Creating a well-used consumer app is hard. Not only do people download fewer apps than they used to, but big companies like Facebook and Google dominate the world of consumer apps. Also, once an app looks like it might bring competition, Facebook just buys it — or tries to squash it.
What kind of apps catch the attention of Silicon Valley investors?
Early Snapchat investor Jeremy Liew lays out his criteria.
George Frey / Getty
But Lightspeed Venture Partners investor Jeremy Liew doesn’t buy it. The narrative that smaller apps and startups can’t catch fire is a total myth, according to Liew.
“Critics have claimed that growth is impossible in the current environment, but they are wrong,” Liew, the first big investor in Snapchat, wrote in a blog post on Friday. “Apps can still break out through word of mouth. If they have the right product hooks, they can get viral growth.”
Yes, it is Liew’s job to think like this. He’s an investor, and investors are always looking for the next big hit. But Liew will continue putting money on the line, and that means there are still opportunities out there despite Facebook, Google and Snapchat sucking a lot of user time.
So what is Liew looking for? Here’s how he described it using Silicon Valley-speak:
“If your app has hit at least 10k DAU with strong engagement (25%+ DAU/MAU, at least 3 sessions/day), retention (30%+ d30 retention — that’s d30, not month 1) and growth (30%+ month on month growth), I’d like to hear from you!”
Let’s translate.
“If your app has hit at least 10k DAU with strong engagement (25%+ DAU/MAU, at least 3 sessions/day)”
What that means:
Your app doesn’t need to be massive. But at a minimum, Liew is looking for apps with at least 10,000 daily users (DAUs).
On top of that, he wants apps where those daily users represent more than 25 percent of the app’s total monthly users.
So let’s pretend you built an app with 100,000 users who visit every month. Liew would consider “strong engagement” to mean 25,000 of those users visit your app every day.
“Retention (30%+ d30 retention — that’s d30, not month 1)”
What that means:
Liew wants to invest in products where users stick around for at least 30 days. Specifically, Liew is looking for apps where more than 30 percent of the people who joined as a user also opened the app 30 days after their first visit. Basically, did the app keep someone interested for an entire month?
“Growth (30%+ month on month growth)”
What that means:
Is your total user base growing by at least 30 percent in each consecutive month? If so, Liew is interested.
These are the requirements from just one investor. But you can imagine that most investors in Silicon Valley have similar criteria. So the next time you hear about a hot new app getting millions from a bunch of Silicon Valley venture capitalists, you’ll have a better idea of what caught their eye.
This article originally appeared on Recode.net.
