I sold my app on Acquire.com today. Mindcast was the first mobile app I had completely self-published. I started working on it only six months ago, and it had just turned profitable. So why would I sell something that's already working?
The raw reality of mobile app business
The raw reality of building apps is that it can be a wonderful business, but it can also be a hamster wheel if you don't know what you're doing. Perhaps you're a developer or software engineer like I was, looking to buy back your time. You don't want to exchange your time for money for the rest of your life. In that case, mobile apps can provide exactly that.
Realistically, given the learning curve, it will likely take 6-12 months before you see a noticeable effect on your income, and another 6-12 months to create the right systems to buy back your time. In my opinion, this is a fantastic deal, since it'll unlock your time to build even more systems (apps are essentially just systems). It's like a mental puzzle. Whether it's mobile apps, SaaS, or any other product, the only limit is your creativity. And if you enjoy solving puzzles, it can be a lot of fun.
Two different approaches
There are roughly two different approaches you can take to mobile apps, with many variations in between:
- Own forever and scale MRR
- Flip for a profit
Which one is better? It depends on the app and your specific goals. If you want to build a sustainable business, you should focus on scaling MRR without increasing churn and CAC. However, if the app is in a competitive niche, it might have limited growth potential, in which case you can always try to get acquired.
Why I sold
I sold my app for two main reasons:
Reason 1: Growth
First, I couldn't find a growth system to sustainably scale recurring revenue. I reached $1K MRR but found myself on a hamster wheel of organic content production, and I struggled to achieve a profitable ROAS with ads. It was essentially a growth problem.
Could I have figured out a sustainable growth system? Of course, I'm sure I could have, but it's all about time and attention. The concept no longer excited me, and I had a new idea I wanted to pursue.
Reason 2: Learning
Second, I wanted the experience of selling an app. I chose Acquire.com, which proved to be an excellent experience. They streamline the process significantly, and every buyer who reached out was high quality.
I wanted this experience because I plan to acquire apps myself in the future. I believe both buying and selling software can be a wonderful thing for both parties. For a builder, selling an app means reclaiming your time and attention, receiving a cash injection, and gaining the satisfaction of knowing someone else will care for your baby instead of letting it die. In my case, it also provided firsthand experience of the acquisition process from the seller's perspective.
Finding the right buyer
Knowing my baby would continue to grow was psychologically important to me. I was fortunate to find a buyer deeply interested in my niche. I'm confident the app will thrive now that someone passionate about the self-discovery niche is working on it full-time. It's satisfying to know the app will remain on the App Store and continue to perform well.
Deal structure
The deal structure was fairly standard. We split the payment: some upfront and some vested, as the new owner is less technical and requested handover support. While I won't disclose the exact amount, it was a market-rate deal at 2-3x annual revenue.
Was it a good deal?
Even if the buyer were to struggle with marketing, which I don't think they will, I believe they'd still have gotten a good deal. The ASO for the six-month-old app will only improve; it's a solid niche, and they've essentially purchased digital real estate.
Should you sell your app?
This is deeply contextual, and only you can decide the right path. The first thing you need to ask is: Do you want to continue working on the app? Do you have the time to work on the app? Do you have kids and a full-time job? Is your goal to go full-time on this app? Do you think this app is your ticket out of LinkedIn land? Do you have a new idea that you're more excited about?
These are all factors you need to take into account. If you have a more exciting idea, or if you've been working on an app for six to twelve months and no longer wish to continue, selling is a viable option.
The keeper case (congratulations)
If you can create an app with recurring revenue, you'll naturally want to keep it. If it covers your monthly expenses and runs somewhat on autopilot, you've essentially "made it." You're now free to spend your time creating more systems and assets that will generate even more revenue. Congratulations.
How to maximize valuation
Maximizing your app's valuation is a big topic that probably deserves its own post. But there are already many experts online, such as Evelin Herrera, who offer great advice on app M&A. Acquire.com also provides a few resources on maximizing your app's valuation.
How to avoid Stripe-induced depression
A side note: I recommend deleting your RevenueCat, Superwall, or Stripe app from your phone. While waking up to your first few purchases is exhilarating, the dopamine spike can lead to a crash on dry days when you wake up to no notifications, or worse, refunds. Even days you would have been extatic about just a month ago, you will feel depressed about if they are a relative decrease to the volume of yesterday. Jeff Bezos's view on stock prices is that daily fluctuations shouldn't influence your day-to-day activities, and similarly I think checking your revenue dashboard daily makes you reactive and sets you up for depression, which is not how make intelligent long-term decisions.
What's next
My app portfolio has now decreased from four to three apps, although I still consider Mindcast as part of my legacy. I'll keep shipping apps and may sell others if the timing is right and I no longer wish to work on them. The ultimate goal is to work on apps that both excite me and are scalable.
I wanted to understand the acquisition process from the other side, because I plan to start a PE-style business soon. I wanted to see the steps involved: documentation, vetting, due diligence, and everything in between. Now that I understand the process, I feel much more seasoned as a buyer. Having sold an app, I'm better equipped to identify and negotiate for undervalued assets.
Buying apps as a business
I plan on acquiring at least one mobile app or web SaaS in the coming year. I'll apply my product and growth expertise to improve LTV and CVRs throughout the funnel, then either flip them for a profit or hold them as cash-flowing assets. I'll continue looking on marketplaces like Acquire.com and scouting on X for undervalued software. I might provide more details about my acquisition criteria in a future post.
The main thing I'm realizing is that buying an app with existing revenue can save significant time and energy. Growing a project that already has some revenue is significantly easier psychologically, since you're coming in fresh and can apply that energy on going from 1 to 100 rather than struggling to go from 0 to 1. From my observation, and personal experience, achieving PMF takes a toll, and many founders are near burn out when they achieve it, even though post-PMF is when much of the fun work begins. It's like that saying: most of the fuel for airplanes goes into takeoff. Once you're airborne, you're cruising, and it's much easier to climb higher.