Chartboost was born at Pier38 in San Francisco and has recently set up shop in Pier01 in Barcelona. The news became public the same week that Facebook announced it will open a centre to monitor fake news in the Catalan capital. "I was initially scared, but when I read the job offers I understood we would not be competing for talent," says Pepe Agell, vice president of Chartboost, the company founded by two Catalans that helps mobile app developers to build their business and that has added the iconic Sagrada Família to its list of bases.
Agell has breakfast every day with Chartboost’s general manager, Maria Alegre, his wife and mother of his two children (with another on the way) as well as the cofounder of this startup that is now a company with over a hundred employees. "Working with your partner so intensely has good and bad things. My overall view is very positive, I am lucky enough to know my personal partner inside out," he says during an interview with VIA Empresa at the Barcelona Tech City HQ.
You are an example of entrepreneurs who help other entrepreneurs.
We help the entrepreneur with an application to build a successful business. If the developers make money, it means that we have done our job. We saw that there was a need; we went through it ourselves in the company where Sean Fannan and Maria used to work.
With the internet it is easy to create but difficult to do business...
The App Store is a perfect distribution channel but doing business is very difficult. That is to say, the content is easy to distribute, as all you have to do is pay for a developer’s licence that costs a hundred dollars a year and you can put applications on the App Store, but what is tougher is gaining users and, especially, getting those users to pay.
Is it like being in a supermarket in which you can choose between two million biscuits?
Yes, but apart from there being two million biscuits, you only pay for each bite of the ones you like best. Most applications are free, so price is not a decisive factor; that makes the marketing even more complex. You cannot use the argument that you have set a good price or that you are cheaper than the competition, everything rests on the product being good. But on top of that, your user needs to be so committed and happy that they are willing to pay for a premium experience, for a service within the application..., etc. The app developer not only wants downloads, but valuable, monetised downloads.
"The app developer not only wants downloads, but valuable, monetised downloads"
Are there still as many new apps coming out as before?
Yes, although it is true that the number of total applications is no longer growing exponentially; every day 500 new applications are submitted. Yet, a lot of them also die off. We are close to two million apps, both in the App Store and Google Play. We work with both stores and also with Amazon, which is a much smaller store, with much less traffic, but with a lot of value, as Amazon has all of the users’ data and usually whoever is with Amazon also has Amazon Prime and therefore a credit card.
Are most applications for entertainment?
Yes. The latest data says there were between 600,000 and 800,000 games. It is a sector with a very long tail. Some 43% of the time spent on our mobile phones is on games and 75% of money spent in the App Store is on games. It is the strongest category in terms of minutes and revenue.
People don’t generally use so many apps...
That’s why the big challenge is to be part of the 9 or 10 applications that the user uses. No doubt there are some that are constants, for messaging, for transport... But then you’ll have others, for financial services, for health... I travel a lot and I message with WeChat, Line, WhatsApp, Telegram... depending on the country I am in. Most users have a file for games, with no doubt two or three favourites and a few others they swap out. The great challenge for developers is to be included in this file of the 8 or 9 that are most used.
"There are a lot of people who build businesses based on spreadsheets and statistics"
What is the magic formula for monetising an application?
Everything begins with psychology. A developer is basically creating content that has to connect with the person and that might seem like a cliche but it is something we often forget. There are a lot of people who build businesses based on spreadsheets and statistics. I agree you have to look at the numbers, but the first step is forging a connection. In fact, a lot of games companies that have managed to reach high levels of monetisation employ psychologists. I don’t know whether there is a standard formula for success, but it is related to the design of the experience so as to show the right tools for monetisation at the right moment and that begins with understanding the user who, by the way, will very easily bounce off. The industry has created free to play and it is the worst possible experience for the user who has the feeling that you only get something if you pay for it (pay to play). The key is engagement, the motivated user will pay. Often, the secret of monetisation is to put up a store that offers items, but neither too soon nor too late, at the right price... Perhaps 95% of users who will not always pay, will to watch a certain video at one moment or another.
Who do you work with?
We work with all sort of developers. There are large ones, such as Supercell, King, SocialPoint, Electronic Arts... and all those great studios. But we also work with, for example, Ketchapp, a small French company set up by two brothers, who have more than 500 million active users a month and who have created a model of very simple games that vary each week. Games die off quickly but while one is going into decline the next one is being launched. They use cross-promotion, they connect the old game with the new one to transfer it to the user base. We are their cross-promotion platform and we help them to monetise their product with ads.
What’s your relationship like with the big players, such as Facebook?
We are competitors. We compete with Facebook and Google as advertising platforms; we are in a very competitive environment but above all we are in an environment that is highly monopolised by the big players. In fact, there are increasingly more lobbies condemning abuses by the large platforms. Facebook, Google and Amazon have so much power and create so much wealth that they do what they want... Yet, in Facebook’s case, being the application they are, they acquire users and we sometimes have them as an advertiser.
This year you are opening an office in Barcelona. What has changed since 2013, when you decided to open one in Amsterdam?
To begin with the aim is different. In 2013, we wanted a sales office with people working in the European time zone and close to our clients, we wanted a city that was well-connected with the centre of Europe. Amsterdam had the advantage that it is in the centre of Europe, with direct flights to San Francisco, as well as to other European cities, apart from the language issue, as in the Netherlands they do not dub films and everyone speaks English. And when we are looking for a city, we also try make sure that it makes a very positive contribution to the company culture. Now the needs are different: the development and technological team has to grow and growing in San Francisco would be crazy.
"In Silicon Valley an engineer earns around 200,000 euros and has offers from recruiters every day; if you want a stream of talent, you have to look elsewhere"
Silicon Valley is an environment that is much more competitive...
Yes and I would add that it is competitiveness that is far from healthy. It is a bubble that will burst, it cannot last. In Silicon Valley an engineer earns around 200,000 euros and has offers from recruiters every day; if you want a stream of talent, you have to look outside San Francisco.
The natural path would be to grow in Amsterdam. So, why Barcelona?
We wanted to take this opportunity to do some benchmarking of Amsterdam vs. Barcelona. We have had Barcelona in mind since the beginning and now the connections have improved a lot. And building a technology brand in Amsterdam would have taken a lot more; here we have friends, associates... Although we have been abroad for 10 years, we have kept all our relationships. And there is access to talent, in terms of cost and quality of life the Catalan capital is ideal. If you can't find talent in Barcelona, it’s easy to attract it here. Retaining talent is already an obsolete concept.