With customers ranging from ANZ (ASX: ANZ) to Europcar to Grill'd, Melbourne-based app developer Appetiser "invested into the crisis" last year and has come out on top with increased referrals driving growth. Co-founder and CEO Michael McRae tells Business News Australia about the trends shaping the industry, and how the company he founded with Jamie Shostak remains self-funded and striving ever higher.
For someone who earns a living from making sophisticated apps for startups and large corporates alike, Michael McRae takes a rather straightforward, no-frills view of what their purpose actually is for a client.
"At the end of the day an app is just a digital form of a business. Let's be really clear - no app idea by itself is better or worse than another," the entrepreneur explains.
"Usually we're just talking about some stores that have a digital storefront and that's the mobile app, and then it does come down to business performance."
Developing and managing these apps is a service, and like any service provider worth their salt, McRae is obsessed with quality. In his line of business that comes down to two key indicators - stability and scalability.
"I'm not going to say any product is ever perfect. In fact, we have some larger clients that often have quality production issues," he says.
"The question is not how perfectly stable an app is, but how quickly can you get things up and running? How quickly can you improve? And how fast can you evolve the product?"
As for an app's design and functionality, a developer needs to be asking the right questions, and a lot of them.
"How well does your app align with your target audience? How easily can you sign up users? How compelling is the design? How much do people identify with it? How easily can you help people come back to the app and buy into it? How can you build addictive behaviour?" McRae asks.
"That is all what makes the quality package - as long as you track those individual metrics for a project, you end up at that point where we as a company keep learning, keep improving, and what we learn from one project we can apply to others."
The user experience of apps has changed greatly in a short space of time after something of a rollercoaster ride. It is a cycle that started with app developers getting overexcited and creating products that ate through too much data or storage, leading inconvenienced and unconvinced users to hit 'delete', turning to web browser options instead where possible.
Data and in-phone storage limitations led to a greater sense of minimalism and utility in apps that were built, but the pendulum has swung back now that these restraints have been lifted thanks to better, more affordable internet data plans and a migration to the cloud.
"Nothing has made as big a difference as the accessibility to data in first world countries," says McRae.
"When you're on the train the amount of people you now see not just scrolling through a feed on Reddit or something but literally sitting there and watching YouTube videos or even Netflix, often these services are coming for free. From a data consumption perspective that's huge.
"With that you have this whole new availability where you can make a lot of things that previously were limited by our data plans available on the fly - the internet has become faster."
While 4G has been running for a while, McRae describes 5G as yet another step up with access to quality content as a major driving factor for apps for entertainment and even educational purposes.
"I would say out of all of the recent changes, that's probably the biggest one because two or three years ago we were still way more aware of even scaling videos up past certain pixel sizes. It got to the point where users wouldn't want to use them because we were chewing through their data," McRae says.
McRae sees the other big trend shaping app development is privacy.
"People mistrust certain social media platforms more and more. Even signing up using those social media platforms as your login handle is something where we see less and less people doing that," he says.
He says advertising isn't as powerful in apps anymore as the push towards more privacy has inhibited the ability for advertiser to collect data on users.
"Apple and Google both push towards more and more protecting privacy of the individual. Now, is that better or worse? Depends on where you stand on the entire privacy debate," he says.
"But the one thing that we do see happening is that from a monetisation strategy perspective, making money from ads is something that hardly anyone does anymore, which is nice.
"But with that we're looking at way, way more paid and premium products which to some users is also a downfall. There are different target audiences and markets, and all of them when you start talking about numbers are a sizeable portion of the market that should never be neglected."
Investing into the crisis
Over the past three years Appetiser has gone from 100 to 170 staff on its books, although the emergence of COVID-19 disrupted the business significantly.
"The idea from the beginning was always to build an agency that puts product success at the forefront and as the primary metric of how we measure our own progress," he says.
"Throughout the pandemic especially that really paid off because what we realised was the acquisition of new clients was an absolute disaster. I'm not going to lie - finding business and everything was very difficult.
"Due to our growth pattern we didn't get government support which was what our competitors got, which put them from a marketing perspective in a very, very strong position."
But while new client acquisition was a challenge last year, he says Appetiser "helped our existing clients grow more and more".
"We've got some private startups that went absolutely through the roof, for example Bodies by Rachel which has rebranded as Move with Us - within the first six months we were talking about 5,000 5-star ratings on the App Store," McRae explains.
"If you now look at converting that to common sales numbers, you can imagine how their business exploded."
Success stories like these and the ongoing commitments of longstanding clients allowed Appetiser to keep up momentum going into 2021. Not only did the group retain staff, but it was able to hire from a larger talent pool of people who got put on short-term work or made redundant.
"Without government support, not a single one of our employees had to do an hour less work. Everyone could keep working, which wasn't easy - lots of counselling, lots of people struggling with mental issues, but in hindsight we couldn't have done it any better," he says.
"We invested into the crisis, we said we're going all in. We're not shrinking, we're sticking together and looking out for each other and that's really paid off. Even from a company morale perspective I'm incredibly proud."
But what is McRae's big audacious goal for Appetiser?
"At a certain point, I'd love to say when someone works with Appetiser their chances of success are higher than with anyone else in the world," he says.
"At that point we can also start working more with external investment companies, VCs [venture capitalists], and then also help startups find more funding because there can be a lot of symbiosis.
"We've never raised any money as a company, so Appetiser is still completely owned by Jamie and myself."
Most of the company's customer base in Australia although very frequently their apps end up finding users - and often the majority of users - in overseas markets such as the US.
"Could I see Appetiser going to the US eventually? Particularly because of access to funding, that's very, very attractive. Absolutely, but I wouldn't do it at the cost of any operations at the moment.
"It would have to be a case where we'd have maxxed out the market here in Australia, we're looking after everyone as best we can, and then we can take what we're doing to the US.
Appetiser is also doing more work with charity. Every single month the company is sponsoring 10 more children from disadvantaged backgrounds to help them go to school and have meals on the table.
"The idea there for now is to make sure every single employee has a child sponsored in their name. That's the point which we're trying to get to by the end of this year, which we're on track for at the moment. It's just something that personally makes me really happy.
"One project I'm particularly proud of is we launched this charity platform with a gentleman from Perth called Matt Golan for the Australian Horizons Foundation. We're on track to raising $10 million for charity just in the first 12 months. It's been fantastic."
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