Building an App Without Monetization Strategy: Two Real Cases to Consider

What does creating an app without a monetization strategy look like? The article analyzes two real-life cases of success and failure.

When an entrepreneur presents a new startup idea to developers and we start discussing the project's details, one of our initial questions for the client is:

"What is your business strategy? How do you plan to generate revenue with this application?"

This initial information is nearly as critical to us as the answer to the question, "What is the problem the user is facing that we are trying to solve?" It establishes the ultimate objective we should aim for when incorporating features and making technical decisions.

But what if the client responds, "Let's not worry about that for now. Let's focus on building an excellent application!"

Let's exclude the scenario where the entrepreneur intends to capture a market share and then sell the business. I'll dedicate a separate article to this strategy. Currently, I'd like to outline situations where the client's mindset is more along the lines of, "The priority is to ensure user satisfaction, and the revenue will naturally follow."

I'll recount two instances where I was personally engaged as a developer and had the chance to witness the projects' progression from start to finish. In the first case, the client achieved success, while in the second case, unfortunately, there was no favorable outcome. Although both projects took place more than a decade ago, they left a lasting impression due to their remarkable nature. Both clients adopted unconventional approaches and exhibited confidence in their decision-making.

Case #1: Real Estate Platform

For this project, we were developing an online real estate platform for a major city in the United States. The founder of the startup had recently relocated to this city and was overwhelmed by the complexity and inconvenience associated with purchasing a home through a traditional real estate agency. Communication with the realtor primarily relied on lengthy email threads, making it laborious to locate specific information within the extensive collection of messages.

The concept behind the platform was straightforward: to allow users to save listings they liked in a personalized folder, organized in a manner that facilitated understanding of the buyer's criteria for property selection. These user folders served as a convenient reference for discussions between buyers and realtors. By reviewing the client's folder, realtors can promptly identify additional options to suggest or search for in the databases.

Building upon this foundation, the rest of the functionality was developed, including notifying buyers of new relevant listings, automatic updates on saved listings (when price changes or a property has been sold), various tools for realtors, and more. The project was extensive, involving the creation of a web version and mobile applications for both Android and iOS platforms. Furthermore, there were technical challenges to overcome, such as standardizing listings from diverse sources and managing the large volume of real estate databases.

To our astonishment, the platform was completely free. When we asked, the client responded that their main focus at the moment was not generating revenue but rather helping people with a problem they had personally experienced and attracting as many users as possible. And they succeeded. The platform quickly gained popularity among both buyers and realtors, with many real estate agencies showing interest in it. However, the owner encountered challenges in promoting a premium subscription. Realtors preferred to use the free basic functionality, which came as an unexpected surprise to the entrepreneur.

By then, the client had already achieved success with another startup - an application for travelers - which they had sold a few years earlier. However, for this real estate project, they wanted to develop and grow it themselves. As it turned out, the outcome of this story was indeed different.

A year after the platform's launch, the client's company was acquired by one of the major players in the American real estate market. The client, along with their entire team, joined the company and continued working on online real estate services, but now in the role of a manager rather than an entrepreneur. They have been leading the key division of the monopolistic company for over a decade now.

What happened to our application? It was shut down two years after the client's company was acquired. The new management opted for an alternative platform. However, our client undeniably achieved success by pursuing their true passion and building a fulfilling career.

Case #2: Online Quiz

The owner of this application had no prior experience in entrepreneurship or the IT industry. They came up with the idea of creating an online quiz that would become a sensation. The application was designed to present users with one question per day at various times, to add an element of surprise. Following that, players had precisely 30 seconds to choose one of the provided answers and demonstrate their knowledge.

The project was executed on a large scale, involving approximately 10 programmers, whereas a typical app development project would usually have 2-3 developers. We developed applications for various platforms, including BlackBerry devices, although such orders were relatively infrequent. Ensuring that all users received the question simultaneously was crucial to putting them on an equal playing field. We fought for every millisecond, addressing each potential source of notification delays. Additionally, we faced the challenge of delivering notifications to desktop users. Since browsers didn't have that capability at the time, we had to develop a specialized application that redirected users to the web version of the app after they read the notification. The game was designed to be completely free, with no advertisements included.

The client intended to offer their game to one of the major companies for an unconventional marketing campaign: a themed quiz. It was the year 2008, and they successfully negotiated a deal with the sponsors of the Beijing Summer Olympics. The plan was to have a direct link to the quiz prominently displayed on the official Olympic Games website - a brilliant idea! However, we faced one challenge - the 2008 Olympic Games were just two weeks away, putting us in a state of urgency.

The game was intended to have an Olympic Games theme, which involved a comprehensive design overhaul requiring meticulous attention to detail. Additionally, the application's performance needed significant improvement as it was not initially designed to accommodate such a large audience. Working diligently and putting in overtime, the team successfully transformed the application to meet the necessary requirements. However, due to a shortage of time, there was no opportunity for thorough testing. Making a difficult yet necessary decision, the release had to be canceled. Offering a product to a wide audience without conducting comprehensive bug testing was obviously not advisable.

Despite the significant disappointment, the client made two additional attempts, coinciding with the opening of the NFL season and the premiere of the film James Bond: Quantum of Solace. Unfortunately, both attempts failed. It is important to note that the lack of interest from these events' sponsors was not the issue; on the contrary, this unique event concept was always well accepted. However, the client faced challenges in resolving the organizational issues that arose during negotiations with the sponsors.

These three failures, coupled with escalating financial difficulties, gave rise to conflicts within the client's team, ultimately leading to the project's closure in less than a year since its commencement.

Do Developers Actually Have to Care About It?

Shouldn't developers simply carry out the tasks assigned by the client, regardless of their nature?

Well, in general, that may be true. We have fulfilled numerous extravagant client requests. Seeking new opportunities and taking risks is a part of entrepreneurship, isn’t it? The client has the prerogative to make decisions, and our role is to bring their idea to life for practical testing. However, it is equally important for us to raise any potential concerns, address overlooked issues, and ensure that the client's decisions are well-informed and carefully considered.

The cases I have mentioned prompt us to contemplate the notion of "making the application genuinely useful, and the rest will follow."

Discovering a compelling idea for a startup is itself a stroke of luck, igniting the enthusiasm of entrepreneurs, particularly those new to the field. Furthermore, it is always about leveraging technology to enhance people's lives. Fueled by their ideas, entrepreneurs invest tremendous effort, both from their side and ours, to help users overcome specific challenges. Undoubtedly, this goal is commendable, essential, and of the utmost priority.

However, people who are willing to pay are often different from the general user base. They may have their own unique needs and problems. Exploring these issues requires dedicated time and focused efforts, including those of the developers. These problems are not typically resolved "on their own" or "along the way," contrary to the hopes of the online quiz owner.

If an app owner solely concentrates on making the app popular without considering monetization, as was the case with the real estate platform, this is precisely the aspect in which they can excel. Our client successfully achieved their personal goals by finding a means to delegate the responsibility of generating revenue to other stakeholders. However, app popularity does not automatically equal income; it requires effort and work to monetize it.

The successful outcome in projects like the ones I have described is more of an exception than the norm. If an entrepreneur does not prioritize monetization and fails to work industriously towards it, more often than not, to our deep regret, the project eventually reaches its end when its funding source depletes, regardless of the brilliance of the underlying idea.

Therefore, in order to achieve desirable results through the collaborative efforts of developers and entrepreneurs, it is crucial to give extra attention, right from the start, to the project's business strategy. This includes defining, clarifying, and implementing the strategy, while concurrently developing app features that cater to the needs of the users.