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MBA Students' Mobile App Start-Ups Compete For Market Share

A clique of entrepreneurs is using MBA programs to develop business plans and launch mobile app start-ups – but the sector is starting to wane.

Tue Aug 19 2014

A clique of mobile app entrepreneurs is feeding a new breed of business school graduate. A group of up-starters experimenting with software development are helping to drive competition in what has been a technology market hotspot.

Instead of pursuing corporate careers, they are writing business plans during MBA and master programs, and developing their products upon graduation.

Many of these entrepreneurs are also collaborating with developers from their business schools’ universities.

In the course of doing so, they are also helping to sustain a sector which many mobile developers fear is beginning to wane.

According to Deloitte, the consultancy, nearly a third of smartphone users do not download apps for their devices in a typical month. The average number of apps downloaded on a monthly basis has fallen considerably this year, Deloitte says in a survey of customers in the UK.

Smartphones have started to saturate mobile markets across Europe and the US, so users downloading new apps have become many developers’ primary sources of growth.

For start-ups, many rely on the app stores of Apple and Google, which both companies claim support a huge slice of industry developers in Europe.

Ali Ahmed, CEO of London-based Lutebox, like many in the sector allows users to download his flagship app for free in the iTunes store. “User growth – our key focus right now,” Ali said. “Once we have a large user base, there are ideas to monetize it.”

Venture capital firms are showing a renewed willingness to invest in start-up mobile companies.

According to Crunchbase, a site that gathers data on start-up investments, about 30 mobile start-ups closed funding rounds in July, an 11-month high.

Significant investments have been made in firms this year including Secret, a messaging app which raised $25 million, and organizational application Trello, which raised $13 million.

Index Ventures, the European investment group that backed mobile game-maker King Digital and takeaway website and app Just Eat, raised €400 million in June to invest in early stage technology start-ups.

But Deloitte’s survey will stoke fears that it is becoming increasingly difficult for app makers to gain market share.

The volume of apps available has made it harder for creators to gain visibility for their products. Download rates have also begun to slow – the number of smartphone users who do not download any apps has reached 31%, a steep increase on last year, according to Deloitte.  

Some of the biggest app makers have struggled. King Digital Entertainment, maker of the popular Candy Crush Saga mobile game, last week cut its sales output, sending shares down more than 20%, after a torrid stock market debut in March.

Amidst the competition to find the next killer app, a troupe of MBA graduates have launched mobile development start-ups in an attempt to claim a cut of the market.

Discount Dealer

Euclides Major, co-founder of deals app MYGON, draws inspiration from Groupon, the Nasdaq-listed discounter. “We really tried to understand why the concept was booming,” Euclides said.

His free-to-download smartphone app allows users to discover local deals in Portugal. Traders sign-up to the platform and pay MYGON a fee.

“Where can I go for lunch? What am I going to do tonight? Open up the app, locate where you are, and see what deals are available to you right now,” Euclides said.

The app aggregates deals and discounts with restaurants, spas and other recreational businesses. MYGON has taken the daily deals concept and combined it with technology to create a sleek-looking app.

“It’s a very convenient way for users to book any type of service, and for merchants to build a local, real-time deals platform,” Euclides said.

He thinks that his MBA, from Spain’s IE Business School, has opened a lot of doors. He plans to expand. “We want to go to another European market and have a few under evaluation,” he said.

MYGON was founded in February 2012 and has since notched over 150,000 downloads from iPhone, Android and Blackberry users. The company raised about €550,000 through a seed round of funding, and has swelled to have about ten employees.

Sliding To Success

Robert Seo, CEO of Slidejoy, has taken a different approach. The company pays users to download their app: “In the last few months we’ve paid out between two to ten dollars per user per month.”

Clients sign up to have their products advertised on users' phones. Users download the app and are paid small amounts in return for having adverts displayed on their home screens.

“You have a choice to slide to the right or left; you get taken to the home screen if you swipe right, and if you swipe left you engage with the advertisement you see,” Robert said.

The Philadelphia-based company has delivered more than 26 million ad impressions to clients including Macy’s, Best Buy and Groupon. Robert thinks that Slidejoy stands out from the crowd.

“It’s an opt-in profile, so we have higher engagement,” he said. “It’s a lot more valuable than [a platform] within a website or an app – it’s a full-screen takeover.”

Slidejoy is a product of Wharton School – Robert, an MBA, met his co-founders there. The group won the Wharton BizPlan competition, netting $30,000. Slidejoy was launched in September 2013 and within three months was downloaded 20,000 times.

Robert believes that an MBA degree will help the company grow. “I would say in every single aspect as an entrepreneur it [an MBA] has been helpful,” he said.

Turning Phones Into Taxi Rides

Bassem Barake, co-founder of London-based Funryde Ltd, is attempting to turn smartphones into taxi rides.

His ride-sharing app, similar to services offered by Uber and Hailo, allows car-drivers to pick-up passengers who are going in a similar direction and earn a quick buck on the side.

Bassem says that this service is 60%-70% cheaper than using one of the city’s famous black cabs: “On average it’s less than a pound a mile.” Users have the option to increase or decrease that amount, based on their satisfaction. The company plans to take a cut of whatever price a passenger pays their driver.

Users are rigorously screened before being approved as drivers, for safety reasons. “We are raising awareness that not anyone can be a driver,” Bassem said.

The second stream of income will be from a carbon reduction initiative service, for private networks. One of Funryde’s main ambitions is to reduce the amount of cars on the road.

The business is based in Tech City – a cluster of technology start-ups in East London. Bassem says it has allowed them to learn from others. “The amount of learning we get from others is huge,” he said.

Funryde was borne from London Business School’s incubator, but Bassem has a Master’s degree from Cass Business School. He developed the app with the help of local City University and Imperial College students.

The company was founded in August last year and has plugged about 2,000 soft-launch downloads of its app so far. Funryde is sponsored by UK Trade and Investment, a government-funded support vehicle for SMEs.

The founders will not disclose the rest of the funding, which came from personal investment. Funryde is seeking an insurance deal to cover both their drivers and customer-passengers.

“The model won’t allow any profit until we find an insurance premium,” Bassem said. But he added that they were in “serious talks” with insurance firms.