Interview: How Runtastic became the most grossing health & fitness app publisher in the world.
The market for health and fitness apps has grown with a double-digit rate. It is too early to say that there are app publishers that lead the market but some of them became incredibly popular within a very short amount of time. One of these app publishers is Runtastic. The Austrian start-up company has a portfolio of 15 fitness tracking apps that made Runtastic to the no. 1 most grossing health & fitness app publisher in the world.
We interviewed Florian Gschwandtner, one of the founders of Runtastic to get the view behind the tremendous success story (Part 1).
research2guidance (Ralf-Gordon Jahns): When you founded Runtastic, what was the original idea behind your venture and what goals did you pursue?
Florian Gschwandtner (Runtastic): Four partners founded our company in October 2009. Three of us had started in 2003 with a master’s study in engineering / mobile computing. At that time mobile computing was still very far from being mainstream. While studying, we have been tracking sailboats on Neusiedler See (editor’s note: a lake in Austria), at the World Sailing Games in 2006, using external GPS signals. That’s how the idea to track sports was born.
In 2009 we decided to track Running via smartphone. Because of our technical affinity and our previous experience, we knew about the existing opportunities.
After having written a business plan, we were looking for various financing opportunities. In 2009 raising venture capital was nearly impossible in Austria. There was a certain ignorance about things like entrepreneurship and start-ups in Austria. Also the business angel scene/-financing scene was very small and unclear compared to countries like Germany.
So we started by developing third party apps for companies like A1 Telekom Austria and a couple of other companies. With the income of these development services, we were able to implement and finance Runtastic.
r2g: So you are 100% self-financed?
FG: Yes, we are 100% self-funded. After 1.5 years we have taken business angles on board who have supported our growth. They have helped us rather with their experience and knowledge about their own previous start-ups, not so much with financing our business.
r2g: How many apps have you published so far?
FG: That’s not an easy question to answer. If I take all our light and pro apps across all platforms into account, we have about 50 apps. If we take core functionalities only, we are currently at about 15 apps.
r2g: As I have seen, you are supporting different platforms: Apple, VP, Blackberry, Google and you are supporting Bada. How do you manage e.g. updates? Do you use special tools or do you develop on your own? How are you organizing your technical development?
FG: We do all our development in-house. This is a lot of work just for the maintenance part. We are working with agile development methods so we are trying to re-use components across different apps. Thus we only have to slightly change a module to re-use it for different apps components. To provide high quality apps e.g. regarding speed and native elements we decided to develop pure native apps only.
r2g: How about reach? Is it true that you have reached 30 million downloads?
FG: That’s correct. In 2013 we already have more than 14 million downloads. That’s an average of 100,000 downloads per day, which is quite good. We are well represented within our target group.
r2g: Do you have any regional focuses? In which countries do you have the most app downloads?
FG: We have a strong user base in Europe, especially Germany, Switzerland, Austria, Italy, France and Spain. These are important countries for us and we are monitoring each county very closely. Since we have started being more active in the US our market growth has increased there as well. We are also growing in Japan and some of the emerging markets. Countries like China and Brazil are catching up as well. We have translated all the apps into their respective national languages.
r2g: What is the share of your apps for the respective platforms?
FG: Generally IPhone and Android are pretty much the same. They constitute more than three quarters of the market. The rest is split between Windows Phone and BlackBerry. Bada has the smallest share.
r2g: How did you come up with the idea to develop apps for Bada in the first place?
FG: We participated in a competition organized by Samsung. In addition to development support the competition did also include a monetary support. Whilst we were developing our app, it seemed suitable for us to participate and release an app on Bada. In hindsight, I doubt that we would do it again. Regarding the Bada platform today, it did not evolve the way, Samsung expected.
r2g: How many employees are currently working at Runtastic?
FG: At the moment we have around 65 full-time employees. The number is varying a little bit.
r2g: Can you tell us, what share of Runtastic’s turnover accounts for the classic download business and what share accounts for other lines of your business (add-ons like sensors, services, accessories)?
FG: In general our main turnover is the app business.
All user data are uploaded to our Runtastic.com page, where we have up-selling possibilities like Premium Subscription with additional information, statistics and services (like linkedIn). Furthermore we are using in-app advertising in all our free versions as an additional revenue stream. Also hardware is becoming more and more important. In 2012 we started with app accessories and are very well listed in the appropriate group and sector. We’re progressing step by step. For us it is important to have more than one revenue stream.
r2g: Besides the traditional business model, like initial downloads, are you using in-app-purchase as well?
FG: Yes, we are testing in-app-purchase in different apps: in our light version and our pro version.
r2g: What are your experiences with the in-app purchase business model so far?
FG: It would be too early to give a final answer or to draw conclusions from our first experiences. To be honest, I wouldn’t even have any metrics regarding this matter. Of course I am following the reports published and I am observing market trends to see, which direction the market is headed. I believe that generally in-app purchases are working very well, especially for games. I am not sure about our market segment; we don’t have enough data yet. Like I said: It is too early to draw conclusions. We have just started with our tests.