In the summer of 2008, Bertrand Schmitt accepted an offer to join a Boston-based web application monitoring company called Gomez.
But only under one condition: if he was allowed to relocate to Beijing.
Schmitt, originally from France, had already lived in the US and wanted to get a chance to live in Asia.
But more important, he wanted to learn from Gomez’s unique business model, where most of the developers were based in China, while the business side remained in the US.
“It was a very efficient business model — for me, Gomez was a great place to learn how to do that,” Schmitt told Business Insider.
About two years later, Compuware acquired Gomez for $US295 million.
That’s when Schmitt decided to leave the company and launch a startup called App Annie, an analytics software that monitors application usage across all kinds of metrics.
App Annie’s service immediately hit the sweet spot for many app developers. Its can track things as basic as the number of downloads and users, and as complex as user behaviour and how it impacts revenue growth. It also shows how competitors perform in certain areas and what trends are emerging in different categories. It ultimately turned into a kind of de facto business analysis software for mobile apps.
“We initially called ourselves ‘App Nanny’ because we wanted to take care of all the apps [with data],” Schmitt said. “But we decided that it might not be taken too seriously, so we settled for App Annie instead.”
Although App Annie was based in Beijing for the first 4 years, it was able to add tens of thousands of users within the first six months of launch, and soon, started seeing people from all over the world sign up for its service. Now, it claims to have over 400,000 app developers from 60 countries using its service, including 94% of the Top 100 app publishers.
More than half of its business comes from the US, which is why it moved its headquarters to San Francisco last year. So far, App Annie has raised $US94 million in total from big name VC firms like Sequoia Capital, Institutional Venture Partners, and IDG Capital Partners.
But Schmitt says a big part of App Annie’s success is a result of taking a page out of Gomez’s playbook: keeping an engineering base in China, while still targeting a global audience.
App Annie still has over 100 engineers in China (out of its total 350 employees across 12 global offices), and continues to have a strong presence in the region. By doing so, Schmitt says he’s able to find engineers who are almost as talented as the ones in Silicon Valley at a fraction of the cost, saving him roughly 30% in salaries.
“I don’t think it’s reasonable to start as a small company with limited resources, especially in B2B, and pay high, expensive salaries to engineers,” Schmitt said. “I think this is something [other startups] should consider too.”
But Schmitt also admits actually finding talented engineers is the biggest challenge — whether you’re in the US or China. “It’s very difficult to find good engineers anywhere in the world,” he said. “But at the end of the day, you can do much more with a million dollars than you can do in the US.”