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5 Minutes With The Founder Of Curation Hit AppGratis

This article is more than 10 years old.

Apple hails the 775,000 apps on its App Store, but a sea of choice can end up being a glut for end users who struggle to choose the mobile service they really need. In the last few years, AppGratis (pronounced 'gra-tese') has stepped in to solve the problem. The free "app discovery" service offers users one free app a day from the App Store, and now has 10 million users, of which 3 million use the app everyday. It also makes more than $1 million a month in sales by taking a cut from in-app purchases after its promotions -- something of a testament to the freemium model and AppGratis' negotiating tactics. I caught up with the company's French founder Simon Dawlat, to find out how his company would be spending a recent $13.1 million in extra funding, and why he doesn't see his service as a "Groupon" for apps.    

FORBES: You've probably done this a thousand times, but tell us your pitch for what AppGratis sets out to do. 

DAWLAT: We are helping developers get distribution in the App Store and helping users discover new apps. We started as a newsletter which had daily deals and daily picks, and from there we became an app in 2010.

When did you hit your inflection point, where a tide of consumers started downloading your service?    

I think that was in 2011. It took the industry from 2008 to today to pass the one-billion-smartphone device user mark, and the forecast is two billion in less than three years. So 2013 is going to be a massive year.

Was it any particular point in 2011? 

When there is a big manufacturer release, whether an iPhone ships to the market, or when it's Christmas and people give iPhones and iPads to family. That's when we see big bumps and acceleration in audience and new users as well.

There are other service providers doing this, not least the App Store itself. Meanwhile carriers like Sprint are offering a service hub with recommended apps on Android phones. Are you pretty much parallel to that or do you offer something unique?

We're not at all trying to compete with the App Store. Our model is to perform the act of helping users discover an app and then send them back to an App Store. Once the user has discovered what he wants to download, we don't host the content. We have two main things for helping users discover new apps. First we have a very unique editorial approach. We have 20 publishers with us from 12 different languages in 30 markets.

"Publishers?" 

People that are testing apps and reviewing them and pushing recommendations. We have 30 people in Paris. Half the team is people who will do the dirty job of finding the apps and picking up the gems.

How do you guys make money? 

In two ways. We make money by partnering with a big brand. So if you think about the Nike Plus fitness program, we're going to help bring this app and offer a two-month free subscription to the service. We will be working with guys like Disney who want to push new games to complement a new movie release. [This is AppGratis' main revenue source, charged on a cost-per-install basis.]

And for smaller developers we do revenue shares. With app developers who monetize their app directly we're able to share the extra revenue we bring them by bringing an extra million users to their user base.

So you share revenue from in-app purchases after the app is installed. 

Exactly.

So typically, would it be a year's worth of revenue sharing? 

These guys have to make money, so usually it's a week. The traffic the users are going to send, the developer will see for a week and a new wave grows. So a week is when we share revenue. [Developers also pay an upfront fee to be featured on App Gratis, reported to cost up to $20,000.]

UPDATE: Dawlat e-mailed to elaborate on the fee structure for independent developers, saying "Sometime we'll back this revenue-sharing option with an upfront flat-fee to make sure the developers aren't lying about their business - from our experience some of them will pretend their app is going to make millions and they unfortunately end-up making close to nothing... after we've featured it. So this is a simple way for us to make sure people are serious about their business; if they're not, they'll most likely turn our offer down and end-up whining about AppGratis on some forums."

Given that you offer daily deals, would it be correct to refer to you as a "Groupon for apps?"

Not really. Mostly because we're really helping everyone at every step of the chain. Our model is helpful for users if they want an app that has the perfect five-star review in the U.S. App Store. There's amazing value for developers because the problem with Groupon is they're overselling people who have limited stocks, creating a sketchy situation. Whereas we're pushing software that can come in unlimited amounts.

Isn't there the issue of server overload for smaller developers, though? 

Sometimes. [Laughs] Sometimes we have crashed some servers, but we're able to warn a developer beforehand. Eventually we're really tackling a big problem in the market, the app discovery business is yet to be cracked and we're getting there with our approach.

Hence why you have publishers curating the apps.

Yeah, of course. We restrict a lot of apps, actually. For us we're trying to make money featuring the best apps, because we have this new trust relationship with users and if we start pushing crap we'll lose users in no time.

You recently received investment of $13.5 million from Iris Capital and the Orange Publicis fund. What was that like? 

It's money that is still sitting in the bank account for now. We'd been around for four years and the company was actually very profitable when we raised the money, which was probably the number one condition for getting a good deal. But we know the market is currently hitting an inflection point in growth and the road to 2015 is going to be much steeper, so the money is here to help us tackle future problems.

What will you spend the money on? 

Thirty markets is a lot of countries to cover, so the business development and developer-relations team is growing. And we need to expand to more countries. We're opening an office in San Francisco but we have an office in Barcelona, Paris, in Sao Paulo, Brazil. Soon we'll be in Germany and London, hopefully.

Brazil too?

Yeah, Brazil is a huge market for us. It's the third market we launched AppGratis in and we've seen enthusiasm in the market place like nowhere else.

We'll also start investing money in our app recommendation engine. We can do curation and have a self-learning algorithm where the more you're using AppGratis, the more we know what you like and our staff can come up with more relevant staff recommendations.

So the recommendations your app currently makes are not the same for everyone, but tailor-made? 

We are starting to expand, yeah. The end vision is to identify different clusters of users. We're working on it. But we're already building your "app-shopper" profile. So the more you're going to be using AppGratis, the more we'll be understanding what you're interested in.

Tell me about where you got the idea to do this - to make an app that offers one free app every day. 

We've been a bootstrapped company for four years. We've been profitable from day one but I started in my dorm room. I was still a student. I went for the model that was lightest to execute in the beginning. It was one app, one daily newsletter.  I was waking up at 5am, crafting my newsletter and sending it out to my user base, then spending the day negotiating with developers and creating the deals for the next day.

So you would negotiate the deals yourself? 

Yeah.

And you were in Paris? 

No, we founded the company in San Francisco. I was here on an internship with online marketing agency Creative Feed that works between New York and San Francisco, and for personal reasons, and also because of the recession, I couldn't stay in U.S. So I went back to Paris and continued growing the company there.

When you started your newsletter, was there anyone else doing anything like what you were doing with that newsletter -- giving away one app a day? 

I think I've seen some companies trying to sort of replicate the model. It's funny because it's easy to start but the real challenge and real value for app developers is the global scale. We haven't seen anyone achieve being in this many markets.

So what's your secret for achieving geographic scale and diversity? 

Well, I think the secret is, [some] start-ups have such a huge home market [ie. the United States], that if they take 10% market share in U.S. they're already big. We started in the U.S. but we knew that scale was important so we started going international very early. We expanded everywhere, from Japan to Brazil, and then entered the United States two months ago. And that's going well; we've passed 1 million new users in the U.S. market. You approach the U.S. with a lot of fear and humility, be very honest.

What does that mean, "expanding to the U.S.," if your app already has an English-language version and is on the App Store anyway?

It means what we're doing now - being local, attending shows, having an office in San Francisco, talking to the local scene, app developers, performing local marketing efforts to grow the user base.

And you're based in Paris? 

I'm spending my time between Paris, London New York and San Francisco. Most of my time is on a plane, [but] home is Il de Re, a small island on the west coast of France. I go there a few weeks a year.

Where do you want to see company in next 2-3 years?

The goal for us is building a global leader in app discovery, and as opposed to so many companies that are following the marketing platform or network approach. We're building a consumer, user-first play. We're trying to develop a global company - as important to the Austrian market as the Japanese market.

So the big focus will be on scaling up?

Yeah. Somehow. If you think about it we've come a long way from a few users to 10 million users. Some people say in the mobile industry 10 million is the new 1 million. We see so much growth that we'll be past 100 million users in the next two years. There's such a huge shift from desktop to mobile that the potential for growth is unlimited.