apps should allow users to achieve key goals with as few finger taps as possible.

Exit Strategy NYC’s extremely simple interface asks only three key pieces of information:
1) What subway line are you riding? (tap the line’s icon)
2) What subway station are you going to? (tap the station)
3) What is your direction of travel? (tap ‘uptown’ or ‘downtown’)

The app then shows the platform diagram for this station. Three taps — that’s it! In and out in fewer than ten seconds. Compare this to the Tube Exits interface design (Tube Exits is the London equivalent of Exit Strategy NYC.) The user has to tap over a dozen times just to get the same information!

One of my favorite apps, Foursquare, took a step backwards in their latest update. Previously you could check in with two taps: once on the venue, and once on the ‘check-in’ button. Easy Peasy. But the latest update added an additional step after the ‘check in’ button. This change added no functionality, only friction.

If you’ve ever played the Settlers of Catan iPhone app, you’ve seen another worst case scenario. Users must tap a tiny “Continue” button every time the next player’s turn comes up. It’s unnecessary and it’s frustrating.

Using an app with poor tap economy is like trying to run a marathon in the ocean. You exert much more effort and get nowhere fast. There’s too much friction. Tapping is mentally taxing, especially when it lands users on an entirely new screen. The user must review this new screen, then figure out which elements are interactive, then decide which one will help achieve their goal, and then tap again! Each additional screen/tap shoves one more roadblock between the user and their end goal.

The best services let users do more by doing less. This makes users feel powerful. Have you ever used Amazon’s one-click checkout to place an order? If not, please try it. It’s thrilling to use! Similarly, Griffin’s iTalk app features a giant ‘record’ button that feels magical. With a single tap, the user can start recording because the app picks smart defaults and stays out of the way.

The only time having an extra tap makes sense is when the alternative is worse: a cluttered user interface. Good UIs balance which elements are shown and which are hidden. Consider Facebook’s decision to add the grid button in the upper left corner:

Economy [of taps] is always a motivating factor, but the grid adds an extra tap [because you need to press the grid button] versus the full-time tab bar. This was a compromise I felt was necessary. There’s always that balance between screen clutter–adding tabs–and the number of taps.

-Joe Hewitt Quoted in Chris Dannen’s iPhone Design – Award Winning Projects

At the heart of many apps is a single core goal that your users hope to achieve — repeatedly. For Exit Strategy NYC it’s retrieving information. For iTalk it’s recording audio. For Foursquare it’s checking in. For Amazon it’s purchasing items. Don’t make your users run in the ocean. Remove as much friction as possible. Let them fly in the sky! The quicker the user can perform their goal, the better they feel about themselves. And the better your product makes them feel, the more they’ll fall in love.

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Mobile spyware is the focus of the tech media’s latest frenzy. It started when a hacker discovered that the Pre sends back location data about users to Palm.  Next, a blogger ‘discovered’ that certain iPhone apps also phone home.  The frenzy came to a head when ReadWriteWeb published Dear iPhone Users: Your Apps are Spying on You.

(from www.flickr.com/photos/gerlos/3119891607/)

This article focused on the NYC-based iPhone Analytics company Pinch Media. The issue? Pinch Media’s software allows developers to learn a lot about their users: Apps with geolocation features can return information about the location of their users. Apps using Facebook Connect can even return demographic information (gender and age) about their users.

Of course, there’s no personally identifiable information here. It’s all aggregate anonymous information — and this has been Pinch Media’s response to the issue. Tracking anonymous information for benign purposes is analytics — not spyware. At the end of the day, developers simply don’t know all that much about their individual users. It’s not like they can identify them by name, right? RIGHT?

Well, um, on that note… we know the full name and location of each and every Android user with our app.

How?!  Did we build in some sneaky spyware into Exit Strategy NYC?

Nope.  Google tells us. This information is part of the Google checkout process behind android app purchases.  Each app download contains the full name of the user:

Clicking on the order number reveals a more detailed page containing the billing city and zip code of the user:

Creepy?  Absolutely.  A google/facebook/linkedin search can reveal incredibly detailed information about every android user with our app. Furthermore, this information is pushed on us — I certainly didn’t choose to see this detail about our users!

Seeing this level of user information displayed was extremely alarming at first. But when you think about it, it’s really not that surprising. Google Android purchases are processed through Google Checkout — the same system that applies to e-commerce transactions.  Certainly I would need to know my customers’ personal information if I were shipping a physical product.  Should digital purchases be any different?

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(this piece also appeared on Silicon Alley Insider)

As a number obsessed techie and ex-management consultant, market sizing and research were a big part of my launch preparations for Exit Strategy NYC. Since launch, I’ve received many questions from people struggling to estimate the market for their iPhone app ideas.

I’ve put together this document as a guide for entrepreneurs considering developing an app. Below, I’ve compiled some up-to-date numbers about Apple devices. I’ve also laid out a framework for estimating what kind of sales can be expected from a paid app.

The Basic Facts

• 45 million iPhone and iPod Touch devices [Apple Earnings Announcement]
• 54% of iPhone and iPod Touch users are in the US as of June 2009 [Admob Mobile Metrics Report]
• The iPhone comprises 68% of worldwide iPhone OS devices and the iPod Touch makes up the other 32% [Admob Mobile Metrics Report]
• Only 75% of users actually download apps [Pinch Media]
  • The most frequently downloaded free apps reach approximately 30% of devices [comScore]
  • The most frequently downloaded paid apps reach approximately 3% of devices [My calculations - explained later]

Right off the bat, there’s a few back of the envelope calculations to make: 54% of the 45M devices are in the US which means ~ 25M devices. The US has about 300M people.  That means about 8% of the general American population has one of these devices.

How To Use These Numbers

Combine this data with your own numbers about how large of a market your product is addressing. For Exit Strategy NYC, our addressable market consists of all subway riding New Yorkers. In 2008, there were about 5M weekday riders and about 3M Saturday riders [MTA's ridership numbers]. The Saturday number is the more relevant one as it better captures subway usage by NYC residents rather than regional commuters. Neither number counts unique riders though, and given that there are 8M residents of NYC our addressable market size is probably somewhere in between these numbers. Let’s say 6M subway riders.

New Yorkers probably skew more techie than average, so let’s assume 10% (rather than 8%) have an Apple device. Also, Exit Strategy NYC works on both iPhone and iPod Touch devices. If your app requires phone/gps/camera/internet to work well, exclude iPod Touch users from your calculations.

How many Apple device toting subway riding New Yorkers are there?  Well 6M subway riders with 10% penetration = 600,000 potential users.

“But How Many People Will Actually Buy My App!?”

Entrepreneurs are optimists by nature, and it’s tempting to think that 100% of people will buy your product. After all, your product is awesome, right? But reality is a quite different story. In fact, only about 3% of users have purchased the most popular paid apps. To determine that number, I used sales figures from one of the all time best selling paid apps, Firemint’s Flight Control game. According to Firemint’s Alexandra Peters, sales to date have been 1.4 million. As a percentage of the 45M Apple devices, this is ~ 3%.

You should expect a similar upper bound of 3% to apply to whatever market vertical you’re addressing. Of course it’s possible that your app meets some crucial compelling need and therefore achieves a higher penetration rate in your vertical. But don’t count on it — it’s equally possible that your app gets lost in the noise and can’t get traction. Flight control has held a constant spot on the top paid app list for months now. Few others have this advantage.

Realistic Unit Sales Calculations

Returning to the Exit Strategy NYC figures, we knew that if we had an effective marketing and press strategy, we could probably achieve something close to this 3% penetration figure — perhaps higher as many New Yorkers are very passionate about the subway (see? there’s that ever-present entrepreneurial optimism!). 3% of the 600,000 subway riding devices would mean 18,000 unit sales. Does this translate to $18,000 total sales? Our maximum penetration figure was based on a 99c app, but what effect would Exit Strategy NYC’s $1.99 or $2.99 price point have on total sales figures?

Factoring in price into market sizing is difficult. Based on our own informal market surveying, we estimated that the most profitable price point would be $2.99 or $1.99. Around 75% of people willing to pay 99c would also pay $1.99 or $2.99. So 75% of 18,000 units at those prices works out to an ballpark range of around $27k – $40k. Like all software, the app’s unit costs are zero, it’s important to focus on maximizing dollar sales rather than unit sales.

A Growing Platform

One thing to remember is that the user base for apps is growing by leaps and bounds. In their latest quarter, Apple sold 5 million iPhones and 3 million iPod Touches. This means that the potential market for an app grew by more than 20% in only 3 months!

Non-Apple Platforms

One last thing to note: The iPhone certainly dominates headlines, but it’s not the only game in town. In fact, Blackberry outsells the iPhone every day. And in a town dominated by Wall Street, it seems like everyone and their mother owns a Blackberry. Realizing this, we carefully designed Exit Strategy NYC to be easily portable across different mobile platforms. Our app is available for iPhone, iPod Touch, Blackberry Bold, Curve, and Storm, Android Phones, and even as an e-book on Amazon Kindle.  Combined, the Exit Strategy App reaches a significant portion of New Yorkers.

But are device sales a good indicator of a platform’s expected app sales?

Stay tuned to Back of the Envelope to find out.

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Exit Strategy NYC is an iPhone, Blackberry, and Android app that answers the quintessential New Yorker’s question: “Where should I stand on the subway platform?” After months of full-time subway riding, we’ve created detailed diagrams for hundreds of NYC stations, eliminating the guesswork and frustration from subway riding. 

The project launched with an article from the New York Times and quickly got covered by Wired Magazine, NY Post, NY Mag etc (full list of press here).

The locations of the subway exits and transfer points have never before been collected on a large scale in NYC. Similar projects have been done in Toronto and Tokyo. We’re extremely excited to introduce this to New York City.

Soon i’ll be writing more about the thinking behind this app and the experience developing across three different mobile platforms.  But for now, buy it and let us know what you think…we hope you love it!

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(This is the second of a two part post.   The first part can be found here)

The ubiquitous iPhone/iPod Touch devices are stealing Bug Labs’s thunder.  To understand why, realize that the iPod/iPhone are no longer mere personal music devices carried around in a pocket.  Instead, they’re increasingly purchased as stand-alone devices that serve a specific purpose.  For example, my brother in law’s restaurant (No 7 in Brooklyn) uses a dedicated iPod Touch with the Pandora app to play streaming music all night long.  Previously they would have needed XM Radio or a full computer to serve this same purpose.  Was the iPod Touch intended to be mounted on the wall of a restaurant (like a thermostat) and stream music for eternity?  Certainly not.  But at $200, it’s a great investment for this purpose.

Back to Bug Labs for a moment.  A classic product example the company has used: you want to build an alarm clock with GPS that wakes you up as you reach your destination on the train.  Great idea.  So you start with the base module (Bugbase, $249).  Then you add a GPS module (BUGlocate, $99).  And a speaker (BUGsound, $99).  Cost: about $450.  Can you do this with an Apple device?  Yes.  How?  Well folks, you probably guessed it — “There’s An App For That!” iNap costs 99c.

And if iNap didn’t exist, you could easily create it.  Most people associate Apple’s App Store with cheap games, free communication apps, and simple utilities.  But there’s an entire half of the App Store that the mainstream media has overlooked: high end apps. There are dozens of $200+ medical apps (Lexi-Comp), $450 salesforce software apps (MyAccountsToGo), and $900 camera surveillance apps (iRa Pro).

But wait, there’s more!  In addition to high end apps, there’s a whole other section of apps that will never see the light of day on the app store: enterprise apps. These Apps aren’t designed to be sold publicly — they’re proprietary in-house applications designed by companies and deployed for internal use under Apple’s enterprise distribution program.  The point is that the Apple devices are powerful and versatile enough to fit almost any need.

Consider the minimalist design of the iPod Touch and the iPhone and you start to realize they’re the ultimate hardware devices. A single large touchscreen. The screen is the primary input and output method.  It can be used to display a single large button.  Or a thousand small buttons.  Or just enough buttons to represent an on-screen keyboard.  Or to represent an on-screen piano keyboard.  The user interface is infinitely configurable.

Additionally, these devices have accelerometers, location awareness, audio inputs and outputs, memory storage, internet access.  To top it all off, there is a well documented and robust SDK (software development kit) and a very active community of developers.  And the devices are cheap.  An iPod touch retails for around $200.

Bug Labs’ saving grace right now is that their hardware itself is open-source, modular,  and infinitely configurable.  Can you add a temperature sensor to an iPod touch?  No.  But it’s coming. When Apple announced their iPhone/iPod 3.0 OS due out this summer, the addition of ‘Copy/Paste’ stole the headlines.  But tucked quietly into the announcement was the fact that these devices will soon be able to interact freely with the outside world through bluetooth and via the devices’ 30 pin dock connector.  That opens an entirely new marketplace: companies creating custom accessories or interfaces for talking to existing devices.  This is a game changer.

Previously, the iPod Touch and the iPhone devices could only interact with external speaker docks.  But now, the consumer, business, and scientific applications are endless. Expect the generic devices to come first: input devices (external keyboards, game controllers), output devices (monitors, LCD display boards), readers (bar codes, RFID, infrared), sensors (temperature, water, heat, weight, chemical).  Soon, more specialized accessories serving different market verticals will follow: medical equipment, sound mixing boards, lighting control, video production equipment etc.

Are you starting to see why I’m worried for Bug Labs? There are 37 million iPod Touch and iPhones in the wild and most people are very comfortable using the devices.  They’re extremely powerful hardware devices.  They’re cheap and readily available.  The user interface is infinitely configurable.  They support powerful custom software development and in house application deployment.  There’s already a thriving high end market for software on apple devices.  With the advent of custom hardware accessories and interfaces, Apple devices will become the dominant platform for interacting and controlling all sorts of equipment across many verticals.  Bug Labs’ is going to have to change strategy quickly.  They’ll need to shift their goal from creating the dominant open source hardware platform and start focusing on building around the Apple devices.  A recent article suggests that this is already happening.

Still need convincing about Apple’s upcoming dominance?  Check the latest edition of Newsweek:  The Military is using the iPod Touch as a handheld field device.  Amazing.

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Bug Labs is a fascinating NYC startup that builds a “modular, open source system for building devices.” Basically, they have a collection of programmable hardware modules that snap together to make custom devices.

I have to admit: the idea baffled me at first.  It seemed like Bug Labs makes a really cool device for technology hobbyists and students — similar to the Arduino or my friend Michael’s company Nerdkits. Bug Labs also focuses heavily on developing a passionate community of users.  But isn’t the product basically a toy aimed at a very narrow niche?!  Why was the company worthy of investment from one of New York’s top VC firms, Union Square Ventures?

Things became clearer when I had a chance to sit down with Matt Cholerton at the Bug Labs offices this past winter.  He demoed the device for me and explained the real uses for the company’s product: rapid prototyping, market testing, and serving the long tail of manufacturing.

BUG is intended less for individual hobbyists and more for companies that can use BUG to rapidly make prototypes of new electronic devices (think handheld electronics: digital cameras, alarm clocks, location based devices).  BUG allows companies to market-test new device concepts before beginning a expensive round of mass production.

Additionally, BUG is perfect when there simply isn’t a big enough market to mass produce a device — this is what Bug Labs calls the “long tail of gadgets.” For example, perhaps some utility company needs twenty very specific custom device for their field technicians?  Enter Bug Labs.

Bug Labs has a really cool thing going and I love the idea of capturing the long tail of device manufacturing.  It’s an incredibly non-traditional idea for a startup and innovative hardware companies are rare these days.

Bug Labs is certainly our most “out there” investment.
-Fred Wilson, Union Square Ventures

BUG’s configurability is based on its modular design.  Modules are added to the base unit ($249) and each adds specific device functionality:  a motion detector/accelerometer ($59), a GPS receiver ($99), a full-color, hi-res, touch-sensitive LCD screen ($119), an audio module with a speaker/microphone/mini-stereo jacks ($99), and a 2gb extendable memory chip ($10).

And here’s where I start to worry.  Can you think of any other devices that have ALL of these features and more?  Oh right, the iPhone/iPod Touch. These two ubiquitous little devices might just pull out the rug from under Bug Labs…

(Continue reading part two of this blog post)

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