With just $3,000 to their name, Melbourne teenagers Mark McDonald and Josiah Humphrey took a gamble and launched Appster. Just five years later, the technology firm is on track to become a $100 million business, has been labelled ‘the next Apple’ and has thrust the young entrepreneurs onto the BRW Rich List. Exactly how they did it is sure to surprise and inspire…
In some ways, it’s not an unfamiliar story. Two young teenagers, without the benefit of a tertiary education behind them, come up with a good idea and launch their own technology business. That business quickly takes off, expands across national borders and makes multimillionaires of its founders.
Yet there is much to learn from Mark McDonald and Josiah Humphrey, the co-founders of app developer and start-up incubator Appster, despite – or perhaps because of – their youth.
By 2018, Appster is set to become a $100 million business – an impressive achievement given that Mark and Josiah founded the company in August 2011 with just $3,000 of their own savings.
“We thought the process of incubators, capital raising and other parts of the startup journey was broken. We felt the mindset of outsourcing to offshore firms was also broken, particularly the Silicon Valley model of raising millions of VC [venture capital] funding on its own,” says Mark.
“Our vision is simple: ‘build a development hub for the greatest ideas and innovations in the world’. So it’s all about helping entrepreneurs take their ideas from concept to reality.”
This vision has seen Appster evolve into a full-scale development company, taking entrepreneurs through the journey of planning, funding, developing and delivering their application to market.
The twenty-somethings have navigated the business from a start-up, expanding its offering nationally and then into foreign markets including the US and India.
To help them achieve this rapid growth they enlisted some high-profile identities to sit on the company’s board of directors, including the former deputy director of the American Federal Bureau of Investigation (FBI), Kevin Brock.
“Kevin had a successful career in the FBI where he was exposed to some of the most disruptive challenges of our time,” Mark explains. “A recognised strategist, he helped create the FBI’s Cyber Division and then led the FBI’s new Intelligence Directorate following [the September 11, 2001 terror attacks]. He was later asked to help establish the president’s National Counterterrorism Center and serve as its deputy director.”
While such experience may seem an unlikely fit for a technology start-up, Mark says there have been distinct advantages.
“Kevin has a unique blend of leadership experience in both the private and public sectors. He recently founded BrockCRS, LLC where he helps senior decision-makers in the private sector improve their strategic management of evolving cyber risk,” Mark says.
“He also served as a senior executive with the premier management consulting firm Booz Allen Hamilton.”
Mr Brock is not alone as a high-profile advisory board member for Appster.
He is joined by the likes of David Jacques, the founding CFO of online payment service PayPal, as well as Liz Savage, who helped found British low-cost airline EasyJet and was formerly the chief commercial officer of Virgin Australia.
Meanwhile, Appster last year appointed former Microsoft executive Mike Wehrs as its chief marketing officer and head of US operations.
Culture is currency
The appointment of such experienced professionals from a diverse range of backgrounds is part of Appster’s broader focus on developing a bespoke culture and creating a team of highly engaged, knowledgeable staff.
“Competitors will copy you. We’ve had several firms started by former employees or had staff from our company leave to assist competitors grow ‘like Appster’.
“The one thing that is really hard to replicate about Appster is our culture across the globe,” Mark says. “They can copy your website/ products; steal your ideas; but culture is one thing that drives a company that can never be replicated.”
Emphasising the importance Appster places on culture and hiring exactly the right people is a hefty 22-hour recruitment process.
“The interview process consists of eight stages, four interviews, up to 10 reference checks and a body language assessment, and can take up to four weeks,” says Mark.
“At the start, we hired people who looked good on paper, but 70 per cent of the time, the person didn’t meet our expectations once we saw them in action. We were losing a lot of money because of having to rehire, so we decided to completely change our hiring process.
“After studying the hiring processes of tech giants like Google and Microsoft, we created our own unique system that allows us to find candidates based on the goals and mission of Appster.”
Mark believes that this sizeable initial investment quickly pays dividends.
“In the long run, our interview process is more cost-effective than hiring the wrong person, which would require us to fire the person in question after spending time and money training him or her, re-advertise the position, go through more resumes, interview more potential candidates, then hire and train someone new,” he says.
Yet even the best culture on earth makes for nothing without a quality product offering.
“Great apps are like toothbrushes: you use them at least twice a day,” says Mark. “More specifically, however, the best apps capture the hardest thing from users: their attention. They provide significant value through solving a pain or being enjoyable to use, and because of that their creators can capture a small amount of that net value.”
To really build credibility in the marketplace though, Mark and Josiah believe that your product must exceed anything else currently available.
“The only way to build credibility in any market is by delivering great work. This means doing a better job than the incumbents and innovating on the status quo,” Mark says.
Appster’s past work is an eclectic array of mobile apps and games, demonstrating the ability for this technology to change and enhance practically anything.
From Real Chords, an app which helps people learn to play a guitar, to Mood Tracker, a survey enabling users to monitor for signs of depression and Food Craze, a game which offers players the chance to win real vouchers to use at restaurants, Appster’s work shows that the only limitation to mobile technology is imagination.
Mining mistakes for opportunity
While Mark admits that there were inevitable mistakes along the way, there is nothing he would do differently.
“One is tempted to say avoid hiring certain people. However, each mistake helped us learn to be a better company and shaped who we are today,” he says.
A big learning curve for the duo has been the cultural differences that exist across different markets – even similar English-speaking ones.
“Every culture is different in ways that are hard to predict,” explains Mark. “For instance, in the US, you need to be super careful with legal compliance and contracts: one small wording mistake and you can have a lot of hard work fixing things. So make sure you localise everything.
“Additionally, once you go global, the founders can’t be everywhere at once, so you need to develop a leadership team that can scale.”
Looking to the future
From humble beginnings, where their first client was a NSW-based teacher looking to remake an alphabet learning app using Australian English, to their current San Francisco-headquartered multinational firm, Mark and Josiah have front-row seats to witness the ongoing transformations that technology is bringing about in virtually every single industry.
“One of the great things about innovation is that we’re seeing deep vertical innovation, which means that founders who come from a range of backgrounds – like property managers, surgeons and more – each has seen a challenge in their industry and wants to fix it and technology is the only way to do so,” Mark says.
“A great example is a product we launched recently called MyOwnCFO with two world-class CFOs. They felt that while large companies benefited from the knowledge of CFOs, small business owners, who often needed this advice the most, didn’t.
“So they built a product to analyse patterns in their invoicing and accounting systems to give them early warning signs. It’s been a hit!”
It is this type of innovation that Mark says Appster is keen to continue involving itself with.
“We have a mission at Appster to challenge assumptions, disrupt the status quo and build things that change the world. I’d like to think that our clients share that ambition in their own way in their own start-ups,” he says.
“In the not so distant future, every business will be a technology business. Look at what has happened to the taxi industry with Uber. Make sure you understand what is happening in your industry and how to adapt.
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