Lucky for us, success leaves clues, which means you can forge your own path by learning from other entrepreneurs. It’s not just about emulating the Cubans or the Bransons, it’s just as important to see how “regular” people with a passion created their dream life.
Today, we have one of our AE members who we’d like to share their success story with you. Justin Malik has been an AE member since 2013, which ultimately led to Justin leaving his job as an analyst and becoming a full-time app developer. Justin was able to sell a small portfolio of apps for $25,000, and since has produced over 20+ apps making $40K in net revenue with over half a million downloads. Justin and his partner, Lee, regularly help fellow appreneurs on their road to success over on their blog MoneyfromApps.com.
Q: Thanks so much for taking the time to speak with our community, Justin! Walk me through the step-by-step process that you went through to get to where you are today. What was the first thing you did? Next?
Back in 2012, my friend from business school texted me out of the blue. We caught up and both realized that we wanted to enter the world of apps. Lee had recently seen an article that Tim Ferriss posted featuring Chad Mureta, and I was constantly looking for a way out of the rat race. Fast-forward around nine months and thousands of dollars spent (starting to sound like a pregnancy!), and we had our first app in the App Store. In less than a year, with a ton of energy spent on marketing, we were able to get a quarter million downloads—more than the average app developer will get in his or her lifetime. But we weren’t making money; in fact, we were losing money…fast.
Down to our last couple thousand dollars, we started reading. And we read some more. I came across BlueCloudSolutions and read every post I could on Carter Thomas’ site, even the ones he had hidden away for his mailing list. After a good amount of research and debating, we took what we had left and invested in a couple of source codes. I learned the technical side of App Flipping, and after a few tries, we were able to make a positive return on our investment. We started seeing the light at the end of the tunnel. We were so excited, we even posted about how great our results were for one of the reskins.
Once we had a taste of success, we tried to replicate it. Some projects succeeded and some failed. Over time and after releasing a handful of apps, we started seeing trends and understanding why some apps would lose money and others would be profitable. We continued this process of building, releasing, and analyzing to grow both our apps and ourselves as entrepreneurs. The profits of reskinning apps allowed us to invest in more opportunities, including joining App Empire, and also creating a portfolio of apps that we developed from scratch and later sold for $25,000. Throughout the process, we blogged about the experience and created video tutorials, hoping to help others achieve their goals of running a profitable business.
Q: Great insight! So a couple questions on that. As a new app developer, what marketing did you do to get a quarter of a million downloads? With all these downloads, why do you feel you were losing money still? And lastly, once you started noticing the patterns of success, why do you see some apps losing and others profit?
Ha.. I thought we could get away with not sharing our secret to hundreds of thousands of downloads, but of course you wouldn’t let that happen.
The truth is, we hustled… around the time that Facebook acquired Instagram, we started looking at Instagram as a marketing vehicle. For a while, I spent all my free time, including weekends, building up our Instagram page. I remember days when I would search specific hashtags, go to a picture, and comment about our page and why they should follow us. We were reaching out to people individually for a lot of the time and we actually gained loyal users that way. A 14-year old kid even created an Instagram fan page for our app. With a lot of effort and unique content, we were able to build a following to 100, then 1,000, and eventually over 100,000 users. We then strategically marketed our app to those users that we had spent so much time acquiring on Instagram.
The problem was that because it was our first app, we didn’t even bother thinking about monetization. It was a social networking app like Instagram and we thought, “If we can keep getting 2,000-10,000 downloads a day, we can eventually sell this off for millions—it doesn’t matter that we’re not making money now.” It sounds pretty naïve, but back then, we really believed it would happen (just like it happened for Instagram) and that it was just a matter of time. But as retention dwindled and our marketing efforts slowed, we realized the truth: we should’ve been monetizing from the beginning.
To make matters worse, because it’s a social networking app and requires a server, we were shelling out $600+ a month in server costs. So not only were we not monetizing our users, but we were paying some hefty monthly expenses in order to keep the app running.
We started putting the pieces together and realizing what works: while you need decent acquisition (downloads), you also need a solid monetization plan. Both are vital, and if executed well, you shouldn’t lose money on your investment, unless your costs were too high to begin with. That’s why we continue to recommend the reskinning model with apps, or with any business venture for that matter—it’s a great money and time saver when implemented correctly.
Q: What were some of your biggest obstacles? How did you get through them?
Having a positive return on investment was always the biggest obstacle for us. There’s an infinite number of ways to make an app, but a finite amount of ways to monetize it.
When we started running out money, the pressure was on, and that forced us to cut costs and only think about how we would make our money back. To cut costs, I learned how to reskin apps myself. We even cut corners with graphics by licensing stock photos and then resizing them to fit our apps. We took the developer and graphic designer completely out of the equation, which saved us hundreds, if not thousands of dollars, for each project. While I would rarely recommend that a beginner try to learn Objective C or Photoshop, getting down in the trenches saved us, and we might not have overcome that monetary obstacle if we hadn’t taken that step. Studying and learning from experts, or others who have gone through similar experiences, gave us that boost we needed.
Q: Amazing! Yea, it’s definitely a tricky situation because learning to code or design yourself has positives and negatives, but each person’s story is so specific, there’s no one size fits all in what one “should” do. Do you feel taking those core responsibilities over was the sole reason you guys bounced back? Or were there other steps you took which helped as well?
I totally agree. Some people just aren’t built for writing code or manipulating graphics. I started dipping into computer programming back when I was in high school and when my family first got the internet hooked up, so a lot of that technical stuff is easy for me to pick up. But for others, like my partner, it’s a foreign language. You have to understand what your strengths and weaknesses are and build off of that.
Taking on those core responsibilities was a big piece of our comeback, but I think we still would’ve been able to turn our business around if we outsourced the work. That being said, our margins would’ve been lower, so it would’ve been a steeper uphill battle. Really, the steps that Carter and App Empire advise and what we teach on our own blog (failing for as little money as possible, learning, tweaking) are what turned us around.
Q: Did you ever having a turning point or hallelujah moment that really cemented things for you?
As I mentioned, there was a major point when we pivoted and stumbled upon app reskinning. Our first positive-ROI app that came from his source code completely changed the game for us and how we looked at the App Store. We no longer saw it as a place where we needed to invent something awesome that doesn’t exist. It became more about taking something that already exists and refining it.
Q: Exactly. No need to reinvent the wheel. A common mistake entrepreneurs tend to make. What’s your favorite thing about this business? What drives you to keep going?
I love this question because sometimes I forget to think about it. I’ll get caught up in the details and lose sight of what this is all about.
For me, the greatest thing about this business is entrepreneurship itself, and everything that comes with it. Well, not exactly everything, because every entrepreneur knows about the roller coaster of day-to-day operations, but the perks of being my own boss outweigh the occasional emotional valleys that come from the smaller revenue days.
I remember sitting in my cubicle, always looking at the clock. It’s a terrible feeling. Now, I work when I feel like it, which tends to be from 9 p.m. – 6 a.m. Yeah, I’m one of those people. It’s actually 5 a.m. right now, and I’ll probably go to bed in an hour. That freedom—to work when I prefer—is amazing. Being the owner of a company is a dream come true. It gives me the option to have a better work-life balance. I’m also more productive because I’m doing something that I care about, and I see the impact of my hard work. Instead of working overtime to make money for a CEO that I’ve met only once or twice, I’m putting money in my own pocket. That feeling keeps me going.
Q: Yea, it’s amazing how easy it is to forget why you’re doing something, isn’t it? I do it too! That’s why mindset topics are so important to me to share with you guys, but I know some people have a hard time wrapping their head around the “fluffy, feeling” kind of advice. It sounds like you’ve always had a bit of that entrepreneurial drive, but what is some of the most helpful advice you’ve ever received about “mindset” or “work-life balance”? Is mindset something you actively work on?
Ha.. yeah, I totally understand what you mean about some people having a hard time wrapping their heads around the fluffy stuff. Even for me, personally, the fluffy stuff didn’t seem to apply in the beginning because I wasn’t yet feeling the pressure of, “Oh shit… if this doesn’t work, we might run out of money.” When we hit our low point, and any time after that (even to this day when we have small revenue days), the “mindset” and “work-life balance”-type advice became more relevant for me. For someone who’s just starting out and hasn’t really gone through the emotional roller coaster yet, I think it’s harder to relate to the mindset topics because they’re still trying to figure out what their business model is exactly. It’s hard to read a post or listen to someone talking about not working yourself to death on an entrepreneurial venture when you haven’t really even launched your own business yet.
I don’t have one piece of advice relating to mindset or work-life balance that has stuck with me over the years, but I think that’s because it’s something that I constantly need to be reminded about… in a way, it’s like every different piece of advice I get is helpful. So I have a few ways of working on that:
The first is to get a nice long call in with my business partner so I can remember why we’re doing what we’re doing, what the vision is, what our purpose is, and what our goals are. It’s a pep talk, basically. That puts me in a better place and resets me, so to speak. Another is to keep up with posts and videos by other entrepreneurs who frequently remind me about these things. There are some good gems in the form of video that can be found through AppEmpire. The last method has to do with my own personality, and I’m sure many of your readers can relate. I’m a high-anxiety guy… not usually on the outside, since most people would say I appear laid-back and calm, but on the inside, if you catch me at the right time, I can be a complete mess. Anxiety has wrecked my stomach, and what works for me is practicing mindfulness and awareness (meditation). After losing about 20 pounds and coming to terms with this problem, there was a solid year or more when I meditated for 30 minutes or more every day—I even took it to the next level by volunteering at a meditation retreat in the Rocky Mountains, living in a tent with some dude I just met. That year of consistent meditation practice was eye-opening to say the least and “going back to the cushion” is something that helps me refocus, center myself, and remember what’s most important. Unfortunately it’s an incredibly difficult practice and in the beginning, feels like the most boring thing in the world… but I can tell you, it definitely changes your mindset, and in a good way. If you struggle with a negative inner monologue, it’s something I highly recommend practicing, because even 10 minutes a day of meditation can be life-changing if done consistently.
Q: Wow! Incredible story and advice, Justin, thanks for sharing that! Glad you’ve found something that centers you. What is one of the most memorable pieces of advice you ever received?
I should probably quote Steve Jobs since we mostly develop for iOS, but Bill Gates once said, “It’s fine to celebrate success, but it is more important to heed the lessons of failure.”
This small piece of advice is very powerful. Without our failures, we wouldn’t be where we are today. It’s also important to note that you can never fail if you don’t take that first step. Our business as a whole has really followed his advice over and over: we try, we fail, we learn and we repeat.
Q: Yup! I’ve seen failure propel people more times than success. It really teaches you the important lessons you can’t learn otherwise, as well as lights that fire under your ass!
It’s one thing to get started (a huge struggle in itself!), but it’s another thing to get over those first hurdles and become what we call a “success story.” How do you feel others can get over these hurdles to really accelerate their growth and find their own success?
This really ties into the previous question in that you will never succeed without failures. To get over those first hurdles, I’d recommend preparing yourself for failure so that when things don’t turn out as you expected (which will happen more often than not), you can fail fast and as cheaply as possible. As long as you learn from those experiences, you can increase your success rate. Through this process, we have been able to have a positive return on every new project we took on since late 2013.
Q: Great point. I see people often have a hard time assessing failure. For example, sometimes a person’s app fails, and admirably they keep pushing to make it work because they won’t accept “failure.” However, it’s not their drive that’s the problem, it’s the app or maybe the idea as a whole. How do you assess “failure” in the sense of when to move on from a project, or when to realign and keep pushing?
That’s a great question. It’s definitely not a black & white issue, and there’s no “one-size-fits-all” answer. A good analogy to this is poker. So many people lose their stack quickly because they chase good money after bad. Once the money’s in the pot, it’s not yours anymore, and you need to reassess the situation. Throwing more money at it will often make you lose a lot more, when instead you could’ve cut your losses, learned a little about your opponent, and taken their money in the next hand. At the same time, you don’t want to fold if the pot size is $1000 and it only costs you $2 to stay in.
So how do you figure out if it’s time to ditch a project and work on something else (fold your cards)? A good poker player will say it comes down to skill: practice, practice, practice. When you’re an entrepreneur, you will almost certainly have eggs in multiple baskets. If you don’t, you should reconsider what you’re doing and the risk you’re taking. Now, I’m not saying you should open a restaurant, develop an app, and launch a podcast all at the same time, but you could try a few smaller apps or make a couple of podcasts to test the waters. By having multiple, diverse projects, you’ll minimize risk and maximize the chance of success. When you create something successful, you then have a working model to repeat, scale, and/or improve upon. You’ll also start to understand when something is failing, why it’s failing, and how to revive it, or if you should cut your losses. I know, it’s a bit of a wishy-washy answer, but I do think failure assessment is learned over time.
That said, analytics are your friend and will guide you. For the appreneurs out there, you can track when users are coming back, if at all, how much time they spend in the app, if they use your other apps, and more. That kind of information can help you understand what problems your app is having. We actually wrote a very extensive blog post about diagnosing an app failure and how to fix each problem, which you can read here.
Last, you can cheat. You can’t do that in poker, unless you want to get your ass kicked and thrown out. So how do you cheat? Ask an expert. Be open with them and get their advice—see what they think is wrong. But if you go this route, try not to harass or expect a lot for nothing… otherwise you might get a sub-par response.
Q: Not wishy-washy at all, that’s extremely solid advice. What do you see as the main reasons people do and do not succeed in this business?
Many aspiring appreneurs have come to us for help and/or outsourced their work to us, which is fine. But we see a problem when they release one app, it fails, and they give up, thinking that every app they will release will have the same end result. One app, marketed differently, can be a major winner for one person and a total failure for another. That’s why I can’t stress enough the importance of taking the initial risk, and then picking yourself up after you’re down. That first time will always be the most risky; every time after that should give you better and better results if you continue to learn from your mistakes.
Our first 4 apps were failures. The fifth app made up for most of it. People that succeed keep trying, learning, and growing.
Q: Right on! When you look at the future of this business, what do you see? Are you planning to make some big changes? Are you sticking with your current model? What are your plans?
Great question… our current model is actually a model of evolution, so when I say we’re sticking to our model, that really means we’re sticking to changing! In the world of apps, things move very quickly, but the basics remain the same: the goal is to eventually produce a portfolio of higher-quality apps that work well together in order to secure a base of repeat customers over a wide range of platforms. Meanwhile, we’ll be constantly evolving by testing, measuring, and analyzing in order to get a good feel for what’s working and maximize our performance.
Q: Adapting fast is everything! I still see people using graphics like it’s the 2011 App Store and they don’t understand why their app isn’t converting. So how do you test, measure, and analyze your apps? As in, what core aspects are you looking at when you do this?
Damn, you really like asking the tough questions! I could write a book about this, but I’ll try my best to point out what I think is most important.
Mobile analytics companies like Flurry provide a ton of metrics for you to look at, but some of my favorite tools in the app world don’t even require third-party SDKs. For example, one metric is ARPU—that’s average revenue per user. In simpler terms, that’s average revenue per download, which is very easy to calculate. Every appreneur should be tracking downloads and total revenue made from an app. Divide one by the other and you have this metric… simple as that. This number can range anywhere from $0 to a few dollars and is a quick way to measure how well your app monetizes. The goal is to produce apps that generate higher and higher ARPU, because if you’re making $1 for every user that downloads your app, you’re in a great position to buy installs of your app through ad networks.
Another uncomplicated tool at your disposal is simply app reviews. What are your customers saying? The ones that go out of their way to review your app usually do so because they feel that they have something important to say. Read those reviews!
Analytic tools (like Flurry) open more doors for you. A simple metric they have is average time spent in the app. If users only spend 30 seconds in your app, maybe it’s not engaging enough, or maybe they tend to click on an ad and leave. Another metric that is helpful is the number of sessions (how many times your app was opened) per user. If this number is high you’re probably in good shape, but it’s also possible that a user opens your app 10 times in the first week, but then never uses it again. In that case, you have a retention problem, which is a separate metric that you can look at, too. As you can see, if you dive into analytics like Flurry, then you’re opening up a big can of worms, and you could literally spend days trying to make sense out of all that data. I’m not saying that you should avoid detailed analytics, but instead, you should focus on metrics you understand and that can point you to what’s working and what’s not working. Once you figure out which metrics are important to you, track them consistently, and then learn by watching those metrics over time and as you make changes to your app. Change the color of the “buy” button? What happened then? Did your ARPU increase after that? Or compare one app versus another. Are you seeing that users spend more time in one app over another? Why is that? The metrics I’ve mentioned here are the ones we pay the most attention to.
You’ll find that analytics often leave you with more questions than what you started with, but that can be a good thing… you’ll transition from questions like “Which app is better?” to “Why do users spend twice the amount of time in App X than App Y?” If you can’t figure out the answers yourself, you very well might need to resort to good ol’ fashioned market research and talking to people.
The last thing I’ll mention about analytics is that everything I’ve talked about so far is post-install; that is, I haven’t even started talking about getting users to download your app in the first place, which mostly comes down to what’s been coined as ASO—App Store Optimization. As of now, there aren’t many tools to analyze this, but that’ll change in the near future. If you’re an appreneur struggling to get downloads, I’d recommend reading up on ASO and going through AppEmpire and our blog to learn more about it.
Q: Wonderful advice! Every one needs to take notes on that right now. So if an aspiring entrepreneur walked up to you asking for your advice and you only had a few minutes to give ‘em your best tip, what would it be?
There are many dreamers out there, and that’s great, but as an entrepreneur, you really need to understand the commitment you’re making. You are committing yourself to one crazy lifestyle that has a fair amount of risk with lots of ups and downs, and that’s something you should be prepared for. Be ready for failure and be sure to take it for what it is—try to see it objectively, learn from it, adjust, and get back out there!
Q: Anything else you would like to add?
I would like to emphasize the importance of community, not only in appreneurship, but entrepreneurship as a whole. While very rewarding in many ways, entrepreneurship can be very stressful, and having some kind of support network is invaluable. That can come in the form of mentors, blogs, forums, facebook groups, meet-ups, teachers, friends, family, and more… they’re out there. Don’t forget that people are your greatest resource, but also don’t forget that they’re just that—people, who should be respected and not taken advantage of. If you think someone can help you, try to help them out as well… showing your appreciation creatively can go a long way.
Q: Well said. Thanks Justin!
You can talk to Justin, read more about his story, and find tips & tricks at MoneyFromApps.com.