App Developers - managing risk and reward

App Developers: Here’s How to Get Paid Properly | MIT Technology Review: " . . . This is the role that VC’s play for at least a subset of apps: they invest in a portfolio of potential winners with the understanding that many will fail, some will produce solid returns, and - hopefuly - one or two will be huge hits. However, venture is just a piece of the solution, and a highly imperfect one. First, VC’s need to be convinced of the possibility of a home run, something most apps just can’t plausibly offer. Second, VC interest in the consumer app space has cooled, at least for now. So Yglesias’ question is still a good one. How do we manage risk in the hit-driven app business? It’s possible that crowdfunding could play a role. Creating a market for apps that gain traction but don’t amount to businesses will help get some developers paid, but doesn’t fully address the question of risk. But there’s a much more practical if unsexy answer that’s already put into practice. Mobile developers can band together to make a good living producing apps for third parties while devoting some time and revenue to a variety of original apps. Though the Times story does mention developers subsidizing their work with freelance income, it dismisses this tactic as draining critical resources from original development. But I think that’s too pessimistic. There’s a parallel here with Google’s 20% rule, where employees are encouraged to spend a sizeable portion of their time on projects of their own choosing. And, rather than one or two developers doing some freelance, the more developers that band together, the broader the portfolio can become. If the firm’s apps fail, well, that’s what the contract work is for. If they hit, the team captures the upside. Less risk, still plenty of reward. . . . "


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