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May 23, 2011

Lemonade Stands and Mobile Applications

Growing up in the Midwest, the Lemonade Stand was probably the initial business venture for every kid in my neighborhood. The entirety of Adam Smith's Wealth of Nations encapsulated into a sunny summer afternoon, with sticky hands, yellow-jackets, and messes for Mom and Dad to clean up thrown in for fun.

The beauty of the Lemonade Stand, from my children's point of view are the profits. There is no supply side, no logistics, no labor costs... Dad makes the lemonade, sets up the card table and chairs, the kids make the sign, and "BAM!" they are in business. Every cup of liquid gold means another twenty five cents in their pocket. Who would complain about that kind of ROI? 100% margin. But there is a method to their madness, even in their blissful ignorance, they have managed to put together a business plan that works.

They know what their product is. Lemonade. Usually Country Time powder from the cupboard.

They know who their customers are. Mostly, their fellow neighbor kids and their parents, or the adults in the immediate three or four houses on our block.

And they know what their expected Return On Investment will be. Quarters. The more the better, but quarters are quarters.

So, by now, you may have smiled as you read this blog, but you are probably asking yourself "What do lemonade stands have to do with mobile applications?"

Well, nothing and everything.

I have been consulting with clients and selling professional services for mobile application development since early in 2008, and lemonade stands have been a very important tool for me and my clients. Early in the iPhone app space, there were a large number of companies, early adopters, who saw potential in iPhone and recognized that it was something that they should be a part of. You could light a Zippo. You could drink a Carling beer. You could shake the iPhone. You could spin dials... you could "Pull my Finger."

Companies who saw potential dove in head first trying to get their name attached to the new technology. But it was all about novelty. The iPhone itself was novel and new and unexplored, and the way that companies engaged in the space was to be novel and entertaining. This was really the norm for basically the first year of the iPhone's existence. From a consulting and sales standpoint, this was a lot of fun; we got to do some innovative, exciting and goofy things, but the space itself was unsustainable. Businesses saw free and 99 cent apps as some sort of free or cheap software and were unwilling to pay real development costs to build it. There was no line item for mobile applications in their budgets, so they would find leftovers in marketing or media funds and piece together project budgets from those.

Fundamentally, there was a disconnect. Clients ranging from individual entrepreneurs to fortune 500 corporations had missed the underlying reality that a mobile application is a business investment. I have given my "lemonade stand" shpiel literally dozens of times over the past couple of years.

In my next installment, we will step up to the counter and see how the lemonade stand works.


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