Sofa Moolah

So I’ve Invested In An iPhone App

There are over 500,000 iPhone apps in circulation right now with hundreds, if not thousands added every day. Trying to stand out amongst the crowd has proven to be a nightmare for a ton of hopeful entrepreneurs who’ve sunk their time and money into creating an app they think people want only to see it slaughtered in the App Store. Meanwhile achieving success in the mobile space I can imagine would be an incredibly stressful and eventful feat that very few have encountered. So naturally this is where I’m heading.

A few months ago I decided to invest in an idea; an application that has yet to be built. I was lucky enough to secure 20% equity in the company which overtime will hopefully pay off. While I won’t go into detail about what the app does or how much I invested, I can say it’s in the photography related area and I can see it being big. Over time I’ll be writing more about the app and its progress and documenting the app’s success or failure – hopefully the former. I’m confident in the team who will remain nameless for the moment which includes 2 talented designers and a top notch developer.

And like any startup you’re bound to run into a few setbacks in the beginning and this venture was no different. In a bittersweet twist, one of the designers was offered a position at Apple while the other was headhunted from both Google and Facebook. This was a pretty big concern for me, 2/3 of the core team were offered positions at some of the biggest and most innovative companies in the world. Both have pledged their allegiance to this startup however I will keep you updated with any negotiations or activity.

Right now, we’ve got wireframes in development, an icon almost completed, a landing page almost up and a name sorted out. I can see this being a great experience – this is the first time I’ve ever invested in an iPhone app so it will be interesting to see what challenges occur and how the team tackles them.

In the comments, feel free to talk about any experiences you’ve had with developing an iPhone app as well as if any member of your team have been poached and how you’ve dealt with it. I’d love to hear your thoughts!

15 Responses

  1. OT: can you disable the weird UI you add on iPad? It makes scrolling pointlessly complicated.

    1. We had an outdated version of OnSwipe installed but I’ve disabled it now until we can get around to fixing it up. Sorry ’bout that.

  2. If your developer and designer are being headhunted this early in the process it could actually be a good thing if you are willing to sell before or just after launch of your product. Both Apple and Google are often willing to take a 6 month re-evaluation request from people they are very interested in, so if you think you can get to the prototype phase in 6 months you could potentially sell the company to either Apple or Google just so they can acquire the Developer / Designer they are headhunting.

    Google has said it is willing to pay 1 to 1.5 mill per engineer when it is buying a company for talent.

  3. It is a good sign that Google and FaceBook are trying to poach your employees. That just means that you got top notch developers. I would be worried if nobody was after your team.

  4. One way to mitigate risk with developers could be to tell them that if Apple/Facebook/Google/etc. are so gung-ho about poaching them, that means they’re probably good enough to have great opportunities at their doorstep 6-12 months from now. If they don’t follow-through with their own startup, all they’ll have is regret and what-ifs. The opportunity cost of staying isn’t that big if you have people at your knees trying to hire you.

    1. “have great opportunities at their doorstep 6-12 months from now.” – love this way of thinking. Thanks for the advice, Jonathan!

  5. Hi Mat,

    Whilst I haven’t invested in an iPhone app as yet, I have consulted on development of one. I find the hardest part was figuring out a revenue model that will work for the particular idea in development. It’s an area that is often missed by us enthusiasts but is a core deliverable for normal businesses.

    Good luck with the app and I look forward to the updates.


    1. Thanks Gem, will try to keep the blog posts regular. We’ve had a few discussions regarding revenue and while that information isn’t public yet, it was a really difficult decision (especially considering all of the team members have different ideas).

  6. Hey Mat, just ran into your initial post while I was searching if investing in iphone apps, or any kind of apps is actually viable/profitable…well then what happened next? I am really interested in hearing your app development story.

Comments are closed.