Why the mobile app industry really is like a gold rush

I live in Denver, which was founded in 1858 as a mining town just as the Pikes Peak Gold Rush was getting under way. Countless prospectors poured into the state in search of gold and silver in the latter half of the 19th century, and some smart and lucky miners struck it rich. But the overwhelming majority of those who prospered made money by providing the goods and services that supported the mining industry that fueled the city’s growth – the retailers who sold tools and durable clothing, the hoteliers that put up workers as they passed through town, the cattlemen and restaurateurs who fed them and the bankers who kept everyone’s money safe.

There are obvious parallels, then, between the gold rush(es) of 150 years ago and the era of the mobile app. Just as finding a gold vein took an enormous amount of luck in addition to some skill, producing a hit mobile app is like catching lightning in a bottle. In addition to developing a compelling offering, a hit app must somehow stand out from hundreds of thousands of other titles on the market. It must be simple enough to engage users quickly, but provide enough of a compelling (or just useful) experience users keep coming back to it. It must generate profits for developers and publishers. Finally, developers must somehow find ways to do it all again for each title. And if you think that’s easy, go ahead and ask any mobile game maker.

So while it’s always great to build the next, say, Instagram – and I certainly don’t want to discourage anyone from giving that a try – a better move for those looking for a career in the mobile app industry is in helping to provide tools for developers. Here are a few examples of those sub-segments:

  • Mobile backend as a service. MBaaS, as the new cloud deliver model has unfortunately been dubbed, helps developers quickly and easily add features like push notifications and social network integration as they develop cross-platform mobile apps. The space received some attention last year when Facebook and PayPal each acquired a notable MBaaS player, and its importance will only grow as the cloud plays more of a role in mobile apps and as the internet of things gets legs.
  • Analytics. Ever-increasing smartphone use is generating an enormous amount of data that can be used to deliver highly targeted mobile ads to users based on everything from the kind of phone they carry to their daily movements to their browsing habits. Those targeted ads can be highly lucrative, which is why analytics was at the heart of some important acquisitions last year: Apple spent $200 million to acquire Topsy Labs, Facebook picked up Onavo for roughly the same amount, and Twitter bought MoPub in a deal reportedly valued at $350 million.
  • Testing and monitoring. With so many apps on the market for free or just a dollar or two, consumers are likely to dismiss or even an app that doesn’t deliver an optimal experience. But the biggest developers generally don’t want to constantly test their apps on every appropriate device, network and operating system, which is why we continue to see a need for companies that specialize in those services. And just like the MBaaS segment, demand for testing and monitoring will increase as new operating systems come to market and as connectivity comes to our cars, our wearable devices and even our appliances.