Why App Economy Disruption Won’t Happen As Fast As You Think – Eric Seufert

0:00All these frameworks for building apps very quickly have existed for a really long time. Kotlin's existed for a long time. Unity 3D for publishing games has existed for a long time. And I mean, you never like fully took the bar down to zero. And even where you made it very, very easy, you invite the hobbyist class in who is just not really interested in

0:17trying to build a business out of it. So, you'll see disruptive change, but it's going to happen a lot slower than people think. Hello, I'm your host David Barnard. Today's conversation is shorter than usual and will be featured in Revenue Cat's State of Subscription Apps Report. Each episode in this series will explore one crucial topic and share actionable insights from top subscription app operators. With me today, Eric Seufert, media strategist, quantitative marketer, author, and investor. Eric currently shares his musings in the Mobile Dev Memo podcast, newsletter, and blog. On the podcast, I talk with Eric about why app economy disruption won't happen as fast as everyone seems to think. How AI

0:54is just as useful for defending against copycats as creating them. And why the real barrier to app success is still distribution, not code. Hey Eric, thanks so much for joining me on the podcast today. David, good to see you. Hardly a day has gone by in the past few months where I don't have someone asking me,

1:15"What's the future of the app economy?" You know, freaked out that, you know, AI's going to subsume all apps, that you're only going to have ChatGPT, that competition's crazy, that, you know, all all manner of questions. So, I I've I've like, gosh, like six or seven of the top questions I get asked on a regular basis, and

1:33I wanted to chat through these with you. I think of of all the the folks around the industry, you are kind of the foremost app economy expert, and I know you're also super into AI these days and following the industry very closely. So, I thought it'd be great to have you on to get your perspective on all this. So, let let's just start with that first question. Like, you know, it's so much

1:53easier to build an app these days. People are vibe coding apps in an afternoon. What is What is a competition angle mean for the app economy? Well, first of all, thanks for having me. Always appreciate the opportunity to chat with you. Yeah, I mean, it's good timing because, you know, we had um we had AppLovin's earnings two nights ago, and you know, the CEO talked about this, right? So, what happens in a world where uh the the sort of barrier to to entry for for app publishing is is far lower than it once was, right? Which Which I mean, we're there now, but what happens as it sort of like just continuously

2:28descends? And, you know, I think what AppLovin CEO said, which is, you know, self-serving, is that the key sort of function of success is distribution, right? And And I've made the same point, and you know, I've been talking about this for a couple years on Mobile Dev Memo, but I I I made this point I don't know, 2023, 2022. A lot of these generative tools are inflationary for for the app economy and and for advertising generally, because, you know, as just you get more and more content being published, it gets harder to stand out. I mean, that's

2:59just like a pretty fundamental premise. I mean, I don't think anybody would disagree with that, right? And, you know, I wrote a post on LinkedIn about this a while back, because, you know, I saw a bunch of people making predictions around the start of the new year about like mini apps and how these would take

3:13off, and it's so easy to start an app. Why don't you just everyone will just create the apps that they need, and these mini apps will become the the sort of dominant interaction paradigm. And, you know, they might Look, they might, but you still have to get people to discover your stuff. And if there's a lot more stuff uh from which, you know, to stand out, you have to work harder to stand out, and that means advertising, most likely. And if you look back at the kind of history of these these mechanisms that made publishing easier, right? And in in the piece that I talk about, I talk about the daguerreotype

3:44photography that made it easier to sort of get images in front of people, or you know, And but like if you look at the sort of like more recent history of just blogging, right? The App Store itself, right? When has user acquisition gotten easier over time since 2008? Has it ever? There's just There's There's this long history of like, well, if it gets easier to publish stuff, it gets harder

4:01to get people to discover it. At a more fundamental level, though, does AI change our relationship to apps? So, will people Will somebody just say, "Hey ChatGPT, I want to run a 5K." And ChatGPT's just going to coach them through running a 5K instead of downloading Runner or Strava or Couch to 5K or, you know, any of the hundreds of

4:23running apps out there? That's a really interesting question. I think it's it's certainly a very relevant question. I think it's TBD. But, I think the the There's a bigger question there, which is like, are you saying, "Hey ChatGPT?" Who are you saying, "Hey to?" Right? Because that's not necessarily settled science that ChatGPT just wins the category, right? And so, the question is like, do you just sort of Is it turtles all the way down and up, right? Like, where do you go for that information? Is it ChatGPT or does someone unseat ChatGPT as the

4:50go-to like verb for discovery, right? But, my sense is Look, I mean, you remember all of Apple's promises two WWDCs ago. They They rolled out Apple Intelligence. They talked about App Intents. And none of that came to pass, right? They They talked about this overhauled Siri. None of that came to pass. Now, that's not because it's fundamentally impossible. That's just because Apple didn't do a good job on execution. But, like I don't know if you remember with the App Intents stuff and they they like mapped out this whole series of interaction flows. And the reason I remember this is I just I remember writing about it. So, I just

5:19looked it up before we started talking cuz I I wrote a whole piece about like, will this disrupt the app economy? Because that's the same question people were asking. If you've got App Intents, do I need to interact with the app at all? Like, if I need to do something in that app, I'll just ask Siri, it'll go in, it's got You've got the App Intents, it'll hook into those, and it'll do everything for me. And And what I, you know, sort of hypothesized was like, when this comes to fruition, and it will at some point, is like, yeah, maybe the category winners just run away with

5:41everything because I'm not going to say, "Hey Siri, open up one of my ride-sharing apps and book me a ride to the movies. I'm going to say open up Uber because that's the dominant one. Right? And so that could become, you know, that could become the new dynamic that we play in. But but I I don't think I don't where I don't think we're going to end up is like some sort of agent that orchestrates everything for us and there's no UI in any app because it's all just APIs or just like MCP interfaces. I don't think we're going to end up there and like to your question

6:08about like with Strava, my sense is like the sort of chatbot interface that we see now is limited in a lot of really fundamental ways and at some point, you know, people just prefer things that are more tactile and more interactive. Now maybe ChatGPT could replicate that. But like that feels like a standalone interaction use case that you'd have to construct and I don't know that, you know, certainly not in the current interface, but I mean this stuff changes all the time. But I could they just have an interface for everything and the running is, you know, learning how to run or whatever tracking your running is

6:38one and cooking is another and, you know, whatever. My sense is like that probably ends up not being super meaningful for them in the same way like why didn't Facebook do that? Because ultimately like you're going to have your core business and that's going to dominate everything. And so building out all these like use cases of specific like functionality are not going to be

6:57valuable enough for you to even do. And I think people all you know the the the kind of AI takes over everything bulls are underestimating the productization that takes place that all the people at Strava who've been building this product over years and have that knowledge and have new features they're continuing to add on in a weekly monthly cadence. You just you don't get that and so at some point ChatGPT or some LLMs a better product manager than human product managers and it can just like build the perfect interface. But I think we're a a long way from that being true. But then what about like vibe coding? Are people just

7:34going to vibe code their own 5K app? No. I mean, that's going to be like a hobbyist effort. I mean, the thing is, you know, coding has never really been the core limitation of getting an app done, right? It's, you know, and and I mean, you'll see this. I mean, like yeah, you could probably vibe code like a recipe app or something that works just as well as anything you get off the internet, but but even then, probably not, right? Because like it's a

7:57specialization. And it's managing the edge cases, and it's having, you know, gotten user feedback. I mean, if you're just vibe coding something from scratch, it's not going to be very good. I mean, you're you're you're going in there with just your intuition versus like an app that's successful in the App Store is is actually operating off of like this long history of of feedback, right? And that's it's been improved over time, right? And that's why, you know, there's a survivorship bias kind of thing there, right? And so, look, I mean, you know, this this was a question when a lot of don't no-code tools were released to to

8:27allow people to like, you know, publish a game in like an afternoon, right? I mean, like it's essentially no different from using, probably actually easier with the no-code tools to make a like a very simple, superficial, hyper-casual game than it is to do with ChatGPT, because then you're still dealing with Xcode and you publish you have to get a DUNS number, as you know, you have to get you know, get an Apple developer ID and all that kind of stuff. I mean, you know, and and I mean, you still have to do that with the with the, you know, like a Buildbox or something, but still,

8:52it's it's it's it's a visual interface for doing that. And that didn't really I mean, none of those games were commercially successful. And and and like here's a good point that I see made a lot, right? It's not mine. Name one successful company that where their product was built by Lovable. Name a single one. Now, maybe there's a bunch of people using their own recipe app that they built with Lovable. Can you name a single company and Lovable apparently, according to them, has a lot of ARR. I don't know what words they're substituting in for that acronym, but they say it's ARR, but name me a company

9:23that is successful that is built off of Lovable, and I don't think I can name a single one. And we're still early, so it'll be interesting to to see, cuz I I do think there is potential for somebody with good intuition and a good idea to go into Lovable and build something that that becomes a a great app that a lot of people use. So, I don't think that's outside of the realm of possibility in the future. But But to your point, so

9:44far we haven't seen any real breakouts. What we've seen is people who are already building apps and already had that product intuition and do have some amount of like code experience. They're the ones really actually succeeding. And then to your earlier point, it's also the ones who figure out distribution. It's It's not just about the code. And so, yeah, you can pull something together in lovable, but how are you going to actually get it in front of people? And that's still such a huge

10:11barrier to entry. I do push back and like maybe, you know, someone would say like, "Okay, boomer." to this, but I just push back fundamentally on the idea of vibe coding like an enterprise grade or scalable product. I just don't think that's possible. And I don't think that's ever going to change, actually. I mean, you just get you just encounter so many dependencies with writing code. And it has to be done really thoughtfully. I mean, there's a reason if you talk to like a senior software engineer, if like they publish 200 lines of code in a day,

10:34that's like a big day. Right? The biggest part of the job is not writing the code. It's actually thinking through the implications on the code base of what you're publishing. Is it scalable? Is it sustainable? Is it going to break something else? Like, is this going to have to be rewritten in 3 years? Is it extensible? And, you know, I don't vibe code in the sense that I don't go into cursor and tell it to, you know, build me an app. That would not be a scalable thing. That, you know, could build you a like an You hear this said a lot. I mean, this is again, this is not

11:03like some novel insight. But you can you can build an MVP really quickly with these tools. To build something that is stable, that is scalable, that is extensible, that is really difficult. And so, I use I use Now, don't get me wrong. I mean, I use AI tools all the time for coding. But I want to see and touch every single line of code that goes into a a big code base. And I I maintain a couple. And what I do is I'll

11:26have it write a function for me, right? I'll have it review code, right? But But you talk to anybody who actually writes software, ask them like what the most fulfilling part of their job is. It's deleting code. It's getting rid of code. It's getting rid of old junk and knowing that you can get rid of it without breaking something. And that like refactoring in that way, you know, what you see a lot of people doing with like vibe coding is they'll just start the whole code base over. That clearly doesn't scale for a large enough like a large enough code base. A, it's going to be more expensive than just having like

11:54an software engineer working on it. But, you know, you're just going to be burning tokens all the time. But be then you're just going to have to do that again and again and again and you're not going to have the consistency of a code base cuz some things are going to change each time you do that. If you're going to build a meaningful app, these tools as they exist today and and they will get better, but they're not going to support that kind of scalability. They're not going to support that kind of uptime. Yeah, and and it just takes a lot more than is still assumed in the AI hype cycle as of

12:22today to actually build that kind of great stuff. So, but you know, things are moving quick. So, we'll see how much better things get. As things do move quicker and quicker though, the the one thing I have heard a lot of people asking about is copycats. Is that, you know, a skilled developer using AI can move quicker and so ripping off an app like, you know, the entire, you know, interaction paradigms. I mean, some are even just ripping off style and like assets from the apps and stuff like that. How do you think about copycats moving forward that if if you have a success within a few days, there's going

12:59to be tens of competitors for any app that goes remotely viral? A couple of things, right? So, one is that's where true design intuition tends to save you and tends to differentiate you. And, you know, like you said, I mean, people are just copycatting these features or whatever. And so like, well then people are just piggybacking off of your true, you know, your sort of like inherent design instinct or skill that you've built up over a long time. It

13:21doesn't necessarily be like an instinct. They can't build new features that way, right? I I that ends up differentiating quality experiences from the mass, right? If someone's just copying what you've done pixel by pixel, there's not much you can do to defend against that. You see this a lot now with with creatives, right? I mean, this has been an issue for years, right? Like if you have a winning creative, it's copied the next day. And so, what do you do? You've got to build a process to always have a winning creative. That just shrinks your lead time. And that's just a fact of nature. And like that didn't stop user

13:50acquisition. In fact, it just made it a lot more important to have a scalable process, right? An actual repeatable for producing winners. And that what that ended up doing was just accelerating like the velocity of stuff that you need. But I think it also made it a lot more process driven, which is not possible to replicate. Like if you're a solo dev, you can't really replicate a process cuz you don't see it. You can replicate the ad, but you can't replicate the process, which means you'll always be eating the crumbs. And that's where again, you see the primacy

14:18of distribution, not production. I have been really encouraged to see Apple taking a hard stance on copycats. They updated the rules of the App Store recently, you know, saying copycats will be banned. I've heard from from several developers who had, you know, blatant rip-off kind of apps where Apple very quickly took them down. So, I do think that there will be some onus on the platforms. And this is where where it's sometimes the platforms can be helpful in in being able to police some of the stuff. I mean, it's not going to be perfect. And, you know, folks don't always just completely rip you off. They

14:48they take, you know, aspects of the idea. But yeah, it's nice to see the platforms getting involved in that way as well. And that that provides a little bit of defensibility, I think, in a in a healthy way. Not preventing competition, but preventing just being ripped off. There's there's another piece of this, too, which is like the AI stuff. It's not one-sided. It's not just the copycats and the scammers and the the fraudsters that benefit from the AI. I mean, there's the other side of that is using AI to defend yourself against that kind of stuff. So, you can use AI to scan the App Store every day, look for

15:17copycat apps. I mean, you know, we've built stuff at Fabulous to to this. We look at the App Store every day. We're looking at stuff that's rising virally. We're scanning it. We're looking at the ads that they run. And so we have defense mechanisms for this. So it's not just one-sided that, you know, the

15:30nefarious use case of AI always wins. The last thing I wanted to touch on was wallet share and willingness to pay. As software gets easier and easier to produce, and and it does seem like it's just going to continue to accelerate from here, is this deflationary on the entire software ecosystem? You know, apps are cheaper and cheaper to build, so developers can charge less and less for them. Do app prices go down? As AI apps like ChatGPT and Claude and Gemini and others take wallet share, are people

16:04going to pay less for the other apps? Like, where do you see things going economically for apps? There's there's got two things here, right? So one is just, you know, I mean, if you if you kind of take a much longer, you know, sort of term view, I mean, you could say, "Well, there's like a lot of wealth fair effects from AI, and it's going to drive the cost down a lot of ways, and and it'll give people more free time, and so there's just more need to use more apps, but you've got fixed income, but what what is discretionary income mean in the world dominated by AI?" And that's you're kind

16:34of thinking like kind of very long-term. I'm kind of if I you if you kind of project out the next couple years, what I think happens is, you know, people have fixed discretionary income. They've only got so many apps they can support. Yeah, maybe you use price as a differentiator, and you just race to the bottom, but what does that mean? It means ads. It means that's how you monetize. And so everything's an ad network on steroids, right? So you now you've got everything running ads. Well,

16:57okay, well, who's buying these ads? Well, all that companies that didn't exist before, but can via the sort of miracle of AI, you know, launch a product, and they've got to get distribution. They've got to get eyeballs on their stuff, right? And so they're the ones buying all these brand new ad units, right? And so you've got this ads economy that's just turbocharged as a result of this, because you can't charge, because if you charge, your competitors undercut you,

17:19and so then you'll get no users, right? And so therefore, the only way to make any money is to show ads. And but won't CPMs collapse if that's the case? No, because there's a bunch of buyers now, because there's way more software that's trying to get eyeballs. It's going to be fascinating to see how how all this plays out in the next few years, but I will say I think the current kind of AI doomerism that there will not be apps in a year is just not

17:41true. And I think it's very overhyped. As an app company today, you should be keeping a very close eye on this. And like you said, you know, running app store queries on a daily basis to look at defensibility. You should be leveraging AI to move faster yourself. You should be watching your back. You know, there's all these things you should be doing. But like freaking out and saying like there won't be software in a year, let me go start a farm, I think is is very premature. This is I think those of us deep into the AI side of things and on Twitter and and that

18:11sort of thing are exposed to it in a different way than the rest of the world is and are a little ahead of our skis on on some of these predictions. All these frameworks for building apps very quickly have existed for a very long time. Kotlin's existed for a long time, right? You know, Unity 3D for publishing games has existed for a long time. And I mean, you never like fully took the bar down to zero. And even where you made it very, very easy, you invite the hobbyist class in who is just not really interested in trying to build a business out of it. So, you'll see

18:38disruptive change, but it's going to happen a lot slower than people think. That's a great way to sum it up. There will be disruptive change, but it's slower than the current estimates. So, yeah. Well, Eric, it was so much fun chatting through this with you. Anything you want to share with the audience as we wrap up? I know you've been blogging and podcasting up a storm over at

18:54MobileDevMemo. Uh yeah, no, not really. Nothing specific, but you can always find me at MobileDevMemo or on on X. Awesome. Thanks so much, Eric. Thank you. Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community. [music]