Author: Tammer Qaddumi, Founding Partner at VentureSouq
Lately, in the entrepreneurial and tech-centric media, there’s been some discussion on whether the app boom days are over, especially in light of the ever-climbing CAC costs reported by tech startups. We asked investors based in the Middle East, from angels to VCs, to talk back and give us their views on whether startups in the app space still have a chance to make it (and get looked at seriously for capital).
THE Q What is your opinion on the idea that the app boom has already gone through a life and death cycle, and that it’s now an overly optimistic (and unlikely) area for entrepreneurs to succeed in?
“People will certainly continue to use essential apps, but it probably is safe to say that the concept of an ‘app boom,’ where business after app-reliant business is churned out, is not a sustainable thing. Over the past few years, the market may have fallen into a trap with the perception that the app is driving a business when, in fact, it is everything else that drives a business. The app overlays the fundamental business, facilitating distribution, execution or marketing in an efficient way. For example, Uber started off as a text message service, where you would text your address and then they’d send a car to you. In other words, their success has as much to do with what happens after you ‘order’ a car, as it does with the ordering process itself. Over the past few years, this plot may have been lost a bit, resulting in a proliferation of and investment into apps that will have a hard time making it into the ‘essential’ collection.
The market seems to be wising up to this. So yes, we may be approaching the end of this ‘app boom.’ Entrepreneurs are starting to understand that it makes more sense to spend the first US$25,000 or $50,000 building out operations or marketing, proving out the business model, and then testing what the best distribution model is. It could be through a standalone app, but it could also be through another app –Facebook or Instagram– or it could be via direct messaging. In any case, it must be the underlying business that drives that decision. The days of building an app for the sake of building an app are probably numbered.”