Before we get started, have you tried FreshBooks yet? Millions of entrepreneurs use and love FreshBooks but have you tried it yourself? Do you yet know how much faster you could collect if you used FreshBooks? Do your customers know how much more professional you’ll look if you use FreshBooks? Try it. It’ll take a moment and I promise you’re going to enjoy FreshBooks. Millions of other people agree with me so it’s not just me telling you that. And, well, FreshBooks wants to make sure that my ads are working so here’s what they’re doing. If you use the name “Mixergy” as your referral when you sign up for an account they’re going to pick one new person every week and give them a birthday cake. It’s their way of saying ‘thank you’ to you and also their way of saying, ‘Andrew, are these ads really working?’ Give it a shot; test them the way that they’re testing me by trying out FreshBooks for yourself and seeing how much faster and easier sending invoices could be.
Also, I got an email recently from a well-known, respected angel investor who said, “Andrew, I keep seeing these spots for Scott Edward Walker. Should I really email him? Should I really talk to him?” And I said, “Yes, absolutely.” How do I know? Because I’ve known Scott Edward Walker for years. I’ve worked with him, he’s been great, but more importantly I see the emails coming back from people who are telling me about their positive experiences using Scott Edward Walker, the lawyer that entrepreneurs love, especially tech start-ups. So give him a call. WalkerCorporateLaw for more information.
Finally, if a friend of mine came to me and said, “Andrew, I want to sell something on line,” you know what I would do? I would send them to Shopify.com. Why? Because Shopify.com is so easy to set up they’ll never have to bug me with tech support issues. And because they’re going to be so well-represented online with this beautiful site that actually increases sales, it’s just going to do wonders for my reputation to be the person who inspired that and led them to it. All that to say, if you or anyone else needs to start a store online will you please check out Shopify.com? You’re going to be grateful, you’re going to thank me and more importantly, the people whose stores get set up because of your recommendation are going to thank you. Shopify.com.
Here’s the program.
Andrew: Hey, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. How do you get 1.5 million users for your company after that business nearly hit the wall? That’s his phrase, not mine co-founder. We’ll talk about that. Joining me is Ouriel Ohayon. Ouriel, can you please pronounce your last name properly to show people the way it’s supposed to be? Ouriel Ohayon, co-founder of AppsFire.com a discovery service for mobile apps. We’ll talk about AppsFire.com. We’ll also talk about ISAI his investment fund and I will also do my best to make sure I pronounce everything right. Ouriel, welcome to Mixergy and thanks for helping out.
Ouriel: Thanks Andrew. Glad to be here.
Andrew: So 1.5 million seems like a huge number. What does it mean? What does a user of your site do?
Ouriel: We are a site but we do mostly apps. We consider a user someone who has downloaded one of our apps for the iPhone or 400. Based on that we are counting our users. We have a site but the site is mostly a gallery rich one to incentivize the users to download our apps.
Andrew: What are some of those apps?
Ouriel: They are all called AppsFire or by AppsFire. We have an app called the AppsFire. We have another one which is a discovery app for the iPhone. We have another one called AppDeals which is focusing mostly on promotions in the app store. We have AppsFire400 which is the equivalent of AppsFire for iPhone but 400. And we just launched an app for Android which is aimed at parents and kids which is called Apps for Kids so it’s a discovery app for kids because there is a strong need. We can talk about that if you want. We have an app for the iPad which is called AppStream which is very popular.
Andrew: There’s revenue from these apps. Where does the revenue come from?
Ouriel: We have two lines of revenue. First, we are an affiliate of Apple so we get revenue but the real business model is that we help developers get quality exposure through the app store, through our apps. Because we’ve reached this kind of particular size we are now able to accelerate their presence in the app store. We’re kind of an affiliate network helping them to promote their app through our apps.
Andrew: So you get paid by an app developer when what happens?
Ouriel: When his app gets downloaded or it gets quality traffic, called ‘download intention’ meaning they click to the app store. We are really a generator for developers.
Andrew: I said that you nearly hit the wall. You told me that and I still felt a little uncomfortable saying that about your business. I’ll get back to the beginning of where the company started and how you grew it, but why don’t we just for a moment talk about what ‘hitting the wall’ means in your business.
Ouriel: Hitting the wall was very simple. Hitting the wall is when you think that what you’re doing is going to end. For any kind of reason. For some people it will be you don’t have any more cash. For some people it’s because you don’t have the ability to perform well. For some people, like us, we thought our app was not going to be approved by Apple. That was the very beginning. We started AppsFire about a year ago and we created a very nice app to discover applications and we submitted it to Apple. We didn’t know what happened but we couldn’t get any kind of feedback from Apple. We waited for 90 days to get some kind of answer. When you’re a very young company and you’ve just raised some seed funding, 90 days is a lot. We really thought that was the end of it. We thought Apple had a problem with what we were doing and we were a bit surprised because first, we had a prototype that was already approved and we had some competitors out there that were approved so we didn’t know exactly what was happening. The app was not rejected, it was not approved. It was just silence. So we sent an email to Jobs…
Andrew: Let me see if I got this right. You said you sent an email to Steve Jobs?
Ouriel: We did. [inaudible]. We didn’t know what was happening so we decided to create another app that was not immediately known. The iPad was just released and we decided to create a different app for the iPad called Appstream. We created it in a weekend and we submitted it to Apple at the same time. This app was quickly approved and it very quickly became a hit. This unlocked the rest; our first app was also approved. We were very happy that Apple was very diligent at approving our apps. At the time I think we were not the only ones experiencing that. Since then the app store has improved dramatically in terms of how they approve apps and how they reject apps and the process is much more transparent and I don’t think many developers have complaints with it. At the time, we didn’t know what was happening and we were pretty worried. The end of the story is that our app was released, we created another app that became a global hit and we were number two in the app store in the United States in a few days.
Andrew: With this new app that you submitted after the first one got stalled? I want to go back and start your story in chronological order but for a moment here I’ve got to ask you. Ninety days you don’t hear back from Apple and that’s what makes you think your company is dead? How dead did you think it was?
Ouriel: When the purpose of your company is to help people discover apps through your app and this gateway, which is called “the app,” is not approved I think you’re pretty much dead. There is an opportunity to do something else. You can still do a web app or you can still put your app but we didn’t like these options. We wanted to do something by the book and we wanted to do something right. If this path was not going to be possible we had to think about a different thing to do with our company. It was maybe not going to be dead but it was going to be dead as we thought it to be operating initially.
Andrew: How does that make you feel as an entrepreneur to have so much of your destiny in this mystery box?
Ouriel: I think once you understand how the box is working and you take some time but once you understand how it works you can evaluate better the risks that you are taking. Also, when you consider your company not as an app but as a platform which is what you’re building, which is not dependent on one operating system only, then the vision you have in front of you helps you going beyond the short term events that are happening even when they are bad. We were, and we still are confident, that we’ll be able to build past that will help create a company whether one of our apps will or will not be approved. So far, things are doing great. We’ve got great downloads, great previews, great ratings, great usage, great return usage. But at the time we were still in the learning so I think the key learning is you have to have a vision that goes beyond where you are today. Make sure you are able to go through bad events when they happen.
Andrew: Now let’s take it in chronological order. Just before you did this you found TechCrunch France, right? What does it mean to found Tech Crunch France?
Ouriel: Simple. Mike Arrington was starting with TechCrunch and I loved it and I couldn’t find anything equivalent in France, reading about new start ups in an exciting, and passionate way. What I did is I wrote an email to Mike Arrington and I asked him if he was interested to have a second blog. At the time there was only TechCrunch 70,000 RSS readers. So we were . . .
Andrew: How many readers did he have at the time?
Ouriel: RSS subscribers.
Andrew: Today he’s got two or three million.
Ouriel: Probably more. But a lot more. I wrote him an email and he answered pretty fast. We started pretty quickly and the blog became pretty popular immediately. It actually became very large and became one of the largest blog for the TechCrunch network. I started alone for about a year and a half and then a few other bloggers joined me to help because it was becoming too big.
Andrew: What was your deal with him as far as ownership and revenue?
Ouriel: I was a stock owner of TechCrunch. I say ‘was’ because it was sold to AOL so this is public information and I’m happy to share it. We also had an agreement on how the revenue was generated and split. It was not my main activity by the way. I was working in the venture industry so I was not doing that for a living. It was just on top of what I was already doing.
Andrew: I’ve got to ask you how you were able to pull that off considering how much work it takes to be a blogger in this space. So you owned a piece of TechCrunch and you also got a share of the revenue of TechCrunch France?
Ouriel: Yep.
Andrew: Why did you do this? What was the motivation?
Ouriel: Actually, the very first motivation was not because of revenues or even getting to be an owner of TechCrunch. At that time TechCrunch was very small. I didn’t need this revenue; I was already making a living. The real reason I was doing it is I was extremely passionate about blogging and I really wanted to do that. I wanted to get some quality exposure, I wanted to build a network, I wanted to get a prime contact with start ups and it was also helping me in my business which was funding companies. It just so happens that it became popular and I also managed to make some money out of it. But the very prime motivation was that. To be frank, given the amount of effort that it requires…I mean, you are a blogger yourself. You never start a blog for money reasons otherwise you would very quickly drop off. But as it grew I was very happy that it could also happen.
Andrew: My job as an interviewer, it’s tough to do it every day but basically I put my chin on my hand, I lean forward and I listen in to an incredible story and you do all the work. I can’t imagine what it’s like to be the kind of blogger you were because you as that blogger had to do work non-stop, had to go and source stories. How many hours a day were you spending on TechCrunch France?
Ouriel: I was working crazy, every day including the weekends. I was spending on average culminated hours, four to five hours a day. It was split between day and night but I was really working a lot. At some point I couldn’t do it alone so I had to add some help. As you know, writing a blog’s not just sourcing stories. It’s also commenting, managing the comments, we were also doing events, I had a job board, answering interviews, talking to journalists, meeting start ups all the time, going to conferences, etc. It’s really, really, really a lot of work but I really liked it so when you like, you don’t count.
Andrew: What was the best source of revenue in the early days as you were building up?
Ouriel: For TechCrunch?
Andrew: TechCrunch France. For the blog that you managed.
Ouriel: I think advertising has always been the main source of revenue…
Andrew: More than the events?
Ouriel: Yeah. It was very small events. I think for TechCrunch the story might be different. I don’t have any secrets to share but I know that for France advertising was most of the revenues.
Andrew: Were you getting the advertising yourself?
Ouriel: I managed that. I had a reseller in France but sometimes I was visiting with advertisers directly for non-standard formats like sponsoring and stuff like that.
Andrew: Is there a story that you’re especially proud of? I can’t imagine, I can’t imagine. I can’t imagine, you know why? People think that when I say that that maybe I’m exaggerating but seriously, try to blog every day and see how long you can keep up with it. Then try to do it multiple times a day the way that Ouriel did and see how long you can keep up with that. And in addition to that, don’t write about your own feelings about the food you ate this morning or what happened on the news last night, go source a story. Talk about all that and if you can survive it for a few months then you can laugh at me for being so into about the details.
Ouriel: I managed to do it for three years. To be frank, at the end I got tired.
Andrew: How did you keep yourself going?
Ouriel: I think the passion motivated me. I really enjoyed it. I enjoyed the contact with the entrepreneurs. I enjoyed the feedback from the readers. I enjoyed the kind of visibility I was obtaining through that blog. And that gave some kind of adrenaline to the whole story but it’s very hard to keep . . . also at some point I got married and had babies and it’s very hard to get all that working all together. At some point I started to think about having my own company. There is no way you can dedicate your time to a full time job and build a start up and still be a very heavy blogger. You can still blog a bit. I did and I do from time to time but otherwise you can’t so I dropped it. Although I enjoyed it.
Andrew: So AppsFire. What was the original idea for it?
Ouriel: It actually came out of a personal frustration. Every day after the app store came out I received an email every day asking me for a recommendation for apps. And I was sending the same email every single day, because I was downloading new apps every day but I was sending the same recommendation all the time and I said, ‘It’s not convenient. I should be able to share my apps in a very convenient manner. Someone should create a service to share apps with friends very simply.’ Then I realized there was a huge opportunity behind it is that the discovery process of application and the promotion process of application have to be reinvented because app stores are a bit like ecommerce catalogs, if you think about. If you’re going out to iTunes or to the Android market and you log in, the experience that you’re going to get in iTunes or the Android market is going to be exactly the same as the one I’m going to get. There is no personalized experience. The browsing experience is based on categories and [??] sections so it’s very painful to browse especially on your mobile so you end up browsing mostly the same rating and rankings that your friends…
Andrew: Wouldn’t you imagine though, at some point, Apple would fix that? That they would create an app store, improve it, improve it, improve it and the same realization that you had they would have? Why wouldn’t you wait for Apple to do it?
Ouriel: Well, they did. And they are continuously improving the navigation of the app store and they do a tremendous job in getting this ecommerce catalog better. But it still remains a catalog meaning that if you want to go beyond what’s available in the typical categories and the typical discovery path that they are creating and you want to go to what you really need it’s very hard. Let’s assume you run a business called [??]. Go write [??] in search. You’re going to see how painful it’s going to be to find a result. Most people are frustrated about this experience and they go out of the app store to ask for recommendations from their friends, they go to blogs, whatever. Based on that observation we said something better needs to be done. By the way, think about music and movies; iTunes is there and still a leader in delivering downloads. But the discovery process of music and movies is not happening so much in iTunes. It’s in parallel services. [??] for music or LastFM for music and movies IMDB or Flixster so I think we have equivalents. What I was saying is that based on the personal frustration of having to send a recommendation everyday and based on the observation that ecommerce catalogs are not enough to provide a deep recommendation experience the same way it happened it music and the same way it happened in movies and apps being themselves being a piece of media we thought it was an opportunity to build discovery guides for mobile applications. This is how we started. At some point my partner Yann and myself decided to quit our jobs, raise a little bit of money and go for creating a company. Then we waited for 90 days. And coming back, we’re closing the loop.
Andrew: The original idea from what I remember, maybe I’m wrong about this, but I thought it was a downloadable or somehow it connected into iTunes and it knew all my programs and then it showed them online and I could then share that with my friends. That was the original idea that Apple took 90 days to look at?
Ouriel: No. The downloadable part is just a complimentary service part of the app.
Andrew: So that wasn’t the first thing that you did?
Ouriel: It was the first thing that we did but the app itself is not that. The app itself allows you to discover apps in a multiple including discovering the apps of your friends. This sync that you’re talking about, these desktop clients, was just helping you populate all the apps that you already own. Lately, we created a new technology that enables you to automatically detect from your iPhone the apps that you already own. We don’t [??] this anymore. We don’t ask users to do that anymore. The original idea was just simply populating your app, sharing them with your friends. But out of that prototype we created a discovery service that is richer. Now you can see the apps of your friends. You can see apps that are relevant to your city. You can see apps that are changing price right now, etc., etc. Things you cannot find in the app store.
Andrew: Then I think you can get alerts too to let you know when an app you’ve been watching drops down in price. I love that. I did that for LogMeIn. It was $30; I wasn’t sure I needed LogMeIn for thirty bucks. I had an alert; I think you guys sent me the alert via email and I instantly jumped on it and got it for half the price. Now I love it.
Ouriel: This is the service that we created from the web. It’s going to come to email but you can click a button, get it for less and once the price drops we send you an email.
Andrew: It’s great too for the app maker because they want people who are a little too cheap to buy to give them the lower price but everyone else should be willing to pay what they’re willing to pay. Looking back, why do you think Apple didn’t accept your application for 90 days?
Ouriel: They did accept it. I don’t think it was a problem with the app. What happened I think, which is the conviction, we never got a clear answer, but we think at some point Apple got tremendous success with the app store. Unexpected success with the App Store. Some apps got lost in limbo in the validation process. Today Apple has put a lot more resources into validating or rejecting apps. Our app was approved; it was not rejected. The only thing was we had to wait a bit too long for it. We don’t have any complaints with Apple now. We are very happy with the relationship we have with them.
Andrew: You’re saying it was 90 days not because of the app; it took 90 days because they were backlogged and that’s how long it took.
Ouriel: Actually a few days after we launched Appstream for iPad we were featured in the best spot in iTunes. They wouldn’t have done that if they had something against us.
Andrew: Right. You said that you launched and then it was an instant hit, as I wrote down here. Why? Was it because Apple featured you or was it something else?
Ouriel: No. We before we got approved before we got featured. Usually Apple waits to sense some kind of quality and popularity before they feature an app. So we got something like 50,000 downloads very quickly and I think the reason is that we were offering a discovery experience that was extremely innovated for the iPad which was not based on browsing catalogs or categories. It was helping users discover apps based on the visual streams of what was popular at a specific moment in time, in real time. It’s very hard to explain in words. You have to see the app to understand why it was popular and why it’s still popular. But it was offering something that was radically different from the app store experience. And people enjoy that. Some kind of word of mouth process happened and bloggers talked about it and it came to twitter and so on. We didn’t buy any campaign to make it popular. We just became popular. Then we got featured by Apple. Then of course this accelerated the process.
Andrew: How did you get bloggers to talk about you?
Ouriel: Some of them we know but most of them we don’t know. I think this is not something you control. I mean, you can control a little part; you can send links to a few of them, but if you want to reach scale you have to have some kind of message that is compelling. It’s not true just for us I think it’s true for anyone. If you read about something that is compelling and you are a blogger and it talks to you you will talk about it. This is how it works. We saw that it was this way so we contacted the guys at the [Detroit Web] and the Next Web and I think also TechCrunch wrote about it. But then we saw a lot of bloggers talking about it. But also the way we built the app enabled people to share it very easily from the app.
Andrew: Tell me about that.
Ouriel: Actually this is a service we are offering right now. Within the app you can click a button and share the app on twitter and on Facebook. You don’t even have to log in twitter. We are auto detecting which kind of twitter client you have. In one click it will open this client and pre-populate a message. In two clicks you have a message on twitter, which is great. No log in, no waiting, no connection, no whatever. Very simple. We accelerated the driver process and that helped us a little bit. Any app will tell you that then we had this wave where we grew very fast and then we fall down and then we had to reinvent ourselves. We had a great [??] but that didn’t take us to 1.5 million users. The key success factor in the app store is you have always to reinvent yourself, find a new story to get users to like you. We created new apps to get those new users we didn’t get with the iPad.
Andrew: How does launching a new app get you discovered instead of having just one more app buried in the app store?
Ouriel: The first threat is you have to make a good app. It’s really important. It sounds obvious but it’s the key to success. A good app has to be well-designed and has to solve one single problem very well. If you know how to do that then there are a few elements that you can play with to make sure that the app is going to be discovered faster. But at the end of the day it starts with a good app. What can you play with to make your app discovered better?
Andrew: Tell me. I’m curious about that.
Ouriel: The name of the app. Let’s start with the name. It sounds obvious but a good name will save you a lot of marketing efforts. If you can say in one word or two words what you do you will instantly get a message or attention from your users. The name also can include a description. You don’t have to be just one word or two words. You can also explain in the title who you are. The AppStream for iPad is DiscoverGreatiPadApps. Number two, the icon. The icon is the first visual contact that you have with your users before they download your app. The icon is extremely important. By the way, this is how we built Appstreams. You only see icons of applications. The icon is like the concentrated DNA of what you do. By the way, if you [??] a designer for designing an icon for an iPad app or an iPhone app it’s extremely expensive for a very good icon. And there’s a reason for that: it’s very powerful. It attracts the eye and gives it power to engage with your users if it’s well done. Then the description and the screenshot. So the screenshots, which are some of the metadata available in the app store, very important to pay attention to what you’re going to put there. The description has to be very short, very powerful, say in a few words what you do. If you’ve got reviews or good ratings include them there because people will pay attention to that. If your app is featured or if it’s got good ratings put them there. If you have a good app [??] great screenshots. If you have a link to YouTube put it in your description. Apple will not render the YouTube video but in AppsFire we will auto detect it and we will render the video in AppsFire so you will be able to see a video preview which is very powerful. Then there is a price. The price is either free or you pay. If you’re a free app, well, there’s not much you can do if you’re free. You cannot be lower than free. You can pay users but don’t do that. It’s very expensive. If you’re a paid app a lot of developers play with the price. It’s what we call ‘price shifting’. They change the price of the app for a very short period of time to get the attention from users who wouldn’t pay for it traditionally. By shifting the price you get higher in the rankings and you get attention from users you normally wouldn’t touch. So playing with the price can also be a good technique. It also helps you finding the good elasticity. Sometimes developers don’t know exactly what price to put for their apps so you start with a high price and they go down and they can find what is a right price for them. These are some of the few secrets. There are some more. For that you have to work with us.
Andrew: That’s interesting, actually. Some other techniques that are like the technique where you discovered that you can auto detect what twitter app people have and pre-populate that. I want to get to the levers you discussed here but let’s start with that one. When you discovered that how did you discover it and how did you know it was okay to do? Well, I don’t know if anyone else was doing it at the time. That doesn’t mean someone else was.
Ouriel: We were the very first to do it. We’re using part of the SDK which is by the book. Any app has a URL that called a URL scheme which, when it’s triggered, it opens another app. This is how for example, Facebook uses the new single sign on. When you connect with Facebook from another app you go to Facebook and it automatically comes back to your app. This is how they work. They use this URL scheme. What we do we simply try to find which kind of apps you have based on that URL scheme. But there is a little more magic to that and we pre-populate a message in twitter and everything is by the book so we don’t use private APIs or anything that is unauthorized.
Andrew: Does Apple give you all the URLs that are available on each specific device? No. So are you just testing a bunch them?
Ouriel: We found a way to…first element of the answer: Facebook is making that more and more popular because of the single sign on. So a lot more apps have these URL hangers. But we found a way to get to a few thousand apps very quickly.
Andrew: But you can’t say how you did it?
Ouriel: Of course not.
Andrew: Fair enough. All right. Let’s talk about some of the things that you did talk about. You talked about a good name. That makes sense. You talked about an icon. Where do you go to find a good icon designer?
Ouriel: It’s very hard. I mean, it’s not very hard to find a designer. It’s very hard to find a designer that is available.
Andrew: So how do you find them?
Ouriel: You can go to some designer communities on the web or if you like Google freelance designer icon app you will find them. There are two problems with that: they are not very available and they are very expensive. My suggestion is that if you have the budget for it do it because it’s very important. If you don’t, start with something that is very simple. There are a lot of apps that are very popular that have a very…well, not compelling icon. So it doesn’t mean that your apps won’t succeed if your icon is not great but if you can do it, if you have the budget for it, do it.
Andrew: Is there someone whose name you can give out here who we can look to as a great designer?
Ouriel: To be frank, we came to the conclusion to do it ourselves because we couldn’t find any.
Andrew: Really? So you guys do your own design?
Ouriel: Well, we did our own icon.
Andrew: Description. Here’s what I’ve been seeing in my past interviews for descriptions. If you toss in the names of apps that are searched for…if you toss in your competitors’ names when people search for them your app will pop to the top. Are there other techniques like that you’ve used?
Ouriel: To get on top of search results? Search, believe it or not, is not the main driver of discovery in the app store. A lot of people don’t know what to search, don’t even know how to articulate their own search requests because it’s not like Google. It’s not like you write anything and you’re sure to get an answer. And you know that anything is available. The most important driver to discovery in the app store is rankings. There are the rankings; people browse the rankings in a constant manner. Top ten for whatever. So search is not a key criteria but if you can do search you need to be good at that. Apple does a decent job of indexing what’s available in your description in your title. There is, of course, a lot of things we don’t know about how Apple works with their search engine and how they rank results, etc. We still haven’t found the secret recipe but we know if important key words that are describing your app need to be present in the title. So if your app is a recipe app we need to have the word ‘recipe’ somewhere even though the name of the app is not ‘recipe’.
Andrew: I see. Right. Now I’m wondering about the test. If I were trying to test a website to see how it converts I could test it every minute. I could A-B test it, I could test it multiple times a second. What kind of test do you do in the app store, with descriptions and the way that you present your app?
Ouriel: Apple allows you to change the description once you’ve submitted and once it’s approved. So you’re free to change it any time. So this is one. Number two, I think you can look at your download rates every day and just change one thing and see if it affects it. It’s very rare that you change your description and you’re going to jump in the rankings. But if your ranking is very bad you will see an impact. My suggestion would be start with something you’re not sure and change something substantial in the description and after a week see if it has an impact in the downloads. It’s unlikely. It happens if the description is okay but if it’s very bad you will see an impact.
Andrew: Finally about apps. What’s the one thing that app developers and app marketers are missing? That if they made this one change they’d see a big result. Is there one actionable advice that you could give app makers that will help them increase in rankings and get more downloads?
Ouriel: Yes. Don’t assume that a good app is enough. A lot of developers have the hope that by creating a great app they will make it. And they will probably for a short period of time. The problem is that the app store is a marketplace and the Android market is a marketplace and there are tons of developers competing for the best spots. You are in front of people that are investing marketing dollars and marketing resources to be the best at what they do. If you assume that just by having a great app you’re going to make it in a consistent manner, what I mean by ‘consistent’ is beyond the [??]. If you want to create a company out of that you need to create it as a company. Think company. Think corporate as a marketing resource. It doesn’t have to be money but you have to think marketing…
Andrew: What’s a powerful marketing resource that app makers need?
Ouriel: First time you need to have someone that is doing it. You need to spend time on forums, you need to spend time on customer support, on feedback. You need to spend time in reaching influencers to try your app and say good things about it. You need to talk to bloggers, your need to do PR, you need to do all this stuff. It’s not just making a piece of software and letting it go. It’s not enough.
Andrew: Are you guys profitable?
Ouriel: No, not yet.
Andrew: What size revenue are you doing?
Ouriel: Since we are a private company we don’t have to communicate on the revenues. So we [??] revenues and we’re growing fast. We don’t communicate on how much revenue we make.
Andrew: I’ve got another question. You are really good at marketing. One of the things I see that you guys do especially well is give out data. People are hungry for data in the app store. How do you decide what data to give? Where did this idea come from as a marketing technique?
Ouriel: We had this idea very early on. We created a slide show, which is actually on Slideshare so if you go to Slideshare and you write ‘AppsFire’ you’re going to find it. We were curious about finding our which apps were actually…if I remember, the very first data that we showed were which apps were popular by categories. Not just the main rankings. And we were also curious to know which were the top grossing apps. At the time, top grossing apps were not part of the rankings. Apple didn’t make it. Two days later they released that. So we created this slide and we released the data based on a small sample of our users. And people really like that so we [INAUDIBLE] do it from time to time although it’s not our activity. Lately, we’ve done an infographic on how people use native apps versus web apps. This infographic has been viewed something like 100,000 times. We’ve had endless coverage from bloggers to a newspaper; everywhere in the world. People are hungry for this information, for data because it’s a new market. There is a lot of unknowns. There is nothing equivalent today or nothing is measuring the apps but it’s not done the same way they do the web. Any kind of piece of information that helps have insights helping developers will be successful.
Andrew: I also want to find out, since I’ve got you here in this interview I have to ask you about what’s the investment environment like for start ups in Europe?
Ouriel: It’s very good. It’s not as crazy as it is in the US. We don’t have companies raising $40 million pre-launch, if you see what I mean. By the way, I love Color.
Andrew: You love it? You’ve already gotten a lot of value out of it.
Ouriel: I didn’t get it at first. I had the same reaction with twitter, by the way. I said it was too crazy and then I tried it with someone and then I realized how powerful it can be.
Andrew: Why? Because with someone else you start to see their pictures automatically on your screen and that feels more interactive?
Ouriel: I think the vision of Color is to create stream of information that are [inaudible]. The power of that is you don’t have to be connected to someone. The location is the common denominator. This is very innovative. If they manage to reach scale they will be able to stream information that is really, really, really powerful and unmatched to date. The starting point, I would say, is accidental and the fact that they start with pictures is something that…they had to start with something but I see how they can do it with videos and with sound and with text. And I think it’s going to be very powerful and execute well.
Andrew: So you guys don’t have people throwing tens of millions of dollars at a new idea but what’s the environment like?
Ouriel: It’s very good. We have a lot of good entrepreneurs that are coming from the past generation. If you think about companies like Skype they have given birth to a lot of engineers and entrepreneurs that want to start successful companies. A lot of firms are present there; not as much as the US but they are present. The other interesting phenomenon is that we have a new generation of funds that have been created by entrepreneurs that are ready take risks and invest at a very early stage; pre-launch or very early after launch. I think in the US you also have that phenomenon. Things like Founder Collective, TechStars, Y Combinator. You start to see that happening in Europe.
Andrew: Your fund is like Founders Collective you told me earlier.
Ouriel: ISAI. I co-created a fund called ISAI in France. It’s a fund composed mostly of entrepreneurs and funded mostly by entrepreneurs but it’s also funded by traditional [APs]. It’s funding companies at early stage. Traditionally it was [??] but a private series A. We’ve made already four investments. We’re not alone in France. There are other funds also, a new generation of funds that have been appearing during the past year, in the UK and in Germany also.
Andrew: What have you learned from making these investments so far?
Ouriel: I was a venture capitalist before and I made a lot of mistakes so I learned a lot from them. The very first mistake that I learned is that it’s really important to invest in the right team, not in the right idea. The right team is not a company. It’s not that you invest in bad teams. A lot of people that have very high [INAUDIBLE] will invest in these. The right match of the people with the right idea. Finding this right match takes a lot of experience and I made some mistakes out of not finding this right match. But I also made a few good investments. One of the companies I invested in both personally and with the friends I worked for is [??]. It’s a social media company in Europe maybe equivalent to maybe [??]. It’s extremely popular in Europe. It’s very profitable and doing extremely well. With ISAI made four investments. I can name them if you want. One of them is called Instant Luxe. It’s a marketplace for people to sell luxury objects. We invested in Comuto which is a carpooling service which is the largest carpooling service in Europe. We invested in Commerce Guys which is helping build ecommerce stores out of Drupal technology. There is a new one I cannot mention…
Andrew: Why don’t you do it full time? Why run your company instead of making investments in others?
Ouriel: First, I am not running ISAI. There is someone that is running it full time. Jean-David Chamboredeon is the boss of this fund. He comes from 3i. He’s a tremendous guy. Second, I was starting AppsFire before I joined ISAI and my heart’s gone to this project. Third, ISAI is not my idea. I helped co-found it but it’s not my baby. I’m very happy to be part of it, I’m happy to be participating in it on a weekly basis but it’s not my baby. AppsFire is my co-baby with my co-founder, Yann.
Andrew: You’re in your baby’s office right now?
Ouriel: No. In my apartment.
Andrew: Okay. I was going to ask you to turn your camera around so we could see what your office environment is like.
Ouriel: You don’t want to see it. You would feel so bad. You would see the…
Andrew: I would love it then. How do you feel about turning the camera around?
Ouriel: It’s night now. You wouldn’t see anything.
Andrew: It’s going to be too dark?
Ouriel: Yeah. It’s too dark, yeah.
Andrew: What city are you in?
Ouriel: Tel Aviv. In Israel. The company’s French and I’m French but I’ve lived in Tel Aviv for seven years.
Andrew: Well, it’s good to meet you. Thanks for doing the interview. Bye everyone. Thanks for watching.
