HowMuchDoesitCosttoBuildtheWorld'sHottestStartups?

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How much does it cost to

build the worlds hottest
startups?
by COURTNEY BOYD MYERS

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Tweet 2 Dec '13, 08:29pm in DESIGN & DEV

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Could $100,000 and the right developer skills make you an

overnight billionaire? How much does it really take to build
a product like Twitter or Instagram? With mobile
development agencies and product incubators on the rise
and more corporate labs spinning out each day, theres
no shortage of talent to help you build the next great Web
or mobile app.

We interviewed the heads of the top Web and mobile

development companies, incubators, agencies and labs to
understand what it takes to design and develop the most
successful apps of our generation. Here are their
breakdowns of the costs and time investments to create
10 of the worlds hottest startups.

1) Twitter

Henrik Werdelin, the Managing Partner of Prehype, a

venture development rm based in New York City that has

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necessarily diicult, but the layered features will take time

to get right.

The short answer is that it will take 10 hours, answers

Werdelin, who built a Twitter clone in a one-day Ruby on
Rails course. But a good developer could make it quicker.

This means assuming you already have a laptop the

cost is almost nothing to build the next Twitter. Assume
$160 for a Ruby on Rails course plus free Heroku, a cloud
platform as a service that allows you to instantly deploy an
app.

However, Werdelin is quick to qualify his statement. Its

not that simple, he says. These days, its less an issue of
creating a technology stack and more about creating the
experience layer on top, the interface that makes a
product relevant and intuitive for people to use while
quickly demonstrating its value.

Still, a product is nothing without scalability. You cant just

build a product today, you need to build a venture. And
that involves processes, structures, feedback loops,
analytics and a community.

Therefore, if you want to bring an MVP (Minimum Viable

Product) to market, Werdelin approximates that youll
need $50,000 to $250,000, depending on the skill sets of
the developers and designers you hire.

Werdelin equates building a successful product to building

a nightclub. You need more than a DJ, a dance oor and a
few bottles of alcohol, he says. You have to ensure that
the right people come in at the right time, and you have
the right decor, ambiance and music. And of course, the
cocktails.

2) Instagram

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Instagram is slightly more complicated to build than

Twitter because you need a wider range of skills to handle
image-ltering for iOS and heavy backend image loads.
However, you could still build an Instagram-like product
inexpensively, in the $100,000 to $300,000 range over a
three-to-six-month period, says Werdelin.

But even with a billion dollars of investment on day one,

its highly unlikely that youll ever be in a position where
you might grow as quickly as Instagram.

Founder Kevin Systrom launched Instagram with 25,000

beta users on October 6, 2010; two years later, the app
continues to see massive growth, recently reporting 150
million active users. Systrom, now a multi-millionaire after
selling his company to Facebook for one billion dollars,
turns 30 next month.

Luck, timing and social engineering are bigger

components than most entrepreneurs care to imagine,
adds Werdelin. And the best way to be lucky is to position
yourself in a place where luck may nd you.

3) Facebook

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Of A Kind, Postography and Yeah TV!.

If you asked me to build Facebook.com for you, I would

quote you $500,000 and nine months of development and
design time, says Schippers. Others would say one
million or a much bigger number. But its a very challenging
question to answer because what it would cost to build is
a small number while operational costs are enormous.

With the existing product in mind, the $500,000 would be

broken out evenly over the nine months with the rst
three months dedicated to design, specically user
architecture, brand and polish design. The remaining six
months would be focused on bringing the design to life,
while the remaining would be focused on deployment and
renement.

Taking into account the dierence in storage costs in

2002, Schippers estimates that Zuckerberg was spending
$3,000 per month on hosting for the rst year and about
$10 million per month by 2006 as the network grew
exponentially in that time period.

Considering Facebooks scale, the company is now in the

business of operating power plants to operate its servers,
therefore, Schippers estimates that Facebook has a $30
million dollar monthly burn rate just for hosting.

Suddenly, those multi-million dollar nancing rounds that

startups raise dont seem so outrageous!

4) WhatsApp

Real-time communication support can be more diicult

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a mobile development company based in New York and

London that has built apps for companies such
as Elevatr, Ribbon, UrbanDaddy and JackThreads.

To put out an MVP of WhatsApp with basic functionality

something that veries phone numbers, perhaps with a
Twilio integration and includes a payment management
system would cost about $120,000.

Follow that up with another $120,000 round for design,

additional development and branding. And then another
$25,000 to x the remaining bugs and add a level of
stability and robustness to the technology stack.

In total, that means WhatsApp would cost a quarter of

million dollars and take approximately nine months to

build, assuming you already have a large user base to

assure quality and facilitate initial momentum.

5) Uber

Artem Fishman is the Vice President of Engineering at

Huge, a full-service digital agency that has recently helped

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The Huge team took a deep dive at the numbers on

CrunchBase to work up estimates for Uber. The San
Francisco-based company made do with $50 million to
build its product from scratch to current iteration. Then
Google and Benchmark pumped $258 million more into it
this past August.

When youre answering the question of what it takes to

build the mere technical proposition, then the answer is,
surprisingly, very little, says Fishman. Based on its early
rounds, a minimum viable product for Uber cost about $1
to $1.5 million to develop.

It becomes increasingly diicult when youre trying to scale

your business both from engineering perspective and
market penetration. For Uber, the issues are more about
local regulations than scale for the time being.

6) Pinterest

At its core, Pinterest, the popular photo-sharing pinboard

site, is a very simple product. According to Sam Mathews,
the founder of Neverbland, a product studio responsible
for brands like Slate and Conjure.io, says Pinterest could
be created with a team of four in just 120 days for
$120,000.

Yet, it becomes increasingly more diicult to fathom

Pinterests cost as its user base explodes from 1 to 75
million. Its not about the product with something the size
of Pinterest, its about the economy of scale, says

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per month in developer and storage costs to maintain its

current product at scale.

7) Shopify

To build a replica of the e-commerce platform Shopify,

Mathews estimates it would cost between $250,000 and
$300,000 with highly-skilled designers, developers and

product people.

These costs dont take into account the many relevant

systems within Shopifys business such as maintaining its
API, the infrastructure and server space needed to
support its 50,000+ shops and designing and developing
all of the beautiful templates that help make Shopify so
successful.

Oftentimes, the biggest costs with a product like Shopify

come down to the decision-making process involved with
the customer and product development expenditure,
explains Mathews. But if you were to replicate the
product exactly, all those decisions are made for you. You
just have to gure out the architectural structure, which
would take approximately four to six months.

Riing o of Paul Grahams essay How to Start a Startup,

Mathews says, To build something complex you rst have

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The issue with building a product like Shopify is that it

required seven years of iteration and feature roll-outs
based on customer feedback and experimentation.
Mathews adds, So even if you replicated the product
exactly from the outside looking in, youre not going to
have as robust a background system to manage all traic
and experiences that take place on the platform.

8) Angry Birds

Our only viral gaming app on the list, we asked DJ Saul, the
CMO of the DC-based iStrategy Labs, a DC-based digital
agency that has built products like Grandstand and Social
Machines for clients like The Washington Redskins and
Nickelodeon, for input.

First, you have to take into account the time to develop a

brand identity including the logo, color palette and
typography, says Saul. Theres the ever-important UX,
both for the app itself and especially for the game. You
need experienced game designers and engineers who can
develop cross platform. Then factor in building for the
expansive world of Android and you have a multiplying
eect on costs!

Saul estimates that hed want a 20-person team working

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million plus overhead. Of course, if youre hiring an

agency, youre probably looking at 1.5 times that amount

in total costs.

9) Tumblr

According to Saul, Tumblr would be much easier to build

than Angry Birds as you wouldnt need game-specic
designers and developers. But the testing, rening and
bug squashing would remain the same.

To develop Tumblr, which is currently hosting 140 million

blogs, The biggest looming variable would be hosting,
explains Saul. On top of costs needed from the product
marketing side, I would need a 15 person cross-platform
development team working on Tumblr for just under one
year. So 15 people at an average salary of $110,000 and
youre looking at about $1.65 million.

10) Vine: Dening the MVP

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a good enough point to be released and gain traction in

the market and begin to build a user base, explains Paul
Choi, CEO of Worry Free Labs, a mobile UX, design and
development rm that has developed apps
like KeyMe, Sendgine, TwizGrid and CraveMate.

To create an MVP of Vine, Choi estimates that it would

cost between $125,000 and $175,000 with four to six
months of development and design time. He says that
Vine is a relatively straightforward app that leverages the
iPhones processing power to compress video les.

With Vine, youre building a backend system that stores

video and a front-end that is a simple viewer and an easy
way to share content out to social networks, says Thadd
Selden, Worry Frees CTO.

For those just starting out building an app for videos, be

aware of the escalating storage costs involved. While tools
like Amazon Web Services and Parse can help you get o
the ground, paying for the storage for 40 million plus
registered users quickly becomes a major hit. Worry Frees
VP of Business Development Brian Badillo estimates that
storage costs for an app like Vine can cost well over
$50,000 per month.

All the grains of salt

Each of these Web and mobile apps has evolved over
months and some over years. Estimating costs is
incredibly complicated because it comes down to hiring
the right designer, developer or product manager who
could build each app for less. Theres an enormous amount
of complexity that goes into each apps environment: not
just hosting costs but oice infrastructure, product
management and marketing to name a few.

Theres also the enormous looming cost of distribution

one thats hard to measure and even harder to predict.
Fifteen years ago, starting a business was primarily a
technology problem. Now that the barrier to entry to start
a business is so low $100K in many cases

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the right hands at the right time. In comparison to creating

eective and data-driven distribution funnels to get your
app out to millions, software is cheap.

Its always easier to copy a proven model than to

conceptualize it yourself, says Paul Murphy, VP of
Betaworks, a New York City product network. The hard
part isnt necessarily the tech, its building and validating
the product and adjusting it until you nd a t. We could
probably build an MVP of any one of these products using
public SDKs, frameworks and a rudimentary design at a
weekend hackathon. But cloning something thats been
proven is the easy part.

And truthfully, you couldnt rebuild Twitter, Instagram or

Facebook today for a billion dollars. But you could
potentially spend a few million on an exact replica that no
one will ever use.

As an aspiring entrepreneur you want to build something

remarkable, captivating and new; something with better
features, dierent features or fewer features. Thats what
the next Jack Dorsey, David Karp Kevin Systrom and Mark
Zuckerberg would do.

The way to get good ideas is to get lots of ideas and

throw the bad ones away.

Linus Pauling

Dont miss: How to design a recurring revenue model that

will attract capital

Fueled* is currently a member of audience.io, an audience

development studio founded by the author.

Image credit: bloomua/Shutterstock

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Courtney Boyd Myers

a.k.a. CBM

Courtney Boyd Myers is the founder of

, a transatlantic

company designed to help New York and London based technology

startups grow internationally. Previously, she was the Features Editor and
East Coast Editor of TNW covering New York City startups and digital
innovation. She loves magnets + reading on a Kindle. You can follow her on
,

and

Say thanks or boo to Courtney

CONTACT

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Commentsforthisthreadarenowclosed.

46Comments

BasGroot

Whatasillyarticle.Itfocussesonthesmallestcostbitofthewholestory.
Buildingthefirst0.9sketchoftheproductisamatterofdays,maybe
weeksthat'snotwhatit'sabout.It'saboutthe2.0,3.0and4.0versionsof
yourstartup.
Itcostshundredsofmillions,evenbillions,andmanyyearsofsteep
learning,tobuildsoftware,structureandinfrascalableenoughtoservethe
worldpopulationandstillfunctionproperly.That'swherealltheinvestment
moneygoes:failwhaleprevention.CompanieslikeGoogle,Amazonand
Facebookhadtoinventradicallynewfundamentalsfasttogetitright,just
daysawayfromcollapsingundertheirownsuccess.Investorshaveno
choice:onceagaindrawtheirwalletorloseall.
Theypumpinsomuchmoney,thatit'sneverevenearnedback.Investor's
solution:Thismountainofdebtisjustchoppedupandpushedthroughto
thesuckersbelieversworldwideviaanIPO,afterwhichtheycallita
profitablecompany.Inrealitytheycovertheirmoneyhemorrhageof
keepalivecostwithadbannersandcallitasustainablebusinessmodel.
Whydon'tanyoneeverwritethatstory?

Renaud

This,exactly.

JeffBrown

Nailedit.

Renaud

I'maformerFacebookinfrastructureengineer.Thissillyarticleiswhatyou
getwhenyouinterviewprimarilydesignstudios,whobyfocusingonlyon
theirpartofthejobcansomehowmanagetocomeupwiththehilarious
notionthat"AngryBirds"is45timesmoreexpensivetobuildas
Facebook."Ohyeah,therearewaymoregraphicsyouknow...":)
GoaheadandbuildTwitterlikefunctionalityin10hoursandserveitfrom
yourlaptop.Sureitwillsortalookthesameonthesurface...anditwillalso
gloriouslysupport100simultaneoususersbeforegoingdown.

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