I’ve been pouring over the results of the 2009 Webapp Survey from TechCrunch and Carsonified.  This really shattered a few perceptions I had about the webapp industry.

Survey Says:

50% of webapps have less than 1000 active users.

People can’t get traction.  This goes right into the second point.

50% of webapps get less than 1000 uniques per month.

You can’t create users if you don’t have traffic.  Most webapps have a 1% conversion rate.  That is, at 1000 uniques per month, you’d only create about 10 customers.

50% of webapps pay less than $1 to acquire a user.

Webapp’s don’t spend any money to find users.  Rather, they don’t spend anything to be found by users.

75% of webapps cost less than $10,000/monthly and are run by 1 engineer.

Most webapps are one man shows with no designer leaving only 25% with co-founders.

57% of paid webapps make more than $5/user/month.

Compare this with only 25% of free webapps making more than $5/user/month.  It appears that per user, paid webapps make more. (note: this says nothing about traffic levels).

90% of free apps make less than $1000/month.

That speaks for itself.

How To Fix It:

Focus on traffic, not conversions.

Would you rather have 2% conversion on 1,000 views, or 1% conversion on 10,000 views?  That math is easy.  Start out looking for traffic and focus on conversions later.

Most free webapps don’t make significant revenue.

Take the “traffic now, monezite later” approach, but have an idea how you plan to make revenue.  There’s a good chance that, like Twitter, it could be tough.

Most apps don’t have a marketing spend.

The old adage “you need to spend money to make money” seems to apply.

Find Co-founders.

Make sure they wear different hats.  Most webapps have a single engineer, no designer, and no bizdev.  An engineer, a designer, and a floater is looking more and more like the ideal recipe.

I’ve been spending the week in San Francisco with @aSadhankar and @Gahzi, immersing myself  in everything the Bay Area startup scene has to offer.  A critical part of running a startup is finding out how others do it.

So why is this place such a startup launch pad?  Three things became incredibly clear at the street level:

Startup “Spots”

Founders know where to find other founders.  When we got here, we knew to immediately hit Coupa Cafe in Palo Alto, Red Rock Coffee in Mountain View, and the Epicenter Cafe in SOMA.  Sure enough, we were immediately surrounded by young founders pitching engineers to work with them and angels talking term sheets.  We thought we’d have to walk into a VC’s office to find it.  No way.  It’s out in the open for everyone to see, and people gravitate towards it.

Employees are the Brand

Employees are branded, and they wear their brand proudly.  Everyone has a t-shirt, zip-up or hoodie with their startup’s name on it.  They wear them to coffee shops, restaurants and even to class.  I found myself Googling startups I had never heard of, only to see a landing page hoping to grab my info.  This is viral marketing at it’s core, and I was incepted.

(edit:  As I write this, one of the Yobongo guys walks into Epicenter.)

Risk = Reward

In Ottawa, I’ve spent the last month convincing friends to leave their “career” jobs and try something a little more rewarding.  It’s been a struggle.  Even with competitive pay, amazing growth, a killer office and rewarding work, young engineers are reluctant to join a startup right out of university.

The opposite is Filip Mares, arguably one of the best students to come out of Carleton.  We ran into Filip by chance while sitting at the Coupa Cafe (see point #1).  It turns out he was picked up by Alphonso Labs, the creators of Pulse.  Filip took a risk, moved to SF and is now has an equity stake in a great company.  He’s clearly winning.  This place attracts a different breed of people; arguably the right ones.