This past spring, the team at Path realized it was time for a change. The San Francisco-based startup had debuted its flagship photo sharing app (accompanied with a serious amount of media buzz and some mixed reviews) in November 2010, and had spent the first several months post-launch working to perfect the original product.

“Six months ago we stopped. We just said, ‘Okay, what are people really using Path to do?’” Path co-founder and CEO Dave Morin said in an interview this week. The company surveyed Path users and found that many were using the app to remember moments in their daily lives — it wasn’t just about sharing photos, it was about cataloging personal memories for themselves. “Ultimately we realized that we had to completely re-imagine Path.”

Path 2, the new version of Path that is launching Tuesday for both iPhone and Android, is what’s emerged from that redesign effort. But to think of this as the 2.0 version of Path would be a big mistake: Path 2 is a dramatically different product than the app the company launched one year ago.

A diary for a mobile and social world
Path 2 aims to be a “smart journal” that catalogs all the big and small moments of your daily life. Along with your photos and videos, the new app has features that let you keep track of your thoughts, the music you’re listening to, where you are, who you’re with, and even when you wake and when you sleep. You can choose to keep each update entirely to yourself, share it with your Path contacts (limited to 150 based on Dunbar’s number), or share it publicly via Facebook, Twitter, or Foursquare (Tumblr support is on the way.)

Path 2 screenshot (click to enlarge)

Morin took me through an in-depth demo of Path 2, and for me it had the perfect combination that I look for in the increasingly crowded world of mobile apps: It was both beautiful and actually useful. Lots of people — myself included — maintain personal blogs or use social media sites partly for the same reason that they would maintain a diary: To personally remember what they’ve done. Every New Years’, I vow that I will be better about tracking the little things that make up my days by keeping a journal, but I typically start slacking off on it a couple months in. With Path 2, it could be a lot easier to keep my resolution: It’s on my mobile phone which makes it easy, and the social options make it more fun.

More complexity, more competition
With this redesign, Path is going more squarely into competition with services such as Evernote and even Facebook, the platform on which it was conceived as a much simpler photo-sharing app one year ago. When asked about this, Morin stressed that Path is different from Facebook on several counts: “We’re private by default and always will be, while Facebook is often public by defualt. We’re a tech company, Facebook is a media company. We’re a freemium business, and Facebook is advertising driven.” He was more accepting of an Evernote comparison, but pointed out that many people use Evernote primarily to keep track of their business lives. “What Evernote does for work, we do for life.”

Path 2 music post (click to enlarge)

This move also brings up questions for Path that weren’t there when it was a simple photo sharing app. When you position your service to be something as personal as a diary, users have the right to be a bit more demanding than they would with a more standard social app. For example: Path 2 still does not have a one-button export feature for all your content, although Morin says this is on the way. Right now, the only way to get all your data from the system is by sending an email request to customer service.

Also, the ability to view and analyze your Path data from other perspectives — say by zooming out to see an annual timeline, or a month view — is not yet available. These types of features could be made possible if Path releases an API, which Morin says is a definite possibility for the future.

But will it have staying power?
The question of money is an important one here. Many web startups don’t start thinking seriously about revenue in the first couple years of business, but if you’re going to use an app as your personal journal, you want to have confidence that it will stay around for a while. Evernote, for example, is a profitable business: The company charges $45 per year for its premium app and the company’s CEO Phil Libin has been forthright about his mission to make Evernote a going concern for the next 100 years.

Path, which has 20 employees, is not at a point where it can cover its own costs. Path 2 is a totally free app and Morin says he has no plans to start running ads. The business model is a “freemium” one, but for now the only premium products Path sells are small: Additional photo filter options and the like. Path has other premium offerings in the pipeline, Morin tells me, and the good news is the company won’t have to worry about keeping the lights on for a while: It has taken on some $11 million in funding since its inception.

All in all, Path 2 is a great looking app and it stands a chance to become a big hit in the months ahead. But if it wants people to really be serious about committing to the new app, Path could do well to outline its financial plans a bit more firmly for prospective users.

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On my last visit to New York, I stopped at apparel maker Bruno Cucinelli’s store in the West Village. In a city of opulent, luxury-brand outlets, this tiny outpost was perhaps one of the most ideal and idyllic shopping experiences. I go there again and again. There is little or no clutter, a limited set of apparel options and more importantly, everything is laid out for maximum impact.

You enter the store, walk down an aisle looking at the clothes hanging on your right (men’s wear), reach the end of the store, turn around, check out the middle aisle, and take in what’s on display. The whole process takes a few minutes. Once you’re done with the walk-through, you zero in on one or more items on display, and engage with the sales person. If nothing catches your fancy, you move on.

It doesn’t take much time, and more importantly, it involves fewer decisions on my part, making shopping less of a chore.

That Cucinelli store is a great metaphor for what I think is a good mobile app experience. Why? Because the store had little or no friction when it comes to the shopping process. Similarly, in order to be successful and stand out among the growing number of mobile apps demanding our attention, the mobile apps have to have little friction.

There are few ways an app can work toward a better experience. It all starts with overcoming three major constraints with today’s mobile and smartphone experience:

Network speeds, despite all the talk from carriers are limited and thus not conducive to heavy download activity.
Limited screen real estate, which puts premium on every pixel.
Finite number of mobile gestures (that don’t involve using the keyboard.)

Faster Is Better
The same demand that makes smartphones an exciting opportunity also turns into a liability. It doesn’t matter what device you use; even the best of 3G networks has bandwidth challenges. And while at some point in the future, the faster wireless broadband technologies are going to solve the problems, today as an app developer, you have to keep the challenges of network speeds in mind.

What you have to do is build apps that are fast. By that, I mean not only does the app load fast, but also has a lightweight experience. It’s optimized less around cool features and more around the speed with which you can use an app’s core value proposition.

Kevin Systrom, co-founder of Instagram, recently told me one of the crucial product decisions his start-up made was optimizing around speed. Knowing upload speeds on wireless networks were bad, they decided to limit photo size to small enough for a quick upload, yet looked gorgeous on the smartphone screen. The speed, he contended, would make for happier customers, who in turn would use the app more. And they were right.

Other app companies are finding out that faster execution is key to higher engagement. Foursquare Co-founder Dennis Crowley, speaking at a recent event, said the company was building a lighter version of the app for faster check-ins and to reduce the check-in time from 20 seconds to five seconds.

The easier and faster it is to check-in, the more likely one is to use Foursquare. This isn’t a radically new notion; Google has used the speed with which it can serve up search results as a lure for getting people to use its search more often. Since the search results show up blazingly fast, one is likely to search again, even if the first try doesn’t yield results.

Size Matters
A couple of months back, I wrote about what makes a hit (consumer) Internet service. Of the three reasons I listed, “clear purpose” and “simple to use” were ones that make perfect sense for mobile apps, given the limitations of screen size and touch-screen gestures. A good example of an app with clear purpose and simplicity? Instapaper: the save-and-read-later app.

That simplicity and clear purpose begins from the very second someone opens the app after downloading. Signing up for your app/service should be done within seconds, not minutes. One of the reasons why I loved Beluga was that it probably had one of the simplest sign-up processes. Not many questions asked — enter an email, get a username and password, and you’re ready to go.

Better yet, use Facebook Connect, which removes any friction that there is in terms of sign-ups. There is a big risk of you being logged out of all these apps if your account gets hacked, like mine was a couple of months ago. But app developers are embracing the Facebook Connect, and are well aware of such risks.

Daniel Raffel, co-founder of a yet-to-be-named stealth mode company, described Facebook Connect as the “K-Y Jelly of the mobile web.” By now, most, if not all, people have Facebook accounts, so by entering their username and password, the hassle of signing up a service and remembering another password is also eliminated.

This is crucial. Too much typing on a smartphone can be arduous and time-consuming, no matter how deft you are. The less time spent between download and using the service, the faster customers can start to experience your offering. Remember, there are no second chances in today’s app-infested world.

A few days back, I wrote about why apps (and other products) have to start building the idea of “happiness” into their offerings. Speed, simple and easy sign-ups, and single focus on core values only add to that “happiness.” Those three qualities are the reason why I keep going back to that Cucinelli store. On my last trip, I almost bought a cardigan — but they didn’t have it in my size.