$80,000 a Month in App Sales by Outsourcing Everything

by gatsby • 16 years ago

205 110 16 years ago

stevenwei2• 16 years ago

$80k a month in ad revenue by making the following apps for $2k a pop on Elance?

  Record Video for Free
  911 Police Radio Free!
  Battery Box 3-in-1
  Find Sex Offenders Free!
  Dash of Color FREE
  MovieFX for Free
  Convert Units for Free
  FilterFX HDR Fisheye in 1
  Fisheye for Free
  FilterFX for Free
  Flash for Free
  HDR for Free
  Convert Units Free HD

I know people are saying the gold rush is over, but that is ridiculous.

AndrewWarner7• 16 years ago

For me, this interview wasn't about creating another "iPhone gold rush" story. It was about understanding how they could build an app business without coding or designing. They even hire someone to write their descriptions for a few hundred bucks.

colinplamondon2• 16 years ago

And they weren't afraid to make a slutty business. For every startupy person trying to 'change the world' and 'make a dent in the universe' with a me-too social network, there's five with a slutty free app business banking it each month.

stevenwei2• 16 years ago

Yeah, the most interesting takeaway for me is how far these guys got with a relatively small amount of effort by picking the right apps to work on. For example, there are literally hundreds of unit converters in the App Store right now, and they shipped another one anyway to great success, because the demand for such apps are still so high.

It does illustrate that there is still tons of money to be made in the App Store for building the right apps.

(Thanks for posting this interview by the way.)

gatsby• 16 years ago

It is. One of the reasons I posted this interview is that on top of doing $80k in monthly revenue, the founders are big Tim Ferriss fans and only spend an average of five hours per week on this project - one of the founders still works a full time job.

coffee• 16 years ago

Wait, what?

They do $80k in monthly revenue yet "one of the founders still works a full time job"

That makes no sense...

Sindrome2• 16 years ago

These guys struck me more like frat boys than SW Devs. They both said they are SW Eng but they totally shied away from going into any details about that. They didn't know any of their stats. Andrew had to walk them through their profitability numbers, wtf?

qbui7• 16 years ago

Used to be SW devs. I used to do .NET programming for a big DOD contractor, then worked for a local internet startup for while, but why talk about my old career? That would have been boring. Plus as we tried to explain, at some point you have to let go and not micro manage every individual stat and app. I'm sure if we did that we could make some more money by optimizing, but that's not what our business approach was about. We wanted simple, stress free which gives us time to do other things. We're not experts, we don't have a degree in business or anything like that. Just 2 27 year old guys from San Diego who wanted to make a couple iphone apps.

jbail• 16 years ago

That guy who was wondering how to spend $3,000 a month to generate income should talk to these guys.

AndrewWarner7• 16 years ago

I'm actually getting a lot of requests for intros to these guys and I posted the interview less than an hour ago.

AndrewWarner7• 16 years ago

After posting the interview I realized that the guy I was emailing about an interview was probably a virtual assistant. I assumed he was working in their office because he responded to my interview request so quickly.

I wish I asked them about it.

eru• 16 years ago

I tried timesvr.com last year. They were usually quite quick, even with the standard account. If you throw more money at them, you can probably get arbitrarily good response times.

jws7• 16 years ago

Hi Andrew, I'm no VA - just a buddy of Mike and Quoc's helping out with BD/Mktg/PR lol. Great interview btw!

mahmud• 16 years ago

Dude, stop by the HN DC meetups will ya? People are gouging their eyes out looking for startup marketers. Email is in my profile if you want me to pass your contacts around.

nikcub• 16 years ago

they probably outsourced the entire interview

qbui7• 16 years ago

LOL! we used indian virtual assistants in costume for the interview =)

d_r• 16 years ago

It would be interesting to see more people chime in here about using sites like Elance. Have you had good/bad experiences with this approach?

Outsourcing seemed to work great for these guys (good for them!) Is it because the apps were fairly simple, or did they get "lucky" with picking the right developer(s)?

davidedicillo• 16 years ago

When I started 39 (my company) I was outsourcing my iPhone development via Elance to a firm in Ukraine. We got some good simple apps out and made some money. But quickly they weren't reliable; they fit your job in a pipeline with other jobs, so you can't just tell them "today just stop whatever you are doing and work on this important stuff". Also you need to be very lucky with the people you hire.

atleta2• 16 years ago

I hope it didn't come as a surprise. What you do when you outsource is not only you hire cheaper workforce from the other end of the world but you also spare on not having a permanent employee/consultant. It's cheaper because you only pay for what they do and not their availability (i.e. you don't pay if you don;t have anything to assign to them). Now on the other end of the business there are people who can only make a living if they are highly utilized. So they'll have a pipeline for sure. (I.e. they won't pay what you don't pay, the availability.)

So if you want an employee or permanent contractor then hire one, even from the other end of the world. Most freelancers will be more than happy to have a longer term contract with a fixed income. But you have to pay the bill...

chadp• 16 years ago

I think outsourcing a simple $2k fart app is workable.

A complex internet service with multiple technologies, web, multiple mobile platforms and your valuable IP is another matter and probably not advisable for outsourcing.

stevenp2• 16 years ago

Hey Andrew! Curious why your podcasts don't show up in the iTunes feed until a few days later. I'm having to manually download this one because I'm so excited about it. :)

AndrewWarner7• 16 years ago

I didn't know that was happening.

For some reason keeping my itunes up date has been a struggle. Thanks for telling me.

kranner4• 16 years ago

The RSS feed as it shows up in Google Reader is also delayed, just so you know.

mise• 16 years ago

I don't know what the RSS feed for the podcast is. The advertised one http://feeds.feedburner.com/Mixergy-blog doesn't seem to have audio information, but I could be wrong.

Sindrome2• 16 years ago

Andrew I love you. I sent you an email a few months ago asking if you could get more videos about the mobile space and you have totally come through. I've seen a hearty amount of mobile interviews this month. Thanks.

AndrewWarner7• 16 years ago

Thanks.

If you come across anyone I should interview, email me.

mdolon• 16 years ago

Here's a link to the e-book they wrote and mentioned in the interview: http://www.freetheapps.com/create-iphone-apps/

It makes sense that they seemed somewhat reserved at certain points of the interview, they don't want to give away too much and make their e-book less useful.

epo3• 16 years ago

Now I know its snake oil, this page has all the wording and techniques of a classic get rich quick scam.

BonesLF• 16 years ago

It's only a scam if you fail. Hell, most people give up even when the blueprint is right in front of them.

It's time to stop making excuses and realize that there is so much money to be made on this here internets that the best idea is to TRY HARDER.

caveat: Yes, this may be a bit slutty. But I don't know if you noticed this Halloween - slutty is in.

smashing• 16 years ago

Did anyone else get a popup trying to leave the webpage?

danieldon• 16 years ago

Regarding the outsourcing thing, it's clear that even they aren't getting high quality. I'm checking out their Convert Units app, for instance, and the drum scrolling and selection is totally broken, although it works just enough to still function.

It's interesting, however, that the poor quality apparently isn't stopping people from using it. Part of it might be that people don't expect much out of a free app, so if it's broken they just deal with it.

chc3• 16 years ago

Even the functionality of the drum is iffy. It seems like maybe a quarter of the time it will somehow mysteriously wind up on something other than what you selected.

epo3• 16 years ago

This sounds a bit too good to be true. How many ad impressions add up to $80,000 in a month? What is that in user hours per month for 12 or so apps?

I'd be fascinated to see the financial statements, I bet we never will

eob2• 16 years ago

I agree. $80,000 a month in mobile ads is a lot of impressions.

qbui7• 16 years ago

It's not as outrageous as you think. Although the first month we hit big numbers we were VERY VERY surprised. Check out the paper toss guys that make 500K a month with just 5 free apps!!! http://www.develop-online.net/news/36155/Paper-Toss-dev-make...

Now THAT'S something. We're not even close to that!

iphoneedbot• 16 years ago

No need to defend yourself.. they'll always be doubters.. you guys keep on raking in the bucks!

nhangen• 16 years ago

Why do you keep showing their numbers? Why not some of your own?

ajg19774• 16 years ago

I don't know what to think about stories such as these to be honest.

My inner entrepreneur says "Wow, great job guys! I wish you every success".

My inner software developer winces, and fears, both professionally and personally, that the ever-growing number of such low-quality apps will eventually make it pointless for developers to invest in creating a ConvertBot or Instagram.

(FWIW I currently make $15k a month from sales of apps $1.99 or higher)

faramarz2• 16 years ago

Great comment.

I just wanted to bring up a point about free-app/knock-off vs. paid quality app.

I would draw a parallel with the fashion industry. Louis Vuitton, for example, will never go out of business because of Chinese knock-offs. Why? because the person who buys the knock off/cheaper product is not their target customer.

Same I think is true with iPhone/iPad apps. Those users who only search for free apps and put up with disruptive ads (let alone click on those ads) are not the target audience of a premium application maker.

Where the cheaper app maker has to churn out dozens of products to make decent revenue, a single app maker who focuses on quality and sustainable business model can really build a meaningful business in the App Store.

revorad2• 16 years ago

Exactly. The same is true in films too.

callmeed2• 16 years ago

It definitely creates a lot of noise and worries me as someone who is just about to enter the mobile app market.

I just finished some iOS training and am working on my first paid app. What would you say is the key to getting where you are? Apps with true utility–or something else?

ajg19774• 16 years ago

I would recommend you do two things:

1) Create one app to throw-away - something that's simple, useful to you, and which you are confident you can create. Don't worry about there being hundreds of similar apps. This is your Learner app. Get it together in a few weeks and put it on the app store for $1-$2. Make sure you have some "please leave a review / send email" link that makes it a no-brainer for people to give you feedback. Read them all, but learn to distinguish between genuinely useful suggestions, and comments from people who feel your app really needs their pet feature.

2) Find a need that you think people would pay $3-$5 for, preferably a need that you yourself have, and work on that app using everything you learnt in #1. Get something basic but polished out, then iterate.

General tips:

- Polish is more important than features. - Ensure you get 6 friends to buy & rate your app (5-6 is the minimum you need for a visible rating). - Launch at $1 for a week, and cut the price to $1 for a week for every update. It does make a difference IME. - Read the descriptions of top apps and see how they sell themselves. - Read the reviews of apps similar to yours and see what people are missing. - Make it easy for people to send in-app email for support questions. Be the best support person they've encountered. Happy users recommend your app and leave very nice reviews (particularly if you ask for the latter after helping them).

phlux• 16 years ago

Where did you take iOS training?

patio112• 16 years ago

Has the ever-growing number of free, low-quality web pages made it pointless to sell stuff on the Internet? </rhetorical>

I love free competitors. They make excellent places to place ads. ("Want to try a solution for this that doesn't suck?")

ajg19774• 16 years ago

So two things

- You're conflating a medium (the web) with an action (selling). An excess of crappy websites do not compete with a subscription to Dropbox for example, and there are not hundreds of Basecamp alternatives. A more accurate phrasing for your analogy would be "... made it pointless to charge for access to higher quality webpages". And I would say that yes, there are few examples of pay-walled webpages being sustainable businesses.

- Placing ads is great, providing that a) you can accurately target competitor products and b) the sales you gain are greater than your per-user cost of acquisition. If you have experience of making this work in the mobile space it'd be great if you would share.

muhfuhkuh2• 16 years ago

"My inner software developer winces, and fears, both professionally and personally, that the ever-growing number of such low-quality apps will eventually make it pointless for developers to invest in creating a ConvertBot or Instagram."

Gimp, OpenOffice, and Linux didn't hinder the popularity one iota of Photshop, MS Office, and Windows (or OS/X) respectively. In fact, the free stuff augments the consumer need for high(er?)-quality alternatives to the free stuff.

That said, I don't think Dash of Color from FreeTheApps even dented Color Splash, which has been cemented in the top 20 overall paid apps for as long as it's been released. Nor has their FilterFX Free app displaced Hipstamatic.

There is _absolutely_ room for low and high quality apps in the App store, as there is room for quality software applications and repackaged GPL apps ported to Windows sold to people who don't know it's available free. Or, for that matter, the Big Mac and the $25 Kobe beef burger.

robryan3• 16 years ago

Anyone know any articles from people that run ads in these kind of apps talking about returns? They don't seem like the kind of apps that would drive any high quality traffic. Interesting to see if it's just an advertising bubble where because it's new there is many companies trying it out pushing up prices or there is actually a sustainable business here for advertisers.

percept• 16 years ago

This sounds like some good advice to help prevent ideas from being taken:

"We get that question a lot. It was kind of concern. So what we usually do in our first bid, in our first description we’re kind of vague. We say, ‘We’re looking for a developer for a simple photography app.’ And from all those people we’ll choose three to five that look kind of trustworthy, seem like they could do the job and then we’ll give them the wireframe bid. So we start off really vague so not everybody sees it. We’ll pick three to five people, we’ll give them the full details and then they’ll give us a more detailed proposal."

faramarz2• 16 years ago

Is it me or does it sound like they are just winging the whole business? Andrew had to pretty much coach on what to do, and what to answer.

That said, they still get A+ in my books for just doing it. That's the biggest differentiator between people who find success and people who don't. Kudos.

qbui7• 16 years ago

We are and have indeed been winging the whole business. We're no business experts, we've learned a lot going through the process. It hasn't even been 2 years yet. This was our first "face to face" interview. We're not great public speakers either haha. Just going with the flow and we've been very fortunate so far.

PhrosTT• 16 years ago

FML

klochner2• 16 years ago

I'm not a marketing expert, so correct me if I'm wrong here ...

Let's assume an iphone app gets CPM of about $1 [1,2]

So if their first app grossed $100k, that means about 100M impressions. That sounds insanely high to me - 100 impressions each for 1M users? 10 impressions for 10M users?

When I then see that they're trying to sell books for $99 a pop so you can cash in on their winning techniques [3], it rings of late-night infomercials telling me how to get rich buying foreclosed homes.

I don't have hard numbers, but my impression is that @tferriss took the same approach - making the bulk of his money off of book sales (and his prior supplements business), pitching virtual assistant techniques that never would have made that kind of money for him.

So the real 4-hour work week strategy they're copying is to give the impression of success with little effort, and then sell people books detailing your special technique.

  [1] http://techcrunch.com/2009/06/24/greystripe-ups-the-ante-in-the-iphone-ad-network-wars-launches-guaranteed-cpm-program/
  [2] http://blog.jwegener.com/2009/07/26/debunking-average-iphone-cpm-ad-rates/
  [3] http://www.freetheapps.com/create-iphone-apps/?hop=tdrone

qbui7• 16 years ago

Less than 10% of our sales numbers are from the ebook. The ebook was just a side project to see if we could share some information and make some extra money at the same time. You'd be surprised at how much ad revenue these apps make. Check out how much the paper toss guys make with just 5 apps - http://www.develop-online.net/news/36155/Paper-Toss-dev-make...

klochner2• 16 years ago

I'm not saying it isn't possible. I'd be interested in seeing how your numbers compare.

They have ~2M daily users and 47M installs, generating 600M monthly impressions. That lines up pretty well with my estimate of about $1 CPM.

spitfire2• 16 years ago

If you go to the freetheapps site it is _so_ used-car salesman. When you go to leave the page it has a Javascript popup that begs you to stay with yes/no dialog.

My already very low view of Andrew Warner just got even lower. slimy get-rich-quick guys give me the shivers.

kranner4• 16 years ago

Freetheapps is not Andrew Warner's site. Mind explaining your low view of the guy?

It seems to me he provides a great resource to the tech entrepreneurship community in Mixergy and hardly deserves to be called a 'slimy get-rich-quick' guy.

robryan3• 16 years ago

As mentioned, his primary interest here was that the guys had outsourced every aspect of creating the apps and had created a business doing it. Sure it may not be the most high quality business but it's still interesting to look at by virtue of the success.

chr15• 16 years ago

If you want to get rich, write a book entitled How to Get Rich with only one line in it: "Write a book entitled How to Get Rich"

Wisdom from my dad.

jimbokun• 16 years ago

"(and his prior supplements business)"

He made his money from this, and busted his butt to build that business.

4 hour work week is about how he was able to continue to live off that business, while devoting only 4 hours per week to it. It was an alternative path to selling it off or continuing to burn himself out as a hands on manager. There's also a lot in there of various things he tried and failed.

Overall, it's similar to the YCombinator ideal of busting your butt while you're young to solve the "money problem" once and for all. 4 hour work week is a different approach to the same goal.

run4yourlives3• 16 years ago

Did anyone actually ask them to verify these numbers? Did a third party do so?

Extraordinary claims ($80K a month) require extra-ordinary evidence.

They don't even really seem to know what their revenue is like, but their fairly certain about the large size of the numbers... normally, that's the smell of bullshit.

Tom Vu's girlfriend wants to see the proof of these claims.

gregpilling• 16 years ago

Ahh, Tom Vu. Whatever happened to him and his late night infomercials? I remember his great quote - "Do you think these girls like me? NO, they like my money!"

run4yourlives3• 16 years ago

Apparently he plays poker these days.

shard• 16 years ago

Curious me googling... Surprised me: he is winning oodles at poker tournaments, https://secure.wikimedia.org/wikipedia/en/wiki/Tom_Vu#Profes...

fapi1974• 16 years ago

Scam, scam, scam. The e-book website could be selling anything from stock newsletters to - well - internet get rich quick schemes!

scottchin• 16 years ago

I'm curious about the ad networks that are used in these apps. I read the interview transcript and it says that AdMob was used at first and then they switched to "AdWorld" (which I assume was a transcription error and it meant AdWhirl). If Mike or Quoc are reading, or if anyone else has any insights, I'd be interested in hearing more.

qbui7• 16 years ago

We use Adwhirl to run in this order - iAd, Adsense, Admob. iAd has been making us the most money so we give it the highest priority.

We also use transpera and greystripe in some of our apps.

tyng• 16 years ago

Who is this Ed Turner guy? Sounds pretty awesome

maxklein2• 16 years ago

He's some type of guy who sends emails to all app developers advertising his services. I've got at least 10 emails from him.

pix30• 16 years ago

I call BS - I don't believe they are making 80k a month. The numbers don't add up and their responses seem very ill informed and shaky on specifics.

known• 16 years ago

Damn outsourcing viz Chindia is destroying American Dream and Confidence. http://goo.gl/2PGOE

maxklein2• 16 years ago

Why is the screenshot on the ebook page Adsense? Are they advertising in their mobile apps using adsense? Is that possible? I thought Apple disallows this.

switch• 16 years ago

Let's break it down.

1) Release a bunch of free apps. 2) Take the holiday season - the single month with the highest sales and traffic. 3) Round it up a little bit to get to $80K a month. 4) Find as many people as you can who're willing to believe the story. 5) Don't lie - just let people extrapolate - Say $80K in a month and let people assume that means $80K per month.

Their website is the classic long form sales letter.

Make it long so people get invested. Offer $2600 worth of value for just $300. Then knock another $200 off.

Appeal to the total idiots who think a 'free' ready to go app that is included will start making them $5,000 a day.

Quote examples like iShoot + kitchen table without telling the whole story i.e. the guy's programming experience and the actual number of months spent and the strategy he used.

A fool and his money are soon parted. These two gentleman are taking upon themselves this painful task.

If we set aside ethics it's just a strategy - One guy builds a super valuable product and sell it at high price to smart people who value it.

Another person builds a house of cards and targets people's greed and laziness.

Notice a few things -

1) Their insistence that they spend just 5 hours a week on this. 2) Their focus on showing earnings from a single month - the month in the year that has the most sales. 3) If you were to wish for a easy, no hassle way to make lots of money - You'd dream up exactly what they are claiming. It's absolutely perfect - you don't have to know coding, you need just 5 hours a week, and you'll start making $5,000 a day within 60 days.

dzlobin• 16 years ago

Right, but as it turns out they didn't just make $80,000 in a month. They made ~$800,000 over a year and a half, and clearly said they have had dud apps as well

bhoung• 16 years ago

I'm a little surprised at the relatively negative responses on this. Is this story not consistent with hacker culture and working smarter, not harder? [Pointing out to a bunch of programmers they can be outsourced is unlikely to be well received though]. The execution and success of their apps was brilliant. Sure they lose marks for immaturity, which is even more of an achievement, and their contribution low-quality apps which now plague the internet.

$80,000 a Month in App Sales by Outsourcing Everything

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