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The three things needed to make a successful app

It is extremely easy to startup today. And several people that I know are doing it. I myself gave it a shot a couple of years ago. But easy to build doesn't mean easy to be a successful company. No matter how you define success - a large user base, profitability, high NPS - whatever the criteria might be, it is extremely hard to be successful.

To make a more specific point, I have to reduce the scope of startups to mobile apps (and websites) for my analysis. When you look at the top apps, they all have the following three things in common.

Users completing core actions
I have gone after app installs and monthly active users as a growth metric before, and a lot of startups go after these even now. While these are good to have, building a strategy around increasing these metrics might be myopic. An investor with a keen eye (there are lesser and lesser blind investors in the market now) will note that these metrics ought to have a key ingredient - completion of core actions.

Even if users are coming to your app in droves, unless they complete core actions on the app, they will leave in droves as well. You will see a momentary spike before your installs and active users drop again once you stop your marketing campaign.

Examples of core actions are:
Duolingo - completing a section
Instagram - uploading a photo
Myntra - making a purchase
Ola - booking a cab
Tinder - swiping right

Unless there is a growth in users that complete core actions, any other growth metric is farcical at best.

Retaining these users
While it is essential to grow users that complete core actions, to succeed as a company, these users need to keep coming back to perform the core actions again. If I make a purchase on Myntra and don't use the app again, or I book a cab on Ola and don't use the app again, it doesn't help Myntra or Ola.

Not all apps that cross the first hurdle end up doing well in the second. This is where repeat activity of users is important. The frequency might be different depending on the nature of the app, but repeat completion of core actions is a key ingredient for success.

Going back to our example apps:
Duolingo - does well to retain users by gamifying the core actions.
Instagram - provides feedback from friends through likes and comments to entice users to upload more photos
Myntra - is struggling to get this right, but is trying it through social profiles on the app
Ola - is doing this by keeping prices low and attractive
Tinder - provides feedback from matches that are uncovered upon swiping right

Without retention, success is short lived.

Virtuous Loops
As users that complete the core actions grow and continue to stay on the app, they need to derive more value every time they complete a core action. This makes it harder and harder for them to leave the app.

Among the examples above, perhaps Instagram is the one that comes closest to achieving this. As I upload more photos, I get more followers and that audience is extremely hard to replicate on a new app even if it offers the same value. Google+ is a fantastic example for trying to compete this way and failing.

If you're building the next unicorn, this is what you ought to do.

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