I took some notes this year at FOWA, and I’d like to share with you some of the things I learned or found valuable at FOWA (Future of Web Apps). This first post is about what I learned from Fred Wilson‘s presentation. Wilson is the co-founder of Union Square Ventures, a smaller ($125 million in capital under management), newly formed, New York City based venture capital firm with investments in Web 2.0 companies such as Twitter, del.icio.us, Etsy, FeedBurner, Indeed.com, Disqus, Clickable and many others. In his presentation he highlighted ten points he finds critical for being a successful startup.

Speed: this is a critical factor for growth. Applications that aren’t fast don’t grow as fast as applications with better speed performances.

Instant Utility: your application has to be useful out of the box. Let the user see an immediate return for using your application.

Voice: you need to have a style, a personality. People need to feel like they are consuming a media.  Just look at the way Wufoo communicates with their users, with very fun unusual messages.

Less is more: Your application has to be simple. Try to focus on one thing and do it very well.  You can always add more features later. This helps speed as well.

Programmable: make it easy for other people to plug or build on top of your application. Your API should always be read/write. This is the reason why we integrated SquarePik with Foursquare only, and not Gowalla. Gowalla has a read-only API, making the applications built on it virtually useless.

Personal: make the experience feel personal. Even little things like avatars or personal profiles make users feel like they own part of the application. Think about how your perception of your Facebook page changed since they changed its URL from a number to your username. Now it’s not just a page in their system, it’s your personal page.

Restful: Fred used this term in a personal and incorrect way by his own admission. He thinks the entire application should have an easy URL system. You should be able to reach any page of your app via URL. That makes it easy to share and send to other people.

Discoverable: people need to be able to be find your application, via SEO or social media. At the end of the presentation, he also recommended the use of guerrilla marketing because of its cost effectiveness.

Clean: use big spaces, big fonts and don’t add too many functions on a page. It has to be very clear at any time what the user should do.

Playful: the ability to play in an application is very important. The game element can help the success of an application. Foursquare and Gowalla are really good examples of this. Even something as simple as a top contributor chart could be seen as a game.

What other things do you think are key for the success of a web application?

As many of you may have noticed, in the last forty days or so I promoted all over the place a simple Christmas application we published called Christmasfy Me. Not only was it a fun application that we wanted to build, but it was also our first experiment with in-app purchasing. Not too long ago, Apple opened the in-app purchase feature to free applications. I personally think this is a great tool for a lot of people to monetize their apps, and at the same time, somehow solve the problem of not being able to release demo and trial versions of their apps.

As promised, I’m going to fully disclose the results I gathered with Christmasfy Me in hopes of helping others to better understand this business model.

The application
Christmasfy Me is an iPhone application that lets you take a picture, or select an existing one from your library, and apply Christmas elements to it. You can then save or share these pictures via email, Twitter, or Facebook. You can view a video of how this application works at www.ChristmasfyMe.com. The application originally came with three unlocked items, we then unlocked an additional three items for a total of six. To unlock the remaining 20 items, the user had to pay $0.99.

Some factors we need to keep in mind
This iPhone application was built and released as a seasonal application; this means that the same kind of application (not necessarily with the same theme) may have totally different results and numbers during other periods of the year. The application was released in a period that is usually notorious for having more downloads that any other period throughout the year: between Thanksgiving and Christmas. Considering that after Christmas the sales dropped considerably, I will only take into account the sales from 11/26/2009 to 12/31/2009.

The numbers
Over a period of 37 days, Christmasfy Me was downloaded a total of 66,623 times. Of those downloads, 32,189 happened in the US while the other 34,434 account for world-wide downloads, mainly in the UK and Italy. In Italy, the application even ranked as the second most downloaded free application in the photography category and about 120th in the overall Top Free chart for a few days. I can’t hide that I was expecting to do better than this. Of course, I’m not unhappy with the results, but everything was timed in order to be included by Apple in their holidays selection and that never happened. Even on its better days, as far as downloads go, the app never ranked better than 500th in the Top Free Apps chart. This says a lot about how many downloads you need to be in the top 100, especially considering the fact that rank and number of downloads don’t usually grow proportionally.

As far as in-app purchases go, we sold a total of 2,193 “upgrades” over the same period. This is actually better than I expected, considering that this was an average conversion rate of 3.29% and, based on the results published by Riptide of their in-app purchase experience, I was expecting something closer to 2.5%. The regional results demonstrate how US customers are more likely to buy in-app content, with an average conversion rate of 4.11%, and accounting for 60.37% of the total of in-app purchases. So, if you decide to build your business on in-app purchases, forget markets like Italy, where the conversion rate was well below 1%, and focus on the US and the UK. Also, If you look at the chart, you’ll notice that conversion rate dropped after December 16th, the day we released a new version where, among other updates, the number of free elements went from three to six.

Conclusions
It might not be the most profitable business model since you need a high number of downloads to make a decent profit, but definitely less than what you would need with ads. More and more powerhouses like ngimoco, Gameloft, and Tapulous are switching to this model with many of their apps. Also, this may allow you to create complex and expensive apps while allowing your customers to pay only for the features they really need (Boxcar docet). The biggest con I found is that a lot of people expect everything to be free to download. I’ve even been accused of “stealing” money because there were only three free elements in the first version. That cost me a bunch of one star ratings in the App store.

I will definitely explore and use this model more in the future. I think there is more that can be done to improve performance and revenue. I’ll be sure to keep you all updated with our results.

These are few blog posts and videos I think could be helpful and inspiration for people who is thinking to step into the entrepreneurial world.

• From Nothing To Something. How To Get There.
• The 5 Things I’d Tell My 21 Year Old Entrepreneurial Self
• You Aren’t Crazy, You’re Just an Entrepreneur
• How to Escape Mundanity
• Web 2.0 Expo NY: Gary Vaynerchuk (Wine Library), Building Personal Brand Within the Social Media Landsca
• David Heinemeier Hansson – FOWA Dublin 2009 (video)

If you have any suggestion of blog posts or videos you think I should read/watch, please share them!

I always found amusing how the very same product is envisioned in so many different ways by the people involved in a job. I think this image perfectly display some of them.