The H(app)y Mr. Schmitt
Absolute techno-addict, Mr. Schmitt tracks down apps, reviews their use and observes their conditions of monetization. Five years ago, this French entrepreneur par excellence created App Annie and turned the start-up into the backbone of a market estimated at several billion dollars.
"App Annie, it's like an aircraft cockpit"
In Silicon Valley rumor has it that Mr. Schmitt, with an engineering degree from his native France and an MBA in marketing from the Wharton School, has created a true control center for the worldwide apps market. The man believes this metaphor suits him well. He likes to compare App Annie to "an aircraft cockpit that provides all the necessary instruments for efficiently driving the business without crashing into any competitor." Clearly, avoiding such collisions has a price. Although the start-up gained its reputation by offering for free to publishers its league tables of the most lucrative and most downloaded apps in App Store, Google Play or other platforms, it has a perfectly solid business model based on developing and selling analytics solutions. App Annie is a sort of technological nanny that monitors the life of the apps – passing from the market to the usages, through the users. "App Annie was conceived as a machine for automatically generating marketing databases that have great strategic value," explains Bjørn Stabell, App Annie's co-founder.
Google, Ubisoft, Dow Jones – you name them – today, close to 400,000 industry professionals use the tools provided by this start-up, whose Annual Recurring Revenue (ARR) has tripled in each of the past three years. In just five years, App Annie has tracked no less than 700,000 applications that have generated twenty-five billion dollars in revenue from some eighty-three billion downloads. The company has doubled its number of employees - now more than 300 - and has opened eleven offices around the world. Mr. Schmitt attributes such startling growth to the quality of his business model that attracted the attention of such prestigious funds as IDG Capital Partners, Greycroft and Sequoia. Last January, Institutional Venture Partners (IVP) entered the start-up's capital in its $55-million Series D funding round. In total, ninety-four million dollars has been raised since 2010, which enabled the start-up to acquire in May of last year Distimo, a company specializing in auditing websites and apps, with offices in the United States, the Netherlands and England. Mr. Schmitt is clearly aiming high. He does not rule out the possibility of an IPO, and further acquisitions are foreseen over the next few months. Already at the beginning of May of this year, App Annie bought Mobidia, a pioneer in analyzing the use of mobile applications.
His CV makes one’s head spin
One might imagine Mr. Schmitt has inherited the ability to enthuse the business world from his father, a tough-talking lawyer sitting on the boards of several large companies and a long-time director of Albert René, publisher of the famous Astérix comic strip albums. "Bertrand has two major qualities: an unshakeable focus and a noble ambition. Whilst others were spending their spare time flirting with girls in corner cafés, Schmitt was preparing his entry to Wharton, discreetly but surely," recalls Pierre-Étienne Lorenceau, CEO of the Leaders League Group. Lorenceau very quickly spotted the enormous potential in Schmitt and hired him for a brief period. CEO, COO, VP marketing, CTO…his CV is nothing if not impressive. Mr. Schmitt grew up under the auspices of an insatiable passion for the technology and of a good bourgeois education in Neuilly-sur-Seine, an upper-middle class Parisian suburb where he was regularly exposed to the world of business. To understand this peculiar binary DNA, we must rewind the chapter of his life and fast forward past the first computer programs written at the age of 11, the tweaked telescopes and early articles published in the magazine Pascalissime, dedicated to the Pascal programming language. We may look back to the era of Minitel, France's pioneering remote information service, when the young geek went to Saint-Germain-des-Prés every week so as to meet members of the community devoted to mobile devices – a.k.a. pocket scientific calculators at the time – with whom he exchange tips via the Bulletin Board Systems (BBS), the forerunner of the Internet.
If we stop the clock in 1998, just a year before Mr. Schmitt earned his engineering degree, we’ll see he founded an IT service/web agency called Arkadia in the forefront of Wireless Application Protocol (WAP), which developed mobile services for B2B software publishers, and then signed partnership agreements with Nokia, Ericsson and Sagem, to name just a few. We then pass over his years at Wharton, where his agile brain fed on spy thrillers and the science fiction of Isaac Asimov, and skip quickly over the two and a half years spent at Zadan, a start-up focusing on mobile multimedia services, during which he had his first taste of the world of analytics. Towards the end of the film, we scan past his chapter of building up the mobile business line for the company Gomez in Beijing to find the extraordinary Mr. Schmitt, aged just 32, sipping his aperitif at an Italian restaurant in Beijing with Bjørn Stabell, CEO of Happylatte. Stabell, his future business partner, remembers seeing “a real geek imbued with an acute business mind sharpened at Wharton and with the sophisticated approach of a well-mannered Frenchman.”?“During lunch, we talked a great deal about technology and science fiction, before ending up on the future of mankind." At the confluence of different universes, Mr. Schmitt is capable of turning his hand to anything new, and always a step ahead on a global scale. Just like Apple Watch.
Obsessed by the product roadmap
Very early, Schmitt realized that mobile applications had all the attributes of a cash-cow. On January 6, 2010, Apple announced that the downloads of iPhone applications had passed the three billion mark. Two months later, nearly 150,000 apps created by some 28,000 developers were ready for download from the App Store to anywhere in the world. In a keynote on June 7, 2010, Steve Jobs confirmed that 225,000 applications were available thenceforth. That year Schmitt resigned from his job with the idea of launching into apps. "I didn't really know where to start," he confessed. But being "pragmatic and obsessed with the product's road map," as his colleagues would say, he started by trying to assess the most promising countries and most attractive business segments, before finally realizing that simply no tool existed to analyze this new market of apps. Looking for someone with whom to share his thoughts, Schmitt turned to his Norwegian buddy, Bjørn Stabell, CEO of a start-up specializing in IT and mobile games. "I loved the idea!" Happylatte's founder recalled. At the time, Stabell had a Minimum Viable Product (MVP) called “App Nanny” in the pipeline. The two put their heads together and came up with an independent structure under the new name of App Annie. "Bertrand impressed me enormously: he had an absolutely clear vision of both the business model and the market. He quickly set up a team and motivated it. He had such belief that you could almost feel it," says Stabell, who never had any doubts about his friend. Good for him!
The latest surveys published by IDC/App Annie suggest that revenues from apps stores from the IT giants are due to explode in the next few years. By 2018, the turnover of Apple Store could be as high as twenty billion dollars, namely double of that in 2014, not to mention the arrival of the smartwatches. On the publication of Apple's 2015 2nd quarter results, Tim Cook announced that the App Store for Apple Watch already contained 3,500 apps, far greater than the 1,000 at the time of iPad launch and the 500 at the App Store launch in 2008. Music to the ears of Mr. Schmitt, whose direct competitors cannot be described as legion. When one speaks of Localytics recently raising thirty-five million dollars, Flurry being bought by Yahoo last July, Mixpanel being evaluated at 865 million dollars or SimilarWeb that tracks the current usage, Mr. Schmitt replies: "App Annie is for the applications industry what Switzerland is for world. We collaborate with everyone to meet our clients' demands."
Clients are more and more desirous of analytics. A real boon for Mr. Schmitt who has no intention of becoming a "one-trick pony." Last December his team launched the new product Audience Intelligence, which provides in the Demographics section a portrait of users – age, sex, income, education – and through the Related Apps section lists the other applications that the users of a certain app have also downloaded. Furthermore on 6th May this year, the start-up launched the tool of Usage Intelligence, designed to measure users' satisfaction. All of this precious information for which certain publishers are ready to spend hundreds of millions of dollars. "Out of the top one hundred apps publishers in the world, 95% are our clients and nine of the ten largest have subscribed to our paid services," explains Nicolas Beraudo.
Riding the wave of emotions
After Singapore, Mr. Schmitt will open App Annie offices in Paris and then Berlin this year. And he can hardly hide the pleasure he feels at returning home. "It's terrific!" says he who already has a foot in seven countries spread across three continents. Mr. Schmitt is decidedly cosmopolitan. It was in China, where he had spent two years as an expatriate to understand the workings of a multi-national business, that he created his company in 2010. When he arrived in Beijing at the subsidiary of the Gomez Group, he was, in his own words, "the only expat among eighty locals." To top it all he didn't speak a word of Chinese. "It was not usual and it certainly wasn't easy," he readily admits. At the time, he didn't really care. China just fascinated him - much more so than America, India or Russia. "There is a real economic development, an immense labor force and a simply huge domestic market," emphasizes Schmitt, who, married to a Taiwanese, has now learned some basic Chinese skills. A year ago, this native Frenchman traded the Far East for the Far West to settle, only temporarily perhaps, in Silicon Valley, as he knows not to put all his eggs in one basket.
Only 50% of App Annie's revenue comes from the United States, with 35% from Asia and the remaining 15% from Europe. This is rather atypical for a tech company that is universally acknowledged in the specialized world of analytics. App Annie is just different. Its cartoon character, along with its graphical design and its fun and personified name, has been a huge hit with users who are mainly in the Y generation. "Our brand has played on the emotional side with our funny character taking the lead. This contrasts with our competitors, whose home pages are overloaded with designs and charts," says Bjørn Stabell not without some satisfaction. The considerable interest in this particular start-up is far from being just a piece of luck – perhaps its success is not simply due to all the indispensable data.
Mr. Schmitt is still astonished every time he hears publishers claim: "I am a fan of App Annie.” “No one would ever say: ‘I’m a fan of Nielsen!’", jokes he who was clearly not content to spend his life solving technical problems, surely as he was born to anticipate them with a good dose of analysis.
Translated from the French article of Émilie Vidaud
Subscribe to our fortnightly newsletter “Leaders Wisdom Journal” to read more insight regarding business, leaders & leadership.
Other articles of the same issue:
Pierre Nanterme (Accenture): "Yes, Leadership = Learnership"
25 Innovative Leaders (Part I)
Accelerate: Building Strategic Agility for a Faster-Moving World
Wisdom on Innovation
Video: Laws that Choke Creativity by Lawrence Lessig (Source: TED)
The European Commission’s approval of the copyright directive in April threw more gas on the fire. In a few years, the internet has become – among other things – the main market fo...
The long-serving boss of Cobepa, Jean-Marie Laurent Josi talks about the business model of a Belgian investment firm that is trusted by major European families, one which marries t...
Since the last half of 2008, it is no longer possible to conceal the term ‘crisis’. New paradigms have become apparent and structural changes are predicted. Indeed mar...