Reed: I teach a lot about business models in the AppsWithoutCode boot camp and there are a couple that I consider to be danger zones. Some of the danger zones are building low-priced apps or only taking transaction fees (like Uber or AirBnB). These business models have small profit margins so you need a large volume of transactions in order for the business to work.
With Kollecto, I got caught up in the hype of the Uber and AirBnb business models and saw the cool 99 cent apps in the app store. And we were generating revenue but we were not exceptionally profitable. One of the things I would have done differently was building a business model that could be really successful even when it was small. When you build something that’s not profitable from day one, you have to look for other alternatives to raise capital. More often, for startups, that leads to going after investors. I’ve taken a different approach with Apps Without Code. When we need money for something, we use our own profit to fund the business.
And because we don’t have external investors or venture capital, we have a lot of flexibility. I get to share the profit with my employees. We're building a different business from my first company and it’s centered around profitability and self-sustainability.
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