The rise and liquidation of Rome

Everyone knows the name Appster, being a well known international brand with an impressive portfolio, they were one of our biggest competitors. At first glance, they were at the top of their app game, with a beautiful website that reflects upon their high quality and creative designs. It’s thorough, giving details into major projects with big clients. They had a story everyone loved, starting with $3k in funding and growing into an international app giant with employees in 3 countries and a revenue of over $52 million. On Thursday last week, they officially went into liquidation with over ten companies already contacting Paul Vartelas, their liquidator, for their assets.

It was not uncommon for us to receive clients who had previously been to Appster and left with apps that were unfinished, not what they asked for, or were buggy. The Grill’d app rates at one and a half stars on the Google Play store with comments stating the app just doesn’t work. While Grill’d is mentioned on Appster’s website, there is no case study.

Grill'd app

App reviews

Why did they fail?

All bark no bite

Appster’s website is a marketing dream. It’s full of high-quality content, is easy and intuitive to navigate showing evidence of thoughtful UI and UX. They had clients such as Accor Hotels, Aecom and the NSW government so potential clients visiting the site would feel at ease signing on with them. However, clients such as Trond Smith reported paying over $60,000 with Appster and receiving something not fit-for-purpose. He criticised the UI and the functionality stating it was “kindergarten stuff”. After asking for a refund, Appster refused, asking for additional payments of $10,000 each to finish the app. After paying 2 of these payments, Smith left Appster, completely dissatisfied.

$60,000 is a very small amount of money for an app, even with off-shore developers. Most apps made from scratch cost well over $100,000 for an MVP. Appster oversold Smith and under delivered which seemed to be a constant in their business model according to several clients reports.

India isn’t so cheap after all

With developers in India and the ATO doubling taxation for offshore suppliers, financial stress grew within the company as Appster struggled to pay bills. For the last few months, they struggled to hit sales targets and quickly ran through their profits to pay bills. They were also back-paying four years of the new tax, wiping out all profitability. The CEOs McDonald and Humphrey blamed the new tax for adding to the collapse of Appster. From the start, Code Heroes has dismissed the offshore option in favour of having all development work done in Brisbane which is simply due to it ensuring a higher quality product. Now it seems India isn’t the low-cost option anymore for software development for any app companies.

Master of none

On their website, Appster lists a range of services including app development, web development, AI and machine learning, blockchain, VR, Smart TV, etc. No company can be good at everything: either all their services are mediocre, or they’re good at a few things and not the rest. Companies that specialise in one product become authorities in the area and last well into the future. For example, Tanda specialises in scheduling software and have a beautiful platform that works very well. We specialise in bespoke apps for Enterprise, creating custom software in conjunction with our client so we actually deliver what we promise. The QUT app is at 4.2 stars in the Google play store with over 20,000 downloads.

QUT app

Quantity over quality

Appster was a well-known app factory and like a lot of Australian app development companies they had a strong focus on acquisition. This focus is a part of an HR framework called the “cycle of failure” where companies focus on short-term goals, sacrificing long-term business stability. As a result, low-quality apps were being handed over to understandably angry clients. Burned clients find it difficult to try new companies like us, having trusted and lost a significant amount of money and time before. Often, we have clients with half finished apps come to us, and we have to give the hard news that they have to start again. This news can be devastating for clients who invested so much in a project and didn’t get what they paid for. Appster grew too fast and lost focus on what really matters; it’s not the app that matters, it’s the value it has and the problem it solves. No client comes to us because they want an app, they want a solution.

Apps without value

When your past work is publicly visible to clients, it’s important that you have a strong portfolio. Making sure the apps you release are of the highest quality is essential not only in retention of clients, but also in getting new ones. Each person on our team is held accountable for what they produce, so we only release apps we’re proud of. Ensuring you hire the right people is an essential step to this. Firstly, being Brisbane based allows us to collaborate closely with our clients each step of the way to ensure we’re building what they had in mind. Secondly, we have a rigorous recruitment process and hire those who can add to our skill set depth and breadth, not duplicate it.

Collaboration on design

Beware false prophets

Choosing who will develop your app is risky, especially if you have been burned before. It’s about more than the appearance of a website and how well you know the name of a brand. Look at their projects, download the app and see if it works. Large companies often lose sight of why we all became app developers. An app without value and purpose is nothing. An app that doesn’t work is nothing. As the end of the year draws near, it’s a sad ending for many companies. We wish all the best to the Appster CEOs for their future endeavours as I’m sure they learned many lessons. To anyone thinking about getting an app developed, we hope Appster’s fall doesn’t turn you away, and you find a company who can help you build something extraordinary. Good luck for 2019 from all of us here at Code Heroes!

References

  • (2018).App darling bites the dust. Retrieved from https://news.com.au/

  • Dudovskiy, J.(2012, November 27).Cycles of Failure and Cycles of Success and their Implications on Service Profit Chain. Retrieved from https://research-methodology.net/

  • Kidd, S.(2018, December 7).Appster collapses — 400 staff laid off. Retrieved from https://medium.com/

  • Powell, D.(2018, December 7).Multimillion-dollar app development company Appster collapses into liquidation, leaving businesses stranded. Retrieved from https://www.smartcompany.com.au

  • Redrup, Y.(2018, December 7).Young Rich Listers tech start-up Appster collapses after tough four months. Retrieved from https://www.afr.com/

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Marketing

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