How to build an App with revenue of hundreds of millions?

The secret of the success of top App companies is that it is obviously extremely difficult to start a successful technology startup, let alone an App company: only 0.07% of the funded startups will reach a value of one billion dollars. Do these billion-dollar apps and Internet companies have anything in common?

Do those entrepreneurs know or do anything that makes them different? The answer is absolutely yes. Let's see what we can learn from these companies.

Not many families. Only forty-three companies belong to this senior club, and only twelve of them are App-centric.

It will take seven years. It is not easy to set up a billion-dollar company, nor can it be done overnight. It takes an average of seven years (possibly through public listing, merger or acquisition), and it is best to prepare for a long-term war of resistance, with a minimum of two years (Instagram and YouTube) and a maximum of eleven years (Pandora).

Five feasible business models. Facts have proved that these companies have five feasible business models to create hundreds of millions of value. Interestingly, the value created by each model is very average. The first is games, where users buy virtual services or goods. The second is e-commerce/market, where users buy real-world goods or services.

The third is advertising (or the company has established a consumer group, but it has not yet translated into advertising revenue). The fourth is Sofare as a Service (SaaS), that is, users buy cloud software (usually in subscription mode). Finally, corporate customers, that is, companies buy large-scale software (which is also a subscription model). Therefore, there is no need to spend time reinventing new models. If you want to make the company bigger, you can adopt the above business model.

Experience is very important. Despite the media hype, the founders of most billion-dollar companies are not young people in their twenties, with an average age of 34. Among them, 35 companies have several co-founders, with an average of 3 people, and 4 companies were founded by individuals alone.

In addition, only the founders of two companies have never been in the technology industry, only the founders of three companies have no technical background, and at least one of the founders of 80% companies with billions of dollars has entrepreneurial experience and has not only established a company.

Most CEOs remain in office. 76% of the founding CEO will accompany the company through the process of acquisition or public listing, and 69% of the CEO will stay in the original position.

Education provides an unfair advantage. Although eight billion-dollar companies were founded by college dropouts, most of the founders graduated from top universities. * * * 33% of the co-founders graduated from Stanford University, 8 from Harvard University, 5 from UC Berkeley and 4 from MIT. Most of the founding CEOs came from science and technology-related departments.

Geographical location. Getting an education in a first-class university obviously helps to build contacts. If you add the excellent geographical location like San Francisco, it is a perfect combination: among the billion-dollar companies, 27 companies are headquartered in the San Francisco Bay Area, and new york is the second, but there are only three. I think international cities such as London, Berlin and Paris will also play an increasingly important role in the next few years.

The enterprise market will be very popular. This is very exciting and the time is ripe. One of the characteristics of a billion-dollar business-oriented startup is that it doesn't need to raise much capital (generally speaking, it only needs 40% capital compared with a consumer-oriented startup).

Therefore, not only the investor's rate of return increases, but also the founders and employees. The disadvantage is that on average, it really takes a little more time to leave. If you have rich experience in large enterprises and make good use of this knowledge and contacts, the industry is waiting for innovation.

Is going public. The average valuation of the ten acquired companies is1300 million US dollars, while the average valuation of the acquired App companies is1670 million US dollars (excluding the outrageous acquisition amount of WhatsApp, otherwise the average figure will be distorted). This is very meaningful, symbolizing that the focus of entrepreneurs is to build a sustainable company, rather than selling it quickly after starting a business.

Instagram's entrepreneurial journey

Instagram has two * * * co-founders, the first is media focus Heathstrom, and the other is Michael Craig. Sister Lun said that although Craig is not often exposed in front of the media, he is the soul of this app.

Instagram was launched on October 6th, 20 10, attracting about 25,000 users on the first day. By May of 20 1 1, it had reached 37.5 million in just a few months.

Due to the strong growth, in February of 20 1 1, a well-known benchmark venture capital company thought that the App was valued at $25 million and was willing to invest $7 million. Other investors include Dorsey (the executive chairman of Twitter), angel investors Chris Saka and Adam Di 'angelo (who joined Facebook when it was just founded and later founded Quora, a question-and-answer website). He is Zuckerberg's high school roommate and friend.

Sister Roma and Craig continue to work hard, focusing on the iPhone platform and only focusing on one thing-sharing photos. This dedicated way has created a very high "viscosity" for the App, which not only attracts new users to download at an amazing speed, but also has a high degree of loyalty.

20 1 1 At the beginning of the year, Roelof Botha, a partner of Sequoia Venture Capital, approached Roma in Sister, and Botha was prepared to invest 50 million dollars to accelerate the growth of Instagram. Now the valuation of this application is $500 million.

The goals of Facebook and Twitter.

No community photo App (or website) has ever been so popular. At the same time, combining photos, filters and communities is really a breakthrough, and users are extremely sticky and people can't put it down. Twitter and Facebook have always paid close attention to and worried about the development of Instagram. If left unchecked, it may pose a threat. Twitter has a close relationship with Instagram because of Dorsey.

Zuckerberg and Sister Lun also have a long history. Not only did they meet Stanford many times in Silicon Valley, but they also encouraged Sister Lun to drop out of college and join Facebook.

20 1 1 In April, Instagram became more and more popular, but only a few months later, the number of users doubled to 30 million, and the Android version was also ready to be launched (when it was launched on April 3, the number of users increased by 5 million overnight).

In early April, Sister Lun had a drink with Dorsey and Ali Rohani, chief financial officer of Twitter. Twitter said that the company formally proposed to acquire Instagram for $500 million (which is reasonable), all paid in stock and without cash.

On April 4th, Sister Lun called Dick Costero, then CEO of Twitter, and said that Instagram was interested in accepting the investment from Sequoia and remained independent for the time being.

At this time, things changed. Sister Lun also told Zuckerberg, CEO of Facebook, but the CEO did not intend to accept a negative answer.

The last link of this event is interesting enough to show that everything can change suddenly overnight. The final negotiations began on Friday and ended on Sunday.

At this time, there are only a few hours left before Heathstrom and Sequoia sign a $50 million agreement, and Facebook will go public in a few weeks, with an estimated market value of about 1000 billion. In this case, it is really impressive that the CEO can respond quickly and complete the transaction decisively.

On Thursday, April 5th, Zuckerberg sent a message to Sister Lun, saying that he wanted to discuss the matter further and would not accept the rejected answer.

On Friday, April 6th, Sister Roma went to Zuckerberg's house. Zuckerberg insists that Facebook is the perfect destination for Instagram, and he will make every effort to complete the transaction, even if it is a high-priced acquisition. Sister Lun also insisted that Instagram should be independent, but publicly put forward a figure of $2 billion. Zuckerberg then renegotiated the content and planned to pay Instagram mainly in stocks.

The transaction was completed quickly in Silicon Valley. Although Zuckerberg holds 28% of Facebook shares, he still has 57% of the voting rights, so he can act independently, and more importantly, he can act at a fast speed. Sister Roma also owns 45% of the company's shares, which gives him the right to make the final decision. There are not many problems with this deal.

On Saturday, Sister Lun went to Zuckerberg's house to discuss the final details (both lawyers were present).

On the morning of Sunday, April 8, Zuckerberg informed the board that he would acquire Instagram. The final figure of Sunday's resolution is 10 billion dollars, including Facebook stock and mouth-watering 300 million dollars in cash. This amazing offer is twice the previous estimate of Sequoia and Twitter.

On Monday, April 9, the deal between Instagram and Facebook was made public, and Dorsey and Twitter CEO Costello wanted to know why there was no bargaining opportunity.

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