Andrew: This course is about how you can create your own iPhone app using outsourced workers. It's led by Michael Moon and Quoc Bui, founders of Free The Apps, the company with over 35 million mobile app downloads. You can see their website right there on your screen. I'm Andrew Warner. I'm the founder of Mixergy.com where proven founders like Mike and Quoc teach. Guys, can you show my audience what's possible? What have you guys been able to do with what you're about to teach the audience here today? Mike: We've created a pretty sustainable app business. We reached a really big milestone recently. We just hit the $1 million mark on AdSense, and this is AdSense only. It doesn't include the earnings that we got from Apple and iApps and AdMob and all the other app companies. Andrew: So, let me look at this. This is over the last two years, October 23rd, 2009 to October 13th - which was just a couple days ago - 2011, $1.09 million in AdSense revenue. Mike: Yeah. Andrew: While that other app loads up, what other revenue do you have? Do you guys offer all your apps for free? Mike: Yes. Andrew: OK. So, beyond AdSense, where else does the other revenue come from? Mike: iAds also is a big one, but iAds wasn't out back when we first started. That's a pretty good source of revenue, also. AdMob is a big one. Andrew: OK. Actually, at the end of this session we're going to show people the specific ad networks you work with. We're going to tell them which ones you recommend, and we'll get into all that, but for now we just wanted them to see a sense of how much revenue you guys are doing and one source is AdSense, which you just showed us. What are you showing us now? Mike: This is our app figures account. We logged into it. You can see if you look at the all time that we've had a little over 35 million downloads. This is showing the dates when we first started, the graph down here, of around August 1st, 2009 to December 31st, so we weren't getting a ton of downloads all the time. When we first started, we were getting about 5,000 downloads and then it started to take off when we started creating more apps. As you go down here, Christmas of 2009 was huge. We got 231,000 downloads in one day, so we got in at a pretty good time. Andrew: That's unbelievable. I think most people would be glad if all time they got that many downloads. Oops. I just got a pop-up on my screen here. Remind me later about that. Here you guys did it in one day; you were able to pull that out. Let me ask you this: Before you did all this you talked to me, before the interview, about how you got a little lost and you were taken in by a free lancer. Can you talk just a little bit about that because I think that it seems really easy when you see how big your numbers really are, but it was a struggle to get here. You guys learned a lot and you're about to share with us what you learned, but what's one of the big issues that you had as you were figuring this stuff out? Mike: One of the first couple projects that we did we picked a freelancer. He looked really good, and he started one of our first projects. This is actually one of my first projects, and then we had three ideas that we wanted to do. Before that freelancer finished the first project, we decided to just give him all three projects. That didn't turn out really well because he turned out not to be able to finish the first project very well, and the second and third ones just didn't finish. So, that was a big blow, but, instead of quitting, we decided to pick up, try some new ideas and find some new developers. That stopped momentum a bit. Andrew: A big chunk of what we're about to talk to people about today is about how to find the right freelancer, partially because you guys got burned that way and partially because if the person who's watching us today is not a developer, can't do the whole thing himself or herself, they're going to need to find the right freelancer and avoid what happened to you and find the right freelancer so that they could get that bump there that I see up on the graph on your screen. I get a sense of where you are now. Congratulations. I get a sense of the danger of not doing it right. Let's talk about how you do it. What's the first step? Mike: The important part is a lot of people are usually scared to outsource their thinking. You know, "I have this awesome idea. What if somebody wants to steal it? You need to protect yourself with a NDA, so let's pull that up over here. Andrew: All right. Mike: And this is the NDA we use for one of our specific apps panorama. Andrew: So, you guys have all developers that you work with sign a NDA? Mike: Yeah. And we include a link for that later so they can download it in case they want to use it as a template. Andrew: All right. So, the NDA that you're showing us right now, this is something that whoever is watching us can copy and paste and just basically steal your NDA and use it. Mike: Yeah. Exactly. Just fill in the blanks. Andrew: All right. Quoc: It's actually one of the bonuses that we give away in our e-Book package. We're just going to link it to you guys so you guys can download it and start using it today. Andrew: One of the things that I love about you is it feels like it just knocks the stuff out and it'll work. But what I love about you guys is that you're hustlers. You sell everything, like everything is available for sale, part of a package. At the end of this session, most people who teach courses on Mixergy, at the end of the session, they go, "All right. Thanks for having me on here." You guys go, "Andrew, we've got a way we want them to take the next step, and if they want to buy something, we want to have that for you". I love this mentality because I feel like you're finding opportunities by trying all these things. You're finding opportunities in the app store. You're finding opportunities by creating products to sell people. And frankly, you and I connected because you wrote a book on how to do this, and I said I've got to get the guys behind the book and the people with the story that I read about in the book. So, NDA, is this really an issue though? Are we really when we're trusting our ideas to outsourcers, there's really a risk they're going to take the idea. Have you guys seen that? Mike: Honestly, no, I don't think it is that big of a deal. People are scared by it, but people on things like eLance, they're not out there to steal your ideas. Andrew: So, this is mostly just you saying, we're going to cover our butts here, and we're going to show the person who we're working with that we're serious about these ideas. But you're not expecting to have to go to court with this or even have anyone steal your idea. Mike: Yeah. Exactly. Andrew: All right. Fair enough. But we're releasing our ideas into the world, if we have this idea that we can pass to people who can just copy and paste it. All right. Next step is what? Now that we've got a little bit of protection, what is the next thing we do? Mike: So, the first thing you want to do after that is create a wire-frame for your product. You need to let the developer know exactly what you want and where you want your app to work. This is the exact wire-frame actually that was used to create our panorama app. Andrew: OK. Mike: We just go step by step of what we want, where we want the app placements. Andrew: So, let me take a look at this and ask you some questions to make sure that I understand it. First of all, this looks really basic. Is this the whole wire-frame that you sent over, the whole logic? Mike: It's really basic. We tried ones even more basic than this where we just have a pencil and paper and draw it out and take a picture of it. It's very basic. Andrew: Yeah. I think actually for this course, you said we'll just grab the piece of paper that we used for one of our past apps, but frankly I think this is much better because it's easier for people to duplicate this, and I don't think a piece of paper on the screen will show up that realistically, will it? Quoc: No. Andrew: So, let me see if I understand what you've got here. What you have is you're saying, give me a splash screen, some kind of screen that pops up as the app is loading. Then, what's that second rectangle that that top splash screen's arrow pointing to? Mike: The one that's pointing down? Andrew: Yeah. So, the splash screen leads to what? Mike: So, the splash screen loads and we have one of the gray screen advertisements right there to show while the app is loading. Andrew: So, the first thing you want to show people is an ad because you guys make money through advertising. Mike: Exactly. And you don't always get to show when the apps already doing something, when it's loading. Andrew: I see because there's nothing else for people to do except to look at the ad. OK. By the way, before I continue asking you about this, what does this app do? Mike: It basically takes a series of photos and stitches them together to create one panoramic photo. Andrew: OK. So, you just want an app that lets people take a photo, photo, photo, photo; stitches it together and gives them one panoramic photo. That's simple actually. All right. I get it. So, you're saying, show a splash screen, then show an ad. Then, where does it go? It goes up to a diamond shaped little chart item. What is that? That's a decision. Mike: Yeah. So, basically if they're going to be taking a bunch of portrait photos from landscape photos. Andrew: So, you want to know: is it portrait or landscape? Let's suppose it's portrait. So, it takes them up to the take a photo screen. Then it goes to the right. After they take a photo they get to view it, either check and say yes or redo it and take another photo, right? Quoc: Yes. Andrew: OK, and then what you're doing is you're leading them right back to the same take a photo page, right? Mike: So, it'll be taking a series of photos until they click, make my panam now, which is when it will start merging those photos together. So, you need a minimum of at least two photos. Andrew: OK, so you can't see it where I'm pointing so I'll just talk it through, but the right most screen shots, the one that's a start over, reshoot photo one and underneath it, done. That's essentially where they're done. Once they've completed this process, they hit the done and that's it. Mike: Yes. Andrew: Alright, then let's see from there what happens. You take them to, what does it say on the far most rectangle? Mike: Oh, on the right? Andrew: Yeah. Mike: Yeah, that's another gray strike full screen advertisement, so that'll pop up as it's merging, which is the bottom left screen. So, as it's merging the photos together it'll show an ad. Andrew: Got it. Got it. OK. And then you show them the photo. Mike: Exactly. Andrew: And that's it. And it looks like you say, do you want to add this to your iPhones photo collection. But you don't have a tweet this, or Facebook this, or anything like that at this stage, do you? Mike: We did, but we had those on the written description that just went more into depths of the wire-frame. Andrew: OK. So, this is it. You hand them this with the written description of what happens and this is your first version. Mike: Yep. Andrew: Alright, I have a few questions about this. First of all, what program do you use, this is such a dorky simple question but I want to cover all my bases here, what program did you use to create this? Mike: I think it's Sierra basic, maybe I even used like MS Paint on Windows on my old computer or something. I mean sometimes we use Photoshop, just really simple stuff. Andrew: So that's it, it's just that basic and of course, Google.docs has a flow charting system and I've seen people even use, what is it Picnic, no not Picnic. I guess it doesn't really matter if you guys can use Microsoft Paint to create this then, then it shows how basic it is. What are you guys doing on PCs? Mike: Oh that, well I'm not on a PC anymore. Andrew: Oh, right, now that you guys have done well, one of the first things you did was buy a Mac? Mike: Right. Andrew: All right, fair enough. So this is the simple, what is the cost, and you're going to show me how to find a developer to get this done for me, but what does it cost to have a developer build this? Mike: Actually, anywhere from one to four thousand. It's like one thousand to four thousand dollars, depending on the simplicity of the app. Andrew: This specific one, what would it cost? If I were to say, hey, you know what, Michael and Quoc just put an idea in my head, I'm going to do panoramic photos also, I'm also going to put adds in, but I'm going to beat them by putting in only one ad instead of two ads and I'll mop the floor with them. If they wanted to do that, how much would it cost them to duplicate this? Mike: This is a little more complicated because of the Photo stitching, so I would guesstimate like, four thousand. Andrew: OK. Mike: We had this app developed half a year ago or a year ago, so this was done a while ago, so back then I think we paid about four thousand for it. Andrew: OK. Mike: Yeah. Andrew: All right, so on a simpler end, if I just wanted to say take, I say it's Christmas coming up and I want a photo where someone can take a picture of their friend and then like on top of the photo put a Santa Claus hat. What would that kind of photo, what would that kind of photo app cost me? About a thousand? Mike: Five hundred or less. Andrew: Five hundred or less. Mike: All you want is just a hat, just a hat on the picture? Andrew: Yeah, and you adjust it on the screen so it goes exactly on the person's head. I'm just trying to get a sense of what a simpler app would cost. Mike: Yeah, less than a thousand. Andrew: Less than a thousand bucks. Mike: Yeah. It's just a simple one hat, but if you want different types of hats and you want, like a beard, different things like that, like different art that you can put on a face, we actually have apps that do that. I think that's like two to three thousand. Andrew: Two to three thousand to go a little bit higher end. All right, and the revenue would come from advertising. Let's talk about how to find a developer for this because this is a great idea but if I end up stuck with a developer for hours and months and it goes too far than the whole idea flops. Mike: Sure. Andrew: So, what do I do now? Mike: So, what we did was since we created, since we were using the panorama wire-frame, we wanted to stick with that application. But since we had that created a long time ago, we wanted to start out fresh. So, two days ago we actually put up, we put up a job on Elance, with that exact description, the MDA and the wire-frame, we just wanted to see what kind of developers would bid on our application. Andrew: OK, so I asked you to walk me through the whole process and show my audience the whole process of creating an app and you said, hey, you know what two days ago on Elance we put up an app, we're going to trust Andrew's audience to see this and we're going to show it all in public. This is what you put on Elance asking someone to design your next app for you. This is the next piece of the million dollar idea, of the million dollar business. Mike, you're smiling, but let me tell you something, this is the same thing, when I had you on the interview, I said the same thing and the audience agreed with me. I have people who've done nothing with their lives, nothing with their businesses, who approach me and say, "Andrew, I'm the best at this, I'm phenomenal". They come on screen and they're talking like they figured everything out, not only business but they figured out women, men, life, marriage, like that, they figured it all out. That's the way they come across. You guys, I know you guys, we have friends in common, I know that you guys are the real thing and you come across like, we just built a Word app, you know, or not a Word app, we just built an MS Paint doc, this is no big deal. So I have to, if the audience is seeing me compensate by being more enthusiastic it's A) because you earned it and B) because you will not express anything. So, I've got to do everything. I mean you're really showing Elance. I've had other entrepreneurs on here who've done iPhone app development and I've said, will you show me your screen on Elance and they're like, are you out of your friggin mind? I don't know who watches this stuff, I'm not about to share it. So, I appreciate that you're doing it and I want the audience to appreciate that too, so I've got to stop and say it. All right, now I've zoomed in on your screen, I see now Elance. Can you walk me through what you've done here and what we need to do if we're going ask someone to create our iPhone app? Quoc: Right, sorry for not being more enthusiastic, we're just trying. Andrew: I can cover for it, believe me, I've got triple the enthusiasm, I'm holding back right now. Quoc: We're just trying to have people not make the same mistakes we made and not really trying to sell anything, so. Andrew: All right. So let's take a look. So, what are you seeing? Actually, know what, let's see if we can do this, can you hit command plus on your keyboard, that will make your text a little bit bigger and it will fill up more of the screen. Quoc: How's that? Andrew: It'll take a second for it to show up on my screen and while it does, why don't you start walking me through this. The app is called photography iPhone application. Quoc: Yeah, so we want to make a title kind of generic, you know, we don't want to put everything in there so we just, pretty much they're going to create a photography iPhone application, so hopefully we'll be targeting the developers that have worked with photography applications who know a thing or two about features, photo, video. Andrew: Mm-hmm. Quoc: And, in our description, we wrote up a pretty basic description. It says, we also attached the wire-frame that you saw previously. So with that we also added a pretty basic description saying we had to stitch multiple photos by aligning, blending, stitching them together to create one photo. That's pretty much the gist of the application. Andrew: I see. OK. So this is actually you recreating the Elance request that you had up before, right? This is not for a new app, right? Quoc: Yes. Andrew: OK, alright, I misunderstood but I get what you're saying. OK, so, what you're showing in the description, this is the way you describe it. Very basic, we need an application that can take multiple photos and stitch them together to create a panorama photo. We need it to be able to stitch multiple photos by aligning, blending and stitching them together to create one panoramic photo and then underneath it you say, we also need AdWorld implementation with AdMobs, Quattro, Google Ad Sense by using generic notifications. Please let us know if you guys can take on this project for us, how long it'll take, how much it'll cost and what's that last line there? Before, oh, OK, this is the part you weren't sure you even wanted to share with the wider audience but I said go for it. Before applying, please include a signed copy of our NDA and we have attached and included the very top of this reply the specific key words so that we know you're human and the specific keyword is, I am human, and the reason you said that people should add that last section is, why? Quoc: Because sometimes people reply, automatic replies, so they'll just reply to tons of iPhone app development jobs and they don't really read the description, it's just a mass reply. Mike: And I'm pretty sure there's probably bots out there too that just spam all these things with bids. Andrew: Yeah, I mean, I guess if what you're doing is reaching outsourcers who develop automation software, of course they're going to develop automation software for themselves to auto reply to all the Elance opportunities that are out there. Quoc: Yeah. Andrew: OK, so that's what it is. And now, you already got, even those this is a fake, now that I see a fake and this is why I should hold back my enthusiasm, I thought this was a real app. It's still very useful but I've got to react in a different way to this. Alright, this is real responses that you go to the test description that you put up two days ago. Mike: Yes. Andrew: OK, great. Thanks for doing that, by the way, for taking the extra time in creating this description and adding it to Elance. So let's see what people responded with. Quoc: OK. And a big reason for this is because after you find developers that you know and trust, we'll go back to them for future projects. Andrew: OK. Quoc: After they finish a project, everything went really well. So after a while, you don't have to use Elance as much, once you find trusted developers. So the reason why we posted this is because, we didn't actually do this project through Elance. We used a trusted developer. Andrew: Got it. OK. Quoc: For this one. That's why. Andrew: But first, you're finding your developers through Elance. Once you get to know them, and you like working with each other and it feels like you can read each other's minds, then you just go directly to them. So let's see who responded . . . Quoc: So first of all, I was . . . Andrew: I'm sorry, go ahead. Quoc: So first of all, I was using Elance. So that's why we want to show this. Andrew: OK. And they even did a case study on you guys, they did a whole post about how you guys keep using them. Mike: Yes. Andrew: And have built a successful business with them. Mike: That's also cool, because a lot of people ask, "How do I know how much this app is going to cost me?" And you put it up on Elance, you get a bunch of different bids, and you can just tally up the average and figure out what the going rate is. Andrew: All right, so it actually feels sometimes to me, when I post a job requirement on Elance, that it's a job in itself just to go through all the responses, and it's hard to figure out who the right person is. Walk me through how you figure out who the right outsourcer is to use for this. Quoc: OK. So here are a couple things that we look at. Here's the first bid. And Elance makes it nice, so you can message the people back, or you can create your own personal notes about the bid. So these notes, nobody can see except yourself. Andrew: OK. I see - ignore or not. Quoc: So these are real useful. See the cheat notes, right? Andrew: Mm-hmm. Quoc: So for this first guy, he didn't write the "I am human" part at the very top. Just a very generic message. Hello sir, I am interested in this project. So right away, it's a red flag. It's a signal. Mike: Yeah, if he doesn't even mention anything about the app that we just described. Andrew: OK. So he's offering to do it for $4,712.33. I see. Mike: Yeah. Andrew: That's his way of saying, even though he's probably not human, that's his way of saying I am human. Quoc: So it's just generic. He says nothing about photography applications, or anything about our requirements, which is a red flag, too. Andrew: OK. Quoc: So he clearly didn't read the description. Let's see, the second one, see it's "I am human". He's attached the NDA, and he talks about how they have experience with applications utilizing camera hardware, photo, video manipulation features. So that's a big thing that we look at too, is have they done something similar? Andrew: OK. Let me give that a moment here to see it. It says, "Please find attached NDA document. We have very good experience with iPhone, iPad applications utilizing camera hardware, including photo and video manipulation features. Here are some of the relevant applications that we've developed." And he links to some Flash and PDF file. He also says he's not ready to say the amount that he's going to charge. Is that common? Quoc: That is common. Sometimes they won't say how much, so it will take a couple back and forth discussions. They just wanted to get to know, they wanted to know more details about the application before they give us an estimate. Andrew: OK. Quoc: Because, since our description was kind of general. We did have a wire-frame, that was pretty specific there, but they wanted more information before they give us a number, so they don't scare us off. Andrew: I see, OK. Mike: They want to get us. Quoc: They want to hook us in, first. So that's their way of doing it. Andrew: And so they start asking you more questions? Quoc: Let me see. This guy didn't ask us more questions. Andrew: OK. Quoc: There are other ones that do. But this one, this is one of the ones that I would have replied back to, because they have experience with video and photography and stuff. Andrew: OK. Quoc: So that's important for our applications. Since we have photo manipulation and stitching and blending. So usually we picked about three to four, that we'd reply back to with even more details, more information. And then we'll pick from there. So we narrow it down. Andrew: Would the first thing you send out be just the wire-frame as you showed it to me, the flow chart? Quoc: Excuse me? Andrew: Is the first thing you send out just the flowchart that you sent me? Or do you do the flow chart plus the text document that you described? Quoc: Uh, we send out both. Andrew: Both, OK. And then later, you follow up with how much more information or what other information? Quoc: Whatever questions they may have. Andrew: Got it. OK. So, let's see who else is on there. That's the first real person's response. Let's see what else you got. Quoc: Here's another. These guys are from the United States. Andrew: OK. Quoc: That's one thing, too. If somebody's from the States, we might be able to communicate with them better. The time zones are the same. If they look good, and the price is good, we might pick them over someone who's overseas. Andrew: I've talked to an Indian entrepreneur who said that he couldn't work with Indian developers. I said, ''What's the issue?" He said, "The problem is that they're not walking around with iPhones in their pockets all day." That the developers that he hired actually didn't have iPhones in the office even. They were just working off of the desktop version of the iPhone, the one that lets you simulate the iPhone. He said, "You know, even if they had a real iPhone in the office, the fact that they're not walking home and playing with it before they go to sleep, that they're not waking up to the iPhone alarm, means that they don't have the same feel for it." That's why he prefers to work with European developers, and you're also making a similar case for American developers. They probably are walking around with the iPhone in their pocket and are itching to develop something for it. Mike: In our experience, the best developers we've found are from Russia, the Ukraine. We've had really good experience with developers there. Andrew: Can you say, "I'm looking for either guys in my time zone, in my country, or in specific countries like the Ukraine?" Mike: Can you repeat that? Andrew: Can you say that you're looking for developers from specific countries? Mike: I think we can. Andrew: But it's not something that you guys do right now. You just know that it's a possibility? Quoc: Yes. Andrew: Let's take a look at the next one. He goes, "I'm human" and take it from there. Quoc: He knows that we're in San Diego. He did his homework. Andrew: I love that. What else are you looking at here? Mike: That was nice. Let's see. He just says he wants to speak with us in more detail. Andrew: What about it here makes you feel like this is someone I'd consider working with? He's in the U.S., you said. He said, "I'm human at the top." He also noticed that you were in San Diego, so he cares enough to do a little bit of homework. Right now, all those things could just mean that this is a guy who spends a lot of time networking, and not necessarily a good developer. How do you know he's going to be the right developer? What clues do you have that let you know whether he will or will not be? Quoc: Some other things we might look at are his ratings. Andrew: OK. 4.7. Mike: 4.7 average. How many repeat clients? Andrew: How can you tell if he has repeat clients? Oh, I see right there. No, actually, I don't see it. Where do you know if he has repeat clients? Quoc: We scroll over, and so we know that he's made $56,000 in earnings, right? Andrew: Right. Quoc: Below that, you'll see it says client [??]. It says 20 total and 11% repeat. Andrew: I see, yes. So, he has some repeat clients, right? Quoc: Mm-hmm. Andrew: Got it. Got it. Quoc: The repeat clients is a good thing, yes. If we work with a bad developer, we're never going to develop good projects. They've had 37 jobs. That's a pretty good sign. Just because they're in the U.S., we might message them back. But, they didn't really say anything about photography applications or video or anything like that. Andrew: OK. The way that you would message them back is, you have to just use the internal messaging system at Elance, right? People don't want you to talk offline. Quoc: Yes. We want to use their messaging system if we work with Elance. Andrew: Why? Quoc: Just in case problems arise. So, we've had it before where, say a developer was taking too long, or they just weren't doing the project correctly. They couldn't finish it. So, it's a good thing to have all your messages on Elance. Then if you need to go into a dispute, Elance can step in and then they can review it. So, everything's there for them to see. Andrew: Got it. How much is Hypeconcepts LLC willing to do this for? Quoc: They didn't specify. Andrew: All right. And, you'd said earlier that's a pretty common thing. Quoc: Mm-hmm. Andrew: OK. Is there one other one you want to point out before we move to the next stage here? Mike: Here's one. Do you see the Harold Solutions? Andrew: It's going to take a moment to come up on my screen. Right now I see Alioth Technology Consulting Company, LTD in China is willing to do this for $4500. Karmic Solutions is willing to do this. We see that Karmic solutions has a lot of payment, I think it's $76,000. Here's Harold Solutions. What are you noticing about these guys in India? Mike: These guys, you can tell they've actually reviewed our requirements and they summarize what we need. So, here's the three bullet points they've summarized, and they actually asked us relevant questions. So, it's as if they've already started. Andrew: I see. Is there an option to save captured panorama effect in the application? Are you going to provide graphics in U.I. or do we need to? This is really good feedback. So, this person really cares, and this person understands the project and has gone through each one of the flow chart steps. I see. So, right now, I'm seeing several people who I'd want to at least engage in conversation with. How do I know which of them is the right one for me to work with? Mike: To me, a big thing is if they worked on similar projects in the past. This guy, he asks good questions, but if he's never worked on an iPhone app in his life, if he doesn't have anything to show or he does have something to show but it's not a well made app, then I probably won't work with him. Sometimes you just have to pick one and go with it. Andrew: Got it. Maybe now is the right time to look at feedback. Is there anything you want to show us from the proposals you just got? Mike: No. I think that's it. Andrew: Can you tell from the proposals how much you should pay for this based on what people have all ready suggested or is that not possible yet? Mike: I don't think this is a good reference yet since it's only been two days. Usually we'll leave up my description for around a week to get more proposals and a better idea of how much we should pay. I would say this is along the high end of $4500. Andrew: Of what it should cost. Mike: Yes. Andrew: OK. So, what you do to figure out the price is, tell me if I'm wrong, you just go through all the proposals and, based on what prices people are pitching, that's how you know how much to charge. Mike: Yeah. You get a pretty good idea from that. Andrew: OK. That plus experience from having created apps in the past. Do you guys have a network of other iPhone app entrepreneurs that you reach out to and say, "Hey, are these guys full of crap or is this really the price? Should it be $4500 or maybe we just didn't explain out app properly so they think it's more complicated than it is and that's why they're all charging in the $4000 range?" Mike: This is a pretty good way of doing it because they can do the closed bids where they can bid and the other people who are bidding can't see what everyone else is bidding, so it's a pretty good way to do it. Andrew: I see. So, now you get this. You go back and forth with people. You pick one of these developers and say, "You're the guy." What do you do now in the back and forth to make sure that this gets done right? Mike: After you pick the developer, it's just a lot of back and forth. They'll e-mail you or they'll message you on Elance with a "Here's a new build. Here's what we're working on." Then they give us a build that we install in our device and we'll play with it, we'll test it, and we'll give them feedback. So, what we've found is that the easiest way is to just make a list, just a numbered list, of things they need to change, things they need to fix, bugs. So, here we took a screen shot of actual feedback we gave for the panorama edition. These are two separate examples. Andrew: OK. Let me take a look at this. This is you guys responding again. You're giving them feedback within the Elance platform and you're saying, "The UI looks great. We love the way you implemented how it stitches from portrait to landscape.". Then you have a list of bugs and also you have a smiley face there. One bug we caught was that when you click the finish button, the green check mark, on the "Take left most photo 3" it shows "Panorama taking photo number 2". We've attached a screenshot, bug.png. They should both be the same number 3, and the only pull up menu that should have the previous number is when you click the back button. See correct.png. All right. So, you're just showing them each step that needs to be fixed, and then you have the summary of fixes. Summary of fixes: 1, Fix the number in bug.png, 2, remove backspace on toolbar highlighted in red in portrait.png, 3, move sign "Take left most photo X" below the ads. See portrait.png and landscape.png. Do I have that right, Mike? Mike: Yep. Andrew: Then below, again, it's similar. Can we give this to people? I know we're giving them the NDA. Can we give them the screenshot of this, too? Mike: Yeah. Andrew: All right. I'm not really sure that this specific feedback can help. But, who knows? Any little bit of just looking over your shoulder and seeing how you do it, I think, can potentially be helpful. Mike: It's just showing how detailed you want to be when describing your bugs to developers because some people will just say, "Oh, this doesn't work." But, that doesn't help the developer in figuring out how to reproduce the bug and how to fix it. Not everybody's a QA expert. Right? So, this is just kind of a step by step showing how detailed we are in listing the app so developers can easily fix the bugs. Andrew: You're at this point installing it on your iPhone and, whenever you see a mistake, hitting both buttons, doing a quick screen shot, and basically emailing them or attaching it to the Elance bug request. Mike: Mm-hmm. Andrew: OK. What else do I want to know about this process? So, you had an issue where you gave someone too much work and it took you too long to know that this free lancer was not getting the job done. I just recorded an interview a moment ago with an entrepreneur who said it took him three months to figure out that the first developer he hired was just never going to get it done. How do we cut back on that time? Is it just enough to say in Elance or whatever system we're using that we're going to set up four milestones for payment. The first one is when you get started. The second is when you deliver the first version, and if you don't deliver the first version by a certain time, you're done. Is that how you guys protect yourselves? Quoc: I've never done that. Andrew: So, how do you do it? How do you protect yourselves from developers who just take forever and don't get anything done? Mike: We probably just stop at the milestone and give what has been created so far to a new developer. Andrew: So, you do use milestones. Mike: Yes, we do. Andrew: How many milestones? At what point do you have them and what percentage of the overall do you pay out at each milestone? Mike: We usually don't even have an initial payment. The first payment's usually after the first milestone where they give us the first test version of the app. Andrew: How much do you give them at that point? Mike: Depending on how many milestones, maybe 25% to 33%. We usually only break it up to only four total milestones or three. Usually three. Andrew: Three total milestones. Are they equal payments or is there a different amount? Mike: I think it's an equal one, and we've also done where the final one is the most. Andrew: It seems to me that it's not critical how much you do it, just that you have milestones, that you break them up, in your case either three or four stages. You don't have to pay right away, but you do say, "At version one, you hit a milestone" and you get either 25% or 30% of the overall. That's the way you guys do it. Quoc: Yeah. Just make sure that those milestones are actually worth how much you're paying them. Andrew: I see. Quoc: You don't want the milestone to be 50% of the payment when it's 10% of the total work. Andrew: Have you ever had someone hit a milestone and not deliver the goods? Mike: Yeah. That happens all the time. Andrew: So, what do you do if you've said to them, "In one week or one month you need to give me version one of the panorama app, and when you do that I will give you $1500." The time comes. They don't deliver. What do you do? Quoc: We just wait longer. We're actually pretty nice. We're pretty chill. Mike: Yeah, we're very nice. Quoc: You could be micromanaging. You could be on them every day, but if they told you something came up, then sometimes you have no choice but to wait a little longer. When you reach your tipping point where it's like "It's been three months since the milestone. I haven't gotten anything." Then that's when you can go to them and say, "We've wasted too much time. We need to get another developer." That's how Elance protects you. You can request your money back, even money that you've all ready paid them for past milestones. Andrew: So, if they hit milestone number one, they hit milestone number two, but they miss the third milestone and they haven't even started to aim at the fourth and final milestone, you get the first two milestone payments back, you're saying. Quoc: You could go into dispute about that. So, first you talk to them and say, "You know what? This project's never going to be complete. You're not going to deliver us the complete project, and we want our money back because we want to start with a new developer." Sometimes they're OK with it. We've had this happen to us where sometimes they'll say, "OK. We can't just finish it, so here's your money back." Sometimes they'll fight it. They'll say, "We did this work. We're not going to give you your money back." That's when you should go into dispute with Elance, and that's where the past messages and all the milestones that you set up come in handy. Andrew: OK. You guys seem pretty chill. It's not a matter of just pushing back on them or being slave drivers with them or worrying that maybe you're being push-overs. You just set up your milestones. You expect them to hit it. They probably do. If they don't, you give them a little more time. It's that chill. I'm OK if I do that. I don't have to freak out, and you know me, I would. You're saying no. Quoc: Yeah. The big reason for this setting up passive income is so that we could be a lot more stress free. Andrew: I see. That does seem like a big thing for you guys. It's not a goal for being the next big iPhone developer. I'm trying to think of who you guys might be aspiring to, but I can't even. In fact, why don't you tell me? Who is it? Quoc: Angry Birds. Andrew: Angry Birds. Yeah. You're not trying to be like them. Quoc: No. Andrew: No, you just want to make some money on the side. The person you told me earlier that you're thinking of is Tim Ferriss, the Tim Ferriss four hour work week. You want to chill and build this thing. It doesn't have to be high stress. You're not trying to create the next big iPhone app. I see the feedback. I understand the loop. You've told me that people are underestimating free apps, that if they wanted to charge, Apple makes it easy to charge and sends them a check, but if they want to go free they don't understand that it's a viable business model. It's worked for you guys. It's where 100% of your revenue comes from. So, teach us. Now we've got this app. It's time for us to make money. What do we do? Quoc: That's a big question. It's "How do you make money when all of your apps are free?". How we make money is off of advertisements, just like how Google made a big portion of their money. It was through advertisements on the web. So, there are a lot of different ad networks that you can put onto your applications. You can have a banner ad, which is a very small piece at the top, or you can have full screen ads. When we first started we were just using Apple. Mike: Yeah. We were just using Apple because AdSense wasn't out yet and Apple didn't have iAds yet. Quoc: Yeah. This is before Apple bought Quattro. So, we just used AdMob. You don't want to use just one ad network because their fill rate won't be 100%. Mike: And all the ECPMS will be different on all the ad networks, too. Andrew: So, what you're showing us is Ad Whirl, your dashboard, this is where you decide which ad network Ad Whirl should serve up in all of your apps. Mike: Yes. Andrew: OK. Why are you doing 90% Google AdSense and only 10% of iAd? Quoc: We found that Google AdSense is paying us the most money. Mike: We should probably update this, though, because AdSense is getting phased out. Quoc: They're paying us the most, so we wanted to show that 90% of the traffic should try to pull from AdSense. The nice thing about Ad Whirl is, let's say there isn't an ad to show, so the flow rate isn't 100%, it would jump to the next one. It would pull an iAd. Andrew: I see. Quoc: If we were only doing Ad Mob then the times where there is no app to show, when the flow rate isn't there, then you're losing lots of money pretty much. Andrew: All right. Which of the networks do you recommend the person who is listening to us now take a look at, AdSense, iAd, Ad Mob. I see Bright Role is on there, any of the other one's even worth their time, should they just focus on the top three that you guys are working with? Mike: For full screen ads, Gray Stripe is a pretty big one, they should definitely try those. Andrew: If their doing full screen ads, Gray Stripe, that's what they should use. OK. Quoc: They can also use, so we're actually going to, for our future updates we're going to start using more Ad Networks, just to try to diversify a little bit and see if we can make more money. So, we're actually going to start incorporating In Moby, Jump Tap, Millennial and, I think that's it. But we've also heard good things about Mob Clicks. You just have to try them out. Andrew: OK. Mike: And a good thing about ad mediators, like Ad World, is you can try all of them out. You can give them all a little piece and see how much money you make. Andrew: Will they do the analysis for you? In other words, will they say, hey, you know what? Ad Mob is sending Mike and Quoc the most revenue, the best bang for their CPM. I'm just going to show Ad Mob and de-emphasize iAd and Google Ad Sense, or do you have to go in and manually do that? Quoc: With Ad World it's manual. Andrew: OK. Mike: Yeah. Andrew: OK, what else do I need to take a look at here? What else do I need to know about Ad World? Mike: Yeah, if you wanted to cross some of your applications, like we crossed from a lot of your apps, so when a new app comes out we'll probably push a lot of advertising so that new app in a lot of our old apps. Andrew: Mm-hmm. Mike: Ad World makes it pretty easy with house ads, you can just put in a house ad. Andrew: Got it, I see it right there, so let's take a look at that. Are you linking directly to those ads, by the way? Or are you using linkshare? Mike: To our apps? Andrew: Yeah, so here's what I heard. I just did an interview with an entrepreneur who's in the app space and he said this. He said, "Look, I have on all my apps a list of all my other apps so that anyone who signs up for one app can hopefully sign up for more." And he said, "What I realized recently was, I can just do a link from, instead of linking directly into the app store and letting people go and get my app, I link to my app in the app store using a linkshare affiliate account."And even though, he says, my apps are free, if the person goes into the app store and buys an app that costs money, I get money back. He told me that for 72 hours after someone clicks using your affiliate link, you end up getting a paid affiliate commission on that person. Did I just blow your minds? Mike: We do use linkshare. Andrew: You do use linkshare. OK. Mike: Yes. Andrew: So, how do you know that? When he told me that, I'm not an iPhone app developer, I'm a guy who's just a student learning. I guess he might have figured this out on his own, but how did he figure it out and how did you figure it out? Or is there someone out there that you guys are reading? Is there a blog that you guys are reading? Is there a message board that you guys are talking on? Do you go to an event where you get to meet people and hear this stuff? Quoc: I think we read it somewhere. Mike: There's so many sites that we read, I don't know. Quoc: Yeah, we might have heard from somebody that there's an affiliate program for the app store and we just decided to try it out. Andrew: OK. Can you bring up that page that you had up a moment ago? I was talking and didn't let people see what point you were about to make on it. And while that's loading up, while Mike is loading that up, Quoc, can you recommend a few sites for us to look at to read more about this? Where are you guys reading about the industry? Quoc: I don't know. Andrew: It's a bunch of sites, you said earlier, but you can think of one? There isn't like a Tech Crunch for this, there isn't a Mashable? Quoc: No, I mean, honestly, I don't really keep up so much. I try to see what other people are doing, as much. Andrew: OK. Quoc: The biggest thing we do is pay attention to the apps store itself. See what's high up in the ranks, what people are interested in, what the trends are. So, keeping an eye on the app store is a big thing. Andrew: OK. All right, so what is this page? This is where you would add your house ads, your saying. Mike: Yeah, exactly. Andrew: OK. And you just click the add button and go from there. All right, so this is the whole process. Let me ask you one other thing that I see we don't have a tab for. In fact, while you answer this, maybe you can bring up the next tab and give it a chance to load. Marketing, we now have the app, it's in the app store, we're proud, we want people to use it. I know it's a little outside the scope of this course, but do you have a couple of recommendations of what we can do to get people to actually use our app? Mike: There's a lot of good marketing sites out there. Apalon.com's one of them, what's the one where they can? Quoc: Combo app. Mike: Combo app is another good one. Andrew: So, it's Combo app and what's the other one? Mike: Apple On. Andrew: Apple On. The word apple and O-N .com. Quoc: No, it's A-P-A-L-O-N. ANdrew: A-P-A-L-O-N. Oh, I see, OK, and what are these sites? Mike: There are a lot of different packages you can purchase, and they'll do a lot of things like send out press releases, just get the word out about your app, get you a lot more downloading. There are even guarantees like, they'll guarantee you a top 10 spot in whichever category you're in or you get your money back. Andrew: OK. Quoc: See, so they help drive traffic, like they drive traffic to your app to raise it in the ranks, to hopefully get other people to see your app, too. Mike: Yeah, for these I would recommend not using them right away. I would actually just release the app on your own and you can send your own and see if it grows organically on its own, and if it doesn't then try one of the marketing packages that they offer. Andrew: OK. All right, so Apalon, Combo App, I've got to do a whole other course probably on just how to promote an app once it's in the store but I feel like just getting it in the store can either bog you down in months and thousands of dollars and wasted time and money, or it can work the way you guys have it working, where you put it out there, you go back and forth a few times and you've got your app. I mean, you put your proposal out there and you get your app. Quoc, you were going to say something. Quoc: One thing about marketing is a good icon, it's a good screen shots and a good title. Those are the things people will see right away. Andrew: Who do you turn to for that, for that design? Is it also the same person who does your Elance? Quoc: No, we actually look for a graphic designer for that too. And the graphic designer, you can find that in either Elance or 99designs. Andrew: Got it. Do you go on 99designs and put up a proposal, or do you see who won other proposals and you say, I'm going to hire him directly? Quoc: No, we put up proposals on 99designs. Andrew: OK. All right, you've got something up on your screen. What is this? Mike: They can, for everybody whose watching this, you guys can go to freetheapps.com/mixergy and we'll have a link there to the NDA there that you guys can download. We're also showing our link to our e-book. Andrew: OK. Mike: We're looking to have it up for a limited time. 50% off for anybody who saw this. Also the app code is another really good program. It's a step-by-step course on how to build a sustainable app making business, and how you can directly work with us on apps. And it talks about how Bitzio, the company that acquired us, can acquire you guys, too. Andrew: All right, let me pause here for a second actually. You guys are selling a ton, but man, you're not selling here. Like, I mean, you're just, this is what we have and let me just make sure, at least, that people understand it. I'm not going to do a big sale job here because I know that people who got this paid for this course and they don't want to be sold on anymore, they just want to learn what's going on here, but this is important. If they go to freetheapps.com/mixergy what they're going to see is the NDA that you're giving them, you're also going to show them a link to the book, "How to Make an iPhone App with No Programming Experience", it's a book where you go into depth about what they just learned here and you also have "The App Code" a full blown step-by step course on how to build a sustainable app making business. Who did you guys do the app course with? Quoc: The app course is actually not ours. It's our friend, Anish. Andrew: OK, so Anish put it together and you guys are recommending it and you also have a link to all the Elance articles about you, to 99designs doing an article about how you guys use them for design, to Mixergy the interview, the first one, where you and I first talk and freetheapps, the passive income life with Quoc. Hey, Quoc...actually, I think we're good here, freetheapps. You know what I'm wondering is, and why don't you bring up the books so people can see that, too and the last tab is the company that, have they bought you guys out yet there? What's the deal? Can we say that their buying you? Quoc: Yeah, so the thing with Anish is that he had an app business to and he got acquired by Bitzio as well and that's part of what the app code is talking about. Andrew: OK. Quoc: It's how his company got acquired by Bitzio and our company got acquired by the same. So, we're going to be working together. Andrew: Got it. Mike: It's a pretty sweet presentation that would definitely do a better job than this, trying to explain it. Andrew: I think you guys just did a great job. You kept it really simple, you kept it actionable. Everything that you guys talked about we can do. In fact, I could actually see someone saying, you know, I'm not ready to build an app right now, but I'm going to just try it." If they can create a phony app - not a phony app but a proposal that they're not planning to build. If a person's listening to us and they have an idea to, at least, put their idea out there and see what the response is. You're also saying Bitzio . . . Oh, there it is. It actually is press released. So Bitzio has acquired your business. Congratulations! So, why are we showing this? What's your idea for the audience with this? What's your vision? Quoc: They could get bought out, too. Andrew: How could they get bought out? How could they get bought out by these guys, by Bitzio? Quoc: Bitzio is in an acquisitions mode, so they're looking to buy out good developers or just good apps. So, if a company makes a really good application, they could possibly get bought out for a lot of money. Andrew: All right. Quoc: So, that's another exit. That's another exit way to do because when people find out that we make apps, they all say, what now? What's the next step? So, getting acquired is an awesome next step. Andrew: Gotcha. All right. Did you guys get all cash for your deal? Quoc: No. Andrew: A share in the business? Quoc: No. Andrew: It's shares and a payout over time. Quoc: Mm. Andrew: And is the payout over time in cash? Quoc: Yeah. Andrew: It is. So, cash over time plus shares in their publicly traded company. All right. Let's get your website up one more time so people can see Free the Apps. It's the first tab on your screen. While that's up there, I just wanted to say, Mike and Quoc, thanks for leading this course. Thanks for showing us how you guys did it at FreeTheApps.com. Mike: Thanks again, Andrew. Andrew: Thanks. And for everyone who's watching us, I actually just before I started this session, I got an email from someone who took a past course and sent me a screenshot with what he was able to do as a result of it. If you go through this process and have your proposal up, have your iPhone app up, whatever, I want to know about it because I want to congratulate you. I want to know about it because I want to be able to help you out as you do it. I want to know about it if you're doing this so that I can tell the audience on Mixergy that you did it as a result of this course. So, come back to Mixergy and let me know. Thank you all for watching.