N.H. Entrepreneurs Carve Out Space In The Growing App Economy
Over the past three years, smartphone ownership has increased dramatically. Seeing this trend, entrepreneurs have sensed the strong demand for the mobile apps that make smartphones so popular. As part of our week long series "The Download on New Hampshire's App Economy," today we introduce you to some Granite Staters who are gambling on startup success…and the challenges they face.
It's a busy day at a coffeeshop in downtown Portsmouth. Ryan Zarick has snagged a small table off to the side, and introduces himself. At least, he gives his name. When I ask for his title, he hesitates a moment. Zarick doesn't like titles--he feels like they pigeonhole him. But he eventually settles on one.
“I’m CEO of Coder Den,” he says.
Zarick looks more like a college student than an entrepreneur. He’s wearing jeans and a loose zippered sweater over a t-shirt. And his dark hair is gelled into something bordering on faux-hawk territory. He really hasn’t been out of college that long. He’s only 25-years old. But don’t let that fool you. Zarick’s already a well-known force in New Hampshire’s growing mobile app scene. Like many developers, he works with customers both in and out of state. Although he can’t name a lot of names—thanks to non-disclosure agreements—he can show off some of his company’s work.
“So I guess the first app I’m going to show you is like a college safety app," he says, pulling the program up on his MacBook. "If an attacker or someone were to get hold of the phone, they’d think it’s off. And if they turn it on, it shows the passcode…and they would have no idea it’s actually recording video, audio and GPS of what’s going on."
New Hampshire’s mobile app development workforce is a diverse one. And so are its business models. There are the classic indie entrepreneurs, who design and market their own apps. There are more traditional, larger-scale firms—like Nashua-based Z-Co—that develop apps for their clients. And then there are contractors—like Zarick—who do something similar, only on a smaller scale. He describes it in a single word. “Boutique-y,” he says.
That’s almost an understatement. Zarick’s business model is…unorthodox, to say the least.
“In fact, I bought a house where two business partners and I live together. So that way we can work as many hours as possible.”
Zarick’s wife also works—and lives—at Coder Den. But they could set up shop anywhere. Caroline Lewko is CEO of Vancouver-based Wireless Industry Partnership. The company builds communities of mobile app developers. And she says a lot of rising app hotspots aren’t in the places you’d think.
“Angry Birds—they’re out of Finland. Fruit Ninja—Australia," Lewko says with relish. "A number of Eastern European markets have some really interesting apps coming into there, too. Even in places like Tunisia, or in Africa, app development is coming along really strongly, and it’s becoming core to a lot of those communities.”
Which begs the question: Is New Hampshire even on the radar screen?
"Not really," Lewko says flatly. There's a long pause before she continues. "You know, honestly, until you had contacted me, it never really occurred to me that you would, you know, sort of be a state that would be an obvious one to point people to.”
That’s one opinion. But based on market size, the US Bureau of Labor Statistics actually puts New Hampshire in the Top Five biggest hotspots in the country for the broad category of "Software Developers, Applications," which includes smartphone apps. And these developers tend to be concentrated in the places you’d think—the Seacoast, Manchester, Nashua--and, to a lesser extent, the Upper Valley.
Those are promising stats. But between the Apple and Android stores, there are nearly two million apps available already. With so much to choose from, it’s getting harder for these workers to create something that people will want to download for free—let alone buy. Manchester-based indie developer Gerard Murphy thinks the key is focusing on a niche market.
“We work with serious photographers, either advanced amateurs or professional photographers, and we help them store, backup, organize and access their photos in a mobile, cloud-based world,” he says.
About a year and a half ago, Murphy and his long-time friend Andy Young left their day jobs to focus on their new Mosaic app. While it was tough at first, it’s going well now--especially for a startup. Mosaic employs five people. And Murphy says business is growing five to seven percent a week. But like many entrepreneurs, he and Young have faced pressure to move.
“We’ve almost been a Boston company three times," Murphy admits. "We’ve been asked to move down there, we’ve been asked to be part of incubators down there. We’ve been lured by capital down there that wasn’t here, by people saying well, you now, I will not invest in you unless you’re in my backyard, is what we hear a lot, and a lot of people hear that.”
A key reason some startups stick around is just money. Boston’s expensive—especially when you don’t have a stable income. But that doesn’t mean it’s easy making it here, either.
“We’ve been down to almost nothing in the bank a couple of times. And it’s scary. I have a wife and two kids. My cofounder, Andy, has a wife and three kids," Murphy says. "We were not 21-year olds who were living in our mom’s basement, playing on sort of our own time. We had real obligations, and it takes some chutzpah to do it.”
And there are advantages to being based in New Hampshire. More than anything, Murphy says, it’s about lifestyle.
“As a startup, you put your families through a lot. You’re taking less money, you’re adding a ton of risk to the equation into your family lifestyle," he says with a chuckle. "The last thing you want to do is move to a big city where you have more expenses and you couldn’t raise your children the way you were raised, with hiking trails and beaches and maple syrup and everything that makes New Hampshire awesome.”
Now the decision to stay is starting to pay off. Murphy says Mosaic is close to being a million dollar company. And venture capitalists are starting to lay off about Boston.
“I think that’s thankfully changing, in New Hampshire. There’s more capital here,” he says.
But there's a lot more to these jobs than success stories and optimistic stats would lead you to believe. The money can be really good--especially if you work for an established company. The US Bureau of Labor Statistics reports the average pay for an application developer is about $93,000 a year. But that category includes more than just mobile. So last year, tech site GigaOm conducted a survey to get a better idea of what smartphone app developers actually make. And it’s not good. More than half the respondents said paid apps brought in less than $500 a month.
“While you can certainly become a millionaire by writing apps, when you look at the statistics, the success rate’s very low. It’s better than buying a lottery ticket, but maybe not a lot," Bob Chesley says with a chuckle.
Chesley is based in Newmarket. He’s been programming since the early 1980s, working both full-time and on the side as a contractor. And after briefly flirting with mobile app development, he’s given the field a wide berth. Instead, he’s betting on a hybrid web-based approach. It’s relatively new. Rather than a company shelling out $50,000 for an iPhone app…and doing the same for an Android version, some web-based tools allow one person to simultaneously create both, plus a website.
Despite the saturation of the apps market, Chesley says he still sees the workforce growing over the years…with mixed results.
“Certainly you’re competing with a lot more people. The democratization of the tool set, the fact that you can go on the internet and learn any of these languages fairly easily, you know, you don’t necessarily have to go and get formal education to do these things," he says. "There’s many people, ever since the Millennial bubble era, there were a lot of people who jumped into internet development at that time. Most of them maybe aren’t doing it anymore.”
That could be Ryan Zarick in a few years--but for very different reasons. Despite early success, he says there are some drawbacks to mobile development. “After the application is done, and it’s out the door, I don’t get any of the money that comes from that, if it becomes super famous or super profitable," he says.
More than coding, Zarick likes the hands-on nature of the startup life. With that in mind he, his cofounder, and their small cadre of employees often end up doing coding projects in exchange for equity. Ultimately, Zarick wants to move out of being an apps contractor, and towards just doing startups.
But uncertainty during the mobile app boom hasn’t stopped other young people from trying to carve out a spot in the labor market. Tomorrow, we look at how two New Hampshire higher education institutions are preparing their students for the demands of this new marketplace.
Editor's Note: In an earlier version of this story, it was reported that there are nearly two billion mobile apps on the market between the Apple and Android stores. There are in fact nearly two million. We regret the error.