In the beginning there was an app, two and a half years later the Upper Austrian startup runtastic enters the offline world. Co-founder Florian Gschwandtner explains how he wants to conquer the US market.
When runtastic was launched in October 2009, the Austrian startup scene seemed to be in a deep sleep. More than two years later, the scene is evolving and runtastic is one of their main ambassadors. With more than 150 000 daily users and 4 million app downloads the software company has been returning a profit since the Summer of 2011.
“We have a broad business model we are aiming to achieve”, explains 28 year old Gschwandtner, “We want transform the brand to the ‘offline world’, that’s a massive quantum jump”
Current income streams for the company are derived from users accessing a freemium model of the app, website membership, e-commerce and advertisements on both the website and mobile devices; however in the very near future Gschwandtner wants to launch their own line of running gear to be sold in conjunction with those that are already marketed on their website.
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With more than 10 percent of the 1.25 million registered users from the U.S, the busy entrepreneur is keen to capitalise on runtastic’s popularity, “We want to attack this huge market, but for a young company this means also a certain risk, especially financially”.
In looking to the US there are many new expected costs such as a local workforce, but also massive new incidental ones such as a marked increase in airline travel across the organisation. There are also other revenue issues Gschwandtner will need to consider, “The price level in the U.S is lower, therefore you can reach a huge amount of people, the challenge will be to find the right price structure for this market.”
Generally he recommends young entrepreneurs think big, “In the early phase we thought about Austria and Germany as our target market, but we soon noticed that we have the ability to stand toe to toe with the bigger and even more established dot coms because we have knowledge and experience from a competitive European market and this has allowed a fresh approach to their (the US) market.”
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Quality and additional value as main advantages for the US
Gschwandtner sees runtastic’s main competitors as Runkeeper and Nike+, but believes he has the advantage when it comes to quality and additional value. Live tracking of their users on facebook is one of these additional values as well as their multi-plattform availability. “You can literally watch your friends run from your own computer, you can feel free to motivate … or demotivate them as they exercise!”, says Gschwandtner wryly. In the medium term he also hopes to offer this live tracking to companies as a part of team building exercises.
For now, the focus is on spreading and empowering the brand, therefore the runtastic ambassador will attend several community meetings like the ISPO in Munich and the Mobile World Congress in Barcelona. Gschwandtner is excited by these events and sees them as opportunities, “Exhibitions like these are always a good place to think about your company, test your product and pick up some good ideas.” In the near future runtastic will launch software for cycling, mountain biking and skiing. And a hint for the next big phase for runtastic – indoor fitness applications.[[{“type”:”media”,”view_mode”:”media_preview”,”fid”:”41″,”attributes”:{“alt”:””,”class”:”media-image”,”height”:”180″,”style”:”float: right; margin-top: 5px; margin-bottom: 5px;”,”typeof”:”foaf:Image”,”width”:”180″}}]]
As one of the experienced young entrepreneurs in Austria the 28 year old has some recommendations for startups. “The golden rule is to keep it flexible.”
When he launched the company together with Rene Giretzlehner and Alfred Luger they wanted to use their own technology solutions to track movements. “Within six months it became apparent that the bureaucratic hurdles for that would have hindered more than helped.”, said Gschwandtner. So instead they changed their business model to accommodate mobile devices. Beside the ability to be flexible other secrets to success include a good network, keeping goal orientated and making a fast market entry. A crucial point is certainly also the business model. “You can build the most beautiful startups in the world, but if you don’t know how to earn money it will fail”, says Gschwandtner. Obviously he understood what matters. After starting bootstrapped the company now has 25 employees and is mentored by four strategic business partners. “But they got only small shares”, says Gschwandtner proudly.
