How the Apple App Store Went from ‘Impossible Thought’ to Job Creator

Motherboard has spent the past several days talking to developers and Apple to better understand the impact of the App Store in the lead up to WWDC.

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Jun 10 2016, 9:38pm

Image: Steve Parker/Flickr

Steve Jobs talked slowly.

In January 2007, Apple's co-founder and CEO paced the stage of the annual Macworld conference, talking the assembled press through some of his company's greatest achievements. There was the Mac, which in 1984 introduced the public to the idea of a graphical user interface, giving everyday people access to computers that until then were hidden behind an intimidating command line. Then came the iPod, the trendy portable music player that legitimized the idea of digital music downloads and that helped morph Apple Computer, Inc. into Apple, Inc.

The iPhone, the device that Jobs announced that day—part touchscreen iPod, part "revolutionary mobile phone," and part "breakthrough internet communications device"—didn't just add zeroes to Apple's bank account. Rather, the iPhone, and its eventual software distribution companion, the App Store, ended up changing the way people work, play, and even build businesses.

But as Motherboard recently learned, not even Apple itself knew how big a deal the one-two punch of the iPhone and App Store was going to be.

"I remember Steve [Jobs] saying to us, 'Do you think we can get 50—literally 50—apps to start with when we launch?'" Apple VP of product marketing Greg Joswiak told Motherboard in an interview last week at the company's Cupertino, Calif. headquarters. The fact that the App Store ended up launching in July 2008 with more than 10 times that number, Joswiak said, "was probably an omen, if you will, that we had tapped into something pretty big."

Today there are more than 1.5 million apps on the App Store, from household names like Instagram, Spotify, and Google Maps to smaller outfits like professional photo editing app Priime, real-time video filters app Hyperspektiv, and tutoring app Yup, formerly known as MatchCrunch. All told, Apple noted this past January that people spent more than $1.1 billion on apps and in-app purchases in the final two weeks of December 2015 through January 3; $144 million of that was spent on January 1 alone. And going back to its launch in 2008 through the end of 2015, the App Store managed to deliver more than $40 billion in revenue to developers.

Not bad for something that didn't exist just a few years ago.

Apple even claims that 1.9 million jobs have been created in the US in large part to the App Store. (The Progressive Policy Institute, a liberal think tank, suggests similar numbers.) Heck, before arriving at Motherboard last July, my two previous gigs (mobile news startup Circa and News Corp's The Daily) were created out of thin air entirely as a result of the App Store.

Apple, of course, has a clever name for all of these good vibrations, the sum total of apps developed, purchased, downloaded, and enjoyed across the more than one billion iOS devices around the world: the global app economy.

To better understand the worldwide phenomenon—and to find out why the average person should care in the first place—Motherboard spent the past few days, in the lead up to the beginning of Apple's annual Worldwide Developers Conference on June 13, interviewing a number of software developers from all over the world, from a Bay Area team that's hoping to transform the way women buy bras (ThirdLove) to a Swedish group that's marrying health and fitness tracking and motivation with attractive design (Lifesum). And while these developers may be located on opposite sides of the planet, a common thread emerged in our conversations: If it weren't for the rise of digital distribution, putting them on more of an even playing field with software giants like Facebook, Google, and Microsoft, they wouldn't have managed to get off the ground in the first place.

Put another way: the worldwide community of developers who enrich our lives with everything from Flappy Bird (Vietnam) to Minecraft (Sweden) can only do so because there's no difference in selling their software to someone down the street or someone on the other side of the planet.

***

Jihad Kawas had to skip high school to attend TechCrunch Disrupt back in 2014.

Today, Kawas is 19 years old and is the CEO of Saily, an online platform where users can buy and sell their old stuff—think used video games and home decor—with only their iPhone. Saily's secret sauce, and what sets it apart from competitors like Craigslist, is that it only processes payments when the buyer actually picks up the item, thereby preventing scam listings from poisoning the community.

"I used to buy and sell a lot of stuff, and I knew how terrible the process was," Kawas told Motherboard in San Francisco, where he's currently based. "Compare sharing photos on Flickr to sharing photos on Instagram."

To hear Kawas tell it, he was just a curious kid growing up in Beirut, but one who was mesmerized by the iPhone and its seemingly endless sea of apps. "This is amazing," he thought to himself upon getting his first iPhone in 2011. "How can you make [an app]? Who makes it? Humans—Do humans make it? Does Apple make it? I really don't know!"

He soon found out, learning enough code to start making apps of his own, eventually culminating in Saily, which he showed off at TechCrunch Disrupt in New York in 2014. "I was literally skipping school to go to this tech conference," he said, "and school didn't accept me skipping, yet I skipped anyway. I was really struggling, building an app and a product and a company yet I had to finish my math shit."

One thing led to another, including a trip to Apple's Worldwide Developer Conference and, eventually, a Peter Thiel fellowship. (Yes, that Peter Thiel Peter Thiel, the PayPal co-founder who openly encourages young people to skip college in pursuit of building their own companies.)

"I really did not want to go to college," said Kawas, recalling how at WWDC 2014 he was telling fellow developers how cool it would be if the Silicon Valley character Peter Gregory was a real person who actually awarded $100,000 fellowships to promising young entrepreneurs who forego college. "They told me, 'It's not a joke!'"

A year and a half after launch, Kawas' app has been downloaded more than half a million times in the US, "without spending any dime on marketing."

***

You'd be forgiven for thinking that the lion's share of apps available on the App Store are birthed in either San Francisco, Silicon Valley, or New York. After all, these are the places the biggest names in tech call home, with easy access to money and talent that make building a successful tech company that much easier. But not everyone believes that it's necessary to be in these places to make a difference. Some developers, in fact, see a genuine benefit building their apps outside of the usual locations.

Take Donde Fashion, an Israel-based shopping app that uses an algorithm to help users find items similar to the ones they've already expressed interest in. (Picture Pinterest, but with a brain.) According to co-founder and CEO Liat Zakay, the Israeli experience of mandatory military service, and all the technical training that's picked up along the way, creates a talent pool filled with knowledgeable, hard-working people that's just as good as anything the Valley has to offer.

"The military is a lot in the culture here," Zakay told Motherboard by phone. "It's very obvious, and it's the goal of a lot of people to get into intelligence because you get a lot of tools and resources. I got a lot of tools and resources there that I wouldn't have gotten elsewhere." Many of Zakay's teammates at Donde Fashion share her military experience. "To be in intelligence, you obviously have to have tech skills, so this is part of where our motivation comes from," she said.

Other examples of apps built outside the San Francisco-Silicon Valley-New York hub abound. There's Stockholm-based Lifesum, an exercise and fitness app that, similar to MyFitnessPal, helps users keep track of how many calories they've consumed throughout the day. Dubsmash, based in the rapidly growing Berlin tech hub, puts a fun spin on the selfie industrial complex by adding user-supplied music clips to videos. Lumino City, a mobile game created by State of Play Games that brings to mind the best of PlayStation series LittleBigPlanet, almost single-handedly destroys the stereotype that the only good software to come out of London is rooted in the financial sector.

"It feels great to be a big fish in a small pond," Luke Whittaker, the co-founder of State of Play Games, told Motherboard by phone, rattling off a list of events and festivals (London Games Festival, Now Play This) that groups in the UK have developed to promote its budding games industry. "We're being held up as paragons of UK creativity."

Real time photo and video filter app Hyperspektiv, which is probably the closest thing to a psychedelic acid trip that Apple will allow on the App Store, calls Los Angeles and Halifax home. Dean Grenier, co-founder of the app, told Motherboard by phone that it's "perfect" to be outside of the Silicon Valley scene so he better understands how people not addicted to refreshing TechCrunch all day live their lives.

"Getting out of that bubble, for me personally, has been creatively really inspiring," he said. "There's a little bit of this pirate ship vibe for people who work in tech here in LA, like a bit of an outsider, but I think that serves us well and allows us to follow our own path."

Allan Lavell, who does the programming for Hyperspektiv, is even further afield in Halifax, something that, perhaps counterintuitively for someone working in tech, served him well as he was growing up. "There's a lot of really good programmers here because that was the only thing we really had to do!" he told Motherboard. "We couldn't just go get a startup job."

Marcus Gners, the COO of fitness app Lifesum, offers another perspective on what it's like to build an app outside of the glare of Silicon Valley: the world may be more global than ever, but in order to really be considered a success your app has to be a hit in the US.

"Everyone outside still pretty much dreams of America," Gners told Motherboard by phone. "If you want to play in the Premier League [England's top soccer league], it's about measuring yourself with Silicon Valley and what's happening over there. It's a bit of a David versus Goliath situation."

The Goliath to Lifesum's David is MyFitnessPal, the fitness app that Under Armour bought in 2015 for $475 million. MyFitnessPal, based in San Francisco, had 120 million users when it was bought—eight times as many as Lifesum's current 15 million users. Gners expects the app to be profitable in a "couple of years," making money off a subscription service that offers nutrition tips and connectivity to fitness trackers like Fitbit and Jawbone.

Gners believes that Sweden, home to other well-known tech companies like Spotify and King Digital Entertainment (the folks you can thank for Candy Crush Saga), is too small to focus on exclusively, so from the very first day Lifesum set out to win over a global audience—something he feels may not have been possible before the age of the App Store.

"In Sweden we grew up with American television," he said, "and we learn English very early in school—Hollywood has sort of taught us how to view the world."

***

Shortly after Mark Zuckerberg concluded his keynote address at the Facebook f8 developer conference back in April, my inbox was flooded with pitches for bots that live inside Facebook Messenger and help people do things like read the latest headlines and get the latest the weather forecast. In my reporting for a follow-up story on these Messenger bots, one theme kept popping up among the people I spoke with, and that was whether or not apps were falling out of fashion. A few studies, one from the research firm SensorTower released this week, show that people aren't downloading apps with the same kind of fervor that they were a couple of years ago.

Needless to say, app developers and those who have a vested interest in ensuring that apps remain the dominant method of interacting with smartphones.

"Every once in awhile a new ecosystem or a new idea or meme comes along that people get infatuated with," Periscope CEO Kayvon Beykpour told Motherboard in a phone interview, discussing the hype surrounding bots that followed Zuckerberg's keynote address. "And while there may be merits to that scene, people can kinda go a little aggro on the media side and on the journalism side calling it the second coming of whatever."

To Beykpour, whose own app is in the white hot space of livestreaming video (even if rival Facebook Live has more fully captured the imagination of the news media), the suggestion that bots will replace the standalone app, or that the future of the app is somehow in doubt, is simply off the mark: They're an interesting technology, yes, but native apps still have plenty of inherent advantages, including the ability to send push notifications that lead to any location within the app, that they'll be hard to overcome anytime soon.

"Developers are going to flock to whatever gives the richest experience for whatever thing they've dreamed up," he said.

Whether these rich, app-based experiences gain traction on devices other than the smartphone is another open question. Phil Schiller, Apple's senior vice president of worldwide marketing, dismissed the notion that the Apple TV and Apple Watch haven't managed to attract the same level of developer support as the iPhone and iPad.

"It's so funny when some people look at the glass half-empty when this is exactly what the world gets excited about," Schiller told Motherboard at Apple's headquarters in Cupertino. "'Apple, give us something new that we know nothing about, give us an experience that's going to take time to learn and to think deep about it,'" he added, echoing feedback he hears from fans and developers about the company's future direction.

And yes, I asked if that future direction included an Apple Car. He expertly dodged the question, instead pointing to Apple's CarPlay initiative.

***

In my conversation with Apple, I tried to get a better understanding of the early days of the App Store so I could more fully appreciate its evolution over the years. Shortly after Jobs announced the iPhone in January 2007, developers began clamoring for the ability to develop their own native apps for the device, something Jobs was initially against. "The last thing you want is to have loaded three apps on your phone and then you go to make a call and it doesn't work anymore," Jobs told the New York Times at the time.

According to Schiller, the desire to allow developers to create their own native apps for the iPhone was always present at Apple, but simultaneously developing iOS (then called iPhone OS) and the software tools needed to create these apps was too much to tackle at the same time. "The thought of doing both become impossible," Schiller said.

"It used to be that software came from companies that made software," Shaan Pruden, Apple's senior director, developer partnership management, told Motherboard that same afternoon. "And now apps come from everybody. If you're a hotel chain or the NHL or whoever, you have an app as well, and you have a team that's building it… Whether you're a giant corporation or two guys working in a garage you've got an opportunity to get out in front of everybody."

Joswiak, the Apple VP who noted that Jobs wondered if the App Store would launch with a mere 50 apps, perhaps put it most simply.

"This was unlike anything that we'd ever seen before," he said. "We changed software."

What's undeniable is that with the App Store Apple has created something that never previously existed: a place where, regardless of location, developers can offer their software for the world to consume. What's also new is a borderless economy being in the hands of one company, a company that has the power to unilaterally change policy on a dime, as evidenced by the recently announced changes to app subscriptions.

The next stage of the App Store begins at next week's WWDC.