Apple's most important innovation turns five today -- How the App Store changed business

By Phil Libin , written on July 10, 2013

From The News Desk

Over the past few years, it has become commonplace to list the ways that Apple has changed the world. The introduction of the Apple brought personal computing beyond the hardcore hobbyists. The iPod and the subsequent launch of iTunes changed the way we consume music. The iPhone changed the way we communicate, the iPad is changing the way we work.

However, there's one Apple innovation that's probably had more profound effects on many aspects of society than all the rest. Effects that transcend industries and touch basic concepts of fairness, entrepreneurship and international boundaries. It's the App Store. And it's five years old today.

There were many online directories and stores of mobile phone apps before the App Store, but Apple was the first to make the complete experience good enough, and universal enough, to quickly reach millions, and then hundreds of millions of consumers. That made the App Store ubiquitous and ubiquity led to its most defining characteristic:

Meritocracy. All you have to do to succeed in the App Store is to make something great.

This is a startling change for business. One of the most common pieces of conventional wisdom repeated for generations by world-weary advisors to idealistic entrepreneurs was, "Always remember, the best product doesn't always win." Sadly, being clichéd made this sentiment no less true. You could build a superior product and still lose to a competitor that had better marketing, distribution, sales, partnerships, logistics, or any of another dozen factors that determined success and were often more important than the quality of the product itself.

Five years ago that stopped being true for apps almost overnight. Over the next few years it started becoming less true for the many industries which have begun to rely on apps as the primary way to interact with their customers. This trend is accelerating.

It isn't that the other factors don't matter anymore. It's just that if you build a great product on the App Store, you get massive leverage on marketing, distribution, and everything else. A great app with almost no prior brand awareness and just a little bit of smart social media marketing can reach millions of people worldwide in a matter of days. A lousy app with a massive marketing budget will fizzle within hours.

What does this mean for entrepreneurs?

It means that you can spend 90 percent of your resources on your product and 10 percent on everything else. Before the App Store, it was probably 50/50.

It means that you can reach, and sell to, almost everywhere in the world. Regardless of where you live.

It means that you don't have to worry about being big. In fact, it's often easier for small teams to achieve greatness on the App Store than large, established companies. You can't buy App Store placement and it's easier to take big risks if you have less to lose.

But most importantly, it means that you can build for yourself. For maybe the first time ever, "build something you love" is a sustainable business model!

If you build something you love, unless you have spectacularly unusual tastes, chances are that there are another 50 million people in the world who'll love it as much as you do. And because of the App Store and the ecosystem that's sprung up around it, those 50 million people will hear about your app. And be able to get it. And be able to pay you for it. From anywhere in the world.

This has never been true before. The fundamental question of entrepreneurship is being transformed from, "what will people buy?" to "what can I build that'll be really great?"

Of course the App Store is not perfect. It doesn't apply to all industries (although its influence is spreading), and it's been quite disruptive to older business models.

Also, and this is where most criticism of the App Store seems to stem from, it's not particularly democratic; "With a million apps out there, how can the average developer stand out?"

The average developer can't. The average developer doesn't deserve to. Average isn't great. The App Store is meritocratic. It is pointedly not egalitarian. The App Store has made the penalty for being average harsher than ever before.

But it's also given a record number of companies the opportunity to be great. The world is unambiguously better off because the App Store is in it. Not many products can claim that on their fifth anniversary. The Apple App Store can. Happy Birthday, App Store.