TMO: Let’s start off with what your company does.
Mr. Teece: Well, we’ve got a couple of companies. We-Envision.com is a partnership between my Project A and Open Door Networks. We develop software for the iPhone, the iPod touch and the iPad now. We-envision.com has over a hundred apps in the App Store, mostly for the iPhone, and basically they’re the ENVI line of apps.
What they are… think of it as a Google image search on steroids. If you go and search for BMW motorcycle, you’re going to get everything. We classify it by model and year. So, we have a layer between the Internet and its images.
So that’s the ENVI app, and each one of those apps is very specific, so you have Harley ENVI, dress ENVI, shoe ENVI, whatever classification you want — that’s all those apps. One of the apps that does quite well is Art ENVI, an app that allows you to look at art found on the Internet. We classify it by the artist.
When we found out about the iPad, even without seeing it, we got very excited and said, “Let’s come out with a brand new piece of software based on our best-selling ENVI app” — which is Art. But we didn’t just want to recreate that app for the iPad, so we created an app, [Art Authority] in its entirety for the iPad. A completely new UI, a thousand artists, forty-thousand works of art, classified by period of time. It’s like a virtual museum. [TMO has reviewed Art Authority.] You wander from room to room in a museum, investigating and finding out about art and experience it in a different, fluid way.
So that’s what we do. Alan Oppenheimer is the owner of Open Door Networks, and I own Project A. We’ve come together to work on cool iPhone and iPad apps.
Jim Teece, Founder Project A
TMO: I take it you do the development?
Mr. Teece: We have developers. I’m more on the design and business development side. Alan is more on the project management and deployment side — and day to day management of app sales.
Alan has twenty-five years total experience and I’ve been doing this for twenty years, so … we’re seasoned. We write software not only for this platform but for the Web. Alan writes specifically for the Macintosh. He has a line of security software.
We got into the iPhone when it first came out without knowing what the market would be. 250,000 apps, a billion downloads … nobody knew. So it’s been an experience for us, and we’ve been quite fortunate because we’ve had several hundred thousand downloads of our apps. Even so at ninety-nine cents an app, we’re getting seventy cents, it’s tough to keep a team going. Because it does take a team. I guess we’re different than a traditional developer, say, a single person developer. We have designers. We have testers. We have an entire QA process that we go through. Customers of the App Store tend to be, ah, unforgiving in their reviews.
So we don’t really worry too much about getting approved by Apple. Our apps have always been approved — because they test it for the quality of the product. Our biggest concern is getting through to the consumer, making sure they see it for what it is and that they enjoy it.
Alan Oppenheimer, Open Door Networks
TMO: That makes sense. Your apps are paid apps, ninety-nine cents. Does that include the iPad?
Mr. Teece: No. When Apple set the price point for their iWork apps, it allowed us to experiment with our pricing to see if the community would support a ten dollar app. So our [Art Authority] app is ten dollars.
And it’s only an art app. You have to want it. It’s not something that people play with. It’s not a game. The space is, do want to learn about art, see art.
Now that the iPad has gone global, we’re in the top ten of each of the global markets. So we’ve been doing quite well with it. We’ve done, I think, better in quantity on the iPad than we did on the iPhone. Art ENVI is our best selling app and it’s number one in Japan. People love it in other countries. I don’t know why. Maybe they have more time to enjoy art.
TMO: Congratulations.
Mr. Teece: It’s been good, but it’s a different kind of success. It’s successful because we’re able to grow a team and reinvest. One of the challenges, however, has been: what’s the true ecosystem for a developer? Apple mentioned at the keynote that over a billion dollars has been paid to developers. Wow, that didn’t go to us, and we sell a fair number of apps. So, does that mean it’s like the music industry all over again? You’ve got your top ten percent rock ‘n roll stars that are taking it all? And the long tail is getting the rest of it?
TMO: Let’s explore that a little. In the world of music, the royalty does tend to command the money. And everybody else basically has to have a day job. The app development community, while it seems like the royalty still commands the lion’s share, it seems like a big portion of the rest can actually make a living from doing this. Does that fit with your observations?
Mr. Teece: That’s why I’ve been meeting with a lot of developers here to see where they play in that. And a lot of developers here are not even independent developers, they’re corporate developers, and they don’t even know what their sales are. It’s simply a big marketing tool for them. They work for an organization that needs to have an iPhone app because its used for marketing purposes.
But if your cost for a developer per year is US$100K, then you’re gonna need to sell 150,000 or 200,000 apps in a year to pay for one single developer. Not including any QA, management, overhead or anything else… so is each of those developers doing that? I don’t know. That’s what I want to find out.
For example you don’t really know the scope of what’s above you. If you’re number twenty-five in the app store and you sell 100,000 apps, does that mean the person at number twenty is selling a million apps? Until Apple shares how it’s all distributed in the long tail, we just don’t know.
TMO: Have you begun holding your breath waiting for Apple to start sharing in that way?
Mr. Teece: [Laughs] No, no I don’t hold my breath… been at this awhile, we don’t hold breaths anymore.
TMO: Tell us a little about about your experiences in working with Apple, the approval process and the App Store team. What are your experiences there so far?
Mr. Teece: It’s excellent on all fronts. We-envision, because Alan is a partner and a past Apple employee and has, I’d say, sixteen years experience developing Apple software has a great relationship with Apple. We have a person at Apple that we go to, and we have a direct communication line with the developer relations team. So I think he’s been quite happy with the relationship with Apple.
Our App, Art Authority, was featured in the App Store as a staff favorite. These are all great things that help you with sales. From that standpoint, incredibly happy. Also, we’ve been at this since the beginning, so we’ve watched the tool set evolve. Those tools were somewhat rudimentary in the beginning, and we’ve watched them evolve, getting better and better. We’re excited to see that.
However, the business side of me wants to have more direct access to my data. So we’re not just downloading Excel spreadsheets and using our own tools. You want business tools to help you make business decisions. How do you market an app? If Apple blesses you and says you’re a staff favorite, if great publications like yours write good reviews, all of that helps. But all the traditional ways of advertising and marketing an app don’t fit anymore. So what I’m hoping is that Apple will make the online resource more of a business gateway for us: tips, tricks, opportunities, things that you can do to leverage your products.
For example, even Bill Atkinson at last night’s Stump The Experts — he’s one of the pioneers, one of the forefathers of the Mac OS, the hero of heros for all of us — and he still had to stand up and say, “Hey, if anybody wants, I’ve got a great iPad/iPhone app. I’d love for you to find it. But nobody’s finding it.
So I think [our experience] submitting to Apple, we’ve had great success. We’ve never been challenged by them denying our app. We don’t build anything that we know could infringe. I just hope that they keep investing in the business side of it, for the developers’ sake. So helping them understand how to be better business people, how do you market an app, that’s what I hope to see more of.
TMO: So let me ask you this. We joked a few minutes ago about holding your breath. From an outside standpoint, what seems to be the ugly truth is that, traditionally, Apple doesn’t seem interested in providing those kinds of tools. So, do you see that differently?
Mr. Teece: I do see it differently. I think that Apple was shocked and surprised, as all of us were, about the magnitude of their success. And so they’re playing catch-up. And they understand that the long tail shouldn’t be forced into choosing another platform.
There were two heartfelt Steve Jobs moments — where it was almost a choke-up on his part. The first part was when he announced that a billion dollars were paid out in royalties to the developers. Not only is he proud of it, he knows that he needs that to happen. That developers can become wealthy writing software for the future platform of Apple. I’ve never heard Apple say, ever, in all the years I’ve been writing software for the Mac, how much money developers make. But here he is saying to the world: “A billion dollars.” I think they are making a statement. They’re saying, we cannot do this without you. And we want you excited about the next billion and the billion after that. That’s an amazing financial ecosystem if they can figure it out and if it’s not all top heavy.
I’m all about building sustainable software development teams. How do you build a team that has sustainability within the App Store? Because the model now is all different. Before, you had direct access to your end users. You could go back to them year after year and say, how would you like to upgrade it? That incentivizes me to keep upgrading my product. But the new model is, you get an upgrade for free. So where’s my incentive in that — to make my product better? We’ve gotta fix that. The developer ecosystem must become sustainable.
In Part II, Mr. Chaffin and Mr. Teece continue the discussion about Mr Jobs’s second emotional point in the keynote, developer passion, business sustainability, overcoming all the negativity in the community, the future of the Mac and the exploitation of social networking.