have a true positive or true negative and understand what that market actually wants, which usually requires building something small.
Richard: There are a ton of different monetization strategies, including: monthly payments (subscription-based), direct payment from the consumer (one-time purchases), advertising, freemium model (free features that allow it to be useful immediately, but eventually steers the user towards wanting additional features), and many others. There’s also a direct-to-consumer route where you sell it to a business and then that business uses it to help their customers. There are so many different options. I think the biggest thing is worrying about 1) can this be applicable to a lot of people? And 2) how do you get it to a lot of people? After that, there is a wide variety of options for revenue strategies.
Joseph: If your focus is on adding a tremendous amount of value to your user base, that’s the most important thing. If you can do that, you can gain users and ultimately you can monetize your product.
Joseph: The cost to work with New Lion varies. There’s all kinds of different ideas and each one has its own unique qualities that need to be addressed. The way that we handle ideas is by processing and finding the smallest possible, vertical slice if you will, of what that product will be. If you think of your product as a continuum, we want to find the smallest piece that we can build to get validation and prove that we’re going in the right direction. The nice thing is that this scope is small, which also reduces costs.
Richard: It’s a lot like any investment–we’re trying to validate that it’s worth investing in. If you have this big idea, don’t worry about building it out completely. Think about it in terms of: how do we pair this down into the smallest ways to test that it’s worth your time and energy to keep moving on it? This is where we structure it first like an incubation process where we brainstorm around what this product could be and then we find the smallest ways to test and validate that we’re moving in the right direction. We do this before doubling down and investing more than is warranted.
Joseph: It’s all about proving that this idea is worth investing in over the long haul for the smallest possible cost.
Richard: The cost for developing an app can totally change and it depends on the product itself. I would say the big thing to understand is that there is no one-time purchase. It’s not like going to a hardware store and buying a new bathtub. Instead, you are creating something from nothing and this is not something that people are normally used to. It will evolve and it will change and it will iterate. The biggest thing is to plan for when it’s time to go into development and start scaling, to plan for multiple iterations and plan to out-iterate your competition.
Joseph: It’s a living product that needs to keep up with the user base and users ultimately change, so it’s important to adapt with them.
Richard: Typically, one of the things that grows the cost the most is when there’s multiple platforms it has to be on. If it’s a direct-to-consumer app, the consumer has an app and then there’s another app for the business to administrate it, which potentially doubles the price. That’s not always the case, but it increases costs.
Joseph: Uber is a good example. You have a driver app, a ride app, and then you have a back office/organization app. Each of those different platforms drive up the cost because you’re essentially building three different things.
Richard: It might seem like it’s one product, but it’s not. It is actually three completely separate products that talk to the same database essentially.
Joseph: The technical piece is totally doable, almost always. It’s more about: how do we engage the user and keep them coming back to the product and add a ton of value to the user? That’s really the question that needs to be answered.
Richard: I think that our team is one of the most technical I’ve seen. It’s very rare that you have a team that has scaled a system to over 140 million daily active users. Also, we’ve done a lot of machine learning and image recognition, but it really isn’t about the technical side. We could do just about any type of software on the technical side. It’s more about getting users and keeping users and that’s what we really focus on.
Richard: New Lion does not trade work for equity. Giving away any equity that early is just going to dilute it too much and then future investors won’t like that. Instead, what we do is try to make the first engagement as cheap as possible so that a founder can afford it. There’s this incubation process that’s kind of ambiguous and it will take you through a bunch of steps to end up with clarity around the product, which ultimately doesn’t actually cost that much and it sets you up to know what to do next.
Joseph: I’d say that the best thing for the founder is to not give away equity, but to go through a process of going from this raw idea to something much more formed, something that’s valuable and something that’s worth investing in. That is the right move for the founder.
Joseph: When it comes time to raise capital for your startup, we help support you through that process both by guiding you and coaching you through raising capital, as well as helping you prepare assets. Typically, what we do is we go through a process, almost like an incubator process, where we’re going from this raw idea state, considering the value that you want to add and how to do that, but we’re also making it much more tangible. That asset is really critical to helping with investment.
Imagine you have something that you can download on your phone, it’s design only, but you can click from one screen to the next and start to simulate what that experience is. It’s visual so that you can start going from “I have this idea”, you’re talking to an investor, and they’re trying to picture what that idea is–you’re going from that state to being able to hand something to an investor that they can touch, see, and interact with it and that helps you through those investment stages quite well. We’ve been able to help founders raise one $1.5M in seed capital by helping prepare those assets for them.
Joseph: We work with clients all over the U.S. and we help facilitate that in a lot of different ways, whether it’s video calls or other different technologies. We’re able to accommodate people in different locations and most of our clients have full-time jobs where they know that this is a side hustle. They’re trying to figure out: is this a viable product? Is this an app that can turn into a real business before they transfer from full-time employee to a full-time founder?
Richard: It works really well to do that so you can continue working a full-time job. Obviously, you’ve got to do some nights and weekends work, but we guide you through that. We make it very targeted and ultimately we do the heavy lifting on the hours input so that you don’t have to.
Joseph: You know if your app idea is a good idea or not based on 1) How big is the problem that you’re solving? 2) Is that a real pain point for those users? And 3) Is that user base potentially really large? Anything that comes after this is secondary to the very first point of solving a real problem for real people. If you can do that, everything else can be adjusted. Your business model, your go-to-market strategy, your product development–all of those different things can support turning the solving of a problem into a real business.
Richard: Another detail that’s nice here is: the bigger the problem, the more a user’s willing to deal with an incomplete product. It’s even better for getting something that’s a little smaller that isn’t fully featured yet to see how much they actually need it.
Richard: It’s actually not important to be a technical person for founding a company. There are a lot of talented developers and that’s not the difficult part. The difficult part is creating an engaging product that people actually use that scales well and that grows well. It’s who understands the customer in the best way and who understands what they need the best–that’s the real key. We can definitely find developers.
Joseph: New Lion is in it for the long haul. Our business model is very simple: we think about the product from a long-term perspective and do what’s right for the product now, short-term, medium-term and plan things out over the long-term. We want to be with founders for the next 5-10 years as they grow and scale and we’re really picky about who we work with. We look for the right kind of people to partner with because once we lock in on a product, we’re there for the long haul. It’s important to work with the right people.
Richard: Most development shops on the other hand are more turn n’ burn–they primarily knock out big projects and then move on. It’s the opposite for us. We use our skills to make startups a success because when a product starts to scale and do really well, it churns out an incredible amount of development work to the point that you can’t hire engineers fast enough. This is why New Lion is a good long-term partner, because any time your internal engineers don’t have enough capacity, they can pull on us.
Richard: I actually don’t think you want a technical co-founder. The reason is because you want the best technical talent you can find and the best ones have high paying jobs. They’re not going to leave a high-paying job for no salary and a higher risk. Instead, there are good developers out there that you can definitely leverage and pay. I think that’s the best way to go about it. I would rather have someone who deeply understands the customer, who can really find user engagement, and get a good product off the ground. Ultimately, you can find people to develop your product.
Joseph: I’d say a lot of times a founder thinks that if they have a technical co-founder that the whole technical side is covered, but usually it takes a team of five, six, or seven different kinds of talent and skill sets to cover all of the technical bases for launching a product.
Richard: Most of the time, if you just have one technical founder and you keep iterating and trying to build something, what you end up with is a product that users don’t love to use that’s also not very engaging, because an engineer is not very good at making something engaging. They’re also not good at designing it, which I would argue are the harder parts to pull off correctly. In that case, you can keep iterating and keep adjusting a product, but if it’s not capturing the user engagement that’s the problem.
Richard: I recommend not doing this and that it’s most important at the beginning to really worry about wireframes, designs, and user engagement instead of worrying about development yet. Ultimately, the valuation of the company is as low as it will ever be, so giving up any equity will be in much larger chunks than normal. I would really recommend trying to get some early validation, get some designs, talk to a lot of customers, and see where that evolves before you consider giving up equity.
Richard: At the very early stages of a company, you’re not actually looking for a CTO. You’re looking for a technical founder, potentially. You need somebody to develop the product. A CTO comes into play later on once you’re scaling a company and you’ve gotten it heavily funded, because they (CTO’s) are very expensive and it’s more of an executive position. Right now you just need a very good technical person. What I would say is that what you actually need is guidance from a software architect. An architect is extremely skilled, they’re very unique, and there’s not a lot of them.
Very few senior engineers become architects, but that’s their whole job. A CTO depends on an architect to steward the technical direction. That’s where New Lion comes in. I think it’s a perfect fit for a founder and we designed it like that–we have really experienced, exceptional architects that guide all of the projects and you don’t need a lot of their time, which makes it more cost effective.
Richard: I recommend that you don’t learn to code. There’s a lot of people that can develop software. The hardest part of a venture is understanding your customer, understanding your product development, how to sell, and ultimately execute on the product.
Richard: Should you get freelancers to work on your project? Sometimes it’s a good idea, sometimes it’s not. Typically, the best freelancer’s time is going to be taken up. That’s a big problem because you might have to wait a long time to just get in with them. Then (once developed), the biggest part about your product is iterating on it, because once you have it live you need someone who knows the product well and can execute updates quickly–that’s what a freelancer just can’t do because they’ll be moved on to the next project at the time. That’s why New Lion has been built from the ground up to focus on founders so that we can be your on-demand development company. We have a pool of really talented developers and we have our schedule set up so we can quickly jump on new updates.
Joseph: As founder you have limited options. You can go to a freelancer or a typical development shop, but wherever you go you’re getting a designer and a developer. It’s kind of like a commodity. There’s a lot of people that could write a line of code, but it’s not the whole equation as you’re missing critical components to helping your product be successful. During the product development stages and the scaling stages, there’s a lot of pitfalls in there. If you don’t have help and guidance through those processes it can be very difficult and that’s what we bring to the table. That’s part of the reason why we created New Lion: to have resources for founders to guide them through those early stages.