And, during the struggle to deliver the business model, we were very much beholden to our investors

In 2007, when we raised our first round of financing for my own startup, WooMe – a video dating website – we were able to find investors with a speculative business model, which seemed like a good thing at the time

Unfortunately, we no longer live in the wonderland of the year 2000, when it was only about users and traffic – and revenues didn’t really matter. Ah, those were the days! Trust me when I say it’s no fun being in that position. ‘But what about Instagram and Snapchat?’ I hear you cry! While it is indeed possible to build an app with bucketloads of users and no revenue to speak of, it’s not a strategy that you should bet on. What if your app doesn’t take off? No revenue means fewer options, which means less negotiating power, and ultimately a lot of unnecessary risk. Don’t worry, though: your business model doesn’t have to be perfect from Day One. But my advice is to make sure you have one – build a business, not just an app. Throughout your evolution from a million-dollar to a 10-milliondollar to a 100-million-dollar app and beyond, it’s very likely your business model will evolve. I’ll lead you through some excellent examples where not only have some apps been able to adapt successfully, but they have also become category leaders because of their ability to adapt faster than the competition. Today the expectation is very much that your app should generate revenue from the start. Why is that? Mainly, because it is perfectly simple to do so. In addition to services provided by Apple’s App Store and Google Play to allow your users to pay with a single tap from their iTunes or Google accounts, there are numerous other ways to make money. We’ll go through the most powerful ones right now.

But when we eventually had to transition from an entirely free dating site to a ‘freemium’ one – where basic features were free, and users paid real cash money for features such as video chat – it was a difficult process

Five Core Business Models So there’s a great way to zero in on the top business models: focus on the existing billion-dollar apps and Internet companies, and then explore the models they have used to get there. As explained on page 63, since 2004 there have been over 40 companies that have been valued at $1 billion or more.2,3 It’s an approximate number because private companies can be tricky to put a valuation on, but trust me for the moment, and I’ll explain how I arrived at those numbers towards the end of the chapter.

I am going to concentrate on five business models that scale nicely into the billions. The companies referenced below – all of which are mobile-first, or have a massive app channel – are valued above $1 billion, and some a lot more. 1. GAMING. The Apple App Store and Google Play have been responsible for

the growth and revenue-generating capabilities of a lot of apps. From pay-perdownload to in-app payment and subscriptions, I am counting these as a grouping of business models that work great, especially for gaming apps, and anything virtual that can absorb the 30 per cent commission charged by Apple and Google. Angry Birds, Clash of Clans and Candy Crush Saga are all in this category. 2. E-COMMERCE/ lumping e-commerce and marketplace

together for simplicity. While naturally there can be huge differences between the two – network and other effects – in terms of revenue generation charging payments for transactions for goods or services via credit card (or other payment methods such as PayPal) is relatively standard. Mobile players such as Uber, Hailo and Square fall into this category as well as more traditional players such as Amazon and eBay. 3. CONSUMER AUDIENCE/ADVERTISING. Audience building is a valid – though