Business model for a startup


In planning to build an mobile-app based startup, how good and effective is a business model that depends on other products? Or would a rather better business model be where the app by itself is a product? (By Business model here, consider the product alone, leaving out other factors like market, etc..)

Let us take an example:

A product that is based on other products (i.e., depends on) Suppose I build an app that aggregates cloud storage from different providers, like Dropbox, Box, SkyDrive, etc.. will it be a sustainable product, and more importantly a legal one? Or would it be liable to prosecution by the aforementioned companies? Such apps do sell, because of the utility, but what about the legal aspect? Also, would you call it a product that qualifies to be a startup, that VCs can bank upon? Or would you just call it an utility app?

A product that is one by itself On the other hand an app which by itself is a good product would be to make something that is like Dropbox, SkyDrive itself!

Would like your thoughts and inputs. :). Thanks.

Legal Business Model Business Mobile Apps Entrepreneurship

asked Dec 30 '12 at 18:24
Quik Tester
6 points
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll
  • Hi there. Your question is very unclear; and the example you give doesn't seem to match your initial question. Could you please rewrite your question to make it more clear. – Jesper Mortensen 10 years ago
  • @JesperMortensen I have just edited my question. Hoping this brings in some clarity. Please let me know if you would like to know any additional details. Thanks. :) – Quik Tester 10 years ago

2 Answers


So, if I understand correctly what your asking is if a single app based on others API's can stand on it's own as a business or if it's simply a feature?

Let's leave out what it does but try and answer the above. You will hear from VC's and others to build rapidly and you can do that by leveraging others API's. Yet, those same VC's and others will ask you what your "secret sauce" is? How defensible is your idea? If you build something and it solely uses API's from others it's not to defensible as it would be easy for someone else to copy. The only way that would work is to get it out for user testing and a possible pilot or beta. Attract some funding and then use that money to build your own code which will give you IP aka intellectual property and thus something that is defensible.

Building solely based on some one else API is very risky for the reason if they change the API usage like Twitter not so long ago did. Your at the mercy of the originator of the API.

So, from this you can see that the scenario is build fast but high risk. As far as the type of business of aggregating all of the storage providers into one common UI. This of course can be done but it alone is not a business unless you tack on something else that gives the user greater value. I know as we're doing this very same thing at a large well known tech company that I head up user experience for. We've spent only $20K but have a working product. The aggregation of storage is only one small part of the story with added features leading the way.

From this you can learn that yes, it's possible but you need to lead with something else as well as just aggregating storage across providers is not enough of a compelling story.

answered Dec 31 '12 at 00:36
271 points
  • Thanks for your inputs, @Tony. I can't upvote for now because of my reputation. I'll wait a couple more days, before I can accept a solution. I'm hoping more people would contribute to the discussion. – Quik Tester 10 years ago
  • I work for one of those API companies (Twilio), so I'm biased but there is a fundamental difference between paid vs free services. At the end of the day, a company is accountable to their customers. When you're paying for a service, that's you. It's in their best interest to keep you happy & active and as long as everything works as expected and is reasonably priced, everyone is happy. Alternatively, when the service is free (Google, Facebook, Twitter, etc), you're not the customer, you're the product.. so their accountability is elsewhere. – Casey Software 10 years ago
  • I would highly agree with CaseySoftwares statement. – Tony 10 years ago


there is no clear answer, just create a MVP and bootstrap your idea

you don't need VCs to help you do that, just focus for 1-2 weeks and you'll be in a much better position to decide what to do next.

answered Dec 31 '12 at 00:39
Business Model Canvas
1 point

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