There’s money to be made with your app outside of the Store, in-app purchases and ads. The thing is you’ll never again generate any revenue for that app from those channels with this monitization method. That’s because it means giving up ownership in exchange for potentially big bucks. The place to facilitate this transaction is Apptopia.com.
Apptopia is the premier online service putting apps in front of buyers. With a focus on iOS and Android apps, Apptopia has been involved in the sale of over $1 million in apps since it launched. Potential buyers browse their website looking for apps that are popular in the stores today, ones with potential and others that have decent code that may be used to build a new app.
I’ll admit, we even have LetterSlider on there and have received multiple offers as a result. We haven’t accepted any because of LetterSlider‘s potential and growth over the last three months, but as they say, everyone has a price.
I spoke with Apptopia co-founder Jonathan Kay about what it takes to sell your app on his website and where the market is headed.
We have to start at the beginning. Where did Apptopia grow from concept to over $1 million in app sales?
The concept started nearly 3+ years ago when my business partner Eli built a quite successful app himself and very much felt the pain our market solves. He has no liquidity, no real exit strategy, and no way of knowing what his “Asset”, his business was worth. We both knew there was a need for a second market (like there is in nearly every industry). But we needed to wait until there was a certain level of saturation before we built it. A few years later we saw apps being built for the sale function of discovering other apps, and Chomp being acquired by Apple…That was a key indicator to us that the marketplace had reached a certain level of saturation and Apptopia was officially needed.
We started making sales and brokering acquisitions even before we launched Apptopia.com and had sales even on the first day we launched. We made money out the gate you could say. We have been very quick to admit our mistakes, and very quick to iterate which has been crucial in getting to $1,000,000 in sales. No entrepreneur gets it completely right the first time.
There are some large-name investors in Apptopia, which has to speak to the potential of this marketplace. What do you think has been appealing to the Mark Cubans and David Hausers?
I think what was most appealing to these guys was the potential of the marketplace. They knew that maybe we would be “early to market”, but that we would also be the market leader if this idea took off. So quite honestly, I think they saw this as a very binary investment. Meaning it would either fail, or go very big. From an investment standpoint those are often the best opportunities.
You offer a free app valuation service — which Gerry does a great job with, by the way. Are people usually surprised (in a good or bad way) with how much you think their app is worth or do they typically agree it’s a fair assessment?
Ha, this is a great question. I would say most people are surprised by their valuation, and more often than not it’s lower than their expectation. However, I think its very important to note that it’s not because Apptopia can not get them a good value or price for their app (we often do). It’s because most people have no idea how to actually value an app. Especially developers, as they have an emotional connection to their app which can often be blinding. Once we take the time to explain to them how we got there, and past acquisitions that match up to theirs they tend to get onboard quickly.
Since so many apps are free (or freemium), a large portion of revenue comes from ad sales. Users can’t link their ad network accounts to their profiles yet, but is this something you’re looking at to give better valuations for frontend buyers browsing Apptopia?
This is something we are actively working on and I have actually dedicated a good portion of my technical team to building out these integrations. We focused on the Analytics integrations before the Ad networks, because analytics & usage data can be much more telling. Not only is it relatively easy to deduce projected ad revenue from this data, but you get much more information in addition (i.e. active users, session length, etc.). This is why in our most recent release we have actually added a data point, which indicates “Projected Monthly Ad Revenue”. In the coming months this will be replaced with raw integrated ad data though. We couldn’t agree more on the importance.
Talk about the sales process a little. These are apps generating revenue in the Store, with Facebook pages, ad networks, etc. How does the buyer ensure they’re getting all the properties and a quick experience to get that app back into the Store.
We have a team of transfer specialists who are staffed 24/7/365 who’s sole job is to make sure the above is as smooth and complete as is humanly possible. From time to time things slip through the cracks, but they always get caught and taken care of. This is also the benefit of Apptopia functioning as an Escrow Agent in the process – it gives us more leverage to make sure things go smoothly.
Is there a common theme among the apps that are sold compared to the ones that just sit unwanted on your site?
There are a lot of developers who build low quality apps. Not because they can’t build good apps, but because they want to put something small out there very quickly and hope/pray for a quick hit. These apps don’t sell, as they are nothing more than just that, a Hail Mary. We consistently see that apps with good design, and good user experience (with a relatively novel idea) sell. Right now we are selling 20% of all apps listed on Apptopia…my instinct is that this number is actually closer to 60-65% when we are dealing with apps that have a real utility and good design.
What suggestions would you give to someone who is looking to sell their app? Then what suggestion to actually get it sold?
Provide as much data, insights, and background as you possibly can. Buyers spend more, and spend quicker when they have the information they need to wrap their head around the investment decision. Most good buyers on Apptopia are also quick to ask questions via our messaging platform and its important to provide quick / diligent responses. We find this instills further confidence, and frequently correlates directly to closing a deal.
Negotiate! We built a real negotiation platform into Apptopia, and so if someone makes you an offer doesn’t just reject it. Tell them why, and make a counter offer. You would be shocked how often this counter-offer is either accepted or sparks a middle ground compromise that is accepted.
On the other hand, what would you say to someone to make them consider selling their app?
You build an app / start a business to make money. Do not just sell your app when it doesn’t work, treat it like all entrepreneurs do their businesses…sell when hype and potential is at its highest. Think about how much money you are making now, and the risk you are taking, and strongly consider the present value of having 6-10 months of cash flows in your hand right now.
Talk about the attachment some people have to their apps. It’s hard to give up an app that they’ve babied, put a lot of time into and seen some results. Do you see a lot of emotional attachment on the site?
A ton. And it’s understandable. But just because it exists doesn’t mean you should let it affect your business decisions. In fact, often times emotion is the biggest enemy for good business. We see people lose tons of money all the time because they can’t separate the two.
Lastly, what’s next for Apptopia? More platforms? A mobile website or app?
We are getting into much bigger apps sales (i.e. consistently $50,000+) and will be aggregating much more data. But more to come on that soon.