Sub Club

David Barnard, Jacob Eiting

Interviews with the experts behind the biggest apps in the App Store. Hosts David Barnard and Jacob Eiting dive deep to unlock insights, strategies, and stories that you can use to carve out your slice of the 'trillion-dollar App Store opportunity'.

Jacob Eiting and David Barnard - Introducing the Sub Club Podcast
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Our guest today is Ron Schneidermann, CEO at AllTrails, the ultimate guide for outdoor adventures. AllTrails was early to the consumer subscription space, launching a $3/month premium tier way back in 2012. Ron joined as CMO and COO in 2015, and then took over as CEO in 2019, helping to grow AllTrails to over 1 million subscribers and tens of millions of active users worldwide.On the podcast, we talk with Ron about the magic of consumer subscriptions, experimenting with freemium strategies, and how private equity isn’t always as bad as you’ve been led to believe.In this episode, you’ll learn: How to refine and optimize your freemium strategy Two things you need to keep an eye on as a founder The pros & cons of outside funding vs. organic growth How Ron fast-tracked AllTrails’ profitability Links & Resources Accenture Hotwire Yelp Liftopia Alex Honnold Spectrum Equity Ron Schneidermann’s Links Ron Schneidermann’s LinkedIn page AllTrails Celebrates 1 Million Paid Subscribers! (January press release) AllTrails’ website AllTrails is hiring Follow AllTrails on Twitter Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Our guest today is Ron Schneidermann, CEO at AllTrails, the ultimate guide for outdoor adventures, AllTrails was early to the consumer subscription space, launching a $3 per month premium tier, way back in 2012. Ron joined as CMO and COO in 2015, and then took over as CEO in 2019, helping to grow AllTrails to over 1 million subscribers and tens of millions of active users world.On the podcast, we talk with Ron about the magic of consumer subscriptions, experimenting with freemium strategies, and how private equity isn’t always as bad as you’ve been led to believe.Hey, Ron! Welcome to the podcast. 00:00:59 Ron:Thanks for having me.00:01:00 David:Yeah. Really looking forward to the chat today. I wanted to kick it off, and most people know what AllTrails is, and it’s a fantastic brand. It kind of tells you what it is right there on the tin. What’s your pitch? We’re in 2021, post pandemic.Give us the short version of what AllTrails is. What does it mean? 00:01:21 Ron:Yeah. So AllTrails is a free app and website that helps you find trails all over the globe, so you can spend more time enjoying the outdoors, and spending time in nature.00:01:34 David:That’s awesome.00:01:35 Jacob:That’s a very nice mission. That’s way more beautiful than helping developers make more money. Both are important, but I can smell that. It smells, “piney” and I like it.00:01:46 David:Yeah, it smells like the Colorado forest. I haven’t been hiking forever, and doing all the research to chat with you today was like, oh man, I need to go hiking more.00:01:55 Ron:I heard there’s a great app for that.00:01:57 David:I heard that.So, I did want to also ask about your journey to AllTrails. You got there fairly early, and then grew in, and you’re now CEO. Tell me, off the bat, what led you to AllTrails way back in 2015 when it was just six people?00:02:20 Ron:Yeah. To answer that I’m going to go a little bit further back in time. My first job right after college was at Accenture, at a global management consulting firm. It was great. A good jumping off point, and I learned a ton. I didn’t know anything going into that job. You know, you get the rubber stamp and it opens doors.By the end of my third year there, I kind of had a realization. Epifany is a little too strong a word, but I just kind kinda realized I can’t take a job just for money again. The amount of time and energy that I was putting into it, and the lack of work-life balance, it really made me rethink who I want to be. Who does working Ron want to be?So, I was able to parlay that Accenture job into a biz dev role over at Hotwire, an online travel company. That was really where it opened my eyes. Like, I am so much happier, and I am honestly so much better when I’m working at something that I’m just personally passionate about.That guiding principle has really held through throughout my career trajectory. From Hotwire, I want to do my own startup in the ski space. I love to ski. So, I did that for nine years. It was a ton of fun. Then I was over at Yelp, doing growth for a bit. I love finding non-chain restaurants, and supporting mom and pop businesses, and stuff. I live in Yelp, so that was great.Then, when the opportunity for AllTrails presented itself, it was just kind of a no-brainer. Of course I’m going to take this.I’ll say this to you, one little addendum, one of the things I learned along the way, too. I am not a zero to one guy. That is not when I am at my best. It just causes me stress and anxiety, and just, figuring out how to keep the lights on for another day.So, again, knowing kind of that sense of self knowing. Like, alright, I’m best at B to C. I’m at my best when I’m using products I personally want to use and like talking about. I like hypergrowth, and I think that’s probably my sweet spot.So, it starts to all align when AllTrials showed up.00:04:34 David:Yeah. And then how did that go from? You joined the company as COO, right? And then, what was the progression inside the company to eventually taking over as CEO?00:04:45 Ron:Yeah. So if you want to demo and COO, I dunno why I really wanted to have both, like, I didn’t want to just be CMO in a vacuum, but not have any ownership or agency over kind of team composition and strategy and stuff. So I thought that it was really. Really important. And when you’re a six person company, it’s pretty easy to grab titles.It’s not like how to take it from anyone.00:05:08 Jacob:I was going to ask, like, I mean, it’s, it’s not like you see this a lot where it’s like a six person company and they had like five C-levels and you’re like, okay. Yeah, sure. Like, like my title, for example. But like, I’m kind of curious, like, you know, you like your background, you founded a company, like you were like a real CX whatever.Right? Like it’s not like it was fake. So how did, how did that, how did you go as like an executive, like choosing your next thing? That’d be a hell of a pitch to get you to like join a tiny little like, team like that.00:05:36 Ron:You know, I think I, I spent a lot of time thinking through again. I don’t know, I, to be perfectly honest, I was, I was a little bit bored at the end of my tenure at Yelp. I love Yelp. It’s a great company, but it was just, it was too big for me. And so I spent a lot of time thinking through what’s next again?That whole question, like zero to one. Do I need, do I need to start something myself or what? So the smallness didn’t bother me. I actually really liked the smallness cause it was almost like, it was almost like a cheat code. Like I got to do a startup, like basically from scratch, but I didn’t have to do it from scratch.And then.00:06:09 Jacob:They had, they had a kernel of something at00:06:11 Ron:They did, they did. And you know, it was actually to, to give my predecessor credit. It was, it was actually more than that. Like they had, they had solid product market fit from a monetization perspective. And then what really got me across the line with their product channel. And I feel like that’s often overlooked and that’s something you kind of pick up in time.Like it’s not just like, is this a product people are willing to pay money for, but just straight up, how are you going to get this out to market? And can you, can you do it in a way that is, you know, viable and scalable and, and ultimately, you know, going to be, be more efficient than, you know, it’s kind of like net out, right?Like the whole LTV to CAC thing and everything that00:06:49 Jacob:Yeah. It’s, it’s something more efficient than paying for every single install. Right.00:06:53 Ron:Exactly. And so. You know, I, it felt like there was good bones, you know, maybe it was like a fixer upper kind of house. but it had good bones, like it had, it had the foundation in place. And I could see, you know, back in 2015, the product sucked, it sucked. and, and what was shocking after I came was how bad the data was.I didn’t realize that when I was kind of doing my own diligence, but it was00:07:20 Jacob:You mean like analytics on the internally, what the company knew about itself or you mean like the, the, the trail00:07:25 Ron:The trail data, like the trail data that we were showing, you know, and that’s that’s subs high consequence. and so that was like a hard pivot, within a couple months, like, all right, this is, you know, all hands on deck thing.We’re not doing anything else until we figure this out. but again, it just, it felt like there was a diamond in the rough, in this one. You know, I’ve been here six years now and I can say like, unequivocally, this is the highlight of my career. Maybe I just got lucky. I don’t know. But, man, like, yeah, this has been a really, really great run so far.00:07:59 Jacob:I was just going to ask about the, that channel and monetization fit. I mean, I guess this was maybe I’m jumping ahead in our agenda here, but, but yeah, they were already charging a subscription before you got there. Right. And in terms of like monetization, maybe like describe that model a little bit and, and how that has changed.00:08:20 Ron:Yeah, I had never done this subscription business before coming here. So this was my first subscription business. And I’ll tell you, you guys already know this. I’m sure your listeners already know this too. subscription businesses are magical. Oh my goodness. Compared to like e-commerce or you’re trying to re when, you know, the transaction every single00:08:40 Jacob:I know I was looking at Hotwire just now, when you mentioned it. And I was just thinking about like, how many of those there were at that era, right? Like, and still are like, when you had to book a hotel on Google and they’re like, oh, here’s 15 different sites. You can actually like book it through it’s like Wolf,00:08:53 Ron:Oh, so tough. Same with Liftopia. Liftopia the ski startup. There was the same thing. Right. you know, but, but with a much smaller niche and segment, and then, and then Yelp is, you know, they’re, they’re kind of the media model and then trying to, you know, kind of pivot more towards like B2B and subscriptions for businesses and value added services and stuff.And coming here doing a consumer subscription business, an annual subscription, the auto renew. It’s like an annuity, like it just builds up every single year. Like obviously, like you can’t take retention for granted and I’m sure we’ll talk about that, but you know, just, if you’re able to kinda, you know, do a, do a pretty good job on the retention side and you see this thing build up And just.Raise the tide every single year that I’ve been here and have it just, is that much more momentum that just gets like brought into each new fiscal year for us. It’s just, it’s incredible. It is incredible. the leverage that it offers. So that was cool. That was definitely a, 00:09:51 Jacob:One of those good bones.00:09:54 David:Yeah. And that’s what I was going to ask you say the bones were good. Yeah, AllTrails had launched their subscription in 2012. So about three years before you joined, what was the state of that? And that’s really early in the kind of consumer subscription software space. Was there a lot of push back was like, how was traction, chargebacks and things like that was the bones were there, but were there some serious doubts or questions in your mind as to how this subscription app space was going to play out? 00:10:28 Ron:Yeah, I mean, so can I share a secret with you guys? I honestly didn’t know that our subscription business loss in 2012, until you guys showed me the research that you did leading up to this, I had always thought that, it launched with our ass. We launched our apps in, I think early 2015, I joined in September, 2018.And I just lumped everything together just in that, you know,00:10:53 Jacob:Yeah. It’s yeah,00:10:54 Ron:Yeah. So I, I, I had always thought that it, that we had launched it when our apps launched, but I guess we were on the cutting edge, the bleeding edge, the subscription space here.00:11:05 Jacob:So, so, but that, then I’m, then I’m correct to assume that, you know, if you launched a description 2012 was on the web, if you didn’t have apps until 20, 20, 15. Right. Right. Which, I mean, my, my experience, I guess I’ve been on old trails website, but like my vast majority of experience has been on the web.Right. Because I’m like, or sorry on the, on the phone because I’m going for a hike and I’m like, I need a map and like, boom, there’s AllTrails. Right. Which I guess is that channel fit. You’re talking about.00:11:27 Ron:Yeah. And that’s been, that’s been one of the cool things when I started. So a couple, a couple, I guess, data points, just to show like, sort of that, that snapshot in time of 2015, we probably had 20,000. subscribers at that point, maybe a million cumulative registered users since 2010, when we first launched and maybe 20,000 active paying subs.And in January of this year, we put out a press release. We don’t normally do that, but it was two pretty cool milestones. We had cracked 25 million registered users and a million paying subs at the start of this. So, you know, again, like the, the, the unlock has been really cool and very, very powerful. but the other thing, like you said, like this was, you know, a web driven subscription business.At first, when I, when I first started here. probably 70% of our, of our web traffic was desktop desktop to mobile 70 30. And obviously that’s inverted, since then, and then Mo the, the, the mobile apps, the native apps are by far the best form factor for what we’re trying to do. Like you said, Jake would like take it with you on the go, the navigation, the GPS stuff, everything baked in there.And so that’s become really the workhorses of, of subscription business and, and of our overall, UDC flat.00:12:42 Jacob:Yeah. I mean, it’s so helpful. you guys have good SEO when you search a trail, it comes up on AllTrails. Right. But that’s, I would imagine like this stage probably mostly like demand gen for the app,00:12:53 Ron:That’s exactly it. No, that’s exactly it. Right. So our se our legacy SEO, this is what, again, one of the beauties of being around for 11 years and counting, we have this amazing legacy SEO and that’s, that was that product channel fit that brought me here was the sales pitch was he just showed me Google analytics.And he just like, look, look at all of this for your00:13:12 Jacob:Just like a hyper-local very valuable data, right. Index. And if you’re, if you’re the winner, that’s a great real estate to00:13:20 Ron:I know. And, and so what we’ve been doing obviously as, sort of consumer behavior has changed and gone mobile first is, we’re able to parlay all of that mobile first SEO traffic it’s, incremental organic app installs, and that’s a huge driver. Of our business. We get millions and millions of incremental app installs that we don’t pay a dime for every mom’s.00:13:42 Jacob:Yeah. And going back to your point, like yeah. Not having to push. Up the hill completely is a bit, you know, you think about a Compounding annuity analogy as you made, right? Like the cost of that compounding really, you know, if you net out the whole asset, right? Like that’s going to be a big part of it is like, how much does it cost to push that that, that, that flywheel up a little bit. 00:14:02 Ron:It’s a moat for business too, you know, you’re around long enough and you’re doing something good. You’re going to see a ton of competitors start flooding into the space, which is great as validation of what we’re doing, but the product market fit product channel fit conundrum is, is real.It’s real. And you know, I see really great products, you know, beautifully designed products that just crank can’t crack the code on either of those. And then they kind of, you know, whether on the line, right? Like see it all the time.00:14:31 David:No, that was actually my next question is that in those early days, and you already said when you joined and when y’all launched the apps in 2015, they were crap. So take me, how did you go from this crap up and what experimentation, what pain, what suffering did 00:14:53 Jacob:There’s some, there’s some old, there’s some like a old guard at, at all trials that are going to listen to this and be like, crap. They were great.00:15:00 David:But what did it take and what was the approach to, to find you, you had some level of product market fit, but then to actually build a great product around those early signs. 00:15:12 Ron:There, there are a couple of philosophical things that we decided immediately. One was around funding. Do we want to go take funding, and try and do this faster? Do we want to do this kind of organically? And my predecessor had done a small seed round. I think he raised 3 million bucks in 2012.And we were still kind of drafting off of that. And then there was a little bit of subscription revenue and then a whole bunch of just, you know, classic entrepreneur head on the swivel stuff. Like let’s throw a bunch of shit up on the wall. Like, let’s see what we can do. So there’s, you know, a media play and programmatic ads.Whatever, right. Just trying to buy time more than anything. Right? Like keep the servers running for a little bit longer. But we decided we very intentionally decided not to take funding. We wanted to control our own destiny. And part of it to be clear, part of it was the handshake agreement with the original founder, was to grow it and sell it.He wanted us to, to, to sell it. And so, so then if that was kind of the. The Mandy. And I was like, well, why would we even just, you know, deal with the, the opportunity cost and the headache of going out and trying to raise funds, as a pain in the ass. So, you know, it was like, let’s just, let’s put our heads00:16:22 Jacob:Especially, especially for our consumer subscription company in 2015, like00:16:27 Ron:Right? Yeah.00:16:28 Jacob:Ben kind of been party to that. It’s not, it wasn’t easy. Let’s put it that way.00:16:32 Ron:Tried doing it in 2005, by the way I was with Liftopia was insane anyways. but so we decided to put our heads down and just say super scrappy, super scrappy, super lean. And so, it just came down to like relentless prioritization and essentially what we ended up doing was triaging sort of a different funnel metric each quarter.Right. So one quarter is. We’ve got to tackle bounce rate. All right. Now we’ve got to tackle signup rate and now we’ve got to tackle pro conversion rate. And now we’ve got to talk over attention and we just kind of spent cycles, through 2016 and through 2017, just each, each quarter, just like laser focus in on that one metric and do what we can and then move.And it worked because by the end of 2017, we actually achieved profitability. Which was cool, which was really, really great. You know, like we wanted again, when you’ve been around the block long enough, you talked to enough entrepreneurs, you’ve seen, you’ve seen enough. there’s so many examples of people going and getting too much funding too soon, and then they develop bad habits, right?Yeah. Let’s get a little hot in here. Is it.00:17:36 Jacob:I never heard of that.00:17:39 Ron:So, you know, but so you see it right? Like that you, you get the, unsustainable growth channels, again, the product channel fit question, like how are you actually going to bring this to market? And how are you going to do it when that VC money dries up? Like, is this actually00:17:50 Jacob:Five X that VC money, right.00:17:52 Ron:Right? Is this sustainable?Or you’re just connecting yourself to the next round of00:17:56 Jacob:You can put yourself in a, in a dead man’s corner, right. Where you’re not your, market’s not big enough, whatever you end up killing and otherwise like really great business,00:18:05 Ron:Totally. And I, you know, I’d seen that, I’d seen that. I really didn’t want to do that here. It felt like because so much of our growth was coming through SEO. It felt like obviously there’s an opportunity, which we later unlocked on the ASO side of things. It felt like even beyond both of those though, it’s just like word of mouth and PR and viral loops and network effects.00:18:27 Jacob:Product market fit as a broad thing, right? Like growth kind of have you have a really good product and it serves a niche, like grit just starts to start to go.00:18:36 Ron:And especially organic growth, right? Like, and that was really the big key as like, do we need to be like one of these DTC companies and just raise millions of dollars for Instagram ads? Or can we, can we do something that’s more sustainable for the long haul? And that was, that was one of the bats.The other big bet that we placed was, from a brand positioning perspective. You know, when I came in the app was definitely geared towards like the through hikers and search and rescue and, and the hardcore, like, you know, back country folks. And the challenge with, with, with that segment is that there’s always these, you know, really esoteric and extreme product requirements that they want because they’re they’re edge cases.They’re by definition, all edge cases. And in this space in particular, a lot of them. Kind of living the, you know, the van life, life, you know, trying to live as frugally as possible. and so they don’t want to really pay you any money either. It’s like this isn’t a good growth segment. We got, we gotta rethink this one.And so, I’ve told this story a lot, you know, this strong man to this day still is, is my wife where like she likes going outside with me. You know, she’s always down to go on a high. you know, spend time outside. We have three kids, totally trying to raise them on the trail. we have a dog who loves being on the trail and, but, but if I’m not there, you know, she’s, she’s not going out there.Right. So it’s like, okay, okay. Maybe here’s the play. Like what, what if we use technology? Kind of tear down the barriers for entry, like instill confidence, whether through like product functionality or content, but really make it so that someone like my wife and the hundreds of millions of people around the globe, like her who, who know that they feel better when they time spend in nature.They’re just a little scared to do it. Like, can we help augment that? Can we help supplement that? And I think that’s going to be the unlock. And that was the big bet. That was the other big bet that we placed in 2015. And you know, 00:20:30 Jacob:And just to summarize that, I understand it’s like to kind of not ignore these like extreme users that are on the edge on the edges, you know, serve them, but maybe not in the way that they would want, but like let’s focus on, you know, this larger segment. I mean, I think that’s the thing, even some good founder advice is good for founders.Sometimes doesn’t always apply. Like B to C stuff sometimes where it’s like, yeah, like, listen to your most vocal users often. There’s something there, but like with an ounce of like moderation, because yeah. They can lead you in really strange places. And think about the network. Think about the like user.Maybe you’re not talking to her, her the next year saying next a hundred million users that you have to get. and that’s potentially a much bigger surface area. And that doesn’t mean you’re going to abandon those court users. Like they might grumble a little bit and they might not be totally served by your use case.And like, that’s maybe just life. but, but you know, you’ve now potentially, like if you think about the, you know, the mission of just getting people outdoors, like you’ve achieved that much better by going for this much larger market segment. Right.00:21:31 Ron:Yeah, and they’re not mutually exclusive. It’s just which one are we prioritizing? Which one are we preferencing? And how are we, you know, what kind of language are we? Are we using lingo or not? Right. Are we making this accessible for everybody or not for imagery? Right. Are we doing like, you know, Alex, Honnold like dangling one handed off of a cliff,00:21:51 Jacob:Or just, or just a picture of the N the end cap at an REI, Right. Like,00:21:56 Ron:Yeah. Yeah. Or, or just like, you know, a family like smiling and having fun out in nature together, you know, like, all right. It doesn’t cater to the core, but they’re not necessarily going to like walk away because they see that stuff either. 00:22:07 Jacob:Right. I mean, and that comes to. Channel fit As well, right? Like not your products fit and your products oriented for, and that like B to C you kind of, you can’t divorce the two, like you can’t have totally independent marketing and channel channels for the product itself, which maybe you could get away with a little bit in B2B.But, but, but they, but they don’t necessarily have to be like completely like linked, you know, you can kind of serve both niches on the, on the product side to your point.00:22:34 David:And speaking of getting more folks out in the mission of AllTrails. I’d love to hear about your freemium strategy, because that’s a huge part of it. Like what early on, what was your approach? And then how did that evolve over time? As far as what features you do give away for free to kind of reach the broadest audience possible, and then what things you pay wall to actually get paid? 00:22:57 Jacob:And, and, and I’d like to highlight how Ron, when we asked you to describe AllTrails, you put free in the name, which I’m sure was very intentional. Right? You said it is a free app, right? It is not a premium app. I mean, it is a premium app, but the highlight the free. So00:23:09 Ron:Yeah,00:23:10 Jacob:That framing, what, what, tell us about your free app.00:23:13 Ron:There’s, this is a, this is, an ongoing. Like not debate, but, it’s an open question always. And we’re constantly like asking our employees and our board, like let’s challenge our assumptions here just because we did something a certain way last year. Doesn’t mean we need to do it this way.Like let’s constantly reevaluate this, for us, there’s sort of three main buckets we have. Free on authenticated users and then we have free registered users. So kind of that registration wall is like the first key funnel, metric. And then there’s, pro subscribers, right? So we have two, two kind of core, success metrics.One is registration rate and one is pro conversion rate. And then what goes in front and behind the paywall and the red wall, the registration wall. Constantly influx constantly. And plus we actually just did this really fun workshop a couple of weeks ago, internally here. It was like the history of AllTrailss pro and just showing kind of which features started when I, you know, again in 2015, like what was the pro feature set?How much of those? We actually ended up pulling in front of the red wall and new features that we put back behind the paywall. So I feel like we’re constantly in a state of experimentation here. we’ve been, we’ve been experimenting with that since day one. We’ve been experimenting with pricing also on day one.And there’s still, I don’t feel like we’ve cracked the code at all at all. When I, when I first started here, I’ll chose pro was 50 bucks a year and I spent the first, like two months just trying to get as, as much like, obviously all the quant data that I could get my hands on, but as much qualitative data as I could get to.So reading every app store review, every Reddit thread, every blog post. Talking to customers, all of it. And aside from everyone telling us that our data socked and, you know, we can, we got them lost. So we got them tickets from the park ranger for telling them to bring a dog when it’s not that currently, whatever it was.The other piece of feedback that we got was like 50 bucks, like it’s way too much. And so we immediately started testing pricing and, and, and we tested it at 30 bucks a year and we tested that 15 bucks a year to kinda all right. If we really just take that price down is, the in incremental, purchase rate, gonna offset, you know, the, the change in that revenue per transaction.They were about to wash it, which was really interesting from a net revenue perspective, 15 bucks a year versus 30 bucks a year was, was basically flat. But we went with 30 because it gave us more maneuverability. We could do more. for the folks who were like price sensitive, do do discounting, intro offers, whatever.At 15, we really couldn’t go any low, lower. So it’s just like, this is it for everybody all the time. but even that we’re revisiting now and thinking through like, all right, maybe are there other different tiers? We’ve never done monthly before. So what is, what is a world in which there’s a monthly price?I don’t, I don’t love it. I mean, again, annual is magic. Like why mess with a good thing, but there is a cohort of users, especially outside of the U S where that’s a pretty high00:26:16 Jacob:Oh, I mean, I live in the Midwest. Like I would, I only need your app from, from April to November. Right. Like I really don’t need to pay all year.00:26:24 Ron:For the two weeks in00:26:25 Jacob:Yeah. I, but I mean, I think there’s the counter argument there of the simplicity. It’s like, yeah, sure. But. Whatever your value is. So your, your, your, this is the price.I really, I I’ve seen that effect before on the price experimentation, you just end up with the same area under the curve. Like, no matter how you move it, and some apps are like that, some apps are not. but I do think it’s really fascinating, the wisdom of crowds, right. And just how, like, they know like the, the, the, the masses have priced and valued your products.And then just like showing that like, it’s very efficient, right. No matter where it goes, then you can come down to like, It’s almost a good place to be. Cause then yeah, you have that like opera, you can choose where you want it to price. You can basically, you’re freed from the like fiduciary duty of like maximum extraction.And you can like, like, just focus on like, okay, what’s gonna what’s right. For us for some of those goals on company growth and stuff like that. If it was right for the mission. And then like also give yourself some like tactical opportunities in terms of discounting and other stuff like this, and then positioning as well.Like what is it? I think that’s almost as important. It’s like, how do you use. How do you see all trials? Like how do you see it as like, what’s the value of perception? Like a $30 skew and a 50 and a 15, those are very different. Right. And those are, you know, I think about consumer goods on those scales.That’s like each one of those things has like a different, like, feel to it.00:27:43 Ron:Totally. And, and then on top of it, though, our business is driven by UGC, right? We have this classic UGC flywheel. And so obviously we know our pro users are more engaged, but a ton of engagement comes from our free users as well. And so you can’t kind of, turn the squeeze on them too hard without like really fundamentally damaging the business.00:28:05 Jacob:What kind of user generated content? Is it like pictures and updated and stuff or what? What’s00:28:10 Ron:Yeah, ratings, reviews, photos, recordings, you know, and then there’s this also this virtuous cycle that we have, this beautiful relationship we have with our users, where they, they help us create as well as Curie our trail Content. So that’s the thing with trail content, just to go down this rabbit hole for a second, Joe Content, super fluid, like it’s not like streets that are, that are relatively static.You know, a trail is you get, you get flooding, you get fires, you get maintenance, you get development, down trees, whatever. Like they’re constantly in a state of flux. And it’s really, really hard to stay on top of it. We can’t do it alone. And so we00:28:49 Jacob:And there’s no, it’s not like, it’s not like roads where there’s like a national database, right. Of like uniform data00:28:55 Ron:Yeah, no, not at all. Right. so we, we do. We have this like really beautiful symbiotic relationship with our, with our users, you know, and, and it’s kind of like, we both get value from each other and we’re both very transparent about like the relationship, like you guys help us and you help the community.Right. And we’ll package it. We’ll, we’ll keep improving and investing in the product experience and everything else. and again, like, this is where it seems to be working, but this is when, when we were talking about. Th th the choke points in the funnel and that, that red wall and the broken version Weill, this is the thing that’s top of mind over all of it. 00:29:30 David:Yeah, that’s great. I did want to move on and talk about in 2018, AllTrails raised, 75 million led by spectrum equity. And so I’m curious about that, about that story. So, I know, you know, the plan was to sell and then you’ve shared on other podcasts that, part of that was the founder taking, taking some money kind of his exit event.But I’m really curious just from like a company building perspective. I think so many founders and entrepreneurs think, oh, if I can just. More money. If I can just hire more people, everything’s going to be easier. but I imagine that’s not the full story. So I’d love to hear about the raise, but then also kind of how that changed the company and changed the trajectory.00:30:18 Ron:Yeah. So like I said earlier, right. That the handshake agreement was to grow and sell it. So we knew going in exactly what the deal was. and once we hit profitability in 2017, it kind of felt like, all right, it’s probably next year. It’s probably our year. And we got an inbound from one of the big tech companies early, you know, probably end of Q1 of 2018.And so I was like, all right, game on, right? This is it. We’ll go get a bank. we’ll run a formal process here. And we started going through it. We started going through it. This was actually, it was fun, right? Like I got to put together sort of like, all right, here’s our top 100 strategic partnerships broken out by category, broken out by vertical.Here’s like the, you know, the accretive value here is, you know, the, the investment credit. It was like a really fun thought exercise. You know, we’re talking to online travel companies and real estate companies, and obviously like the retailers and just so many different types of companies out there. And we ran a process and it was, it was fun.But, and as we were going through it, well, a couple things happen. One is our business really took off. Like it was a breakout trajectory year for us. So that always helps. Anytime you, you meet with someone, you share your plan and then you come back a month later and it’s like, Hey, actually, Outperforming outpacing.So your price just went up. so that was, I mean, that was great. Like a great position to be in. I’ve never had leveraged like that. And the other, the other thing was like, we could walk away at any point. If we, if we didn’t like it, I had done a lot of fundraising before and that I’ve never had a position of, of leverage like that.So that was cool. But as we were going through the process and talking to these different strategic acquires, the other thing that kept jumping out was like, I don’t want to just go be middle management at some big company that I already like have chosen not to work out anyways, because it doesn’t align with what I want to do with my time.And so, you know, we’re kind of going through, it’s like, is this really, is this it is this the only path? and we’re talking to our bankers about it and like, you know, there’s a, a huge ecosystem of financial investors that are really excited about this consumer subscription space. let’s, let’s do a spike there.And so we started talking to somebody. Different financial firms out there. And that’s where it got really, really interesting. you know, I think, I think we all probably have preconceptions about like private equity groups, like, you know, I know, right.00:32:36 Jacob:Just, it then the light dimmed here. When you said00:32:39 Ron:I know, cause a lot of the classic ones, they’re just there in your shorts about like your bottom line expenses and micromanaging and telling you to cut costs and00:32:47 Jacob:That’s, that’s the, that’s the, the stereotype at least.00:32:50 Ron:Totally right. but there’s this whole class of growth equity shops out there and, and we, we sort of plugged into it and I would squarely put spectrum equity and that one, and the first time we talked to them, it was so clear. They’re like, you guys, aren’t thinking big enough. It’s like, what? I love that.Okay. Let’s talk growth. You know, like you guys need to be thinking global. Right. And it was just like, there was so much alignment around. This, this opportunity in front of us. And instead of like pulling the rip cord and just kind of being absorbed and integrated into something else, it’s like, how about, like, we really make a, make a run at this.And so the more we talk to them, the more it’s was like, yes, hell yes. And it wasn’t just from like, a funding perspective, you know? Cause if it was just that like again, then you just do an auction and you just see whoever’s the highest. But we really wanted, like I needed a partner. I wanted a value added partner that I wanted someone who could bring in, you know, a sense of community, not have to reinvent the wheel all the time.That’s always nice when you can plug into our portfolio of similar companies and just pick their brain. All right. Like how did you guys00:33:54 Jacob:Yeah. I mean, that’s an under, that’s an underappreciated aspect of raising versus like going at your own. It’s like the network, like it’s, I think feces oversell it, but maybe founders undervalue it. Right? Like00:34:05 Ron:A hundred percent. Couldn’t agree more. It does. It really does. and so yeah, we kinda went, yeah. I, I feel incredibly fortunate that we were able to partner up with spectrum equity. And so David two question, I have, it’s like it for us, it was this huge unlock. It was this huge online. Like we have another partner, we’re going to be more formal, with our board structure and, you know, the, the sort of like metrics, which is great, like we needed to level up, and our corporate diligence and everything.And they’ve been, they’ve been a partner and we’ve, we’ve grown the board. We’ve added more expertise. And again, like the, the portfolio being, being sister companies with, with like Headspace and the not worldwide and survey monkey, whatever, like these cool companies that I respect and be able to, you know, hit up the CEO and be like, okay, how did you guys deal with this?Because like you said, like there are a ton of challenges that come when you’re going through that, you know, that the slope of the curve at that point, right? Like the true hyper-growth curves. All right. You know, we can’t fall back on, on money as an excuse, you know, like it’s purely an execution play and how do we do more faster?And that’s honestly like, that’s my, I think one of the coolest things I can say about my board, that the single biggest piece of feedback I get from them where they’re just like yelling at me all the time and a great way. It’s like, you gotta do more faster. Why aren’t you doing more faster? Right. Like that is the mantra here because everyone sees this opportunity.It’s ours, it’s ours to go take. Right. But we got to execute and do it as fast as we can.00:35:33 Jacob:Yeah. That’s that’s, I mean, I’ll say as somebody recently constructing a board, like that was sort of my cause as a founder and as a CEO, like you’re always, you’re just, you’re you’re at, you should be at the limits if you’re doing your job. Right, right. Like you should be kind of feeling at least like thinking, you know, what your limits are and what the company’s limits are.And it’s nice. Even if there isn’t anything more you can do. It’s nice to have some people who like, ostensibly are aligned with you to be like, Are you sure there’s not more right? Like, is there anything like, are you doing like, could, could you change this? Like, could you go go faster potentially? And sometimes the answer’s no, but it does always kinda, you leave those board meetings going like, like maybe there is like, maybe there is some way we could do this, like better or faster, right.00:36:10 Ron:Yeah. And then you build a team, right? And that leads back to like the team growth. And this, you know, this is our third year in a row of, of doubling head count. Hopefully next year will be our fourth year in a row. And all of the leverage, I’m a big believer, like two things are the lifeblood for companies like ours.One is culture and the other is momentum. And you can’t, if you lose either of them, Right. Like, you cannot take your eye off of either of those as a CEO, as a founder, whatever it is. and so like building both, you know, they, they got to go hand in hand, or you can sacrifice culture as you’re doing the internal hypergrowth.00:36:43 Jacob:Have an exit strategy, right?00:36:45 Ron:Exactly.00:36:46 Jacob:Going to last very long.00:36:47 Ron:Because you’ll never get it back. That’s exactly right. But, but generating momentum through like value added hires and raising the bar or bringing, you know, a bringing in a plus, I love being the dumbest person in the room. That’s my favorite thing at all. Choose walking in there. It was like, all right, I’m going to learn something.Someone’s going to teach me something cool. and building a team.00:37:06 David:So it sounds like the biggest unlock for y’all taking the money was just the ability to hire faster, hire better folks, offer better pay. but was there anything else that you feel like taking funding helped unlock for AllTrails? Did you, were you able to spend Mo did you start spending more on, on user acquisition or ramping anything else out? 00:37:27 Jacob:Can I ask a clarifying question without like you sharing your term sheet or whatever, but like D w like these, these deals can be very different than like a venture deal, right. Where like, almost always all of it hits the books and it’s dilutive, meaning that the company gets the money, but this was like kind of a buyout for the founder as an alternative to a sale.It’s like, did you guys structure it? So some hit the books and not, or was it all to the founders or how did it, whatever you’re comfortable00:37:50 Ron:We, we hardly took any primary capital in 2018. I didn’t, I didn’t want it. I don’t want it. Like I liked our organic trajectory. I didn’t want. And obviously I’ve gotten to know spectrum a lot better. They’re not built from the CNA, but you take money from a VC. And the expectation is like the success metric is suspended as hard and aggressive as possible because they’re incentivized to keep you hooked, you know, on the next round.And I wanted to, you know, accelerate more like on the product development side of things, but I didn’t want to get stuck in a, a growth model that’s dependent on unsustainable paid acquisition. Right. So. almost the entire deal with secondary capital, which was great, which was00:38:33 Jacob:And for the financial illiterate IME, like 18 months ago,00:38:37 Ron:Yeah,00:38:38 Jacob:The company gets the money. Secondary would be somebody who’s already a shareholder gets the00:38:41 Ron:Exactly the people on the cap table. so it was buying out the founder, buying out the original investors, like really cleaning it out. It was a new chapter, a new book altogether. At that point and, you know, start sort of starting together. I think, you know, to the question earlier, in terms of like the other value as like, I really can’t stress enough, just the strategic value add that I was able to get like, again, because as a founder or as a CEO or as an example, You’re kind of stuck in your own head a lot and you can talk to other founders, but you know, there’s this like culture, especially in Silicon valley, like, oh bro, coaching it.Yeah. I mean just crushing it, you know? No, one’s, you know.00:39:19 Jacob:I didn’t, you didn’t have to put air quotes around culture there, but like, I could hear the00:39:24 Ron:Yeah.00:39:24 Jacob:I’m called.00:39:25 Ron:You know, and very few people are like really open and transparent, about the challenges and what have you. And so being able to go in. and have this board that I trust that I feel like we’re all aligned. I’ve had boards, you know, especially VC backed boards, where you get like a different, you know, venture capitalists from every round that you do.Like you have a lot of misaligned incentives. You have a lot of sharp elbows in a room.00:39:47 Jacob:I was gonna say, there’s a lot of, you know, these are all competitors in a lot of cases, right? Hopefully you pick well, and you have people that are professionals, but like you can totally end up in a situation where you have frenemies,00:39:57 Ron:Yeah, you’re watching your back at your own boards. That’s a horrible way to live. Whereas with this one, it was so clean. It was like, we were owned by spectrum. This is great. I work at on their behalf. This is great. We’ve got the two of them there’s me. And then, and then, but to their credit, they’re like, let’s bring on two more operators.And so, you know, they didn’t care about like, well, we have to have 51% plus of the seats. It was just like, no, let’s just surround ourselves with really awesome. And so we got, you know, we got the former CEO of ancestry, who, you know, they know a thing or two about, subscription businesses. And then we got the COO of Robin hood and obviously like they know a thing or two about hyper-growth and everything else.And again, like, so it’s almost like it’s this team, you know, it’s like this dream team we’re just collectively, like they’re helping me chart stuff. Like see things. I wouldn’t have been able to see on my own, whatever the pattern00:40:45 Jacob:Yeah.I mean, I think it’s, it’s, it’s a good story in the sense that like, I think, I think we think too terminally sometimes about companies, right? Like it’s like, they’re born, they are grown and then they get sold and then they die usually like nine times out of 10, right? Like it’s, it’s not often that an intern, like I say, all goes well and the integration goes, well, some spectrum of results.Right. But this is a result where I think you, you guys have a company that’s two important. To let die, right? Like if you had sold, I don’t know what, you know, your fangs or whoever was like, I’m sure I could see any number of massive tech company wanting this to be a part of their data set or part of their like social, like aspect of whatever.It’s just, I could see a plugging into a lot of things, but you know, to get Google’s exciting acquisition today and not saying you guys. Talking to Google or not, but as an example, like their exciting acquisition today is tomorrow is like, you know, happy trails, blog posts, right. That actually a good name for the, the shutting down AllTrails, acquisition at Google blogposts.But, but the, you know, and this is a, this is a path where, you know, people who are passionate about the mission, the employees and the users, like can kind of, you know, get that exit that people are looking for. But without like jeopardizing. Thing that’s important. And like, maybe this is very hippie, right?But like, I think there is some aspect of companies that’s beyond like the capital value and beyond like, even like the culture, but like actually achieving the mission and, and making that change in the world or providing that service. That’s, that’s, that’s more important than, you know, Hypergrowth or whatever.And look, I mean, we should get into talking about now, like posts around, but it sounds like you guys are in hyper-growth anyway. Right. So it didn’t, it’s not like it’s, it’s this false dichotomy of right. Like either you’re like raising for venture and you’re like going at it really hard or Like you’re a lifestyle business or, you know, whatever.And it’s just like, Maybe, whereas maybe us like lampooning, this straw man of a false narrative has like most of the talking about this to like make that is the, the, the totality of the false dichotomy is us talking about it. But I really think this is a great example of like one of those like interesting, you know, outcomes and, and stories.So it tell us about what’s happening now. 00:42:52 David:I appreciate you sharing that specifically because even in researching it, I listened to a couple of your other interviews. I still assume that that the. A pretty big primary chunk that, that went into the balance sheet of the company and then it accelerated it from there. So it’s an even more interesting story to me that that raise was mostly secondary.So from the $3 million seed way back in, whatever it was 20 12, 20 13, it really has been an almost bootstrapped company and becoming what it is today on. Little capital is really incredible and it really kind of speaks to consumer subscription space and, and how you can operate and go big without spending a ton of money.If you do it right. If you don’t, if you don’t just plug into Instagram and blow $5 million of VC money acquiring the wrong users, if you actually talk to them and build a good product and everything else. but I did00:43:55 Ron:Well, and I was just stay on top of not only that at the first board meeting that we had with. I, I walked in and I said, Hey, you know, this is great high five super-stoked, we’re also, I think we should donate 1% of our revenue to environmental causes. I know you guys just shelled out a whole lot of money, but would that be okay?And to their credit, they’re like Yeah, let’s do it. Let’s do it. And you know, one of the first things we did post-transaction was signing up for 1% for the planet, you know, like there there’s totally a different path here. I didn’t realize it. And I think it’s cool for people.I don’t know. I, I wish I heard this earlier in my career. Like there are, like you said, like there’s not a dichotomy, like there’s so many different ways to do this. I think we have. Fetishizing almost, or like putting on a pedestal this whole like massive VC round kind of stuff, you know, and there’s a time and a place for it, for sure.But like, that’s not the success metric in and of itself, like more often than not, especially for earlier companies, the death knell. And so I think that, I’m always, you know, I get, I get hit up by people, you know, for whatever I’ll all the time talking about this kind of stuff. And so I was like, dude, if you can boot shop, if you can control your own destiny, like do it, you know, find right partners that are gonna unlock growth and everything else.Don’t fall, don’t fall victim to that. Like, just that story that you think is like the classic Silicon valley startup story, which is you go out, you raise a big round and you have an IPO. It never works. It never works that way00:45:19 Jacob:Who would do that?00:45:20 Ron:To too many man.00:45:22 Jacob:We’re running out of time. I do want to know. So you’re talking about like doubling and so I’m guessing like the pandemic, like we’ve seen across the ecosystem has been really, especially, I can imagine there’s two aspects to it, right? Like one your digital service.And then secondly, like you’re very good compatible with like, social distancing. So did you like think you would be having this conversation for whatever four years after the spectrum, deal like doubling every head count every year? Cause that’s typically not what private equity companies growth rates look like.00:45:51 Ron:I know. No, it was, I mean, so I’ll preface this by saying we were incredibly fortunate during COVID and sometimes you just get lucky. Sometimes you get like, there’s a ton of great companies out there that just like how to pull sales reps out of the field, or we’re an equip for like the supply chain issues or whatever it was.Right. Like, Well, like you said, we’re digital first company. we, we already, we had a somewhat distributed workforce, so we already like using zoom and slack and going fully remote. Like we, we saw no, no drop in productivity. Now granted like when, when the world shut down mid-March that was a little bit scary.But we knew it would be temporary. I, you know how long no one really knew. Bye bye. Mid April, we were going to our board and saying like, look like, I know things look a little bleak right now. Like the, the machine has fully ground to a hall, but we think actually like this is going to be an insane accelerant.Once things open back up, there’s nothing to do. Like you said, it lends itself perfectly to social distancing. You know, people who can’t travel anymore. Like, all right, we’re going to explore our local state parks now, you know, like we’ll scratch that. It’s that way I got three kids and you know, school is canceled and obviously, you know, summer camps forget.What are we going to do? What are we going to do with these kids? And it’s like, we’re going to run them ragged on the trail, you know, every weekend we’re just going on the trail and we’re running them ragged and00:47:10 Jacob:There’s a good ad campaign in there. Just00:47:11 Ron:Totally right. And so,00:47:13 Jacob:Sleeping kids in the back of a Subaru Forester and it’s like,00:47:16 Ron:Yes, exactly. So, I mean, you know, we made, we did make a big strategic decision, to get in front of it and, and start hiring like crazy, and just make, you know, make a play, make a play. And, and again, Sometimes you get lucky. you know, that works, that works all these companies around us, that we were never able to like really poach from or whatever.Something like we’re able to go grab their talent. Like not just from people who are like, oh, but people were actively working there who were just like, I don’t want to do this with my life anymore. I like spending time outside. I had the number of people, the number of inbound applicants that like write in their cover letter.I was looking at which apps I use the most. And I just started applying to those jobs. You know, I think that there really is. It’s like really. Great. And I applaud it and I love it. And I hope it never stops people like taking more agency and control over their career and not just like reactively, you know, just doing whatever leftovers00:48:10 Jacob:Yeah. I mean, the geographic unlock of remote, I think is a big part of that. Right. Cause suddenly like you’re, you can just literally go on your phone and pretty probably today, nine times out of 10, you’re going to be able to work for that company depending on your like, you know, locale or like time00:48:22 Ron:Totally.00:48:23 Jacob:It wasn’t that way two years ago,00:48:25 Ron:Not at all, not at all. Exactly. So, a lot changed. A lot has changed in this time. With all of that, with the big accelerant they were seeing on the usability side through 2020, there is, I think David, you had asked this like pre pre-show, you know: there’s two big questions hanging over our business as we went into 2021.One is, are the registered users who we got last year during COVID are they going to convert to pro like our conversion to pro happens over time? We look at a lot of stuff through a cohorted basis, and it goes up and to the right. It will take years for some users across the line to go pro, but it’s great.It just keeps going up. So, are the folks who signed up when there was nothing else to do, are they ever going to convert to pro or not? The other big question is: all the folks who converted to pro in the height of the pandemic in 2020, once the world opens up, are they going to retain? Or, are we going to have the bottom drop out from under us?These were two questions hanging over our heads. We have a seasonal business, it follows the sun pretty much. So, as we headed into May, June, July of this year, thankfully that the answer for both was a resounding “yes.” The folks who signed up last year are converting at a higher rate than normal.The folks who subscribed are retaining at higher rates than normal, too. And I think it’s kind of more of a testament to how the zeitgeists has changed a little bit post pandemic. Being outside just makes people feel good. I guess it’s that simple. It’s not very complicated.You feel better when you spend time outside, and people are just incorporating it into their regular routines.00:50:08 Jacob:Yeah. It’s interesting. For positives and negatives, I think you came up three cherries, right? It just really lined up, and then it’s continued. You’re talking about the hiring thing, too. Like a lot of habits changed during COVID, and I don’t think anything will necessarily go back. Especially if people have found a new, happier, maximum for their lives. You guys are part of that. That’s great. and that seems like, I dunno, we don’t have total good analytic quantitative data on this, but it doesn’t seem like the whole boosts from last year totally collapsed.It seems like it just was like an accelerate, and I think other industries would sort of back that up. 00:50:54 David:Yep. Well, we’re coming up on time. Is there anything else I should’ve asked you? 00:50:59 Ron:No, this was fun.00:51:00 Jacob:You guys are probably hiring, right?00:51:02 Ron:We’re hiring like crazy right now. Yeah, absolutely.00:51:06 Jacob:AllTrails?00:51:07 Ron:Yeah.00:51:08 Jacob:There you go.00:51:08 David:Any particular roles you want to shout out? 00:51:11 Ron:We’re always starving for great engineering talent. Android, iOS, front end, back end dev ops, security, all of it. PMs, product designers, mapping designers, customer support, the full gamut. The entire company, every department is hiring right now.00:51:28 David:Well, it sounds like a really fun company to work for. We’ll put links to your job page and to your personal LinkedIn, and a few other places in the show notes, but this was really fun chatting with you today, Ron. Thank you so much for taking the time. 00:51:41 Ron:My pleasure guys. Thanks for having me. This was fun.

E

Nov 17

52 min

Our guest today is Eric Crowley, a tech investment banker with GP Bullhound. With investments in companies ranging from Spotify to Whoop, and clients such as AllTrails, Pinkbike, and Lingoda, GP Bullhound provides transaction advice and capital to many of the leaders in the Consumer Subscription Software space.On the podcast we talk with Eric about his 2021 report on Consumer Subscription Software, the truth about LTV calculations, and the new era of organic user acquisition.In this episode, you’ll learn: Was 2020 just a “COVID Bump,” or a shift in consumer behavior? Are the Bumble & Duolingo IPO multiples justified? How savvy developers are adapting to Apple’s App Tracking Transparency The truth about LTV The new era of customer acquisition Links & Resources Spotify Whoop AllTrails Pinkbike Lingoda Bumble Duolingo Instacart Match Group Netflix Noom Weight Watchers Tinder The Dyrt Day One Journal Automattic Tech Crunch Scribd Pandora Eric Crowley’s Links Follow Eric on Twitter GP Bullhound GP Bullhound insights Eric’s LinkedIn GP Bullhound 2021 CSS survey Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Hello, I’m your host. David Bernard. And with me, as always, RevenueCat CEO, Jacob Eiting. Our guest today is Eric Crowley, a tech investment banker with GP Bullhound. With investments in companies ranging from Spotify to Whoop, and clients such as AllTrails Pinkbike, and Lingoda, GP Bullhound provides transaction advice and capital to many of the leaders in consumer subscription software.On the podcast, we talk with Eric about his 2021 report on consumer subscription software, the truth about LTV calculations, and the new era of organic user acquisition.Hey, Eric, welcome to the podcast.00:00:56 Eric:Hey, David, Jacob. Thanks for having me back. It’s always a pleasure. 00:00:59 David:Yeah. Every year you release this report, so we had to get you back. This is the third annual Consumer Subscription Software Report, and I wanted to kick off just asking you a little bit about the motivation, and where your headspace is in thinking about creating this. Who the target is, and what kind of questions you’re asking yourself as you prepare this report.00:01:24 Eric:Yeah. The report is the GP Bullhound Consumer Subscription Software Report. I call it CSS, which is kind of a playoff SaaS. This is the third year I’ve been writing it, and it started back in 2018. I worked with a company called AllTrails that was starting to monetize really well by selling subscriptions.It was like a light bulb went off in my head. I was like, this is a phenomenal way to provide a consistently improving product to consumers, where the margins are pretty good. It’s easy to access a ton of different people globally through the app stores or through the web, and I just got really excited about it.I started putting some notes down on my own, and then GP Bullhound really supported me in saying like, “Hey, this is actually a pretty big trend. There’s gonna be some amazing companies built around this space,” and companies like RevenueCat, that are supporting CSS companies, are just as exciting.So, we’ve been slowly educating ourselves. The goal behind the report is really just to force me to do some thinking about the space. What it looks like. What it will be. As a banker, you can quickly focus on transaction, transaction, transaction, and not really do any long-term thinking about where the world’s going.It’s putting myself in your guys’s shoes. You guys are building RevenueCat not for what the world looks like today, but for what the world looks like in three to five years. I try to take the same approach with CSS, and think about where’s the world going to go. So I talked to a lot of smart people as I put the report together. Entrepreneurs, investors, get their opinions.You guys can see their interviews in the report, and then ultimately we publish it. The audience I like to think about is entrepreneurs, people that are thinking about starting a CSS company, or already launched one, and they’re looking to improve their metrics, or think about their target audience as entrepreneur-rich.By partnering with them, investing in their businesses, it takes them to the next level. The other way I like to think about it, it’s my own personal scoreboard. I love to flip back two years ago and see, was I right about this company? You’re publishing in public, so people can always come back to you and say, “Man, you were way off.” So, I look forward to that.00:03:26 Jacob:I remember the F finding the first one, the 2018, I guess, reporter 2019, whenever the first one you put out,00:03:33 Eric:2019, I think that’s how we met actually.00:03:36 Jacob:Did you reach out to me or? I think I found it, or I don’t remember what it was, but00:03:39 Eric:We’ve had a mutual friend, Nico introduced us and said, Hey, you guys should talk about this. and then I think we just went off on a two hour tangent.00:03:47 Jacob:But yeah, I remember being, it’s still, there’s still not a ton of like really focused research or writing on this space. and I think that, that, you know, this will probably won’t be true for very long, right. As long as it continues to grow, but like going back to like who it’s for. I mean, I imagine it as some, you know, end of the day, if you’re employing.Pushing into some kind of lead gen. Right. But it does provide a lot of value for, you know, even if you’re not interested in a transaction or whatever, just. Some like holistic data on a space. Cause like, I, the same, I mean, Eric, you said we’re, we’re thinking three and five years in the future. It’s like, I wish like a lot of times I’m thinking like three to six weeks in the future.Right. and so it’s even useful, I think, you know, even if you’re, you know, I, you know, we’re, we’re in a bit of an interesting place as a infrastructure provider to be at kind of a bird’s eye view, but it. Founder on one of these CSS apps, you know, like it is useful for you to know, like what’s the meta environment, how’s it evolving, you know?And if nothing else to like connect you with other people who have experimented with things and stuff like that. So, yeah, I think it provides beyond, beyond the, the, the lead gen aspect of it. It provides a lot of value for people. So I’m glad, I’m glad you’re, you’re still doing it. 00:05:04 Eric:Yeah. And just for any of the listeners, it is free. So you just go to the GP, bullhorn.com website. It’s all easy to download and then you can see all our past reports as well. So 00:05:12 David:Yeah, and we’ll drop it in the show notes. but, yeah. And, and, and speaking of all that, you know, it, it’s something we as RevenueCat want to get more into as well. I mean, just seeing how much value you’ve created in producing these reports, and we’re kind of sitting on a, you know, Processing over a billion dollars a year in, subscription revenue.We’ve got a lot of interesting data that, that we, that I’m very personally excited to share that we haven’t, kind of had the infrastructure to, to do yet, but are, are getting there. And, so hopefully we’ll, we’ll have our own kind of, state of subscriptions that dives into the data and some of the trends and stuff in a different way than, than your kind of, strategy and higher level look at things.But when one thing that has happened, in the actually. It was announced before your last report, but actually implemented since your last report. And that’s the app tracking transparency and iOS 14, which didn’t actually ship till iOS. What was it? 14.4 or five or something. So, so we’re kind of just now starting to see the impacts of it.And, and, you know, you took a couple of slides in your report to start discussing it. And it really is kind of one of the biggest topics and top of mind for subscription app developers, because it really is a huge shift in the landscape. So I want it to. Start with talking about that. And one of the things you shared in the, in the presentation is that you feel like it’s a short-term pain, that’s ultimately going to lead to a long-term gain.So I’d love to hear your thinking around what that pain is, but then also what you see the long-term game being.00:07:01 Eric:Yeah, it’s a, it’s a, great point. And, you know, anytime apple or Google make changes to their, their, their app stores, right. It’s a seismic shift throughout the industry because it’s something that impacts everyone. And so everyone has to be aware of these changes and then ultimately have a plan for them.And so I think that the change you’re talking about David is really the. The implementation of, removing tracking for a lot of, a lot of these businesses specifically, like. And so what the change did with IDFA, is it, it really deprecated the ability for, for marketers within some of these CSS businesses to really accurately target people, specifically using Facebook or some of these other social networks.And so what it’s doing is it. It’s impacting the conversion rates on, CSS, CSS, businesses, marketing to consumers. And so if you just can’t find that person that just is in love with, for example, biking, if you’re a Strava marketer, it just takes you a lot longer to find that specific subscribers you might have to market to 10 people now to find two subscribers versus before you can market to five people and find two subscribers.And so it just means marketing efficiencies going down. And that can mean. Growth rates. It can impact conversion rates and ultimately impact just financials of these businesses. And so it’s a pretty important consideration for any, CEO marketing team on how they go out and get their, their business in front of consumers.If Facebook’s no longer as efficient, they have to find other ways. And so. So my, my thought is like, this is a short-term problem, right? It’s something that’s going to take people two to three months to adapt and find a new way to reach consumers. But ultimately my hope is for the space is you see the long-term game, which is what I was referencing.People really focus on organic ways of acquiring customers. Right? So instead of just pumping ads through Facebook and trying to find someone who fits a profile, you spend a lot more time really narrowly targeting your demographic, your niche, and then finding ways for them to find your product organically either.You know? So like a company that I work with, we sold a company called Pinkbike and so what they do is they partner with, the trade associations for mountain. And those trails associations now act almost as the marketing partner of pink bike to let consumers know about the fact that all the trail details.Is on, is on the pink bike app or it’s called trail forks. And so that’s, that’s a really powerful, organic customer acquisition tool that they don’t have to pay for. And so you’re seeing, seeing the same thing happen with, like Strava is doing this, pre.com recently partnered with the NFL. So if your team’s got a last fourth quarter fuel goal and you need to get something kicked, you can go to pray.com and submit a prayer for your kicker. I wish I was joking. It’s a pretty brilliant idea. So I think this is really good for the sector overall, but yeah. Happy to dive into it. It’s it’s a fascinating00:09:37 Jacob:We it’s a callback to a sub club podcast content, but, Greg, this, the plant app, this is something that they were doing, which is like, we’re partnering with, plant nurseries. Yeah. To like, get their app into people’s hands. And, yeah, I don’t know if it’s an earned media or. Bought media, but this is more like this is earned, right?This is like building an audience. You’ve seen it in the maker community, actually a lot, like in the indie SaaS community, more it’s a different game when it has to be consumer scale. Right? Like there’s a little bit different. You have to build maybe a bit more than you would in like, oh, just blog about.Built this thing and that’s enough to get Indies, but you can apply the same thing, right? It’s like produce content, produce something like low investment for users to get engaged with your brand because you’re not building an app unless you have some, I mean, maybe you are, but you’re not going to build something with very high, like multiples.Like if you’re, if you don’t have something unique to offer in the first place, but put that into like a more like lightly consumable format, start to build that audience and then make that an on-ramp and yeah, I agree. Like that’s, that’s something you own, right? Like your brand is. your brand doesn’t exist on the app store, right?Like your brand can exist outside of these, like shifting sands and regulations and whatnot, and ultimately is like, you know, going to get reflected in your asset value if that’s something you care about. Right. So, 00:10:53 Eric:Yeah, that’s a key thing we talk about, right. If any business that we look at that’s potentially selling or, or thinking about raising capital, right? It’s like, how are you finding your. And if you’re, if you’re one channel is Facebook, and then consequently, like doing Facebook ads or apple ads on the, on the app store, that becomes pretty challenging.And so you want it to be such a good product, right? So it involves more work upfront. And just as you’re talking about Jacob, the product’s gotta be better. It’s gotta be more efficient. It’s got to reach consumers where they are with the problem they have. it becomes a lot more viral and a lot more sticky.So I think, I think it’s going to be good for the sector.00:11:26 David:You wouldn’t want to name names of course, but I am curious if. Had any clients, or just talks about anybody in the space where they were very reliant on Facebook specifically, and then, and have really struggled as things have changed. You know, I’ve been seeing some tweets around the, the consumer packaged goods space where some of these CPG companies are really struggling.And so I’m just curious. You know, without naming names, if, if there’s any kind of high level things you could share around, apps that have struggled in this new paradigm. 00:12:02 Eric:Yeah. I mean, I definitely can’t name names, you know, obviously I keep everything confidential with my clients, but even non-clients, you’ve seen CACs go up 20, 30%. you see, like, if you think about like conversion rates from installs to subs, That’s a big metric of actual intent. Did you find the right user, right?Did someone just click on it and download it? Great. But if they’re not actually subscribing that wasn’t a successful transaction for you. And so the way I think about this, David is it’s the app stores made tracking a lot harder, so it’s harder to find your right consumer. So imagine if you’re a CPG company, you walk into a grocery.And instead of stuff, being laid out perfectly across the shelves at the right height for you, they just tossed everything in the middle of the store and said, find what you want. Just go pick it out. Right. You’re going to have much lower conversion. You’re going to have much lower purchase rates because people aren’t being targeted with the stuff they want to see.And so I think now you have to find, you know, it becomes more of a specialty situation where you’re walking into a store that has stuff for just outdoor gear or very healthy granola. Right. And you’re going specifically to that store for that. That’s probably better in the long term, for a lot of these companies, 00:13:01 Jacob:Yeah, but there’s, there’s a lot of, there’s a lot of folks that have benefited from this ease relative ease, right. And any sort of market disruption is going to be painful. I was like, anecdotally, I mean, David, we’ve heard on this podcast and elsewhere people who have just like straight up pause acquisition, who are like all re scrambling because yeah.You get it tuned to this very fine knife edge. And I imagine for like consumer physical goods, like DDC stuff, it’s even worse because their margins are thinner than software. Right. 00:13:28 Eric:And you’ve got inventory and everything. Yeah. It’s a totally different. 00:13:31 Jacob:But, you know, as you do like you, the market reshuffles and the people, I can figure it out, the fastest are gonna are going to come out the best.So. 00:13:39 Eric:There’s going to be a shift though. So people under this is like that seismic shift that just shows how much of your reliance is on maybe one or two channels. Right? Two, two major tech companies sitting here in San Francisco. If you’re super, truly relying on those and you’re doing great, fine.But if a bump happens, right, how exposed are you? And so like, this will be a benefit. Right. I think it’s going to be a huge benefit for Tik TOK. Right? I think people are finding really good ways to acquire customers through tic-tac. And so that’s a very interesting channel. I think it’d be really good for influencers, right?If you have people that are very passionate about a certain space and then they go out and, you know, have a very core customer base that loves what they do specifically. It’s going to be pretty powerful for them to.00:14:18 David:Yeah, and I was just gonna say, anecdotally, you know, we haven’t done a super deep dive in our data, but at a, at a high level, I was. Bracing for our numbers to take a big dip. Like I, I mean, Jacob and I had talked about it in the spring about, you know, how, what is going to look like for RevenueCat, you know, are some of these subscription apps just going to completely unwind and people are apparently figuring it out because you know, it keeps going up until the right. 00:14:49 Jacob:I mean the consumer, the consumer need hasn’t disappeared. Right. So maybe if they just weren’t driven, you know, it’s not going to, it can’t just disappear overnight. Right? Like if you never, if you, if you are a Coke fan who never saw Coke out again, and it’s like, you’re still gonna buy it. Right. Like there’s, there’s, there’s a certain amount of demand.That’s just going to find the supply. But, but yeah, no, I mean, it’s hard for us to, to definitively say looking at our data and aggregators. Cause there’s so much, but they’re definitely. Like this summer was definitely slower than we’ve had in the past. Like on my, as I’m writing my investor updates of the year and each month and stuff looking at it.But yeah, it wasn’t like this catastrophic, you know, macro thing. And they were talking about a lot of like, you know, probably outliers that we hear about people who were affected, you know, more than others, but overall. I, I don’t think our, I don’t think our prediction last year of, of a potential recession was necessarily false.Like it doesn’t, it definitely doesn’t feel like it’s sped up the ecosystem. Right. But it doesn’t necessarily feel like a depression, right. Maybe, maybe a slight recession or just the normalization. 00:15:49 David:Looking at our data in aggregate that, some folks use this to their advantage and actually, and, and accelerated because they knew it was coming and they did focus more on product and organic and other things. And so for whatever, you know, losses, there were. Other folks more than made up for that.And that’s it kind of the interesting thing about working with so many, I mean, we’re closing in on 10,000 apps on revenue cat. And so, you know, you kind of have a pretty broad basket where you, you know, there are going to be winners and losers, but in aggregate subscription apps are just continuing to tick along and do really well. 00:16:26 Eric:David it’s like you read directly from bullets on my report. I, I, I completely agree with you.00:16:34 David:Another thing I wanted to dive into was the, the COVID bump. Cause that’s, that’s another thing that’s kind of been on everybody’s mind is simultaneous to this. I was 14 and, and this is something we’ve talked about again internally, with revenue cat, is it. This summer was the, everybody who was vaccinated and, and Delta hadn’t kind of bumped yet.And so, you know, may, June and July, there was a big shift socially. kind of it felt like it, especially in the U S that we were coming out of the pandemic. and, and so simultaneous to the app, tracking transparency, going into effect, we had these like societal shift. And then now we’re kind of back into it a little bit with the Delta surge, but just curious what your thoughts are on how much of the boosts we saw in 2020 really was dependent DEMEC and then how much of that will actually linger as kind of shifting consumer preferences and shifting consumer spend.00:17:36 Eric:Yeah. I mean, there’s, there’s absolutely a companies that benefited from us is called the removal of inf in in-person conversations. Right? So like Bumble and DuoLingo, two companies that both went public, right. They both benefited because their, their business model is designed around, not meeting in person for the first couple of conversations.Right. And so. There’s no way to say that they didn’t benefit. the way I think about it, though, in this, in the CSS space, it’s very similar to like the overall e-commerce space, right? Is consumers looked around to find a solution for a problem they’re having right. Instacart you couldn’t, you couldn’t go to the grocery store or maybe you felt less comfortable going to the grocery store.So you tried an Instacart for the first time. Maybe you were, you know, thinking about meeting someone, you know, long-term but you never, you never wanted to try online dating or you couldn’t go to the bar. So you tried online dating for the first time and sorry. What the pandemic did was it really opened up people’s eyes to other options from what they’d been doing for the last 20 years, 50 years, whatever it was.And so they had to find other solutions to, you know, their demands, their needs. And so I don’t, I think it’s absolutely a COVID bump, but I still look at it as really as an accelerant of people adopting new products and services that they would have tried in three to four years. but the pandemic kind of pushed them to try something, to move out of their comfort zone and try something new.So, you know, I absolutely think you’ll see a little bit of a downshift in, in some of these companies that had a really big boom, right? Like language learning. People had nothing to do for four to five months, especially over some of the winter times. So people tried new hobby, tried language learning, you know, that’ll probably go down a little bit, but overall, if you look at it from like a five-year trend, It’s going to be up substantially from where it was in 20 17, 20 18, 20 19, and 2020, you know, made it look like a little bit of bump, but eventually I think those companies will continue to grow and surpass what anything they did in 2020. 00:19:21 David:Yeah, that’s really interesting.00:19:22 Jacob:I’ll back that up as well with the, the unreleased, Jacob looks at graphs and then gives a, gives a hand wavy descriptions of them. But we, yeah, we, we were, I was kind of bracing for it as well. And then I would say this summer was slow and like, David was. We’re not sure why. I think it was, I think it was a number of factors things have since picked up again.But I think generally summers are slow for software a and then B. Yeah, I think we were seeing kind of like a little bit of the payback for, for COVID perhaps it’s a, it’s a vial. I think it’s a plausible theory. We don’t, it’s really hard to prove. but we have not seen, you know, we, we saw our COVID experience was really drastic.And we have not seen. Similar, like back off from that, like, it has been like, it has been like we just compressed six months and I’m saying partially, this is just revenue casts, individual story because of where we were last year. But then I think also it’s, it’s indicative of the system in general.It’s like, I think, yeah, we just compressed a whole bunch of, like consumer behavior change into like a very short period of time. And yeah, we’re not gonna be able to keep that up. Right. We’re not gonna be able to continue. To, to crunch that in, or we’ll run out of consumers eventually. But, but it doesn’t look like everybody’s, you know, because, you know, I think the story for CSS in general, it’s like we’ve delivered value for people, right?Like it’s, it’s a good, it’s a good product, right? The whole line, not every product is good, but in general it’s like a it’s, it’s a decent deal. And so I, I think more people discovering that. Yeah, it can only get bigger, right.00:20:55 Eric:Yeah, I think we talked about it in our first year, our first time together, right on the last podcast, which is if these businesses are truly making consumers’ lives better, this is going to be a very long-term.00:21:04 Jacob:Yeah. 00:21:05 David:And speaking of that, and the two companies you just mentioned, in the, Time since we last spoke, but Bumble and DuoLingo went public and some other consumer subscription, apps went public. so tell me a little bit about your, your perspective on the, the public investor. Excitement for CSS.I mean, we’re seeing pretty high multiples in the both of those IPS did, did very well. so what are you seeing in the, in the public investor space?00:21:33 Eric:Yeah, I think, I think the public market has really woken up to this business model, the power of it and understanding, you know, it’s public markets. They do a lot of pattern matching, right? If they’ve seen something be super successful, they look for something that looks similar to that. And so I think a lot of people are waking up to, how powerful Salesforce is not waking up.They’re well awake, very aware of SAS businesses. But I think they’re seeing that same pattern starts to take, hold on, CSS. It just has different metrics. Right? And so, you know, Bumble’s now public, the match group’s been public for quite some time. Once I spun out of IAC, you’ve got Netflix and Spotify, which are fantastic examples of the international global reach of Content, and how consumers are very sticky for something they love.And so. These businesses who can get to scale really quickly, like you nuMe, right, is a competitor to weight Watchers. Weight Watchers has been around for decades, but Newman built a better mouse trap and they acquired customers at a really quick rate. And, you know, they’re well over 400 million in revenue and ready for the public market.So I expect them to go public. Pretty soon. And so I think there’s going to be a lot of businesses that follow them that are using this, this metric. So, and then that’ll cascade all the way through, from public market investors as, as exit opportunities all the way down to, you know, series a series B investors, seeing this business model work and scale.00:22:47 Jacob:Yeah. I mean, I guess my, like, what’s your, like, I, I, when, when we started seeing these go public in the last, like couple of years, so, well, I mean, honestly, it’s like, Since we started RevenueCat, like was actually the, kind of the first unicorns, even like, I guess Bumble might’ve been passing unicorn when we got started, but like there weren’t a ton and now it’s like every, every month there’s a funding announcement for a CSS company.That’s a, that’s a university. I mean, partially that’s just like valuations going up and stuff like this, but like, how do you see. The evolution of this market. Long-term, you know, so DuoLingo pops becomes the first, you know, are they going to be like Salesforce and just be dominant in that space forever?Or do you see it being maybe more dynamic than sasses?00:23:31 Eric:I think it’s a little more dynamic than SAS for, for a couple of reasons. One, new consumers like to try stuff, right. And so if it’s with like a Salesforce or something, right. That integrates into your day to day operations from a business model perspective, right. So if something breaks there, right.Your business. 00:23:47 Jacob:Is very high. 00:23:48 Eric:Yeah, it’s a little higher, right. And it’s not just you using it. It’s your entire business. Right? So you’ve got 10 people using this product or 20 people or 5,000, depending on the size of your company. Right. In CSS. It’s it’s you, maybe you and your family. Right? So it’s a little bit of a different switching cost.So that’s, that’s one. However, these companies can scale a lot of. and they can, they don’t have like the heavy, heavy cost and, you know, on the sales and marketing side. So I think they have an ability to actually get to profitability a lot faster, especially if they have an organic customer acquisition engine.And so I think that’s going to be a big difference between that, between CSS and SAS. 00:24:23 Jacob:So, yeah, you mentioned the metrics are different. What are, what are the metrics that folks are, public investors are looking at for these companies that it might be different from a SAS company?00:24:33 Eric:Yeah. I mean, a lot of them are the same metrics, but the numbers that are like good are different, right? So like on a SAS business model, right. Revenue growth is just as attractive as a CSS business model revenue growth. Right. Everyone wants to see high double digits, triple digit numbers on revenue growth.But like an interesting thing is net revenue retention. Now that’s very different, right? In CSS, you typically don’t upcharge people or have additional seats be filled because it’s just one person. Right. So, you know, maybe you get an. 00:24:59 Jacob:It’s not much expansion opportunity. 00:25:00 Eric:Yeah, you can, you can do maybe some, some packages, upgrades, and people are starting to experiment that you can pack it and you can experiment with bump, bundling 00:25:07 Jacob:But it’s certainly never going to be greater. It’s never going to be net positive, right? 00:25:11 Eric:No, you’re never going to see a net positive number where a lot of the SAS businesses, right.People are looking for net revenue, retention, numbers of north of one, 20, 120% net revenue retention 00:25:18 Jacob:I mean the opposite of churn, right. Which if you have a CSS business with opposite, Congratulations. like 00:25:25 Eric:Yeah. You’re doing something well, and I haven’t found it yet, but yeah, 00:25:28 Jacob:You might be the only one 00:25:29 Eric:Yes, I think that’s right. 00:25:31 David:Quick, point though, to counterpoint to what y’all were both just saying, of all the apps, dating app, it’s totally slipping my mind. 00:25:40 Jacob:Tinder. partnership. David, look at us. We’re like on a wavelength. 00:25:46 David:They, they have in-app purchase. They have consumable in-app purchases to boost your, profile. They’re one of the few that I’ve seen that could potentially actually have a. A a positive, net revenue retention. whereas most subscription apps are just a subscription. it’s going to be interesting to see if other subscription apps can pull off that sort of model that you could actually generate a, a net net revenue retention. 00:26:19 Eric:I think you nailed it, David. So that’s coming from. Right. I think people first experimented with, Hey, how do I get someone to buy my product every year or every month? Right. And now is how do you make it even better? So they’re starting to listen to their core users. And we talk about this a little bit on the LTVs.And what do these people want and what makes this experience even better for them. And I think you nailed it with Tinder, right? It’s the most, it’s the easiest thing to convince people to, to encourage more is more, you know, more relationships, right? People love more relationships and people are willing to pay for that.And so, you know, then what else, what else could this go down the path of, right. What other options could people pay for additional services? Or what we’ve seen is like marketplaces or transactions spinning on. Right. So if you have a really passionate user base and they’re going out there doing, camping, for example, like on, on the dirt, it’s a camping site, right?What about doing a marketplace to buy and sell use tents right now is not a subscription, but now if someone’s paying, like, okay, now they bought something through your marketplace and you get 10% of that purchase price. So there’s going to be a lot of stuff. I think that happens there, to encourage that, to encourage that LTV numbers start rising, I just haven’t seen a ton yet, make it happen above 00:27:26 Jacob:It’s a scale problem. I need to do that either be at such scale for that to make sense. So I was going to say for anybody, listening to this, that hasn’t reached 20 million in ARR, probably north of that do not add a marketplace to your 00:27:37 Eric:I totally agree with that. Very, very much focused focus, focus. And so I would even say like closer to 50 00:27:43 Jacob:Yeah. I mean, until you’re like, how do we get this thing public? Or how do we show, like, how do we show like N plus one revenue streams, right? Like it’s kinda more what it’s about than it is necessarily the revenue generated. 00:27:53 Eric:I’m just a dreamer though. You’re just a realist. I’m here, I’m here. And you’re just telling me all that stuff that could go wrong. 00:27:58 David:One of the things you just kinda touched on that I wanted to dive deeper into was, was a truth about LTVs. And I love this slide on the, on your presentation, kind of defining these two cohorts, which I’ve never heard, defined this way. And I really loved the analogy and I’m going to start sort of stealing it from you and use.And crediting you of course. but in the presentation you define, tourists and locals, and then talk about kind of the importance of identifying these different cohorts. So tell me about Who the locals are and why that matters and who the tourists are and how companies can start, analyzing their data to understand this and better target marketing, better, craft the experience in the app and, and those sorts of things. 00:28:46 Eric:Yeah. So we’re going to geek out here guys, and, really go deep into STSS. Right? So this is where, this is where my brain goes sometimes on a Saturday night, which is just exciting. but so the way I’ve been thinking about CSS a lot, and so the LTV component of CSS, which is lifetime value, Which I’m sure all your listeners are very, very well aware of is kind of like how much money can you make from this consumer over time.Right. And it’s a function of your pricing and it’s an, a function of your turn rate. And so, a lot of people are very focused on this metric as investors or buyers, right? Because it’s effectively, how valuable is your customer? So it’s an extremely important metric. The problem with this metric and lots of other metrics is it’s, it’s derived from an app.Right. It’s looking at all your users that come into your, in your ecosystem is paying customers. And then how do they perform over time? and it’s, it’s driven, it’s driven off an average of all your users. And so when I’ve gone through some of my client’s data and you look at their user base, right, we, we quickly discovered there’s a, there’s kind of two different profiles.And I won’t use any names here, but let’s just, let’s just say it’s, a walking company, right? So you’re, you’ve got people that go out and they, they sign up, you have a hundred people that. And 20 of them start walking every day and they’re, and they, this is what they love and they’re tracking, they’re walking and you’ve got another 40 that do it for like a month or two.And then they kind of drop off and then just like, I’m going to go do biking or skateboarding or something. And I switch and you’ve got another people that sign up. They subscribed to it because their friend pressured him into it and they hate walking and they’re never going to walk again and they turn off immediately.Right. So you kind of have those three different groups, some that are just going to do whatever. Some that do it for two to three months and then leave. And then some that do it the first month. And then say, forget this. I’m never going to use this again. And so the problem is your LTV of each one of those three groups are very, very different.And so what, we’ve, what we’ve been guiding investors and entrepreneurs, as they think about their growing their businesses, really find out who those locals are, who those people that are going to come and use your app every day, every week, every summer, whatever, whatever the metric is that you’re looking.And find ways to measure that, right? Because ultimately that’s who you need to bring to your community. And one, those people make the community run more robust, right? Cause they’re constantly contributing feedback into the. To, they’re much more likely to stay around with you guys. And so you need to find those tools that they’re looking for.Right? Like seeing around the corner and saying like, okay, this person loves walking. What else can I provide them? What about a weather forecast? So now that they are about to go out and walking, you know, what does the weather look like? And, oh my God, this is now, this is my one-stop stop for, for walking.And so I think w we’ve been guidinGP Bullhound’s like if you use the averages as a broad metric and that’s great, and you should, because investors are going to want to know that, but, but really dig deep into your, your cohort and understand like who’s using this every day, all day and what do they need. And so if you can really identify that and show that LTV to, to invest in.I think you can get people a lot more excited than just like that average LTV, right? Cause this shows them potential of what it can be over three to five years, which is really important if you’re two or three year old company. Right. And try to convince someone to invest in you showing them that lifetime value of the tour or the locals is going to be a lot more valuable than that average.00:31:46 Jacob:I mean, if you think about just as the, you know, I think it’s one of the, you highlighted one of the hard parts of assessing these businesses early on, is that yeah. Your cohort, your total subscriber base is very heavily biased on like your most recent cohort, because often you’re also growing, right?Like that’s often, like your most recent cohort might be the size of your first five, you know? just because, and for that reason you can really have scurry looking data. but you know, if you think five years from now, mostly. Those other two groups you mentioned there they’ll have turned out from most cohorts.Right? And then the only ones remaining for four years of cohorts will be these locals and these long-term retention. And then your total subscriber base is gonna look very different than it does today. Right. And yeah, I’ll admit revenue. I’ve tried to solve this problem in the product. And we still are trying to solve this problem in the product.It’s how do we like show people? Cause you’re, you’re dealing with a mixed population, right? And like you, you can also also run into a problem with begging the COO or like doing very, like, look, you got to invest in and say like, look, look how great my retention is. If I just ignore them. Bad users. Right?Like, let me just look at the good ones. Right. But there is something there in that. What you’re talking about, Eric, that long, that very long-term view is that if these users really do retain for a long time, eventually they will be the lion’s share of. Subscriber base. And that churn that we talk about, like, you know, if you’re adding 1% of your total user base, the most you can experience off of that as like 1% of churn, right.Versus when you’re adding half, you know, if you have 110,000 subscribers and you add 10,000 in a month, that’s going to be a huge effect to your overall subscription subscription base. Right. so yeah, I think, I think, you know, we certainly have a lot to build on the tooling side. Right. And I think it goes to what you’re talking about.Air. We’re very early. Like, I think we’ve just kind of solved infrastructure, like infrastructure. I mean, I would even say kind of, cause there’s a lot for us that we need to do yet. but as far as like data science and actually yeah. Being able to outside of a spreadsheet, understand this stuff. It’s it’s, it’s not trivial.It’s not trivial. All 00:33:51 Eric:It’s extremely hard. And I think like, cause there’s so much more you could do once you’ve broken those two cohorts into tourists and locals, right? Like how do you acquire the locals versus how do you acquire the tourists? Are tourists coming through like Facebook, apple store and the locals are coming from referrals.Okay. So maybe your Facebook spend, is that even worth doing the spending on right. If they’re, if they’re turning off after a month or two, you know, subscribers is a vanity metric, right. If they don’t. All right. You can grow. We talked about this in our 2020 report. We have like this cheetah versus thoroughbred.Right. And it’s really easy to show a ton of growth. And you’ve got all these subscribers and everything is fantastic. Right. But if those subscribers get tired and they turn off right away, you kind of probably wasted money on them. Right. Maybe you got paid back in a month, right. So you didn’t lose like on the CAC spend right in here, but you’re not building your business.Right. You’re just gonna you’re pinching pennies. 00:34:36 Jacob:But not a lot of work. Right? Like it’s not actually getting translated into business 00:34:39 Eric:Exactly. So is it better to kind of focus on the product, right? Figure out what those, those, tourists are using and spend less time on the marketing side and really nailed the products like, Hey, you’ll probably grow slower, right? And That’s an issue. That’s a risk you have to take, but maybe you can grow more efficiently, more capital efficiency.00:34:55 Jacob:Capital’s free now, so that’s not a 00:34:58 Eric:That’s a fair point of half my fault, I’ll take full responsibility for some of that. Right. 00:35:03 Jacob:I think it’s interesting how this like feeds into, you know, kind of going back to targeting and ad targeting how often. Optimized Facebook campaigns on like trial conversion. And that doesn’t even that doesn’t, that’s all your tourists and your locals. I mean, maybe some of those that never even start a trial would be cause, but there’s a lot of tourists in that group that started trial right.Or convert a trial. And a lot of people are targeting off of that. Right. And so as these methods become less. Good. it will force it’ll force developers to yeah. Maybe do one of these scary things actually talk to users, right? Like actually like find those locals, like go in your analytics. And I think just the thing as you were talking about, I just want to point out that, like, I don’t think you necessarily need to define this off of monetization retention either could just be retention, like pure usage retention, but it could also be engagement.Yeah. I think about the way Facebook, Oriented their growth teams very early on, which was like findinGP Bullhound that connected, like that was a really key step for them in their product, was to get people to make like three or four. I forget there’s some number of friends and they oriented all of their growth efforts around that.Find the thing that people do in your. Shows that they’re engaged and give them opportunities to show that. And then, you know, you can use that as an indicator. Okay. Talk to those folks and actually talk to them, right? Like find out, always put something in your app that lets you reach out to them in some way.And like, have you can get on a zoom call. I’ve done. It’s easier now in SaaS land because like, I, I, I, people I’m an app. People like I know how to talk to them, but when we were, when I was working in consumer. Phone calls were more awkward, right? It was different. You’re not going to books like outside of computer land, but still like just incredibly valuable.And, and, and, and I think like, you know, if we want to talk about the way to build the way to fully realize how CSS is going to, I’m just going to go all in on your turmeric, by the way, I said, I’m going to, 00:36:57 Eric:That.00:36:57 Jacob:I’m going to push it. We’re going to standardize. But 00:36:59 Eric:It’s not trademark, but knock it out. 00:37:01 Jacob:All right. So to fully like, to fully realize the potential to like help problems for people.Like, I think we need to lean into this more of this model. Right. Rather than I’ve always kind of like had an uncomfortable relationship with how our RevenueCat fits into the like hyper fast monetization stuff. Right. I’m like, get users, check your CAC, put more money into Facebook. Right. And so, the more the industry gets away from that. The happier I am. I don’t know. Like you said, maybe it doesn’t go quite as fast, but I think the overall Tam will be larger. Right? If we take that approach,00:37:33 Eric:Think that’s right. And, you know, I mean, I’ve talked to a bunch of founders that haven’t raised capital. Right. And they build something that like their users love. Right. Like, so I don’t know if you guys saw the deal with day one that got bought by automatic braised almost as your outside capital.Right. He built. 00:37:46 Jacob:Big fans that they won. 00:37:47 Eric:Yeah. Yeah. I was a big,I got it’s an awesome business and he did that exact same thing. Right. He just listened to his users. He didn’t care about vanity metrics grew really nicely. Right. And it wasn’t like, you know, he’s not getting tech crunch publishing, but that’s fine. Right. You know, on an amazing business.And then, you know, I’ve got a fantastic exit out of it. So I think, I think people are really waking up to that’s a very much a possibility here in the.00:38:08 David:Yeah, one thing I wanted to highlight too, in that graph that you made, and for people that are listening to this, you can go to the show notes. We’ll have links to the, Eric’s presentation and you can find this chart, but to visualize it00:38:25 Jacob:Page 18. it open right here. 00:38:27 David:Following along at home, the, line for the locals drops.So, you know, even, even for locals, you’re going to have some turn early on, but then it essentially flat lines. and I’m sure you did that very purposely to kind of illustrate how. How long term some of these, these, this retention can end up being, and it’s something we’ve actually been talking on the podcast about recently is that we’re so early in the space.We don’t even really know what, how to measure LTV. Cause you’re going to have people who ended up subscribing for decades. and years and years and years, if not decades. And so, and, and then, you know, to your point about the cheetah versus thoroughbred, another great chart in the patient number, Jacob Page number00:39:16 Jacob:I 00:39:17 David:Cheetah versus thoroughbred but in that tuna versus thoroughbred, The other aspect to locals, and we’re kind of touched on it earlier is that those cohorts start to stack. So when you identify this cohort, that is going to be a very long-term cohort. That’s going to stay subscribed and have very low churn. You, you acquire a hundred thousand this year, and then they’re still there next year.And you put a hundred thousand on top of that. And those are still there next year. And by year three, you know, you just continue to grow this pie of people who are very, very sticky in the product. And I think that’s part of what. you know, what you’re talking about with delinquent and Bumble and other companies is like, we’re still just starting to understand even as different as this is from SaaS.We’re starting to see similar dynamics as far as. Early on the churn is so high, but then you do have this really strong stickiness over the long-term that, that, that can build a really healthy business of people who really love your, your product and really are invested in it and are going to stay for a really long time.So yeah, I just wanted to point that out that, that I, I love that aspect of the chart of how flat that line is for the locals. 00:40:35 Eric:I mean, you, you can see it in your own spending patterns, right? Like how many of you guys have subscribed to Netflix or Spotify for more than five years? I bet it’s a good chunk of your listeners. Right? So, I mean, if I look at my phone, right, I’m going to subscribe to all trails for the next decade, 00:40:47 Jacob:Yeah, I’ve got CSS. I I’ve started subscribing to in 20 13, 14, like as 00:40:52 Eric:Yeah. 00:40:52 Jacob:It was a thing, 00:40:53 Eric:I’ve, been a script user for four years and I still download audio books or download other books from like the San Francisco library. Cause I’m probably the cheapest banker of all time. but you know, I still use script 00:41:04 Jacob:It’s finding margin, Eric you’re finding margin. That’s what that is. 00:41:07 Eric:Exactly. I’ve pinched counties all day.But yeah, so I mean, I, I think those tails David to your point are still being written. And so that’s the whole point, right? If you use average LTV and you say, all right, well, we have 30% churn that math means you lose every user in three years, and that’s just not how it works. And if with really good businesses that are delivering value, right?And so then once you convince people of that, right, the investment case becomes a very different company.00:41:30 David:And speaking of that, you, you had a great, slide on investor benchmarks. And so I wanted to get to that real quick, tell me about how you, how you thought. These different metrics. And what, and how investors think about these metrics? Because you know, we’re talking about LTV and in there you have LTV to CAC of you, you know, for a really strong app, that investor would be super excited about.You’re closest to. Six X versus less than three X, you start to cool off. So, yeah. Walk us through each of these metrics and kind of how you think about it, how you think investors think about it, And even how that’s kind of maturing as we understand the space better. 00:42:10 Eric:Yeah. And just to note like these metrics are all different for different types of businesses, right? If you’ve been around for a year, these metrics are very different versus if you’ve been around for 10 years, right. If you’re in high growth, you know, venture back, spending a lot of money, these metrics look very different than if you’re a bootstrap business, you know, just trying to inch out.You know, 10% growth a year. Right. So they can be very different. And the important thing is how does the story of your business and what you’re trying to accomplish tie to these metrics? Right. So that’s what we spent a lot of time talking to founders about is, is what’s good based on what you’re trying to do.Right. So it’s just how you, how do you tell your story through the metrics? but yeah, so a couple of your points on the S on the slide, we talk about like user growth rates, gross margins, LTV to CAC, churn rates, free to paid conversion rate, and then sales efficiency. and then, you know, just to talk about something different, we, we talked about LTV a little bit earlier, but maybe talking about, churn, right.And so like how quickly do people churn off? Right. And so that’s, there’s a couple different ways to interpret churn, right? It’s one, they didn’t find your product. Too. They thought it was really expensive. or if they’re not turning, they really love something you’ve put together. Right. And they decided to pay you multiple times for that either monthly or annual.And so what we just try to do is try to tell the story of where the business is at and where it’s going by looking at these metrics. And so, you know, that’s why it’s so important to truly understand these metrics, because if you don’t understand the metrics, it’s hard to tie that to the story. so we spent a lot of time with any client or even non-clients just talking about this stuff to truly understand, you know, what investors care about.And it’s, you know, if someone’s buying the business, they may care a very good. They may care about very different metrics for someone who’s investing your business for growth, right? So someone’s going to put 40%, $40 million on your balance sheet to go grow. They may be focused less on LTV to CAC now because your LTV is not formally formed, right.They don’t know how good it is, but they will focus very heavily on churn, which is a reflection of how good your product is and how good you’re finding consumers that love your product. Right. So those, those are metrics that they may focus. They made me more comfortable spending a lot of money in the next two years.Right. So your CACs going to look a lot worse because they watched, you acquire a lot of users to make the platform a lot better. Right. And a lot of CSS businesses, right. UGC is a, is a, is a spinoff of user activity on the post. Beautiful uploading photos reviews. They’re adding new new items on, on the platform for other users to use.And so it’s worth spending more money to get those people in the first two to three years because your platform becomes that much better and that much more valuable, right? So you may be willing to burn down to a, an LTV to CAC of three X or something like that in the near term, or sometimes even two extra one X, because it’s a land grab for those.Once you’re on their platform right now. You want to see that LTV to CAC, start to move up a little bit, right? So you start to put it to four or five, six X, LTV to CAC. So it’s all about where your business is. It’s each different stage, but it’s important to have a story and a message around why your numbers are, what they are.00:45:03 Jacob:Of the, I have the slides up in third slide, 37 for anybody who’s following along at home. all of these as a veteran SAS CSS person, every annual user growth rate, gross margin to be cash I’ll clear me, sales efficiency ratio. Can you talk about that one? Cause that one’s, that one’s, not as a little foreign to me. 00:45:22 Eric:Yeah. It’s, it’s a, it’s more of a metric that’s come out of SAS just to be honest. So it’s thinking about like, it involves like how, how many users are you gaining? It’s how much revenue you’re gaining versus how much money are you putting out there? So it’s a little bit of a different metric. and most CSS businesses don’t get to that yet because they typically don’t have heavy sales team.And so we’ve included it because you’re starting to see some of these CSS businesses really start to grow. And so how much revenue gaining versus how much revenue you’re losing and how much is it costing you to do that? And so that’s when you’re starting to get into like the tens to $20 million of, of, marketing spend a year, it’s, it’s, important to understand like how efficient is that spend being, and this is the best metric 00:46:00 Jacob:We, it says called sales, but you actually throw in marketing, spend in there as well. So it’s like all go to market spend 00:46:07 Eric:Yeah. Are using head count, not just like the ad dollars. right. 00:46:10 Jacob:Right. 00:46:11 Eric:It’s like a fully loaded CAC number, like 00:46:13 Jacob:Your, all of your people telling Facebook what to do, 00:46:17 Eric:Yep, exactly. Exactly. 00:46:18 Jacob:Content graders, like all that stuff, right? Yeah. 00:46:20 Eric:If you’ve got a hundred people running around campus, right. Promoting your app. Right. Okay. How much those people cost. Right. So it’s an important way to think about how much you grow. And it’s a way to think about like how well can you grow a capitally efficient capital with limited amounts of capital.So it’s an important one. We look at it, it’s typically a later stage, right? So you’ve gotta be like north of 20 million of 00:46:40 Jacob:So he’s going to be super high when you’re small, right? Because you’re, you’re your. 00:46:43 Eric:Sir. Request important. 00:46:44 Jacob:People are discreet. Right. And that you can’t, you’re not continuous. So, and also your, your, your revenue just grows less because of like, you know, you’re smaller, you’re less, well-known like, you’re less is momentum is things like this. 00:46:56 David:Well, we’re starting to run low on time, but there’s so much more I want to talk to you about, but just to hit one last thing. I also love this chart you did, of Pandora versus Spotify. It’s such a. And encapsulation, really everything that we’ve been talking about on this podcast is to see how well Spotify revenue has compounded over the past few years versus a Pandora, which, which look was the juggernaut.You know, when, when, when Spotify started. so, so walk us through this chart. And in how and why you think, you know, Spotify was able to, to grow the way they did while Pandora really struggled. And obviously there’s a ton of, you know, other business factors and execution and other things. But, but I think overall, this does speak to the power of CSS.00:47:54 Eric:Yeah. And this is, this is something we did back in 2020 when we were just trying to decide like, Hey, what’s is this CSS thing real? And, and a big question you get from, from investors. And listen, I think a lot of them have stopped asking this question because the case studies are out there is why would someone pay monthly or annually for something they can get for free?And by get for free, it means listening to, or watch. Right. And so I wanted to see like, alright, graphically or like actually numbers to will people, more companies make more money by making that really hard decision and say, pay me for what I’m giving you first. I’ll give you something for free and exchange every half hour, you watch two minutes of ads, right?That’s a really hard question to say, because it involves you putting a lot of value in your product. And so entrepreneurs, you know, product developers have to. Is this worth money or am I giving something out to people that, Hey, they’ll kind of use it if they get it for free. Right? So it’s a, it’s a gut check for people to say, like, did I build something that someone will buy?That’s hard. That’s really challenging. Ask yourself, especially if you’ve started with advertising. and Spotify, you know, listen, they were a small company based in the Nordics, right. Versus Pandora US-based juggernaut and, and raised a lot of money. Right. That’s a tough challenge. And so they took a really tough thing and said like, Hey, we’re going to get.And make people pay for our product and we’re going to make it better. But the crazy thing that happens though, right, is you make so much more on a user from subscriptions than you do from average. Right on advertising. You’re trying to pick up pennies per subscription on some or pennies per user on the subscriber.You’re making 10, 20 bucks a month, depending maybe maybe $60 a year for a subscriber. So the amount of users you have compounds so quickly, and then if you have that heavy retention, all of a sudden, you’ve got these really thick layers of cashflow that come in every year, use that cashflow. You invest it back in.He invested back in product and you do it again and again and again, and all of a sudden you’ve got a better product. And if you have a better product, people will come to it. And if it’s something that they’re using daily, right. Why would you not be comfortable like paying five bucks? Right. If I think about like how much my Netflix subscription is, right.It’s $11 a month or something like that. Right. Well, I probably watch 10 hours of Netflix a month, right? So I’m paying a dollar an hour to be entertained. Pretty good deal. And so, like, I think if people, people start doing that math and you start to see like how powerful that that subscription is for user versus an ad driven, it becomes pretty interesting.And so I think you’ve seen this case study play out over and over and over across CSS, where if you build a good enough product, you know, a 10 X product versus the free option, people will pay for it. 00:50:24 David:And Spotify does double dip as well, which is interesting is that they have a good enough free tier and people can listen for free. But they choose to spend, even though they can. And so, so Spotify is a great example of, of double-dipping with a great freemium tier, but then a good enough product in a compelling enough reason that people will pay.00:50:47 Jacob:Yeah, another dimension. I don’t know the specifics of Pandora and Spotify. It’s like fundraising history, but if you have like the subscriber. Subscription revenue momentum makes capital more easy to access. And you look at some of this. I think of some of the strategic stuff that Spotify has done. Like they got the Beatles on Spotify pretty early on and lets up, they spent big on partnerships and Content and stuff.And if you have momentum, if you have hard dollars, it’s a lot easier to go to an investor and be like, Hey, like I want to raise X million dollar. Revenue growth. I have, like, this is very clearly a business. I can remember raising money in the pre revenue is everything era or like trying to raise money.And it was like a lot harder. Right. Cause it was just like hand waves and we’re going to grow and like, and now it’s like, yeah, for better or worse, you go over the curtain and you show something. Right. But the big benefit too, I think for founders, it’s not just for investor, for founders. It’s like, yeah, you build a great business.You’re building a safety net, right? Like if you can’t fundraise, it’s not the end of the world. Like you have options. And I think that’s part of the reason why also, I mean, now we’re getting into fundraising like macro, but that’s part of the reason the funding environment is crazy because businesses are sturdier than they’ve ever been.Like they need capital less than they’ve ever needed it. Right. And so like, that’s why it’s gotten cheaper. or, you know, evaluation’s gotten higher same thing. Right. So, Anyway. Yeah. And this is a fascinating to put this. I already was not on here, which was my horse. And I was like really pulling for them.And then it gets to a whole different story of why that’s not on there. But, but yeah, it’s fascinating.00:52:11 David:Well, I think that’s a really fun place to end the story of Spotify, one of the biggest juggernauts in the space. We’re going to include in the show notes a link to the report, a link to your LinkedIn and Twitter to follow along.Anything else you want to share as we wrap up? 00:52:27 Eric:No guys. Always a pleasure to join you. One thing for your audience users, we are trying to make the GP Bullhound CSS report a resource for founders. This year, for the first time ever, we did include a link to a survey.So, if you want to contribute your data, what we’ll do is aggregate everything, anonymize it, and then we’ll provide back a summary to users to say, “Hey, here’s your LTV to CAC. How does this compare to other founders at this stage?” We are trying to be a resource. I’ll probably give you guys that link, if you don’t mind. We’d love to have as many people as possible. No pressure.Of course, all of it would be anonymized. This isn’t a marketing tactic for us. It’s us giving back to the community. We’d love people to take a second to do the survey, but if not, don’t hesitate to email me, tweet at me, hit me on LinkedIn with questions, comments, and specifically stuff We got wrong. Absolutely love to hear where we can learn.00:53:22 Jacob:Yeah. 00:53:23 Eric:Because we’re not building, we’re just talking about what you guys are doing.00:53:26 Jacob:By the time you print this thing, it’s like, stuff’s changed, right? Like it’s changing so fast.00:53:32 Eric:The whole Apple thing when we were publishing was happening everyday. And I was like, this is unbelievable.00:53:36 Jacob:And wait to...00:53:36 Eric:Since July, and I have to change every minute. Yeah. I had to change a PowerPoint. You guys had to change code. So I think one was a lot harder.00:53:44 David:Well, it was great having you on, Eric, and we’ll have to make this an annual thing.00:53:49 Eric:Sounds good.You’re welcome.00:53:51 Jacob:Yeah, we’ll see you next year. 00:53:52 David:See you in 2022.00:53:54 Eric:All right. Thanks David. Thanks Jacob.

Oct 27

54 min 12 sec

Our guest today is Seth Miller, Founder and CEO at Rapchat. Seth is on a mission to democratize music creation with Rapchat’s mobile app. Rapchat takes the friction out of making music, and has helped millions of artists unleash their creativity.Seth earned his bachelor’s degree in business administration, with an emphasis on management information systems, from Ohio University. Before founding Rapchat, Seth worked as a consultant for Adidas, and an IT Systems Engineer.On the podcast we talk with Seth about bootstrapping his way to signs of product market fit, raising money from strategic partners like Sony Music, and what it’s like to have Facebook completely rip off your app.In this episode, you’ll learn: Finding the right niche for your app Bootstrapping and early funding Using the right marketing channels for your app Filtering out the wrong users for your app's paid features How to transition your app from free to paid Links & Resources Sony Nico Wittenborn Twitter Adjacent Complex Seth Miller’s Links Follow Seth on Twitter Rapchat Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 Seth:We would be dead for sure if I didn’t learn how to code. It’s an invaluable skill that I’ll have in this organization and future organizations. It also just helps me think about things. It’s a really great way to look at the world sometimes.00:00:31 David:Hello, I’m your host, David Bernard. And with me as always, RevenueCat CEO, Jacob Eiting. Our guest today is Seth Miller, founder and CEO at Rapchat. Seth is on a mission to democratize music creation with Rapchat’s mobile app. It takes the friction out of making music, and has helped millions of artists unleash their creativity on the podcast.We talk with Seth about bootstrapping his way to signs of product market fit. Raising money from strategic partners like Sony, and what it’s like to have Facebook completely rip off your app.Hey Seth, welcome to the podcast!00:01:06 Seth:How’s it going? Thanks for having me.00:01:07 David:It’s been a long time coming. You and I first chatted way back in 2019. You were the first office hour call I ever took at RevenueCat.00:01:18 Seth:Oh, wow. 00:01:19 David:Yeah, going way back in my RevenueCat days. 00:01:22 Jacob:It tells you how bad of a CEO I am that we’ve never actually spoken on the phone in those two years.00:01:30 Seth:Or how good David was!00:01:31 Jacob:Yeah.00:01:32 Seth:I was sold after one call. I’m like, all right, dude, where do I sign up? How do I get this going? 00:01:37 Jacob:We have a lot of cross connections, because you’re an Adjacent portfolio. Nico is a co-investor. We’re also both Ohio-based. So, yeah, lots of cover today.00:01:54 Seth:We got to hang out. 00:01:55 Jacob:We should. It’s beautiful in Ohio today, but I’m not going to make an Ohio podcast.But, maybe kickoff and tell us, what is Rapchat?00:02:07 Seth:Yeah, absolutely. So, Rapchat is the easiest way to make music on your phone. We have an iOS and Android app. You really just like tap in, and open the app. We have hundreds and thousands of free beats on the app. So, you just pick a beat, you can record over it, and then you can share that anywhere.We have people making full-length studio-quality songs from their phone and sharing it to Instagram and SoundCloud. And then also on the platform, we have a social layer as well. Which is really cool. Pretty much a recording studio in your pocket, with a community, with a social layer.Similar to Visco, or Instagram for music. Our mission is really to democratize music by providing access and tools to the next billion music creators.00:03:01 Jacob:How did you get on this idea?00:03:05 Seth:Well, like just scratching my own itch in the early days. Almost eight years ago when I was in college, apps were really starting to become a thing, and same with social networks and you-do-see platforms that let you create content and share it. You know, the golden era of Vine, Snap, all of that. But there was nothing for music.I also had a hobby of freestyling with my friends. So, we’d get together, throw on beats, and rap, and some people would sing and just create all sorts of stuff. It was something that I noticed that was like, yeah, this should exist on your phone. I should be able to do this with my high school buddies that are on a different campus that I used to do it with.That was really it, just scratching my own itch. Then over time, I think we’ve really come to realize that there’s just this massive opportunity to do this at scale for those that really want to make music and take it seriously.So, I’ve kind of outgrown my own use case a little bit, even though we have people that come and have fun, but really we’re focused on providing tools for the everyday artist that historically has been kind of gatekeeped out of participating in music. So, we try and give them everything we can in their pocket, and still feels like we’re only getting started. 00:04:26 Jacob:It’s not as easy to pirate logic these days I imagine, like it used to be.00:04:31 Seth:Yeah. Right.00:04:32 David:What did those early days look like? Did you learn to code? Did you have a coding background? What did those early days look like, and when did you get the app out? 00:04:43 Seth:Yeah, I mean, pure chaos and it’s not too much different today, you know, it’s just a little more organized. yeah, the first version of the iOS app was June, 2014. I think it was June 7th and that was really. I wouldn’t even pass as an alpha version think especially with how good some of the test flights are, but, you know, it was very basic.It was, you could open the app record one track over like 10 predefined beats that had to come with the app store bundle, like would even have server side, like beats, and. Like, we just wanted to test that people would do it. And you know, of course the first couple of months, is just getting friends off Facebook and family to download it.But then, I started to notice like, you know, a little bit of traction and then more traction and then basically quit my job. I was like, all right, I gotta, I gotta really go after this. And it, that exactly. That’s when I taught myself how to code too, because, I had a lot of help in the early days, just from like friends, faculty members, anyone I could get to work on it But then after, you know, I noticed there’s just like basically early signs of product market fit, I guess, if you will now, but people sharing it. I was like, I really want to make updates to this thing and I can’t afford any engineers and I don’t know anything about fundraising. So it was like the only way I could make any updates and then wrote really shitty code for like three years.And, but got enough traction improved to kind of, you know, enter the startup space, the fundraising space. Now, luckily we have really amazing engineers and I still write some code here and there. That’s probably not that great, but, you know, I love it. So,00:06:22 David:Did you have any co-founders? 00:06:24 Seth:Yeah, so we, I mean, we had a team on campus in the early days, that, you know, we’re helping out. We’ve had a lot of people along the way, help out in different parts of the journey it’s been. An epic journey, you know, and, lots of ups and downs, but yeah, we’ve had lots of different people help us out.And, now we have a fully distributed team, and still relatively small 10 people, but, lots of great product builders and, yeah, it’s a lot of fun00:06:54 Jacob:Yeah. David can, can probably talk more to the pain of not like having on staff. Like it’s not so much. I mean, yeah. I mean, the cost is a thing for sure. But like, I think a bigger thing often is the, the, the turnaround time, right? The iteration time of not having well, you know, even if you’re. You know, product person who’s non-technical and you have a technical co-founder, there’s even like friction there and communicating the ideas.Right. If you’re not really in sync. And so having that all in one mind can really like speed things up. And in the early days, that’s what it’s all about. Right? It’s all about iteration speed. It’s all about getting, you know, different sticking stuff, different stuff to the wall. As fast as possible to see what takes off.So, that’s always the advice saying, I don’t know if there’s anybody that listen, this is there, there probably are people in the podcast in a similar situation where they’re like, maybe they didn’t study programming or whatever. Like it’s gotta be, I mean, I don’t know so that you can, you can go against this.Maybe it’s not the case, but it feels like it’s probably the best way to invest your time is like, get to the basics, like as fast as you can.00:07:59 Seth:Yeah, I think so. I mean, the amount of time you’ll spend trying to like find a co-founder that codes. Sure. The ultimate is like, you find a co-founder you guys gel and like, they know how to code and you know, you know how to do everything else, but like, I dunno, we would be dead for sure. If I didn’t learn how to code and it’s an invaluable skill that I’ll have in this organization and future organizations, it also just helps me like, think about things like it’s a really great, like, you know, way to look at the world sometimes.00:08:32 Jacob:Yeah. You’re not bamboozled by engineers too, which 00:08:34 Seth:Yeah. Yeah. And I can like talk to engineers and I think like, it really helps me get, buy-in like I can go to the engineering team and be like, yeah, no, tell me the real shit. Like, you know, what’s really going on and we can have technical combos as opposed to like, you know, kind of the, I don’t know if it’s just a whatever stereotype of early CEO that’s like, I need this and this is why, and I’m going to go sell and you know, that can get you into trouble and. Yeah. So anyway, I, I’m a huge advocate. I get some people are really, it’s a scary thing to learn. It does take time. You’re really bad for00:09:08 Jacob:Ever, basically, I don’t think, I don’t think you ever get, you’re not going to be good. Like every engineer you work with is going to be like, oh right, like this 00:09:16 Seth:Exactly, But I do think it’s, it’s really helpful, especially those in the early days. Cause like, trust me, you can look at Google and be like, oh, I need to raise money for my startup, which is what I did.And eventually we did, you know, do some fundraising, but It’s again, the amount of time you’d spend trying to figure out how to fundraise and just jump in this like really deep ocean versus, you know, a skill that you’ll have for life that will instantly, you know, provide value in your current job even.Yeah. I’m, I’m all for it. I mean, I try to get people to code no matter what, 00:09:47 Jacob:I guess like you mentioned kind of that, that early stage. Finding product market fit. Like how long if something’s called wandering the desert, but like how long did you wander the desert? Like how long until, and then when you first started to see those indications, because probably market fits this, like it’s, it’s a bad term because like, It means different things to different people and founders can deceive themselves all the time.And, you know, even, even YC is like, I think one of the best orgs for defining this and communicating this there, their definition is not very good right there. Like, it just feels like it’s going faster. It’s like, okay. Like you can still lie to yourself really easily. So what did that look like for you?00:10:26 Seth:Yeah, no, I could not agree more and could go on lots of, lots of rants about this, or just in general, like, you know, benchmarks or anything like that. I think. You know, and I’ll just speak for myself. Cause like you said, it’s like totally different for every company. but the, the first signs is when I remember I was working the first and only job I had out of college, I was a systems engineer at progressive insurance.So I was in their data center, literally like working on servers, had no idea what I was doing, but, I was there for like six months and I remember I was like at work, searching Twitter, like Rapchat on Twitter, just to. And then over time, like more and more people just kept sharing their tracks to Twitter and like saying how much they love it.And then app store reviews were a big thing. I mean, it’s just clear that we like, like people truly loved the product. and that was kind of the first step. And you can’t really like quantify. It’s not like, oh, there was a thousand Twitter it’s, you know, quotes or. 00:11:29 Jacob:You weren’t measuring like day one retention, day 30 retention. 00:11:32 Seth:Was, I learned that I learned all that stuff over time and like, we track, we track a lot of that stuff, but I’m telling you like the most important stuff was like the qualitative in the early days.Then, but you need qualitative at scale. Like it’s not just like your friend, you know, it’s like, plus you know, 50,000 I may use at that time or whatever it was. And I think that. That was really key. Like the first thing is like, people were actually able to record music on their phone and share it.Some people were really good at it. Like this is, this is kind of like obvious now, but it wasn’t back in the day. Like there was like technical challenges there where, you know, people didn’t think it would be a thing. Some people still don’t think it’s like a billion opportunity, but like, you know, we had to prove out that people would really record music on their phone.Like that was, it seems so obvious, 00:12:21 Jacob:What was the propeller heads app? gosh, what was that called? 00:12:25 Seth:Had a few, I00:12:26 Jacob:There was, there was, I remember this bad podcasting. I don’t know the name of it, but I remember there being some really key like music apps that were kind of around that era. Right. It was like, the phones were finally getting fast enough to be able to do this without like just falling over and dying in 00:12:41 Seth:Yeah. Yeah. 00:12:42 Jacob:Timeframe.00:12:42 Seth:And Andrew, it’s still like really freaking hard to get. Right. But I mean, over time now we have like a process of like, how we think about, you know, does our product work for a certain market? And it’s changed. Like I would say you never really—we’re not in a desert, but you never stop wandering Like your product evolves over time. The market evolves over time. We’ve seen different personas evolve and grow in our community over time. and now, like I said, in the early days, a lot of it was providing just like a fun, social media app that was music-based for the F for everyone. And now, while we do have those components, it’s much more about providing a really great recording studio in your pocket with a community of creators for the everyday artists.Like, so now we’ve actually. Zoned in a little more and focused on one or two specific segments. And we have really strong metrics engagement, now subscriptions for that specific persona. So I think that’s a big thing. Like in the early days, you’d read all these blogs and, you know, what to look at for retention or what to look at for product market fit.But a lot of times it’s not married with context of like personas. And so for the first three years, I mean, we were getting whatever millions of downloads a year. But like this person, in India’s here to have fun. This person in Georgia is here to take it seriously. And we were just looking at it all blended.And so like, once we learned to actually be like, no, like when now we literally ask, like, why are you here? Like, what are your aspirations? And, then we view things through that lens. That’s been one of the biggest unlocks, like, it it seems obvious again, but. If you don’t think that way then in the early days, you’re just kind of like wondering like, well, why is my day one retention?Like not changing. It’s like, well, you know, you’re getting 30% of your users from this like really bad channel and they’re low intent. And like, you should filter those out. because that’s noise.00:14:42 Jacob:I it’s so tricky though, because I was in a similar position when we were trying to work on growth elevate. And, you can, you can really easily. That thing where founders are trying to lie to themselves, it’s a very easy way to lie to yourself. Right. And be like, yeah, I have a great retention if I just ignore all the users with the bad retention.Right. And it’s like,00:15:02 Seth:Yeah. Yeah.00:15:03 Jacob:I think context is the important thing. Right. It’s like, okay, like what are the actual context for this? And I mean, it makes me think of, the photo room, a founder who we had on a couple, a couple of weeks ago. I don’t know the ordering of the pockets come down, but they also had a similar situation where they found it, like within their greater per user base, like a persona where retention was really strong intent was really high.And then it’s kind of great because it gives you, I feel like from a founder and product perspective, it gives you license to focus right. A little bit and be like, okay, like we found this profile, that’s going to be our most important. And we’re going to like really put our energy here. And it kind of clarifies a lot of like things for the, you know, product decision-making. 00:15:43 David:One thing to interject on this real quick is that, I think a lot of people underestimate just how amazing Facebook got at doing this for founders. Because that the feedback loop and Facebook’s algorithm and how much data that had on people prior to app tracking transparency and apple is kind of unwound all of this, but that’s part of why Facebook has worked as the like user acquisition main channel for so many apps to grow is because all of what you were talking about, Jacob, and you were talking about.They just do it automatically with really sophisticated eye AI and way more data than you’re ever going to have to understand people’s intent and the, the, the types of people who are going to. Oh, well in your app. So when you’re feeding those subscription monetization events back to Facebook and Facebook’s experimenting with $50,000 a year money, what are they really doing?They’re doing what you can do. And now with app tracking transparency, we’re going to have to do it more is they’re finding those personas and then advertising to them to get you that return on investment. I think people underestimate how great Facebook did it at finding the. Amazing personas that work in your app.But now, like it’s kind of back to doing what you’ve done. So I’d love to hear a little bit more to, you know, early on just seeing it on a, you know, Rapchat trending on Twitter and like following all that stuff. Like, I think a lot of. Over instrument early and just need to like hit some critical mass first.But then as you get a little further along, you know, you’ve talked about building this like product market fit engine, like how, like, what’s your, what’s your stack. And then how do you think about measuring and learning about those personas and then kind of building for them and orienting the app around that?00:17:44 Seth:I mean, there’s a lot there. So, I mean, again, for context, like we are now just getting into that game, which is like the worst time ever to get into the game where, you know, we’re actually trying to bring those users in with our dollars at00:17:59 Jacob:Maybe, but, but you know, as it’s been disrupted, right. So there’s opportunity. You, you you’ll have probably a better time than somebody who’s trying to adapt from something they got used00:18:07 Seth:Right. We’re going the other way. Pretty much like, so. 00:18:10 David:Facebook charged a lot to do it. That’s the thing it’s like, they captured a lot of that revenue by figuring it out for you, but if you can figure it out and then find those channels that reach those personas in a more cash efficient way you actually are at, at, in a better place. It’s just more work on your side of things, but then you understand your customers better.So there’s benefits to,00:18:30 Jacob:So, so maybe Seth put it on a timeline for me. So like you said, 2008, 2009. So you’re, you’re getting on a, a decade of, of working on this, right. It’s been, it’s been, how long have you been working on. 00:18:41 Seth:2013,00:18:43 Jacob:Sorry. Sorry. How are you telling me a college point? This is before the podcast. Sorry. I’m very good broadcaster.It’s yeah, 2013. So it’s still okay. 7, 8, 8, 8 years or so. So when, when did, when I guess like we are, when did to kind of lead into David’s question, like when did you kind of transition from like, maybe it’s it’s recently, but like at some point, did you go like, okay, like how do I grow this thing? Like, what’s the, what’s the, you know, I see this happening a lot.Consumer apps cause consumer apps really, it maybe they’re inherently viral, but they almost always have to have something to drive the growth. Like some sort of mechanism. When did, did you ever have a point where you started transitioning, start to think about that more as part of the company-building 00:19:26 Seth:Yeah, absolutely. I mean, so I mean to date, like, you know, we’ve had over 7 million people create music in over a hundred countries and over 80% of that’s been organic. So it’s like, you know, we’ve really, that was our whole thing forever because we didn’t have capital. we may have had capital, but we didn’t have enough to have remotely a good budget so we really, yeah, we, we kind of tweaked and refined our viral loops in the early days because that’s all we had. So when I say scrolling on Twitter, that was like the first instance before you could eat, there was a time period where you couldn’t even post on Twitter, you had to open the messages in the app, and then we made it really simple.Again, all this shit’s so obvious now, and now every app does it, but you know, we made it really simple to post a link to your Rapchat to your Twitter and your Facebook. I remember it was only Twitter and Facebook, like two ugly square buttons. because those were the things at the time. And that worked though.I mean, we saw a 10x Return on that. And I mean, to date, you know, that type of flow, come in, create content, share externally, bring your friends in. Some of them will either have the app. Some of them will go to the landing page on the website, download the app, that loop. I mean, that’s been millions and millions of downloads.So, you know, we’re kind of lucky in that sense that, you know, being a UGC and having some network effects, like that’s really been key. and. And just continuing to improve the onboarding, improve the recording experience, improve the sharing experience. Like at some point we, you know, added Instagram and video where we auto-generate a video for you.That was a really good moment because people, and now that’s our most used features, like sharing a video of your. because those do better on social network algorithms. So I think, you know, we’ve kind of had the core loop identified for quite some time and it’s just been consistently tweaking and investing and making that better now, since we’ve had that—and that’s kind of driven itself and still drives itself, you know, we’re looking at all these different other components as well.So, we’re testing out some paid stuff. we’re testing out. Different types of like content marketing and like, we have our own podcast now and we really are bullish on like, you know, creating educational content for the mass music maker across different channels and think we can do some really cool stuff there.We’re starting to explore different parts of like the growth stack, and even web like SEO and web, we haven’t invested in. And we think it’s a huge opportunity because we want to expose this content to. To everyone and we can create unique experiences per platform, and we have the bandwidth to do it now.So now it’s kind of the fun part. whereas, you know, before it was, yeah, pretty much all organic. 00:22:12 Jacob:Surviving 00:22:13 Seth:Yeah.00:22:13 Jacob:How did you make money with the app, like throughout the history and when did you realize subscriptions were the only and best way to make money on the app store?00:22:19 Seth:Yeah, nice plug. no, I mean, we didn’t, we didn’t make money forever. Like until last year I think we hit like we’re hitting year one. So we’ll, you know, we’ll figure out these yearly renewal renewals and all that, but, yeah, we didn’t make money. Like we basically punted making money. Jury’s still out.Like I think if I were to start another app company, I would just implement subscriptions way earlier. But, you know, this is what, when we started and we raised our first round of funding. So we’ve raised three rounds of funding and,00:22:51 Jacob:When did you raise your. 00:22:53 Seth:First round was 2017 and it was very much like, of course the investors are like, no, no, no, don’t make money. know, grow user base, do what Twitter did.00:23:02 Jacob:Oh, you need money. I’ve got some right here. 00:23:05 Seth:Yeah. Just keep raising venture capital. Yeah, yeah, yeah. Essentially like, just get on the treadmill of ambiguous. And then at some point you can do an advertising layer and that’s how it’s done. Like that’s that’s and it’s not like we had any much better ideas either.And we’re like, all right, like, yeah, let’s just keep growing the user base.00:23:22 Jacob:How did you get, how did you get this for years? You just like eating ramen and work in side jobs and 00:23:27 Seth:Yeah, dude. Yeah, Yeah. I mean, so two of them were at college. It was like part-time, you know, like grind in, it took a minute to just to get the test flight out and then the first version then. After progressive I for a year, you know, I just, I mean, I cashed out my 401k and paid some decent money at progressive and sold Bitcoin at like $250 a coin and yeah. Things like that. So 00:23:50 Jacob:Nice. 00:23:52 Seth:Max out some credit cards. I mean, whatever00:23:54 Jacob:You do what you gotta do. Right. it was real, scrappy until that, that, that first round. So, I mean, that’s, that’s the trade off there. Like you don’t either you’re at makes money and like you can flow and like kind of live off it or yeah, you got to do that kind of stuff and then eventually bridge to capital.So I was kind of curious, like how, 00:24:10 Seth:Yeah. And, and to be honest, like that, wasn’t the only time we had to be scrappy. Like even after the first round, you know, like a lot of companies, we were kind of like, okay, we scaled our user base. Like I think, I dunno 10 X after the seed round, but it still wasn’t quite like series a level. So we were kind of stuck in between rounds and it’s like, oh shit.Back off payroll. Okay. Like, here we go again. And, you know, it’s, it there’s Mo there’s been moments, multiple moments like that. and without revenue, it was like, you’re kind of at the, you 00:24:41 Jacob:Is this it’s a safety net, right? Like it’s something you can go back on. Right? That, that, that I I’ve, I’ve been the receiver of that advice. Not, not in this round, that building revenue cap, but in the past of the like, just go, go, go. And it’s, it’s not bad advice. Cause it does like that’s how Instagram did it.Right. There’s examples of companies. But it’s that classic. Like you, you know, people with a portfolio of tens or hundreds of companies giving advice to somebody with a portfolio of one and like the risk there, the, the, the, the, the, the risk equation is fundamentally different there, right. between people.And it’s just one of those tensions with venture capital that exists. And like, you just got to negotiate. So, yeah. It’s, it’s, yeah. You know, it’s a story we’ve heard all too much. I think it’s why. No, I, I be, obviously I’ve got a horse in the race, but like, it’s why I think subscriptions are great. Right.Cause it just like, you can still use venture capital. And in fact, like, I think it’s going to be very accelerative. Right. But, but like you have options, right. And you’re like less fragile now. 00:25:45 Seth:I mean, and I’m happy to say, like after that grind now we’re absolutely in the best place we’ve ever been. We have, you know, recurring revenue, we have more cash at the bank than we’ve ever had, like multiple years of runway. And we should hit cashflow positive, like pretty soon. So it’s like totally different ballgame.And I think to answer your other question, we turned out subscriptions. Yeah. About a year ago. And it really changed the like perspective of product building too. And I think that’s a fundamental difference, like when we were raising our seed round and, you know, we had, I mean, we do, we have a social network on top of our tool and people were like, Hey, why don’t you just try and get to like a billion users?Like that really changes how you build product and what type of features you prioritize? Like, yeah, you’re going to be more like, okay, let me put it in another sharing. Like, let me really nudge you to share or like, 00:26:35 Jacob:Eyeballs. Right? you don’t care. You don’t care. What’s behind them, right. You’re just like 00:26:38 Seth:Like you basically focus on the top of the funnel instead of the middle, bottom of the funnel and like with subscriptions. Yeah. I mean, subscriptions bottom, bottom of the funnel and that’s cool because it kind of focused, it, it focuses you more and that’s, that was just a really, it was all big unlock, like last year and know, frankly, we had to figure out how to make money. We were kind of like in between again and, yeah, it just came to us.David came to us and convinced us to do revenue00:27:07 Jacob:Yeah, I forgot. I forgot that that was the, that was the case. I mean, that was part of the thesis of, of what we built to. I ideally lower the barrier and, and stuff like that. So, but how has, like, has has that, because I think there’s one that you kind of mentioned just like top of funnel versus bottom of funnel, you think of an app that’s driven by virality.There’s like disadvantages to reducing, right. To like, so you must be balancing that really delicately, right? Because you still, you don’t want to, you don’t want to take the gas out of that, that viral loop 00:27:40 Seth:Yeah. Yeah. I mean, especially a year ago when we were like, oh man, we’ve had a free app. We have like, you know, 400,000 monthly active users or whatever it was at the time. And we’re about to introduce this like paid product, you know, it was kind of nerve wracking that tastefully. You know, we took the approach where we didn’t paywall any of the current functionality, like you could come in, you could do everything you did before.In fact, we upgraded the free functionality as well, and then we built new stuff. So like new vocal effects, new ways to like automatically make your song sound better using algorithms, and a few other cool things that people wanted and we paywalled like additional functionality. So I think that was really crucial to do it that.Way and we spent, you know, a few extra months building that, but, that was key. And then people converted and they’re still converting because it’s just like you get the core experience you come in and then, you know, we gradually level them up and we’ve launched one subscription product We have Rapchat gold, which again, unlocks Supreme creator tools.But now we’re working on a second one that we’re going to layer on top that helps these artists make money and gets their songs on Spotify and apple music. And that’s going to kind of complete the artist journey. So, building subscription products can be like really fun and fulfilling for both parties.You know, it’s like, we’re finding ways to help you in your career. And also like, we don’t have to start either, you know, it’s like we can00:29:04 Jacob:Yeah,00:29:05 Seth:Grow together. And that probably sounds too happy, but like really it, it is like, it’s, been 00:29:10 Jacob:You know, it’s almost like an efficient market, right. Where people are paying for value and 00:29:15 Seth:That. 00:29:15 Jacob:Value is getting created, right? Like it’s almost like a good way of00:29:19 Seth:Yep.00:29:20 Jacob:Like00:29:20 Seth:I like that.00:29:21 David:So tell me a little bit more about, about the fundraising process, as an app and kind of being at a, you know, you said there was that kind of in-between time where it’s like, you, you, you had all these signs of product market fit. You were going after the big opportunity. And then when you switched to subscriptions, it wasn’t too long after that, that you, went and raised money, right?Did did the subscription product really take off or was it just early and signs of it? It really taking off that, seed investment. 00:29:54 Seth:When we closed that round, you’re talking about that’s, you know, whatever public and, that, that was around Nico and adjacent came in, you know, we were a couple months into subscription, so it’s not like we had a ton of data, and we weren’t even like fully rolled out. Now we had proof that.People Liked it and good conversion rates and stuff like that. But I think that was iteration one of the paywall and iteration, one of the flow and really early. but I do think it changed the pers, like how, investors perceived our company and we, we proactively changed it too we’re like, no we’re building subscription products for our best users.You know, we, we were able to kind of take control of the pitch more-so than before where it’s like, you’re not making money. How are you going to make money? Are you going to be a social network with ads? Are you going to be a tools company? It’s like, No like, this is, this is what we are like, you know?And, that really put us in control. And, yeah, once we got Nico and a few other, like we, it was also just a good time in the market. Like, I feel like in the past couple of years—you guys have seen, there’s been a lot of activity on the investor side getting into subscription. apps On the market side with IPOs on the founder side with building really great apps that scaled.I mean, Adjecent’s whole portfolio as an example. so I think people were also like, that was the first time where the market worked in our favor. Right. Because before were a music tech social app, it’s like, no one wants to fucking touch that. 00:31:19 Jacob:You’re like a, you’re like Instagram, but smaller.00:31:22 Seth:Yeah. Right. Like, and so. It also like it, it was kind of a perfect storm, I guess.And, yeah, we were very fortunate to get in the right investors that understood the market and also understood like the vision, like the vision was a lot clearer and like, I know Nico really latched onto it and his kind of thesis was perfect for like what we’re doing for music. so yeah, it just, it, it was a good fit obviously Sony was in it and like, you know, that, that was kind of a big key moment to get validation from like the music industry where it’s like, oh, they’re a lot more open and flexible to some of these new-coming technologies and apps and companies.And in fact, like see value in working together, that kind of knocks down that like historical music/tech graveyard of the industry, killing every music tech startup.00:32:13 Jacob:They learned their lesson once probably.00:32:15 Seth:Yeah. Pretty much. 00:32:16 David:Yeah, I’m I’m really curious about, about Sony specifically. And then, you know, you’ve already been talking about Nico, but you, after, after raising that round and going through that process, what, what’s your perspective and maybe even any advice to people thinking about this, about that kind of strategic alignment and the kind of value add, you know, finding that, that company/investor/founder fit. any lessons you’ve learned from that? 00:32:45 Seth:Yeah, it’s hard one 00:32:48 Jacob:Was going to say, I was going to ask like, why? because it sounds like you’re leverage different changed probably right from 00:32:54 Seth:Yeah. 00:32:54 Jacob:Because I, I can’t imagine, did you raise this first rounds in Ohio?00:32:57 Seth:Yeah, it’s some in Ohio, some in the Midwest. You know, smaller funds on the coast, but mostly, 00:33:04 Jacob:To have changed drastically since even 00:33:06 Seth:Yeah. 00:33:06 Jacob:Those first couple of rounds, right? Like it’s going00:33:08 Seth:Yeah, for sure. For sure. No, we have a lot more left. I mean, we’re, we can be a lot more choosy. We’ve got to pick like really great investors as of late. it’s a whole different, yeah, it’s been, it’s been crazy.Crazy awesome. But yeah, I mean working, I don’t know that you’ll get a lot of different advice in working with strategics or big industry partners and depending on who you talk to, some will say don’t touch them at all. Some we’ll say, if you can work with them, work with them. you know, all I can say is, from my experience, like, it’s, it’s not easy.Like you’re working with a massive, usually a public company and they have a lot more process than, than you do. So like literally getting a deal done is just going to take longer, be more strenuous, probably have a couple of strings. We were fortunate enough for it to be a really good, like clean same terms type of deal, but.It’s, it can be really difficult. and that’s kind of up to the founder and the company to figure out like, is it worth it? you know, for us major record labels are. Still kind of the end state for a lot of potential artists in their journey. Like they still provide a lot of value if you get to that point.So like, of course we want to, for the long tail, for our, millions of creators, give them that opportunity. if we can help bridge the gap to get signed at some point, that’s really, that’s really interesting to us. but yeah, it’s hard and again, it’s very contextual. It depends on every deal.It depends on every company and in general, It’s just, it’s gonna take a, it’s gonna take some time, 00:34:36 Jacob:Yeah. dealing with like a big company, like, like Sony, like venture deals, probably the only thing you’re probably tooled for this stage. Cause like that’s a bit cleaner, right? Like a venture deal. It’s like they invest money. Yeah. If you can get it on the same terms as like another venture investor, like it keeps it clean versus like if you’re working on partnerships or something like that, it gets more complicated and I think different.And I’m sure, I’m sure that’s probably something you’re thinking about going forward. It’s like, how do you actually like begin to really engage on those partnerships? I think that’s even harder. So in this specific case, or like maybe a more general case, I can venture a small, like venture investment. It can be like a nice way to kind of just like, get your foot in the door with, with a company or like a strategic, just kinda meet people.Just kind of give them some visibility. And then as you grew up, but I would be, I would ha I would caution against like, trying to engage on some big, hairy, strategic, like, partnership deal. I would like push that out until you get a bit bigger. And like you said, like can match the, like the bandwidth differences a little bit better.00:35:33 Seth:Yeah. I have like our own general council full00:35:36 Jacob:And a partnerships 00:35:37 Seth:Tons of it. yeah, 00:35:41 Jacob:That might probably not the best use of your time at this stage. Right. So.00:35:45 Seth:No, I totally agree. I mean, that’s, that’s, that’s pretty spot on 00:35:48 David:And how did you even get an intro? I mean, if you don’t mind sharing, like, it seems like it is such a perfect fit, but even those perfect fits, like sometimes it’s hard to just even get your foot in the door. 00:36:00 Jacob:Email CEO, 00:36:01 Seth:Yeah, right. honestly, like that’s, shit, I don’t even know. I mean, I think someone might have intro to us, or I, I reached out to somebody, I mean, we’ve had a lot of different contacts. I mean over the years and you guys know this, but like now, okay. We’ve been startups for five, six years and have pretty good network and investors, partners, founders, and it’s just kind of a flywheel like now, you know, things come in, things go out.Like it’s kind of a engine. I think with that one, it was later on in my like startup journey. So I had a lot of. Connections out there already with the other major labels too. It’s like, you know, we we’ve talked to, we’ve kept in touch. That was one thing I think we’ve done really well throughout, like our time, even though we, you know, we’ve been around for a minute, but we’ve consistently like kept people updated, whether it’s investors, whether it’s potential employees, whether it’s partners and you know, sometimes like the guy you knew or girl who.Four years ago that you were talking to at a specific part of a bigger company is now leading venture. Right? Like in that, that type of stuff happens a lot. And I don’t think this is one of those instances. Like I literally think we talked to one division of Sony and then someone like, introduce us to another like, oh, you should talk to the U S music department or whatever.And, you know, all that to say, like, it’s just happens. Like you just reach out to people or people reach out to you. There’s there’s no like magic 00:37:29 Jacob:These, big places have venture teams typically, right. Or they have like some venture part of their Corp dev wing. That’s like, has, you know, funds and knows what they’re doing usually. but, but yeah, I mean, it’s tricky to. Pick partners like, cause yeah, you also, like we’re, we’re a interesting company in the sense that like we have kind of many implicit partners.Right. and it, it, it, you know, there’s no, like there’s no like cap table, you know, wedding rings between any of us, which, which maybe simplifies or doesn’t, 00:38:01 Seth:I thought you guys own like 10% or at yet.00:38:04 Jacob:Yeah, that was, that was that’s how you got our free plan. 00:38:07 Seth:Right, right. 00:38:08 Jacob:Days you didn’t read the full, you didn’t read the 00:38:10 Seth:Yeah. 00:38:11 Jacob:Terms of service, parody, parody, comedy. 00:38:14 David:Yeah, I did. I did want to ask, Facebook. Kind of jumped into your space not too long ago. 00:38:22 Jacob:Where were you? Cause you, we guarantee you, you remember when you saw this, but w what were you doing when, like you saw like, Facebook, like clingy guys?00:38:31 Seth:I honestly think I might’ve been sitting right here. Like I think I was just working.00:38:35 Jacob:Yeah. 00:38:36 Seth:It was nothing special.Like. 00:38:37 Jacob:That’s Like a S a founder moment. Like, there’s these moments where you’re like, oh, somebody just like a bullet, just grazed my ear. Right?00:38:43 Seth:No, I wish I could say I was like at the gym on the treadmill and then it came in and I like jumped up the treadmill. 00:38:50 Jacob:It’s most likely you’re sitting at your desk, 00:38:52 Seth:Yeah, statistically. Yeah. no, it was, it was kind of a weak, like I don’t, I don’t even know how to describe the emotions. I mean, I was just like, I kind of laughed. It was just like, okay.You know, I definitely wasn’t. Like scared or super worried or freaking out, like, you know, it’s maybe, I don’t know, 2019 me or something or in the early days would, I’m like, oh shit, like now I can’t get venture funding or now I can’t like keep building, like, they’re going to crush it. But I mean, we’ve been around in some minute ourselves, so yeah, I just, it was kind of funny and ironic.And then it went like many viral on Twitter with a lot of, you know, my network and other people. And then, I had friends sending it to me like, oh dude, what do you gotta do? And, I don’t know, man, like just probably download it and see how bad it is and go from there.They’re like, yeah. And it was, and honestly, it was just kind of a fun thing.Like, you know, it, it did, like we got press around the round and then some people could write about that. And it was kind of a funny story and somewhat of a badge of honor, like people, you know, they copy a lot of the top apps. And again, it’s just kind of like validation that like clearly you’re onto something.I mean, they used the same. Color scheme emojis at okay. One of my most proud things. 00:40:10 Jacob:Stuff that makes you angry, right? As a 00:40:12 Seth:Yeah. 00:40:12 Jacob:They cloned you it’s that they 00:40:14 Seth:Yeah. 00:40:15 Jacob:Right? That’s what makes me mad. 00:40:16 Seth:The thing that really got me was, Like for our like, button, right. it’s a flame, it’s like an emoji. And like when you hit it, it like turns into the actual emoji flame. And I always thought that was like the sickest thing ever.Like they did the same exact thing. I was just like, all right. Like, I mean, that’s what the little things are, what confirmed that they actually kind of like really looked at your, your app. But, no it’s been, I don’t even know what they’ve been up to. I don’t even know if they shipped updates. It’s zero concern to us. it was just kind of fun. It was like funny to share with the team and, investors and, you know, a lot of investors were like, hell yeah, like that’s a good sign. Like 00:40:55 Jacob:Yeah, you should hire somebody off the team. 00:40:57 Seth:Yeah, right. Oh, trust me. I would love to 00:41:00 Jacob:Because like you just think about like, yeah, I, I think you’ve got the right mentality about it. I’m not even telling you this as like, trying to make you feel better. Like really? Cause like, think how much more skin in the game you have it. I don’t know who built this.It’s probably some product managers like promotion, packet, project or whatever. I’m being condescending to people working in big companies. But you know, but, but, but think about it like this, you know, this is a, this is a one-time thing there’s trying out, right? This is. Passion, right. This is your life or you’ve last whatever years, right?Like good luck. Unless it, unless they just happened to be way more talented and way more funded, which maybe Facebook is, but like they’re not, they don’t execute perfectly on everything. Right. So, I think you just smile and you just be like, yeah, let’s go, right. It’s not, it’s not like apples competing with you and being like we’re pre installing a chat wrap 00:41:42 Seth:Right, right. Yeah. 00:41:44 Jacob:Which you know, could happen, but 00:41:46 Seth:Sure. Yeah. I mean garage band. Yeah, I appreciate that. I mean, the thing is also like, look in the early days we were. I’m just sharing this for context. Like we were, you know, one of the first apps that actually let you record your voice over a beat and share it like that was like New.Okay. Now there’s plenty of apps where you can come in and record vocals. You know, different types of audio for beats and like music making apps are kind of a commodity. but what we’ve done that I mentioned, and we kind of fell into this was like, we built that social layer, that community layer, and you can’t replicate that, you know, like they can come in and replicate the tool and have a feed, but like, nah, dude, we already have like hundreds of thousands of like passionate creators that have been with us that have been riding with us. And my favorite thing was when complex tweeted. And like complex being like a very like cultural industry outlet. And they tweeted out and their responses to that were just like the most hilarious thing. I don’t even think I could say like half of it, but it was like, basically like Zuck this like reptile coming into like, you know, vulture culture vulture and like, oh shit, that would be my worst nightmare.People said about us and they don’t like, it’s just are we’re authentic. And you know, we really care about the community and that’s, you know, That’s 00:42:59 David:That’s awesome. Well, I think that’s a great place to wrap up. We’re coming up to the top of the hour, but I did want to give you a few seconds to pitch. I know you’re hiring and you got a lot going on right now. Any specific roles at the company that you think our audience might be a great fit for? 00:43:17 Seth:Yeah, for sure. I appreciate that. I mean really just like product builders, and I say that broadly. So, engineers, designers, growth marketers, we’re looking for really great people to help us scale. Again, we’re still a small team. Ten people fully remote and, really looking to scale the product and the company. Now that we have some stability it’s a great time to jump on board. We really think that this era of mass music creation has begun, and we kind of kickstarted it, but we’re only getting started, right? We just have a really strong opportunity to provide the everyday stack for the everyday artists.00:44:04 David:Yeah, that’s amazing. I took a look at your careers page. It looks like there’s some great opportunities there across the whole stack, which is fun. 00:44:13 Seth:Where were you looking at, David?00:44:17 Jacob:You guys are welcome to have this conversation, but just let me leave the room, please.00:44:22 Seth:I’m kidding. I’m kidding.00:44:25 David:I do have a background in audio engineering.00:44:27 Jacob:Yes. True.00:44:31 David:No, I’m not in the market. I have too much fun having conversations like this with people like you.00:44:37 Jacob:Alright, thank you for listening to the Sub Club podcast. 00:44:41 David:That’s a great place to go out on there. Thank you so much, Seth, for being on the podcast. It’s been great. You’ve been so generous with your time and just sharing.Seth’s been on multiple other podcasts. He’s been on app promotion stuff. So, I love it when people in this space are open and share about the successes, the failures, how they’re building things.So thanks for your time today and for being so active in the kind of broader app maker community. 00:45:11 Seth:Yeah. I just want to say, thanks. Thanks to you guys. The podcast is awesome. I listen to it, every episode. Not to plug your product, but your product, we love it. It’s been instrumental in building a real business over here.00:45:30 Jacob:That’s awesome. 00:45:31 Seth:I just appreciate you guys. Yeah. 00:45:36 Jacob:Thanks. It was great to meet you.00:45:38 Seth:Likewise, man. Let’s let’s hang out. You guys take care.

E

Oct 6

45 min 58 sec

Watch the video version of this show on YouTube »Matthieu Rouif is the co-founder and CEO of PhotoRoom. PhotoRoom enables anyone to create studio-quality photos on their iPhone. Before founding PhotoRoom, Matthieu was the Senior Project Manager at GoPro. Matthieu is also the co-founder and CTO of HeyCrowd, and co-founder and CEO of As-App.Matthieu earned his graduate degree in materials science and engineering from Stanford University, and his bachelor’s degrees in economics, and physics from École Polytechnique. While at École Polytechnique, Matthieu was a member of the skydiving team and debate team. Matthieu also served as a Parachutist Commando Officer in the French Air Force.Matthieu started developing apps in 2009 as a student at Stanford, and subsequently started two iPhone app companies. He was part of the Replay app team when they won App of the Year in 2014. Matthieu started PhotoRoom after leaving GoPro in 2018.In this episode, you’ll learn: Matthieu’s retention strategies for keeping app users subscribed Innovative and clever ways to get users to demo your app Balancing your app’s pricing and features How churn can be an asset Links & Resources YC HeyCrowd GoPro Photoshop Zenlea Shopify Poshmark Depop Corel Matthieu Rouif’s Links Matthieu on Twitter Matthieu on LinkendIn PhotoRoom is hiring! 10 Tools to Ship an iOS App in 2 Weeks PhotoRoom’s Website PhotoRoom API PhotoRoom on Twitter Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode Transcript00:00:00 David:Hello, I’m your host, David Barnard. And with me as always, Jacob Eiting, RevenueCat CEO. Our guest today is Matt Rouif, co-founder and CEO at PhotoRoom, the app for removing backgrounds and creating studio quality photos right from your phone.On the podcast, we talk with Matt about how his time at GoPro led to founding PhotoRoom, how churn can actually be an asset, and how being locked in Apple’s basement led to one of PhotoRoom’s biggest marketing wins.Hey, Matt. Thanks for joining us on the podcast today. How are you doing?00:00:48 Matthieu:Great. Hey David, Hey Jacob.00:00:51 Jacob:Hi, it’s nice to finally meet internet/virtual face-to-face. We’ve known each other for a little while. I’ve become fortunate to know you kind of through RevenueCat, but not actually know-know you. So, it’s nice to finally put a face to the name.I was looking back through my email and I think the first I ever heard of you was from our mutual friend, Cisco, if I say that correctly?00:01:23 Matthieu:Yeah, Francisco.00:01:24 Jacob:Francisco, who shared with me a blog post that I had seen that you wrote where you talked about RevenueCat as part of your stack. Since then, I think we talked as you were thinking about going into YC, and then after YC, I put in a little bit of money, so this is a good opportunity to check in on my investment.I’m super excited to dive in, because there’s a lot of questions. I kind of have followed you guys and kind of seeing some of the stuff you’ve been doing, but I don’t know, like the behind the scenes decision making processes and like, and all that stuff. So yeah, I’m excited to hear the story firsthand.00:02:04 David:Yeah, but before we get into PhotoRoom, you’ve got quite a history in app development. So, I want to go back to the beginning and talk war stories. A lot of people were in the industry way back when. Jacob and I both started really early as well. So, you got your start during the Stanford class and you were actually a teaching assistant at Stanford at the time, right? I’m kind of stealing your story, but yeah. Tell me, tell me how you got into it.00:02:34 Matthieu:Yeah. Actually I wasn’t a teaching assistant in physics. I was doing a master’s in physics at Stanford, right at the moment of the first iPhone class. And, I actually went to Stanford because I was fascinated by the entrepreneurship. And I had this business idea of printing photos and sending them.And that seemed a lot easier not to buy hardware, but just use the iPhone which just started at that point. So, I was at Stanford, there was the iPhone class. I wanted to do a photo app. So, see, 12 years later....00:03:05 Jacob:A 12 year overnight success.00:03:07 Matthieu:That’s what they say. Exactly. And, yeah, I got, I actually, I got started, programming.I was doing physics before, and I didn’t know anything about programming. So I took a class with a friend that went through the basics, and I just wanted to push products on apps. And I found that the iPhone was the best at that point. And actually the photo app became something else.The first company I started back in grad school and they became like a ski resorts app. I shipped, we had all of the major ski resorts. And, It was a great, I did that for two years and a major ski resorts and, yeah.I started an apps company after that, one called HeyCrowd around a social network. So like we had surveys that you could answer to with polls, like, a bit like Instagram stories now, and that didn’t work so well compared to the ski resort, but, yeah, I got into iPhone apps right since the beginning.00:04:18 Jacob:I remember the Stanford course. It was on iTunes U that was mass disseminated or was it the later one?00:04:25 Matthieu:No, it was the one that it wasn’t Stanford U. There was a, the guy from Fitboard during the class. I don’t know if it was doing that.00:04:42 Jacob:Yeah. I remember. I remember it being like the moment when we were like, oh, this is going to go mainstream. Right? Like, because up to that point, you had to learn iOS by doing basically Mac OS. That was like the one point there was the big nerd book you learned Mac OS, and then the SDKs came and you like tried to learn quickly, like what worked and what didn’t.But, if you were like me who came from no Mac programming, there was really no iPhone entry into it. I remember when the Stanford course came out. It was like one year too late for me. Because like at that point I had already done a lot of stuff, but it was still really great.I still watched the whole thing. I remember watching it. But it’s interesting. We have the same path. I don’t know if we ever talked about this, but I was studying physics in undergrad as well. Yeah, I didn’t go to Stanford, but I went to a small state school instead, just cause, you know. But yeah, kind of similar story where like I was in, I wasn’t in grad school, but I was physics, undergrad.Didn’t really know what I wanted to do. I really loved physics and the math and all that stuff, but like, there’s a stronger economic pull, let’s put it that way, to work on apps. That was the same story for me. Like took a little bit of what I had learned, writing code for experiments and things like this, and then kind of started making apps.And then, yeah, the rest is history.00:06:06 Matthieu:Yeah. I think one of the introduction to physics is like how fast data applies to the real world from science to real world. And you don’t find that in a, like a physics job where you kind of find that back in, like a software development where you like, can we solve a math problem, a computer science problem, and you can directly apply it to real00:06:25 Jacob:Yeah. Or like, even with business modeling and stuff too, you know, you think about how a business moves and like what number moves this number. And there’s no physics there. You’re not approximating a physical system, but some of the same principles apply. Right. You’re like trying to find some laws that are underlying it and work from there.So yeah, I found it hasn’t been terribly unrelevant, but, but yeah, that’s interesting. What else, what else do we have in common? Let’s keep going.00:06:48 Matthieu:Yeah, sure.00:06:49 David:Well, actually, I, I want to jump in. I want to get to PhotoRoom, so we’re actually going to skip over. You’ve done a lot now. So after, after that you went to replay and replay was like onstage at a keynote. And you’re the co founders that you were working with, you know, as, as you joked, before we started recording, spent a month in the basement and apple, as everyone does before a keynote.But then you ended up at GoPro working on imaging. so just tell me about that. Leaving GoPro. I mean, Great company done a lot of innovative stuff. but tell me about leaving to start a PhotoRoom and what the inspiration, I guess we’ve heard part of it, you know, 12 years of working on imaging and wanting to build a photo app.But yeah. Tell me about the founding of, of.00:07:36 Matthieu:Yeah, I, I, so GoPro is an amazing company, but it’s more marketing and hardware. And, I really wanted to, I grew a bit frustrated about like how we could, do better software. Yeah, a few frustration from that I, as a product, I was product manager by them. So I was like frustrated with the design tool, like a Photoshop and, and, you kind of have to move to, and by that time you had to move to California to move the stuff.And I was based in there in Paris and I decided to stay there with the family and, and kind of, we had an amazing missionary team at GoPro in Paris, but it’s really difficult to. To change the paradigm of a kind of a software, like a, if it works from a kind of more deterministic way. So I kind of realize that it’s really tough to ship a new software with new paradigm, and we’ve mentioned our new insights.So I thought there was a big opportunity with the new, new hardware coming on, the iPhone formation, learning the new, the new, yeah, this new kind of way of thinking about software. And, I left the GoPro to start a company and we’ve just ideas in mind. And I also, at the time realized that there was a. A lot of apps, you know, like after 10 years on the app store, you kind of know the tricks of the app store. And I knew there were a lot of apps in the top of the photo apps that were around razor and background eraser. I realized like, okay, if they’re just kind of a, you know, I say scam, but it’s certainly scam, but all these apps that are built quickly, there must be some demand around it.And so that’s, I started with the background remover idea. Like I saw that there was a mission learning team at GoPro that there was some background removal, paper and all that. Okay. There must be some demand. Let’s ship something quickly and see how it goes. And that’s kind of the nice thing of like 10 years of development, you know, the right tool to go fast and just shipped a prototype in two weeks.We’ve actually referring at, by then I have a blog post on like the 10 tools I use there and, And, yeah, it was, it went super fast, super fast to the store and we have some machine learning and, on-device machine learning by then. So it’s as a, and it kind of caught up, like you tried a dozen ideas on some kind of stay on the wall on some, like, and just stay on the wall.00:09:43 Jacob:So at the time it was called BGE app background app. Right. was the focus initially, did you have like a big scope for it or was that your entry? You were like, Hey, I know that they there’s these photo apps that kind of suck that are doing this background thing. I think we can do it better. And like, let’s see where it goes from there.Or did you have like a bigger plans or longer term aspirations? 00:10:04 Matthieu:I think there was, an understanding that people kind of needed that and the tech tech was 10 X better as they say. So it was really interesting, but I didn’t, I mean, we didn’t have the full plan for that. It’s really a few months in that we are understood with Elliot the kind of the market fit.And we understood also like this idea of, and we call it, we translate pixels into concept that makes it much easier to, to, to edit. So w for the room is the best for digital for entrepreneurs. And the idea is that instead of using mask and layers and pixels, you just like, the machine learning, understanding what are the.The big cells and they just tell you, okay. A cat. So we call it cat to catch up on the cat. And you should have actions that are relevant to a Catholic changing the fur color. if it’s, if it’s a piece of clothing, it should be the texture of the clothing. If it’s a, if it’s a kind of graphic change of color, you know, kind of, it makes it much more accessible than what exists in like 10 year, 20 years, software that exists by for the editing.00:11:03 Jacob:So, so yeah, I mean, I think that sounds like a very much a pitch and a story that somebody would be taught at Y Combinator. So I’m curious, like what I’m curious, like, how did that evolve? Like how so you, you, you, you guys launched the app in the, I remember I was talking in like the spring of 2019.00:11:20 Matthieu:Yeah. Like may 2019. Exactly. 00:11:22 Jacob:And then, you started YC in the fall or the winter?Yeah.00:11:25 Matthieu:No, we actually, so we started YC in the following summer. We were supposed to do the winter batch after that. So seven months. And, we, we couldn’t because our visa issues, at some, with the family, I couldn’t move to, to, to YC. Yeah. 00:11:42 Jacob:Can tell you there’s one way to solve that problem.A global pandemic.00:11:49 Matthieu:Exactly. Yeah. That’s exactly right. So we did it involve, I think we shipped super fast. We failure my co-founder who is like a, like a machine learning genius. and we follow early on the YC startup school, which is kind of the, first step to. And, and so what does it help you? It kind of, you measure the, yeah, the progress.So, how much customer you’re talking to, Ahmed, how much money you made and how happy you are doing what you do. And so that’s kind of how we iterated 00:12:24 Jacob:You were 00:12:25 Matthieu:Months. 00:12:26 Jacob:During, startup school or 00:12:28 Matthieu:Yeah, the school kind of asks you every, every week, discussion and you make sure you make progress on that. I think these are the right question to make progress on your business.And here’s, what’s kind of, kind of natural, like two months later. So we started in may, may, June on that, application for YC where I probably in September, like, so, so we did like all summer, we did the startup school scheme and then framework and made some progress on that. And we got the YC application in September and the interviews actually in Paris, In, I think November.00:12:57 Jacob:And then, ha had you, I guess like, your, your aspirations or your reasons for applying, I guess, are in some ways, self evident to somebody. You know, obviously you don’t need to convince me, but for the listeners, I, what was your, yeah. What were your motivations? Like? Why did you, well, I guess for one there’s, you know, I don’t know.I always hear there’s a couple of reasons, right? Like sometimes it’s prestige, like people want to the prestige of YC, sometimes it’s, it’s the help, which I honestly think is the, the, the best reason. Cause I, you know, it’s, it was honestly really good for us, but then there’s also like, you know, it’s, it’s a great way to springboard venture back.Thing, right as well. So like, did you have like strong reasons? Was it all of the above or what was the motivation for, for getting on the venture? 00:13:44 Matthieu:Yeah, that’s a good question. so I think number one reason was, ambition. I think like a lot of your brain startups, you Batara, can be not ambitious enough. And I think if you’re ambitious, like YC is really a way of, the alpha taking the ambitious path. Okay. Then how to make it like a business and a product that has a strong impact, like on a very large number of people.So that was, that would be my number one. I think then it’s kind of the learning. we are at the beginning of the company, we sit for failure, then what’s what kind of is the most important, you know, for their culture. And we talked about it also. And, one thing we really value is learning fast and I think YC kind of helps you, you probably a lot of like, you learn so much faster because you’re at the right contact.So it’s, I mean, it’s. It’s on the partners. Like every time we have a office hour, almost every time, like, wow. Blown away, there is like also Atlas. I get the right investors, I mean on the revenue, on the like mobile subscription and like, yeah, like you like auger from Blinkist, like, someone from, John from Spotify.So that’s really helpful and also extra connection like we have in AI, we have the VP of AI and locale Facebook, and I don’t think we could reach this network with, with. 00:15:01 Jacob:Yeah, the network thing is depends on, you know, what your background is. Obviously you had been in the peninsula, but still it’s hard to be really deeply networked and still it’s hard to. Invest in your engineering skills. Right. And like your IC skills and invest in a network at the same time, which was kind of my world.Like I had an okay network, but like, it wasn’t super well networked. So YC was like a big like boost to that. Right. You could get interest to people. You could get a little bit, it’s still, a who, you know, game Silicon valley is still in a lot of ways or the broader concept. 00:15:33 David:Before we move on. I wanted to talk to us a little bit more about the, about the ambition of PhotoRoom, because, and this is something I think is, would be really relevant to a lot of our listeners who are, are building apps in the space. And, and I, as an indie developer for 12, 13 years, feel like I’ve, I’ve, I’ve worked too much with, with blinders on.Not thinking about the bigger opportunity. So like the first app I launched was trip cubby. It was a model it’s log tracking app, to get reimbursements from taxes or get reimbursed from your company, for your mileage. And I just, I treated it like a little tiny indie business, lifestyle, business, and everything else.Meanwhile, 00:16:19 Jacob:IQ00:16:20 David:IQ built a huge 00:16:23 Jacob:Probably launched about the same time. Right. I would think. 00:16:26 David:No, they launched much later actually, which is even again, it’s like I had a multi-year lead as kind of the, how to do that 00:16:33 Jacob:Assuming the market was there. Like my, like you probably came when the market was finally there, 00:16:37 David:Starting to grow, but yeah. But what’s so cool. Is that, I think there’s so many opportunities in the app store that people overlook that seem really niche. Like you just started out replacing backgrounds in photos, 00:16:50 Jacob:And now you’re going to be the next generation Photoshop. Is that a good one? Is that a good pitch? I don’t know what the 00:16:54 Matthieu:Yeah. 00:16:57 David:What, what’s the ambition that, where that took you from, okay.We can replace background images too. This is, could be a huge business because we’re, un-bundling one of the like key parts of Photoshop, which is a massive business. So what, what, what is the, what was the ambition and what is the ambition that you feel that this, this can be such a big thing. 00:17:21 Jacob:How did you, how did you convince yourself of that? The ability to do that?00:17:25 Matthieu:Yeah. 00:17:25 David:Yeah.I mean, it’s, it’s amazing.00:17:27 Matthieu:I think it’s, well first like working on photo, video editor, like I realized that, I mean, video is big. Like we got, I think we free-play then named quick by GoPro. We got to $100 million. It’s kind of tell you like, and most people, they are still using like photo collage. So everyone’s working on photo and video is too complex for most people.So like, if you get 100 million for a video, then it’s probably like any good, like yeah. Project improvement like 10 X product improvement on photo must get like 1 billion users. And I think it’s like, that’s one of the YC model, but it was really starting from a pain point of myself, like creating the assets for actually for the app store.Like you have to create a PSD. And I was like, you spent so much time on non creative task. And I was like, I want to make that much simpler. And I think the big heart moment was kind of talking to the user. So, and also like talking, yeah. Talking to people like we kind of build in the open and people told us, it’s like, yeah, Yeah, it’s a, it’s like a actually it’s like programming, like a U instead of you’re you’re doing like, object oriented, editing, like you understand what kind of objects you have and you make actions that are relevant to that.And that’s, that’s kind of done myself, like really burning myself away. Like it’s much simpler. Like you have an object and you, you offer it to the user. What’s the logic for the subject lines, Photoshop. It’s such a pain to learn. Like I think everyone would remember is kind of the blown away part of Photoshop, but also the pain it is to understate.00:18:51 Jacob:And it hasn’t gotten easier in 20 years. Like the only way now you can paint on a sphere or something like, there’s nothing like new, I still open it and it’s comforting. Cause I learned in CS two or whatever, and it’s all still the same, but like, I don’t think it’s necessarily, like, I think, I think there’s even a broader near you.I’m going to make your, your $10 billion company, a trillion dollar company. But I think there’s an even broader narrative there around just like the future of software and how machine learning. Further like narrows the gap between like in software, like programming, not in the traditional sense, but like telling a computer what to do and the computer telling, like asking us or like bringing us like the things it can do.And you see this in like varying degrees of it working well. Right. like Gmail, like suggesting like absolutely insane sounding replies that I would never say, like, that’s kind of that, but, but I think that’s all maybe a little bit too far, but I think what you guys are doing, it’s really great. You know, like segmenting photos, like giving people those tools, like taking, especially for a tool like email it’s like writing, like, I don’t know.An AI assistant to like, say, thanks like I can, I got that. Thank you. But for, for, yeah, like, like cutting backgrounds out and like setting up. Yeah. Just building like, things that to a human, because we’re so visual in the way we think seem really basic, right? Like I want the cat in front of a blue background, right?Like that. Just tell the computer and it can do that right now. The existing tooling is like very manual and very skills driven. And you guys are bridging that gap. So like yeah. Who knows something? I don’t know. Maybe photos, aren’t the end of it for you guys, maybe next you just start tackling the next software domain.Right? I, you know, I don’t know that we’ll get to 10000000001st and then we’ll worry about the trillion dollar.00:20:28 David:And that’s the really magical thing about your app and your onboarding that I wanted to ask you about. So exactly what Jake was saying. When I think of removing a background and I’ve worked in Photoshop literally since the nineties, late nineties, I’m old. but it’s, I’ve tried that like a hundred different times.And even in the most modern Photoshop, I don’t even know how to do it. I expect it to be. I downloaded PhotoRoom and in like three taps, your onboarding is magical because you don’t get in the way of the person having a desire to get something done. And then seeing it happen. So in like three tops from opening the app, I see a background removed and it was just like00:21:16 Jacob:Okay. 00:21:16 David:Instant, like mindblowing experience. 00:21:19 Jacob:Yeah.00:21:20 David:This thing that like, I know it’s so hard and I think of needing professional tools and needing to be a professional to even figure it out. It just happens magically after three or four taps in your app was that I assume that was very intentional. Did you have different onboardings before and kind of iterate to that point?Or what led you to just such a focused get the person to that?00:21:45 Matthieu:Yeah, that’s a good grade. She was our interview. I think, we like, if we, especially in the beginning every week, we’d go to McDonald’s and pay a meal to student or anyone. And they like the tagline for McDonald’s and Frances com. Everyone can come in and come as you are. So we really met like tourists students professionals, and like doing user interview.We got so frustrated. I think that people didn’t get to the step of removing background that kind of like00:22:12 Jacob:Oh, so you would give them an unlogged out like a brand new device and like, watch them go through onboard.00:22:17 Matthieu:We would like pay the meal initially for downloading the app. We’d like first ask you three, four questions about their photo usage on their, on their phone. kind of ask them to download the app and yeah. Blinded as yeah. And, and we were like came sneaking. We just were, we were just iOS at the beginning.So try to find people with iPhones and not Android, and that was stuff, but yeah, I mean, people usually stopped before and they don’t understand something and like to build trust with them, we figured out like the best is to short tech. So I can we get to the point where. We actually have all these people, we try the app that actually see the bag, the magic effect of Futterman like, so like taking a white sheet of paper, we valued microphone and like thinking, how can we do that?And it got to like adding that as early as possible in the onboarding. I think that’s, that’s, that’s fine.00:23:06 Jacob:I think, I remember now reading about the McDonald’s testing and your, your, YC application and being like. That’s the moment I knew these guys were going to make it, I guess like it’s was brilliant, right? Like I, I don’t know how much user testing, like real good user testing is. If you do it in some sort of like professional context, it’s probably really weird and like expensive and like hard.And this is dead simple, super scrappy. Right? People don’t do it because I don’t know nerds. Don’t like talking to people like we don’t like, you know, it’s, it’s, it’s tough to put your, your app in front of somebody and see them. Not, it’s one thing to read like bad retention numbers on amplitude is another thing to like, see somebody actually churn and like, but honestly that’s the best way to learn.Like this is the best way to like, get really actionable feedback. So, I’m sure that was, that was super beneficial.00:23:53 Matthieu:Yeah, it’s a, it’s a trick from Zenly. So the social network and maps, like that really is, one of the best, app in embarrass and they, and we apply that and yeah, it requires some. It’s not easy, I must say. But, you really, you learn so much and the pain today is more like we have more qualified users.So it’s really easy in the beginning when you’re in your photo apps and people just as the app and everyone has photos. So it’s easy to explain. Then you want to like talk to your kind of retain user. It’s difficult to get them at the McDonald, but now we’re friends with all the vintage shops around the block.So in Paris, so we get.00:24:28 Jacob:So that, yeah, that was I kind of my question I wanted to ask. I’ll just slide it in now, but like I’ve noticed, I don’t know. I don’t know if you had this intention initially, but it seems like you’ve found a new. Even amongst these apps in something I would say commerce or even e-commerce it seems like a lot of people use these, use your app to take photos of objects, to use as like advertising or gone Shopify.Is that, is that true and statement or am I just like misreading investor updates?00:24:56 Matthieu:No, it’s totally true. Actually, it’s not. The interesting thing is it came from a personal lead, like using, as you say, Photoshop and wanted it much easier for me, but I wasn’t clear who was using the CRA’s background apps. I’m talking to like user at McDonald’s. We realized like there was all these reselling apps, especially in the Europe and the U S where people.Yeah, they’re just like selling Poshmark on vintage in Europe and they, there is no app that’s focusing on their photo need. Like everyone’s doing like selfies or I dunno, whatever lens on video you can make or, but, no one’s in it helping them. And it actually came from the user interview like, oh, that some user told us like, oh, my girlfriend would love that she’s selling on Depop.And, and we kind of like it after multiple user asking us in support. asking us, and in talking at the user interview of my goal, we realized that, oh, that’s a niche that we should kind of focus on. So that’s Allie Kim, 00:25:51 Jacob:Was that pre YC, like pretty early in the process.00:25:55 Matthieu:And it came in a few, just not in one day, but it, I think early, after being taken at twice a 00:26:02 Jacob:Okay. 00:26:03 Matthieu:Like early 20, 20,00:26:04 Jacob:So then my next question, I guess, is like, how do you decide then? So you have a car for strong product. You, you, you might have like varying. This is, I think this is very common for a lot of apps and companies is like, you have probably different levels of product market fit depending on the market.Right? So like maybe broadly across all users of iPhone, your product market fit may not be as strong. But then when you look at this one niche, like maybe it’s really strong. And then I think some. End up in a situation where you have to kind of decide, like, do I want to go for this maybe less fit, broader market, or maybe a tighter market with a stronger fit that I’m starting out with.Did you have that internal conversation? And then did you make an active decision? Like we’re going to focus on this and then yeah. And then what’s the plan after that? Like, or is that the forever plan?00:26:48 Matthieu:I think we, the easy part is as a product guy, I’m really convinced that our usage is really deep. Like we’re starting from a different Lego brick, like, okay, you don’t need it mask or square pixels, you edit like objects. So, I mean, any app that kind of want to copy that Nike that’s to stop doing what it does today.So it’s kind of the thing that relates to the missionary understanding excelled in the beginning. So we were confident. Digging into this usage and this product paradigm and like product basic block is interesting. And then we decided to focus on the pro usage and, and it’s difficult as a follower. You want to serve everyone at the beginning, we were even doing a video plus photo, like in December of 2019, we dropped the video, just for animation.And then we dropped kind off the casual use case to focus on the pro and, and it’s, it’s been helpful. You’re not like giving up on the other users. You, I mean, some of the features, they’re still going to use it, the other, the casual, the people doing memes from, from the app, but she just like when you build features, you think about them.And I, around that, I think YC is helpful because. like if you reach local maximum from one vertical, like product market fit, then you investing so much on the take. It gets better than the, all the local maximums or, or adjustment. Like you can reach them after, and it’s not a big deal and kind of believe and believing and trusting that helps you on, on like a, okay, we’re going to focus on this one for, let’s say three months and we say,00:28:14 Jacob:Yeah. I mean, I think that’s a really good point in that I think can trip up people early in the process is that you think. That making an active choice to close yourself off to part of the market as a mistake. Cause you’re like, well, I want to serve everybody or, well, I want to, you know, I want to have the most broad appeal I can cause it does, it feels wrong, right.To not serve a use case. but often tactically it’s a bad choice because yeah, in the early days, anything. Hey find any users that love your product, even if it’s a small group, there’s, it’s a, it’s a closer step to like, get your foot onto that than it is to try to get sustainability on like mediocre product market fit across the broad market.Because then also it makes, yeah, it makes your McDonald’s discussions easier. Well, maybe you don’t have McDonald’s discussions anymore. It makes your product discussions easier. Cause you can say like, okay, these are pilot. We’re not going to do all this stuff. We’re going to focus on this stuff, which gives you more of a loss city.I just really feel there’s so much to getting that velocity early. Right. Like getting something that’s like moving and growing and getting fast. And I think that’s one of the things, I mean, I don’t know, I won’t, I won’t docks you guys on retention numbers and stuff, but you know, when you have a, I’ll just say that when you have a pro user base, that’s using it for something non casual retention gets easier, right.Like have a reason to come back. And so if you, I mean, there’s not that many apps like that. That on it’s hard, it’s hard, it’s hard. It’s rare to find mobile apps that have that opportunity. Right. So when it’s there, you need to take it00:29:45 Matthieu:Yeah. 00:29:46 David:How do you think about pricing for that value creation? Since, since those that kind of pro segment really probably gets a lot more value than you’re even currently charging. because they’re actually making money with your product. Like how did you think through your print pricing? And did you iterate to this point from a more kind of consumer pricing to them to a, I mean, to me it feels like you’re in the middle still of somewhat consumer-friendly and really honestly, probably cheap for a professional use case.So how did you land on your current price?00:30:24 Matthieu:Yeah, to be honest, it’s like most of the photo apps. I mean, when we started and maybe it’s different, they are all pricing like 10 bucks a month and that’s kind of given by, I guess, Spotify Netflix, like it’s kind of the, the glass ceiling of the price of subscription, even for prosumer. And, and we kind of iterated on the under yearly from 40 bucks to 69 bucks, in, in the U.So we didn’t like, we kind of landed on that quite early. you don’t want to alienate the user, especially if you put the up-selling in the onboarding, like, to be too expensive. I think we have a major opportunity though, to like address the more advanced business and the more than one person in a shop, it’s just, it’s really difficult to build this a B2B case in in-app like, you don’t have that many apps that use that in the up-sell of the phone.So you probably have to show it like. The the first price, to every user and on the pro you probably can to brigade them after, I think it’s something we can do later, like focusing on the product for now and make it simple as much as you’re like, if you start with two prices, like the support, basically it is going to go crazy.We still do the support of the users. That’s something we try to maximize for simplicity here.00:31:37 Jacob:I mean, it’s a good point to make, especially too. It depends on, depends on your cashflow constraints as well. Just like how much, how extractive you want to be, how much you want to push it. Right. because you know, when you have good retention, like there’s an argument, an argument to be made to not mess that up by because you’re raising your price will hurt your attention, right?Like it’s kind of at least on paid, right? Like more expensive. It is. People are going to churn more. and if you’re compounding your total, like paying subscribers, that might be more important and then extracting an extra, an incremental $2 or $10 or whatever from each user, right. It might be better off just to keep them happy and longterm.And that’s what makes it, I don’t know, pricing just so complicated. It’s about finding that equilibrium to maximize like the longterm area under the curve and not just, not just like the individual LTVs.00:32:27 Matthieu:Yeah, exactly. I think there was one. yeah, we, you want to talk to, like, you don’t want to. Expensive at the beginning, you should have too expensive. Like one of the really source of feedback was also our support. And like, if you’re too expensive, you get less pro. And the goal, I mean, the reason we launched after two weeks with was like the feedback from process so much more valuable than the feedback from, for users.I mean, you still want people to pay, like, just stop at 500 bucks in long month is going to be like, there’s no way people are going to pay for that. So, and I was actually talking on Twitter that like, we actually put forth first a monthly plan because we wanted people to churn and be able to talk to them.So there was really a focus on learning from the 00:33:07 Jacob:Interesting. 00:33:08 Matthieu:Early days.00:33:09 Jacob:Yeah, I’ve always. Yeah. The, the short, I think, long, the annual subscriptions obviously have a bunch of benefits to, to, to app developers, but you do end up flying blind for a very long time. Right. Until you really know what those numbers look like. So if you’re on monthly, purely, it does kind of simplify things early on.Which is another case to be made for just not over thinking your pricing, like initially, right? Like you guys launched just with the monthly and it was fine that you added, I don’t know when you added an annual product, but you brought it in when the time. 00:33:40 Matthieu:I think the logical, so learning from GoPro and replay days is the pricing is quite elastic. So you double your price, you divide by two, the number of pros like minus plus 10%. And so, so it doesn’t, I mean, it’s, I mean, when you get bigger, it’s way of doing experiments on pricing, but in the early days it’s worth, it’s not worth like taking too much time on that.00:34:01 Jacob:Yeah. I mean, it’s good to know if you have an elastic curve, it means you’re pretty close to, to the optimum already, right?00:34:06 David:Did you start from day one at that $10 a month price point?00:34:10 Matthieu:I think we were at eight or nine. it’s pretty much like every pro for the pro apps. Like not selfies was at that on the photo and it’s, and I think. The co, I mean, it goes from Spotify on Netflix. Like, everyone’s like a, it’s like if comparing industry report, they tell you a comparing you to Spotify on that fixed anyway.So it’s a, I think it’s a good, like a way to start on as they increase the price, they increase kind of the time of all the possible ATV of all the apps, which is really good. Thank you.00:34:40 Jacob:If they don’t take care of it, inflation will don’t worry. 00:34:43 David:But, but that’s just amazing two weeks, to an MVP that you could charge $8 a month for, and people actually paid it.00:34:50 Jacob:Well, 12, 12 years in two weeks, David, if00:34:52 David:Well, right, right, right. No, no, that’s a great point. But the point being that there, there are still opportunities that when you have experience and domain knowledge, that it’s not the, the programming, it’s not the, it’s not such a monumental task to build something that’s really valuable to people in this space on mobile, that you can build something good quickly with that experience.00:35:17 Matthieu:The first app was really crappy though. Like I think we 00:35:20 David:Yeah. 00:35:21 Matthieu:A few weeks before having our pay first paid users.00:35:23 David:Gotcha. I did want to talk a little bit about your marketing, so, What did you do at launch? Did, did you get a little pressed? Did you, you know, talk to apple, how did you get that initial code?00:35:35 Matthieu:So yeah, we were super, I mean, apple has been super supportive to us. I think. Before GoPro, GoPro acquired replay. so we play was, app of the year, senior as, elevate. So 00:35:46 Jacob:You guys at the year in France, is that what the00:35:48 Matthieu:No, so so I have a card, I brought the screenshot that, 00:35:52 Jacob:The U S 00:35:53 Matthieu:So we didn’t, yeah, we didn’t, get the U S we didn’t get the U S and north America, and it’s kind of a private, taser, but it’s, we got like most of the Europe and Asia. And, yeah, and then I was seeing like the star that elevate their they’re thinking the other U S and we should get that. 00:36:14 Jacob:It was good for you that we hadn’t localized maybe 00:36:18 Matthieu:Yeah, 00:36:19 Jacob:That was the thing we were like only English at the time.00:36:22 Matthieu:Well, elevate is such a difficult business to localize. So I think it’s a photo video is easy to localize it. Yeah.And, and so we got like, we got the keynote, so, and we kind of, I mean, the app is really good at marketing. using the latest technology of, apple in, like the metal and using the lasers, the GPU, I kind of build a relationship from there, with the apple team and also like learning AR that’s kind of the narrative of apple, like to showcase apps.Leveraging the latest technology. They do their marketing through developers and that’s awesome for us. Like it’s super opportunity. And so what was that? When we started, it was well, we’re using a Carmel to do the background removal and we did use like really early on in September of 2019, we use our KPIs to remove the background, to do some live preview of the photo.And so we got into, there is an accelerator inference in the biggest, like sexual life is one of the biggest things. Accenture and apple has a program there and we got in there and they helped us and like marketing and, and business, during the summer. And we had some tech workshop and in September we got Macy’s, marketing from the using Eric.He, three, I think, API APIs. So I think all the days was marketing through, using the latest tech software and hardware from.00:37:42 David:And where did it go from there? Yeah. So after, after you’ve, you’ve gotten some traction in some of those early customers. did you jump into paid user acquisition 00:37:52 Matthieu:No. 00:37:54 David:Of, of, paid to, organic growth?00:37:58 Matthieu:Yeah. So we got into, we didn’t do paid until like, we really got traction and market fit. So early 20, 20, and we started to have some, we got Gary V tweeting about us, like a video, farmer. So that was like a viral video demoing the app. And we kind of, I mean, the thinking was if some videos of demoing for term or viral, it probably works so-so as ad.So we kind of use these viral videos and try ads on that. Started ramping up, I think before YC, Facebook ads. So in April of last year and, it kind of, yeah, it was a good, channel of acquisition for us. And we always had in mind, like, we don’t want to spend too much, we wanted to have it under control, but the payback was really good.So we kind of, added mix like, I don’t know, it was three 17, maybe at that point in between the, between paid 30% beta and the 70%. And, yeah, organic and so that we ramped that up and I think it wasn’t a good time to all this marketing and we kind of fast in that, at that point, because there was a COVID, the beginning of the COVID and all marketing was going down.So it was super cheap to try stuff there. 00:39:09 David:Yeah. 00:39:09 Matthieu:So I tried to be a part of these tick on that an influencer. I like a lot of times. So like all of that, we were at the right time and at the right moment for that day,00:39:17 Jacob:So how much, like are you balancing? I mean, obviously there’s always so much you’re balancing as a founder. but you know, how much are you thinking about investing back in the app and like broadening your appeal, making it better new markets, like new platforms versus. The scale of approach, like how can we scale marketing and, and continue to grow?Or is it like 50, 50? Like, do you have a top priority right now? Or, or how has the, like, how has your, your mind thinking about like your biggest growth levers?00:39:48 Matthieu:Yeah, we try to try to have a higher, level kind of privacy laws. So let’s focus on retention or let’s focus on this specific kind of users. So, in the U S for just three months, and we tried to align product and growth, on like a three months of that. And so that’s kind of. that’s yeah, that’s how we think about it with Elliot and, and try to have it on growth and on product and kind of put us to talk more to these kinds of users, so to improve on, on these kind of shoes or just, just niche for instance.And, I don’t know if people are selling on this marketplace for a month and then we’ll see maybe another nation, another country, but still improve the experience for everyone.00:40:29 Jacob:And are you thinking about marketing in terms of like specific people selling on specifics, like marketplaces, like the you’re actually going like channel by channel that, that, that, that closely. And does that inform like features or does that inform creative or how does that feed back into your part?00:40:44 Matthieu:Yeah, we’re good. We’re getting into that. Like we tried to understand bearer by a persona use case. What’s the LTV and what’s the retention is, and I think we are at the scale where we start to do that, but before it was like a general, a general creative for everyone and kind of demo the value of the app.And we were super lucky that our creative we’re working for them. And I think like now, like the way marketing works, it’s, like a. Facebook or Google are doing most of the optimization and you’re more into like, what can I add up my creative so that it fit the focus I want to do for it. I don’t know if the U S so I’ll be a make sure you’re in English.I’ll make sure if you’re like looking at multiple countries, try not to be too localize. I think there is a Netflix called neutralize, or they have a specific wording on making the, the artwork or the creative, not to localized, not to English, for instance. Okay. So you just content that’s good. So it’s kind of, that dictate kind of what we try to do with growth and marketing.00:41:39 David:That’s great. Well, I have a million more questions, but we do need to, to wrap up. We’re going to put links into the show notes to find you on Twitter and LinkedIn and, and PhotoRoom is such a great name, easy to Google, easy to find on the App Store. but you’re also hiring, what, what positions do you have open?00:42:02 Matthieu:We’re hiring a lot. We’re hiring on growth and paid acquisition, hiring project designer, iOS developer, Android developer. And the way we think about the team is really to have a, like, we are 10 people, and we have a strong impact to millions of users. So, really leveraged like a small team, high impact.I think it’s possible because of apps. So, we’re looking for really senior people for that, and mostly in Europe. So we have like a, two, three days a month, in the Paris HQ, but, you can work from anywhere in Europe.00:42:35 Jacob:Yeah. And I’ll, I’ll second that. I think working on this product would be really interesting. Purely based on my insider knowledge as an investor and your friend, but for real, I mean, a lot of apps don’t, you know, get to the point you have. You’ve got a lot of tailwinds and I think actually, the upsides are go far beyond the App Store.The future is very, very, very big. And you guys are ambitious. So take these jobs. Thank you.00:43:02 David:Yeah. 00:43:03 Matthieu:Yeah. We were thinking be everywhere. We stopped for a while, but we were like mobile first, not mobile only. And we have the web app web tool that we launched last week. We have an API for any developer that wants to remove the background. We have photo and attribution, and have the module folks using it.So it’s really, I think we want to be close to the entrepreneurs, and we want to communicate through pro images that sell. And so sometimes it’s not an app, it’s just a photo and button. And so you can use the API for that. So, yeah. 00:43:33 Jacob:It’s pretty great when you have a good product market fit, it just gets really fun. 00:43:37 Matthieu:Yeah. And we have that kind of, now that we have money, we kind of, we have like super smart people on the machinery team. So, we have the best thing on the market to do that. And that’s super exciting. Now we’re shipping new machinery next, I think next week. And it’s going to be awesome. I can’t wait to see the result on the analytics.00:43:52 David:That’s amazing and 10 people. I thought you were bigger. I guess you want to be, you want to be, 15 or 20 with all the postings you have. 00:44:01 Jacob:That’s why I’m really bullish on this market, David.00:44:04 Matthieu:Yeah. 00:44:04 David:Yeah, 00:44:05 Jacob:A small team can do a lot of stuff in this space. It’s crazy.00:44:07 Matthieu:Yeah, It’s00:44:08 David:It is crazy. Well, thank you so much for being on the podcast. It was great chatting, and thanks for sharing your insights, Matt. 00:44:13 Jacob:Yeah. We’ll have to catch up again in two years to see how, see how it’s going. 00:44:17 Matthieu:Yeah, of course. With pleasure. Thank you guys.

Sep 15

44 min 36 sec

On the podcast, we talk with Ben about all things app stores. From Apple’s revolutionary launch of the App Store in 2008 to the monopoly-like powers both Google and Apple now wield today. With multiple lawsuits filed, government investigations ongoing, and developer sentiment at an all-time low, we take an honest look at the challenges and trade-offs in trying to bring two of the world’s largest companies to heel.Ben Thompson's Links Stratechery Ben’s Twitter: @benthompson Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingRevenueCat: https://twitter.com/RevenueCatSub Club: https://twitter.com/SubClubHQ

Sep 7

1 hr 27 min

Watch the video version of this show on YouTube »Shamanth Rao is the founder and CEO at Rocketship HQ. Shamanth also hosts the Mobile User Acquisition Show podcast, and is the lead instructor for the Mobile Growth Lab workshop series.RocketShip HQ is a boutique growth marketing firm with 8 figures in managed spend. Before founding RocketshipHQ, Shamanth led growth marketing resulting in 3 exits: Bash Gaming (sold for $170mm), Puzzle Social (acquired by Zynga), and FreshPlanet (acquired by Gameloft). Shamanth has also helped many other mobile apps grow and scale.Shamanth is passionate about teaching and sharing everything he’s learned about mobile growth. Much of his time and energy goes into the Mobile User Acquisition Show. Shamanth strives to ensure that the wisdom he’s gained reaches as many people as possible.In this episode, you’ll learn: The history of user acquisition and algorithmic targeting How Apple’s AppTrackingTransparency has shifted users to Android What Apple’s new tracking policy means for developers Are subscription apps impacted more than other apps by Apple’s tracking policy? Links & Resources A Brief History of App Store Monetization episode – with David Barnard A Brief History of Device Identification episode – with David Philippson iOS 14 & IDFA Deprecation How App Marketers Must Adapt - YouTube Shamanth Rao’s Links RocketShip HQ’s website The Mobile User Acquisition Show Mobile Growth Lab Follow Shamanth on Twitter Shamanth Rao’s website Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode TranscriptShamanth: 00:00:00The more signal you give to the algorithm, the better the algorithm performs, right? You know, in the post AppTrackingTransparency world, if you gain more purchases, the better the algorithm performs, obviously that would take purchases from you and everybody in the world, and it would just do better. Now, obviously it’s just taking your trial and doing much, much better.David: 00:00:38Welcome to the sub club podcast. I’m your host, David Bernard, and with me as always Jacob Eiting.Hello Jacob.Jacob: 00:00:45David, glad to be here with you, as always. David: 00:00:48Our guest today is Shamanth Rao, founder and CEO at RocketShip HQ, of the podcast Mobile User Acquisition Show, and lead instructor at the workshop series Mobile Growth. Shamanth’s company, RocketShip HQ is a boutique growth marketing agency with eight figures in managed spend. Prior to founding RocketShip HQ Shamanth growth marketing, to three exits. Hey Shamanth.Welcome to the podcast. Shamanth: 00:01:16Honored to be here. Thank you for having me, David and Jacob.David: 00:01:19Yeah. So, I wanted to start with a little bit of a history lesson. You’ve been in mobile advertising and working on mobile apps for, since very early. So, could you take just a couple of minutes and step us through the history of kind of what led us to today with app tracking transparency, and all the different ups and downs and changes that have happened over the past?Shamanth: 00:01:48Yeah. There’s been a lot of ups and downs, as you said. I see two overarching trends, but for folks who want to go into the weeds, I would actually recommend two podcast episodes. One was mine with you, David. A brief history of App Store monetization. You provide a very great perspective into how the App Store itself has changed over the years.The other one was an interview I did with David Phillips, A Brief History of Device Identification You know, we are all about brief histories, but, I think to what we talking about ATT and how essentially disrupted growth in today. There have been two forces that have led up to this point, the last decade or so I think it’s important to know and understand both of these, just to know how we got here and why it’s important, right.Because ATT just did not happen overnight. There were signs for a decade. And, you know, I think obviously a lot of this is evident in retrospect. but I think it’s helpful to know and understand what those breadcrumbs were.Trend number one has been increasing accumulation of particular data platforms over the last decade.You know, I remember, you know, David, as you pointed out, I am a really old person who, which around then, but we don’t advertise. It took off, with all this gray hair. But you know, when I started that we were doing CPC buys, CPM buys. I started doing mobile advertising before Facebook even had mobile ads, app ads.There is no conversion tracking. you know, I give it like no conversion tracking. If you, would buy installs, and you’re like, oh, we bought 70 stops. We got so many touches that we are profitable and spent like millions on games the time. And suddenly the level of sophistication that emerged in mobile advertising. I don’t think we could have posted in 12, 20 13, 20 14. But like I said, from the TPC buys gradually they have a CPI buys as ad networks that now are billion dollar companies. And so it’s an app love and have a tiny ad networks at the time.A lot of others basically fell out of the side. know, they, they like, we have enough confidence to be able to build. Rather than just a or impression we have that kind of data, that kind of confidence the next time AEO or purchase optimization. This is 2016, right?It’s just, it seems so recent. And it’s staggering to think that they could not optimize like athletes if they six, years ago. And that was just the biggest game changer in it. I still remember having a lot of skepticism that this would even work and I’m like, how are they going to find out who’s going to purchase?They’ve never done it, nobody’s done it. But clearly, if somebody could do it as a Facebook, they had the budget for data. I can only to that point the time I think it became evident to me, myself, that as to why Facebook was so successful. basically have the IDFA that IDFA on Google ID.They had that idea, with print from on Facebook audience network. So for diva able to predict with ed accuracy, who the purchaser’s book, obviously they took it a step further with relapse optimization, So obviously the more data Facebook’s SDK gun. The better it got predicting who the purchaser as well.Obviously more data the pixels on the web got the better, the better the accuracy of the SDK became other way around that, because they had, you know, if you made a purchase on a beauty of that site, you would make a purchase on, an e-commerce app. So they put all of that data together.Right? So obviously Google had a very, very similar trajectory. I don’t want to go too much into the weeds. Over the last decade, increasing amount of data accumulated by Facebook, by Google folks like apple. And then I am so all add Netflix, everybody got increasing amount of data about users, spectator. they just, weren’t doing this in isolation, apple licensed up to this, you know, Google, Google had a bit of a conflict because they were also making money off of this.They are also making money off of this. these less active in pushing back, but you know, apple, the apple, again, not to go too much into the weeds that it’s corporate strategy. Two, but for apple to say a hobby, a privacy minded, but it’s also very, very much about profits for them. the opera motive.Oh, an ad network. No, I don’t know. I don’t have a lot of confidence to how they would do anything. Right. So apple said, know, look, we have this beauty ID, which is not great. Let’s phase it out. Let’s have an IDFA, which is reset the vote, which wasn’t too much and improvement. they said, oh, let’s make this, idea phase zero, but physio, which means how to use it goes on and off the lab.idea of it becomes and advertisers could not cannot target people. Shockingly enough, to idea, phase zero, which was, I think 2016. But if I use it on the flat adjustment advertises, please don’t track the fuse. It’s almost like a request. a non enforceable requests, basically needs to attract me, but nobody can, anyway, so even lab Vito was a very, very telltale sign that this is ATD is, where apple is headed.And if you have to look on the web, safari had intelligent tracking prevention. They have obviously. Much more active on the web terms of crackdowns, Mozilla had what what’s called ETP. I think it’s called it should tracking prevention. I forget what it’s called, then Chrome of course said, Hey, we’re going to deprecate They’ve accepted the deadline, but been a lot going on in the direction of privacy. Right. and that, has happened very, very much in parallel that increasing accumulation of data by. And to some extent, you know, it’s having these surprises for anyone who’s followed the breadcrumbs, not to gone to zero and 2018.Apple said kid stops will not allow tracking. That was almost like a trial balloon bar and of cost 2020. It was not unsurprising, I would say, right. That, it came to be just because of everything over the last decade that I just did.David: 00:09:21Yeah.That’s a really great way to summarize it is those two parallel courses with it’s like in the shadows, there was like more and more and more and more, more data accumulation feeding all of this, but simultaneously there was more and more and more awareness of privacy concerns.What that data was being used for, and that, you know, it does seem like the press a big influence in this. I mean, when was in New York times and wall street journal, both had big posts in like 2017, 2018, where they showed, you know, how you could track individual users when they’re going to, you know, a certain medical clinic or, there was another set of stories around us service members who were being tracked by fitness apps. revealing, basic, we call unknown previously unknown, military installations and things like that. So it, it, yeah, there was a lot going on that has led us to this point. So. So now apple has, has dropped the ball after acting transparency. You know, you you’re, you’re, you’re not allowed to track unless you first prompt.You know, we could, we could talk an hour on all the different motivations and the, and even the way they deliver it, you know, the, the way they. Request the prompt is, is, and the wording of the prompt it has, has even drawn controversy, but let’s not get into that.Jacob: 00:10:52Time it comes up, I still don’t know what to click, David: 00:10:57Let’s talk about the real world impacts because I think there’s been a lot of ink spilled in a lot of discussions around, those other things. But, but what I want to hear from you as someone who manages a ton of spandex and works in the industry and, and has to deal with this day in day out.Let’s talk through the world impacts of, of, of how this is impacting the apps that you work with and what you’ve seen kind of in the broader industry. I thought it was interesting before we jumped on the, on the, and started recording, you actually said, you were expecting a crazier summer, so let’s just start with that.So you’re not quite seeing the disruption you initially expected. Is that, am I over reading that.Shamanth: 00:11:42I don’t want to be grand standing here, but I certainly was for worse. and I don’t want to jinx this, but suddenly that couple of advertisers really all right, that actually crying.But I talk about the mechanics that may have contributed to that further on, but, I certainly was prepared for far, far, far worse.I would say.David: 00:12:07Yeah. So, so what are you seeing? I mean,Shamanth: 00:12:10Yeah. David: 00:12:10And then one of the things you you’ve mentioned before is that you are seeing some shift to Android. Tell me about that, shift to Android spend. And is that in certain categories across the board? Shamanth: 00:12:21I think it’s across the board. I think it’s much more so in gaming. and if you look at a bunch of MMP boats or the estimates, the, shift to about iOS. Yeah, about 30 to 40%. I think that sounds like a realistic range. Obviously there’s some verticals that are hit much, much harder, right. yeah.Definitely. I think there’s a lot of sped shifting to ad drive. I would attribute some of that to the fact that. Tracking is broken, but you know, oh, I hate to see a, this, like a mother spoke to the work with, and the, also the advice and I’ve just stopped you. You’re like, oh my God. My CPA is a boated by Facebook is terrible because Facebook’s not tracking anything.And then when we look at the blended numbers, Basically the money they make and the trials to get and the subscriptions get, which is exactly what I mean by it. Not being as as I expected. You know, look at the iTunes dashboards,Just go crashing down, which is what I was afraid would happen. Right. and that, that has not happened. but what is real and true is like I said, tracking is broken, even if not right. I’m tracking to just grow congested because apple has a concept of privacy threshold. which basically means, if, campaign.Does not have minimum number of stops or purchases. Apple is going to show they report all installed. But, but the report very few purchases. What that means is you are a casual game, our social casino app that has Costco, set it up 150 to $200, is not uncommon for these. each campaign, if you’re running $500 a day per campaign, you get two patches.So for people, campaign would just get obfuscated by the privacy threshold, which means if you’re going to find a dollar at a campaign, you’ll probably get it, but you’re just not seeing them, which is better than a was that I’m not.David: 00:14:53Yeah, we We, are we back to the old days of, of half your advertising budget is working. You just don’t know which half Shamanth: 00:15:01Yeah. Yeah, yeah, yeah. Very much true.Jacob: 00:15:05I was going to ask, so the pull back on the spend, like, is that, do you know where that’s coming from along the chain? Is that, is that companies not being sure anymore and pulling back? Is it, is it agencies? Is it all long? Because at some point somebody has to, because I, it makes sense that like, one, we don’t know how effective all this stuff was to begin with.Right. And so just losing the tracking doesn’t necessarily mean it’s less effective. It just means we don’t know. And so it seems a little foolhardy to just dial back. Right. you know, especially if your business relies on it, but it seems like that’s what most, at least some percentage of companies have done.They’ve they’ve pulled back just because they’re not sure.Shamanth: 00:15:44Yeah.I think I would also say a lot of companies that have pulled back have had strong drive products. the couple of companies that I know that are doing better now, actually don’t have very strong, I drive products. We don’t have a choice, right? We don’t have a choice. I obviously I don’t fly that strong guy, but having a fall back means be good to take a little bit easy most time to Android.We figured out what is going on you get to your question. I think a lot of that’s coming from companies, especially larger established companies that have. BI teams and reporting systems and dashboards on the creative level alive. We just don’t have that in our book anymore. Jacob: 00:16:38And they’re spending too much to be confident in just YoloShamanth: 00:16:41Yeah, yeah, yeah, yeah, Yeah, yeah, David: 00:16:44Any specific trends on, on CPMs and cross portrayal or anything like that? As far as with the drop-in. Spend on iOS and the increase on Android has some of the performance on Iowa’s not degrading been more to do with market dynamics change versus it actually just working as efficient.Shamanth: 00:17:07Yeah. you know, I try not to look at CPMs just because CPMs are very contingent on the kind of optimization you have to like, you know, and may, if you had value optimization, you be paying QPM segment to their roof and your CPMs on audio sense. I couldn’t be higher than Instagram and Facebook and the metric.What I like to look at is really the CPA, but there’s a cost, but. also has the capacity because of the privacy, especially for nowDavid: 00:17:41Right. Shamanth: 00:17:41Cost per trial, which I see being steady. Now to your question to your underlying question about, do I attribute back to the underlying market dynamics?Definitely. I think that the fact that there’s less of competition, I do think has contributed to, the TPA being steady folks that have continued to do iOS. Definitely. I do think that the lesser competition has pleaded. David: 00:18:06That makes sense. let’s talk a little bit, cause this is kind of our wheelhouse at, remedy CA obviously, nice shirt by the way, Jacob. Jacob: 00:18:16Is the original first ever revenue cat t-shirtDavid: 00:18:19Nice. how, how are subscription apps being impacted in, in what you’ve seen and then how is that different from, you know, games and other categories that you’re working. Shamanth: 00:18:31Yeah. I would say subscription apps are hit much, much less odd than. A lot of games, again, I’m qualify. I don’t want to sound like I’m grand standing because this is not like a body of Fiesta yet, but I think they’re it better than folks who are really clear that I don’t want to say clueless, but folks who are just struggling, you know, I talked about, you know, let’s just say a hypothetical casual game or a social casino app that has a cost, the big user 150, if you get killed by the privacy test, short subscription app less impacted by that. just because, you know, again, you’re off book which is a primary metric, nearly every subscription app, a squat Cheverly under $50, which means for the same $500 budget you getting, you get, you’re getting 10 purchases.So. Deceptive as are that privacy threshold. Right. and the other factor that makes the whole ATD tank a lot easier for subscription naps is that nearly every subscription app, I know have 90%, lots of trials happen within the first 24 hours of install. What that means that in the ATP paradigm is A lot, not nearly all of that signal gets captured by the ATT algorithm, by a scab because a scab network workshop with system of timers, right. immediately after install a timer starts and after 54 Davos the timer reset, if y’all, and then the reset of the starts and, if no event has happened in that second time, A lot of the events that have happened first, get sent back to the, get sent back to APO.Not that event gets sent by them. And I’m probably definitely grossly simplifying the, some of this. and, I have a YouTube video that goes into the distance with the V2. People can check that out, but my point being the fact that of the trucks nearly all the trials happened within the first 24 hours.Make it relatively easier for our subscription apps to have to be captured by ad network. that’s one of the reasons, lack of trust snaps do quite and obviously, you know, the most signal you give to the aggregate them, the better the I that is in bombs, right. you know, in the P PhET was if you gave most budgets, The better that I go to them, but obviously the algorithm would take you and everybody else that it would just do better.Now, obviously it’s just taking your trial and doing much, much better. add onto the trend we’ve seen is that VAT based flows work a lot better for subscription apps than for games. again, there are challenges in execution, certainly. One of the things that they’ve seen that allows them relatively most after doing doc, that based lotion.Right. yeah, so I, I would say those are some of the factors that think contribute to subscription apps being better off than games and the post ATT world. again, not to grandstand, not to the, victory yet, but I think that that much, much better.Jacob: 00:22:14Yeah. There’s, there’s still, also just the dynamic with consumable games. Like, I don’t know what retention curves really look like and stuff like this, but with subscriptions, you know, your acquisitions you’re making today only effect, you know, a chunk of your revenue in the very short term versus, and you have this like recurring user base consumables.If your new users dry out really fast, like suddenly, you suddenly lost a lot of. Yeah. A lot of them, your business model doesn’t work as well. Right. So, but wow, that’s incredible that the, so on the CPIs, for like social casinos or whatever, which I imagine is just thought a high spend category, highly competitive space.So if they don’t have like value attribution, What sexually driving the CPI so high? Like how do they know like what users to spend that much money on? Is it just, is it just, I guess click-based like, it is still like they can, they can proxy and know like people that click on those are part of that high value group or, or what, what, what keeps the, keeps the targeting good enough so that, you know, cause you can imagine if everything was perfectly anonymous, all CPAs would clicks would be the same, right.Across all apps.Shamanth: 00:23:21Yeah, yeah, yeah, At this point, I don’t, would not say if you have a perfect answer or apps with high CPA, I think the best we have right now is true. Facebook reports, metrics, health platform reported metrics that directional, which means your CPA today would not be comparable to your page 80 TCPA, but because it’s going to be very, very high, just because of the privacy picture that I just described, if you are getting maybe $500 on this 700 on that, that you just input campaign is better than campaign.But you’re not impairing that job. That is your actual cost acquisition. So you’re taking the CPA as a relative measure. I think that’s true for the game it is for subscription apps. You’re treating the CPA as a relative measure cabinet and campaign B or not so much as an absolute measure of unit economic.David: 00:24:20I think that’s a great to transition into what’s actually working right now. So we’re talking about some of the impacts, but, Hinting at it’s something that you’ve mentioned before, is that the best source of truth now is not. These specific return on ad spend calculation, but actually using blended metrics.So tell me a little bit about how, how you approach thinking about metrics as a source of truth versus, you know, the past, you know, five or six years where it’s way more focused on. very detailed return on ad spend. And again, to our earlier point, even if that return on ad spend calculation, wasn’t actually as accurate as it seemed, Jacob: 00:25:07Okay David: 00:25:08You were at least able to calculate it more accurately.Now it’s like kinda everything’s out the window. how are you approaching blended spend or blended metrics, to measure these things?Shamanth: 00:25:20Yeah, I would add the caveat that the blended metrics isn’t like modern on you. Right? What old school? Offline advertising work. They were like, oh, this is how much I spend. This is how much I made, how they measured everything before the internet. And even with the internet, like of companies, we work.Even three ATT works at blended metrics because we know that a portion of our paid installs drive organics, we have a very, very clear correlation between updated organic. So we would be money on the table if we took into a concept paid users and not organics. So, you know, people have definitely done that.And that companies that have done it just to pursue growth. they’re like, look, we need to grow as aggressively as possible. And the way to do that is to take lead and metrics to justify the growth rather than to shackle us. Jeff Pedro lab, back to your question. How, how how do we sort of look at this names will say, this campaign gave us, return on ad spend 20% cost per trial of $30.You’re basically saying your overall marketing spent, gave you a $20 cost per trial across paid and organic and social and that you’re spending on. Obviously, a lot of people to be uncomfortable with that because they’re like, oh no, if I hadn’t spent on marketing, I would have still gotten trials a day.And I’m giving credit to marketing for that. And, you know, I, I don’t have a direct answer to that, but I think the answer really is. Would you want to be, would you want that’s helpful and has to get crew or would you. And model that’s accurate, but isn’t having you grow. not going to claim I have an answer to that one, but, yeah.So basically looking at your total number of trials and your total spend. obviously this calculation becomes scarier. you have multiple chats, Yeah. If you’re running Google, Facebook snap, and multiple ad networks, then you’re like, oh, you know, one of the ad networks probably performed badly, but my total blender not change all that much because my other channels, 10% of time stops, but there are challenges, especially at collage level spend, but is very solid source of truth, especially for smaller advertisers who may be on a handful of channels.Here, I guess it’s what you see in the back. David: 00:28:19And, you also mentioned that, people, do you, you mentioned web flows are working really well. And I assume what you meant by that is sending people from an ad into, onto the web instead of onto the app store, which is, it’s really fascinating to me on multiple levels because. You know, the app stores have always been this black box where you put a certain number of, of clicks into it.Then, you know, you see the end result, but you don’t see any of the steps in between. I mean, you have some basic metrics with app store, analytics and stuff. but with the web, I would imagine that that gives you a more direct. Trackable, link from somebody who, sees an ad to then actually kind of what they’re doing on your website.So, but then ultimately I’ve talked to a lot of developers who talk about how on the web, their conversions are actually quite a bit lower in the app because Apple’s made it so easy to use an app purchase. So, but it seems like maybe there is somewhat of a balance. There is that maybe you lose fewer people.From having to jump through those hoops of the app before they even get to the onboarding before they can be shown, you know, the value proposition and then being, you know, shown a subscription, page or whatever it is. what have you seen working in regard to web flows and then, and specifically for subscription? Shamanth: 00:29:53Yeah. Yeah. Yeah. Like I said, I’ve certainly seen a lot of success bar description apps that have adopted web most, a couple of apps have up 15 month on month group to ATT. not to have typical, revert, but it’s that’s happened. I think a couple of elements, you know, I think it’s, what’s most important is to make sure that it’s right and there’s a couple of possible lows.I think it’s important to pick to which one is right. And really, and I think one flow could be showing that. A user goes to a landing page, which is basically like a B2B ought to be, to see that the page on the web and what you would get for a And you have a link that accept call to call to action on the landing pages, go to the app store.So a lot of that experience, but just, and try to explain it’s happens on the app store, the web page. I actually does the job of telling the user on the product. And it’s my hypothesis that this actually works well because Yvette page can do a much, much better job of selling than the app store can, while still making it clear that this is an app, and while actual conversion happens within the app itself, but, similar, a different flow that’s very comparable would be take an ad, take a user from an ad to a landing page where users have to input that.Which again, get, use, it makes it makes it clear to the user that this is an app. is a mobile experience. User gets a text message and use assigned top work. and when they click on the text message, get to go to the app store and download the app. Right. Again, another model could be a user clicks on an ad, to an article or a content page, which is what you would see if you had a Double-A or a printed article or a content page to not store.And I can, the last one I can do, the more complex no is just to have onboard them on the web. basically take them to a webpage and they And, hopefully so I can make the purchase on the web. It mitigates your favorite petty, to be honest, the hottest and most strict food resource intensive.And really it’s my recommendation that you put you that back after you put you in one of the best that I recommended, because you don’t want to invest a kind of engineering and development time and bending, don’t even know that the flow is going to work for you. so I would recommend just testing the web landing pages first then onboarding stuff.But, I think those are most important models that we see work. Somebody else. I think that’s also very, very critical. think a lot of people, when they look at a lot of advertisers, I know that have started on the web for the first time. We’re like, oh, Put together this nice landing page that looks like our homepage, on our website and just put it out there.Okay.Let’s, you’re being very intentional about what value propositions to touch on Actually out of your landing page. And we have a structure that we use now. most important, part and value proposition and that’s social proof then your most important emotional benefits then. I think the most successful advertisers we work with are very, very intentional about what that, that page is looking like.And they also tested their athlete. I think it elements are very, very critical to making theDavid: 00:33:59Yeah.That’s really smart. And I hadn’t thought of it quite that way about how, yeah. And that was, I was talking with the apps are being the black box is you’re just sending somebody, hoping they look at the screenshots, hoping the icon resonates with them, hoping the title and subtitle are meaningful, but when you send them to the web, it’s not just about them right.To subscribe on the web, but it’s actually just. Having a better opportunity to communicate the value prop so that by the time they get to the app store, they are, they have a much higher, They have a higher, they’re just more likely to actually take action by the time they do get to the app store.Does that makes a lot of sense?Jacob: 00:34:39Tells you a lot about the quality of like the app store as a sales pitch. Right? I mean, but I guess when you’re like looking at a, you know, you’re trying to differentiate, right, and there’s only so much, you can communicate in a block of text and then a bunch of screenshots. Right. And you’ve seen so much.Data shoved into the screenshots on asking LAMSTAR right. They’re not screenshots. Right. They’re like deck.David: 00:35:00Billboards Shamanth: 00:35:01Yeah.Yeah. I also think another reason why the app store works so well, pre with Facebook would just show ads to users to install other subscription apps. So if you send them directly to the after, they’re almost pretty qualified. case anymore. So I think that absolutely level the field a lot.Jacob: 00:35:27Yeah.It’s, it’s, it’s a tough, skill set though, for a lot of developers because they don’t often have web experience internally. I think, I think I’m, I hear so much, like people get so obsessed about the 30%. and they want to jump straight to that last one. You mentioned about building a whole online purchasing thing, which like, you know, Stripe’s pretty easy to use.Like it’s, it’s, you know, it’s not that much more work than building a landing page, but you have to remember. okay. Management. So now you got to have a link for somebody who can go and cancel that thing. Now you also have to worry about taxes, Stripe. Doesn’t like collect a tax information for you already.You have to, you know, then synchronize that with your backend. And, you know, if you’re using revenue, casing grants with us or whatever, but you got to manage all that too. a lot of complexity, for 30%. Right. And when you’re just trying to, you know, all of these things can find incremental. But like, as you’re saying, it’s important to put them in the right order or you can end up a lot of and money.Shamanth: 00:36:28Yeah, yeah. David: 00:36:30Well, I did want to, to move on to the, the, future. So we, we’ve kind of gotten through the first couple of months of these, this rough patch in or into this, era of, of mobile advertising. Are there any things that you’re seeing that are especially promising. the future is the future.Everything we’ve been discussing so far of just of your advertising works and 50% doesn’t mean you’re never going to know which, do you, or are there some technologies coming online or some approaches that are just going to take time to of work out.Shamanth: 00:37:12Yeah, I think there’s going to be some changes. I don’t know. These are going to be shattering, in terms of changing. ATP. I think the most promising though, I would say, iOS 15 custom product pages, basically solve the problem of Jacob. didn’t give it to you. How one tomorrow slide deck and everybody sees the same tag and Astro does a terrible job of sending a user on.What the product is basically, the custom product pages can have up to 25 washes off your app store. which means like if you’re a, you know, wellness app, if let’s just say you’re a meditation app that has a meditation for sleep or anxiety and how to meditate. Separate landing page, so to speak on the app store, anxiety, meditation, right.And you can send, get a unique URL for each of these. you’re going to have ad for sleep, going to an app store for each sleep for anxiety going to an app. So for anxiety I can, that can help. I just don’t think it’s going to have too much on the measurement front. obviously.Actual execution is still unclear. The announcements out. Definitely one of the big changes I would take that’s coming with 15. The other one would just be that, advertisers are going to be receiving post-docs, which is huge, at least in ensuring of the advertising data so far, completely bonkers right now.Networks like Facebook snap, everybody get your post back from ASCAP network, but you have advertiser you as an advertiser. Which means you basically take the word for it. I do know for a fact that has actually changed values. I don’t want to call it malicious because the conversion value was no.And to change it to zero, the problem is that knowledge will have very, very different meanings. You don’t mean install. not mean to install happen, and there’s no value. know that they did that change. I don’t have that company to do it. but my point is, and Google, Google explicitly say we are going to use model conversion.So you basically take out what bird app Facebook face tapping data is accurate. Everything underneath it’s modeled, means take out all of this is because the postdoc goes to the metroplex, but not the avatar. if the post that goes to the advertiser, you can add the very least verified that tell me the truth, which bonkers? I think David, you imagining, until all the time, you, you just have to think that, oh, back onto words for it even PhET right.I think That’s going to be a big, big change, even though a lot of that will happen under the hood. And I say advertisers for the back majority of advertisers, going to do, they’re receiving a Okta. Uh post-bacc but I think that’s going to be a big deal, but, I think those are the big changes, the custom product pages and the post-bac to advertisers the tree and the intent of the future.In many ways, I do think it’s going to be back to 2013 or 2014. I think I had talked about how. A number of installs and to be held that certain percentages, knew that each of them would convert to Jacob: 00:40:59Okay Shamanth: 00:41:00have a digital subscription. So they the cloud, but think it’s going to be a very similar world. We are going to be, you’re going to have to be more comfortable making decisions based off of incomplete data.But I do see that thing. David: 00:41:15One of the things I’ve been hearing a lot about since, since apple announced. The last year is incrementality testing. So systematically on and off, you know, so if you’re advertising, I mean, obviously this would be a tool for, for larger apps, but if you’re advertising across Facebook, Google snap, TOK, and you know, other mobile DSP.You know, systematically moving spend around and then measuring the difference or even turning spend off in certain channels and increasing spend in other channels. you seen that work? and are you, excited about the potential, of having tools in this space? do you think incrementality testing is a bit over-hyped.Shamanth: 00:42:02Any recommendation like incrementality? I think one caveat that a lot of people miss. That it’s useful. What a very, very tiny fraction of advertisers, David, like you said, if. Like all the society building networks, multiple DSPs, ad networks, instrumentalists TV. Yes, absolutely. You know, you should use incrementality because there’s just no way you’re going to find out if this is going to work incrementality and, media mix modeling.You want to use both of them had an ad to make that work. But I would say the kinds of advertisers who need like this are a very tiny fraction. So the vast majority of advertisers, even the advertisers who are on four to five channels, even advertisers who spend those six tickets in a monthly spend, I don’t think testing is going to be, Betty has just because Todd, you know, it’s, it just becomes imprecise.Volumes of data. You need a critical mass of data for to be useful. right. I think it’s a very similar thing that began X models, right? You need anomalous, anomalous budgets to dose to be useful and helpful. So I do take, these are great. I think the fact that they’re not an antidote to all of the havoc that has, about the applicable to our tiny Sheila David: 00:43:39That makes sense. And then if, if you’re only advertising on Google or only advertising and Facebook are only advertising on the two of them, they’re, they’re essentially doing some level of incrementality testing for you right there. Measuring the performance of this campaign against that campaign.And they’re up depending on the results that they seem to be seeing. So there’s some of that’s kind of already covered if you’re using those platforms, as your primary sources, Another thing I wanted to get your thoughts on was experimentation with other forms of advertising. I you’re, you’re very focused, currently on, on, you know, paid user acquisition and I don’t think that’s going away.And I think for, you know, for a lot of apps that is going to be the, the, the best, most reliable way to continue scaling even without accurate measurement. But have you seen any other. pushes with any of your customers, to work on, on, on different styles of advertising, different, approaches to marketing that are being successful.And do you see their kind of more incentive to try more things these days?Shamanth: 00:44:50No, I spoke about web, and I think there’s definitely much, much stronger interest in that campaign than even six months ago. Larger budgets, definitely stronger interest. I would, again, like with the extra mentality, I would say shut on smaller budgets, I do not recommend experimenting.I do not recommend diversifying, but certainly have larger budgets. I would also say that are worth spending in the tens of millions, budgets like that have the, even like millions a month. Uh there’s some, these other larger studios. They have already been on influencers that wasn’t even advertised on TV, none of this would be new to them.Yeah, so I, I don’t, I bet anything radically new that.David: 00:45:42Yeah. And then that kind of gets back to the old tried and true. You just got to build a good product and work on your monetization, and kind of get back to the basics of, of product as well. Jacob: 00:45:54I think sometimes these, these overly complex, overly targeted systems, especially for people who make software contend to be busy boxes, right. They can tend to be, can tend to be things that. Can attract our attention and, and ‘cause, they, they seem very like, you know, oh, we can get it right.And really make it scale. And then some people have right. It’s possible. But 80/20, I think for a lot of people out there, like just, just, just focus on the fundamentals and you can go pretty far. And then as time comes, you can layer in the more, you know,Shamanth: 00:46:27Yeah.Yeah, yeah, yeah, and like I said, at a certain level of care, influencers, all of this becomes much, much more meaningful. and like I said, that’s certainly more meaningful already. Yeah. You don’t need too much. David: 00:46:42Well, I think that’s a great place to wrap up. it was great chatting with you and yeah. lot of insight there on, on what’s working and what, how to think about things in this, this new world of mobile marketing. you know, as we wrap up, is there any last thoughts to include links to, where people can find you on, on, on the web and to RocketShip HQ and whatnot.Anything else you want to add?Shamanth: 00:47:09No. Though, like I said, guess this not bad as it reported to be. They’re raised to mitigate the worse-case scenarios, that helped me out, been able to share. so, hopefully they’ll come out on the other side of all of this without too much craziness.Jacob: 00:47:35I think people are going to keep using apps. That’s my, that’s my prediction.David: 00:47:40And I think people are going to keep advertising apps. Shamanth: 00:47:43Yeah, yeah, It’s the, how that’s going to have to change and it has to change dramatically and there’s no getting around that.David: 00:47:51Well, it was great chatting with you and, we’ll talk again soon. Shamanth: 00:47:55Absolutely.Jacob: 00:47:57Thank you.David: 00:47:58Good bye.

Aug 25

48 min 15 sec

Watch the video version of this show on YouTube »Maddie Kirby is currently the Senior Social Media Manager for the video journal app, 1 Second Everyday. Maddie started her social media marketing career at Ozwest. Ozwest is an exclusive distributor of Zing branded toy products and the Ozwest toy line in the USA and Canada.While working at Ozwest, Maddie started growing her personal social media presence. Maddie has almost 400k followers on TikTok. Since joining 1 Second Everyday in 2019, Maddie has been instrumental in leveraging TikTok to organically drive millions of downloads.Maddie has a bachelor’s degree in advertising from the University of Oregon, and has also worked for companies such as Bytedance, Inc., Egg Strategy, Transition Productions, and Atomicus Films.In this episode, you’ll learn: How to promote your app with user-created content Clever tricks to get your app noticed Why TikTok is a great place to market your app A great strategy for growing your app’s follower count Links & Resources Maddie and David’s App Promotion Summit USA panel discussion Cesar Kuriyama’s Twitter Cesar Kuriyama’s TED Talk David Smith on The Sub Club Podcast Widgetsmith app Maddie Kirby’s Links Maddie Kirby’s TikTok Maddie Kirby’s LinkedIn 1 Second Everyday’s website 1 Second Everyday is on Twitter 1 Second Everyday’s Instagram Zing Toys website Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode TranscriptMadison: 00:00:00I like to think of them as content buckets or pillars. You pick three and stick with those for a little bit. Try a few ideas in each bucket. See what's working, what's not. Scrolling through the app is the best way to kind of keep on top of things. And then you have to be able to think really fast and post really fast because these trends come and go. Jacob: 00:00:39Welcome to the Sub Club podcast. Our guest today is Maddie Kirby, Senior Social Media Manager at 1 Second Everyday. She began her career in social media marketing at toy company, Ozwest.While working there she also started growing her personal social media presence, accumulating almost 400,000 followers on TikTok.In 2019, Maddie joined 1 Second Everyday where she has been instrumental in leveraging TikTok to organically drive millions of downloads.Maddie, welcome to the podcast.Madison: 00:01:08Thank you. I'm excited to be here.Jacob: 00:01:10I'm also here with David, my guest, which I forgot to introduce in our freaky Friday intro swap.David: 00:01:16I usually do the introductions, but that was great. Jacob.Jacob: 00:01:19Hey, you know what? I'm very, very, very versed at...David: 00:01:21You gotta mix things up. Jacob: 00:01:23I'll pass back to David because he's the one who preps all the questions. David: 00:01:29Nice. Maddie and I were on a panel together earlier this month, at App Promotion Summit, which is a great thing to watch. We can link it in the show notes.It was four of us on the panel and it went really quick, but she shared a lot of really interesting stuff about what she's working on in social media marketing, and working with 1 Second Everyday on their TikTok presence.So, I wanted to bring her on the podcast to actually give her time to talk a little more about it in the context of promoting apps, because she's been on a couple of other podcasts where they're talking more specifically about social media.I'm super excited to have you, Maddie.I do want to dive in. We typically do have more developer focused guests, you know, people that are doing the coding or focused on user acquisition, spending 50K a month on Facebook. And so that's another reason I was excited to have you on the podcast is to just get a really different perspective.I think that there's a lot of potential in social media marketing. But not a lot of people talking about it in the app space and then...Jacob: 00:02:40Or just knowing how to do it, right?How do you even start, especially if you're a developer-turned-promoter. I think a lot of app creators tend to do the things you were talking about. David does technical channels about buying ads on Facebook or whatever, where's a lot of leverage in social media stuff. If you can do it. David: 00:03:02Yeah, absolutely. So, I did want to start with, you got your start in social media marketing, not with an app, which is another thing. It's like you came to the app marketing with such a different perspective, which I think is is really good. There's too many people who are just so narrowly focused in the kind of existing playbook for marketing apps.So, are there any lessons from your time at of all the places a toy company? Any particular lessons from being at a toy company that you think helped you grow and learn this form of marketing and specifically that apply to subscription apps?Madison: 00:03:41Yeah. I don't know if it's necessarily a lesson or lessons that I've learned. But I think coming from the toy industry, which is also an industry where people don't leave it. They have a lot of people that started in the industry and then just stayed there forever. You have a lot of people that aren't really thinking beyond just what they are normally, what they're used to, I guess, is what I would say. Jacob: 00:04:05Is what they're used to, like ads on Nickelodeon.Madison: 00:04:08Yeah, it's definitely commercials. Like when they were still talking about TV and trying to transition out of that, that's really funny that you brought that up, but that's kind of what we were talking about at the time. So I got really lucky and I had a great manager who really wanted me to push people outside of their boxes.And I feel like I wouldn't have found TikTok unless I was at a toy company, because we were so focused on trying to connect to Gen Z and young people. And I heard some kids talking on our public transportation about TikTok, which was musically then. And I was like, oh, and I just had like my feelers out about it because I was just so focused on kids at the time, and like trying to find this like cool new way that we can connect to them. And I downloaded it and I was a content creator, too. So I thought it was super cool. Getting onto TikTok at that time and super early, I feel like wouldn't have happened without being in the toy industry. Also then I was able to take that into 1 Second Everyday and already had experience, which I feel like a lot of people don't really have TikTok experience coming into a company.David: 00:05:16Yeah, that's really cool. and so then what, what was the leap like? what, what, yeah, how'd you land the gate hit 1 Second Everyday and decide to jump into that the app. Madison: 00:05:24I was using 1 Second Everyday already, before even looking for a job. so i had already, and i had known about the company the company is amazing and they have a lot of great benefits and they care so much about the people. in the company itself and it's small and, remote. so i was already hoping that they would have a job opening.Right. And I, so I didn't necessarily have my sights set on an app. really. it was just, i was interested in 1 Second Everyday, cause i use it. and i also like it because it's content creation and i have a background in that. so i feel like i was able to kind of have this weird experience coming into it. David: 00:06:04Yeah, i do want to pause real quick and maybe talk a little bit about the app. and i should have researched, i should have read up on this before the podcast, but it'd be fun to just ask. 1 Second Everyday has been around like 10 years, right? like this is the, like, i think i bought this as a paid app in, in 2009 or 10 or something.So tell us a little bit about the history of the app itself. and what the app does.Madison: 00:06:30Yeah. so our founder has been recording his life for 10 years now, which is a really long time. and they started on kickstarter actually. and he did a ted talk and that's how a lot of people initially found us was through his TikTok, where he had left the ad. for a year he left his job to go record his life, his 30th birthday.And yeah. it's, it was amazing and people really connected to it. and it's like a very simple idea. and then he did his ted talk about it and then that's how he launched the app. and now it's just kind of built slowly up, through that. really just being able to have him connect with people. caesar's an amazing person and a really great storyteller and people were able to connect to him first.And then that's kind of how he built a team around him to slowly.Jacob: 00:07:22I love the, i mean, i think, you know, when you talk about. user acquisition or, or, you know, ultimately that's, you know, what marketing or whatever is, right? you want to get people into your business, your app or whatever. it always feels so much easier when you start with the story, right? when you start with like the narrative, the story, then you add in the business or the product later, right?Because now you have a foundation. i was, i was on the 1 Second Everyday reading the timeline, right? it's all very clean narrative, right? like this person has this story whenever, and then everybody can join in. humans are very narrative driven. right? so we'd like to be part of something that like that like makes sense, right.That like has an arc to it. so i think it's, i, and i think that downstream that's going to help will help makes apps like once every day be successful is they have this like something that makes sense. and they don't have to just go out and like, oh, you need 50,000 users spend $50,000. right. you actually have a little bit of like organic story there.David: 00:08:21Yeah. and speaking of. no worries. so while you were still at the toy company, you started building your own social media presence. so you had, your own personal TikTok account, but then also built up several others. what was it like again, this, as you said earlier, this was a musically at the time before it even became TikTok before he even blew up.So you're really early to this really cool platform. how did, how did you build these, accounts.Madison: 00:08:49I started off at, on vine and then of course, vinyl. yeah, i know i had started it and then i had a harambe bay vine blow up. and then a week later they announced that the app was shutting down and i was devastated because i was like, here's my shot. i got it. and then, so i was looking for my next place to go cause i was a youtube kid growing up.So i've always wanted to make videos and i, and i love it just naturally. and i had some friends invite me over to this app called flipagram, which is actually kind of funny because that was a. competitor to 1 Second Everyday at the time. and i didn't even know about 1 Second Everyday yet. and so i was a paid content creator over there to be using their app, and then got on to TikTok and started just posting random, funny videos.And at the time things were the algorithm wasn't really developed, then it was more you post and then whoever likes your stuff is really important. so if you have somebody really cool and like, that likes your video, your video is going to blow up. and i just had two popular twin girls had liked my video and i had all these people coming over and said that these girls had liked my video and they saw it on their platform or their account.And then that's how it started. it just started like going up and getting followers. and now, i have, an account where i play guitar. i decided to take up learning electric guitar. and so i built. an audience of 11 k on there in two and a half months. so i'm really like addicted, i guess. Jacob: 00:10:28So, yeah, so, so, and do you, do you, you know, i dunno this is more about like personal, just like brand and like building these, these properties. i mean, i do think it's, it's, it's the skill, like, you know, we're talking about developers building their own social media properties. it's like, okay, you got to have a shtick.Right. i don't know what you'd call it. right. like could learn guitar. so do, do you carry them over from your other properties? you try to like bootstrap them or you're just like, nope, totally greenfield. i'm just going to like, be a guitar person now and like make it a thing. is that, is that more how it goes or.Madison: 00:10:57I mean on my other account, my comedy account, i guess it's always been a really hard thing to kind of stick with one thing that you're into. and some people are really good at that. yeah. definitely not the best when it comes to my own stuff that i, like, i just want to do whatever and kind of see if that works, but that's kind of morphed over time.And then with guitar, i was just like, i'm just going to record myself, playing guitar and see what happens. and it did well.Jacob: 00:11:24Oh, so you don't, you don't, you don't like plan out like, oh, i'm going to do a funny heran bay guitar thing. it'sMadison: 00:11:29No, i just do it. it's a lot of it's like improv and going for it and just seeing. i think that being on the platform for so long, i kind of know what's going to do well, and yeah. and sometimes you'll put, you know, five seconds of effort into something and it does really well. and then other times you put, you know, an hour of work into something and it doesn't do well.Jacob: 00:11:50This is me and my twitter game. So you need to give me some advice because like i can, i still can, 11 years in, i, sir, out 13 years in on twitter, i still can't predict what's going to do well.Madison: 00:11:59Yeah, exactly. David: 00:12:01So you've kind of been talking about your, your personal accounts. but these things that you're saying, i would assume also apply to company accounts. okay. i would assume growing a company account, you just need to have a similar amount of exploration. so how how have you taken those lessons from your own personal accounts and then systematize them to, to grow a company account and then even pushing back on, on not overly systematizing because you have to keep experimenting.Madison: 00:12:37Yeah, that's a really good question. i think how i tackle it now, since i've been on so many accounts, because i grew one, back at the toy company too, for the stop motion animation toy, and that's kind of my first dipping into that. and we grew really fast. like it's like at a half a million now for followers—t but, i think hat's kind of when i was realizing that there's buckets to these things.And like, i like to think of them as like content buckets or like pillars and you like pick three, like i'm going to do behind the scenes videos. i'm going to do, some kind of. app walkthrough maybe for 1 Second Everyday purposes and then fun trends and stick with those for a little bit, try a few ideas in each bucket.See what's working, what's not. and then kind of maybe if the behind the scenes stuff is not working as well, then we won't make as many of that stuff. and then just scrolling through the app is the best way to kind of keep on top of things and make sure that you're experimenting with new stuff, because people are always thinking of really creative ways to make new videos and have these like wild ideas that you don't think could ever relate to 1 Second Everyday but they can, and then you have to like, be able to think really fast and post really fast because these trends come and go. so that's kind of like my system, i guess. Jacob: 00:14:01How do, you avoid the. what did that steve buscemi meme that's like, hello, fellow kids. how did, how do you, because that's always my fear too, is like, especially as i get older, it's like, if i'm trying to be hip on twitter or whatever, like, it feels like there's this uncanny valley that brands can really easily get in to and you see it with like bad social media.Right. is there is, there is a solution just hire people who are actually good at social media or like, or is there like a framework for not becoming the steve buscemi meme?Madison: 00:14:30I think the biggest thing is don't try to make anything that you don't understand already. like don't try to guess. i think i learned that. Jacob: 00:14:39I canceled this, the, the, the sea shanties revenue, cat, collab, because yeah, i still don't understand it.Madison: 00:14:47Yeah, it's i think i learned that on my personal account. specifically just as i age and everything. and you get like these young kids on there that are like, wait you're, you're a millennial. that's really old. and then they just kinda like it pierces your heart a little bit. and you're like, oh god, that hurt really bad, but okay, thanks for reminding me.And it's okay if they do that, it's actually kind of funny and you can lean into it. but don't try to be gen z i think is the big thing when you're trying to relate just as i wouldn't try to be boomers either. Like you wouldn't try to be somebody else. so it's being yourself, knowing what you know, and like, not trying to guess at it, and you can talk to that generation, but they might just tell you, like, stop, get off the platform or something. i don't know. but there's always people that you can find within the platform that will relate to you too. that's a big thing David: 00:15:41How much of this do you think is kind of product social media platform fit? i guess. so my question is like, can you shoehorn a product that wouldn't necessarily work on social media, into social media marketing. so revenue cap being a good example. you know, we are, you know, sharing some videos on twitter and stuff like that, but it doesn't feel like TikTok would be a good platform for us to invest in marketing wise, as opposed to. Jacob: 00:16:18Cause because we're an infrastructure tool. David: 00:16:22As opposed to, you know, it sounds like even at the toy company, the stop motion animation product was what really hit on social media. did you try other, products within the toy company that didn't hit? or do you have any kind of thoughts on that kind of product platform fit? Madison: 00:16:41That's a good question. we specifically got on to TikTok because of the stop-motion toy. and i think it definitely makes it easier when you have a content creation tool, because we had an app that went with that toy too. and, and really it's all about entertaining people at the end of the day on TikTok and if you can't make entertaining content with your product, then it gets harder. i don't think we tried with other products. we did do a cross-promotion where we would have like a stop-motion toy playing with our other toys that we had kind of thing. and that was a fun way to do it, but we had different strategies for other toys, like influencer marketing or unboxing videos as well.But i think that anybody can be on TikTok but i also like to ask people, why do you think that you can't be on TikTok and people will say, well it's because kids are on there, it's a kid's platform. and it's really not at all. it used to be, it used to be people just lip sinking. and that's what i had started out doing.And i was terrible at it. i'm like this sucks. i am not, this is not a good platform for me. and it's really just transformed into a place where anybody can kind of find their, their audience and, and maybe with revenuecat it might be a thing of just trying to explain what you do in a really fun way and unique way to make people excited about it.Jacob: 00:18:03There are other developer brands that find success on there. right? there's like a certain language or that, that works. it's just like, hey, you know, for us. and so it's, and i think for any, any, you know, as an app, i think to going back to your point, david, about products, network fit, right. apps in general.Sit. well, i was thinking about 1 Second Everyday and TikTok, right. you're pointing a camera at your face at something. right. so like you're already, like, they were very like products in some ways. so it's like very smooth transition. but for most apps, it is right. you're there, you're on your phone.You're doing stuff you're probably bored like here. like, let me tell you about some other application you can use. it's a smooth transition. but then like i still. yeah. thinking about, i mean, we have this problem now that'd be the podcast we do. it's one thing. but then like, you know, for, for blog content and other things, it's really hard to come up with stuff that matters.Right. that like, like you were saying, maddie, like, so that, that, that, that, that's funny, like you care about, right. that that's what you want do. cause like, at the end of the day, if you're just trying to like chase the meme, it's gonna come off as hokey. right. it's going to come off as like an ungenuine. so. but i think app developers. yeah. i mean, i, i, it feels like we've heard like this whole tick talk as an app distribution mechanism really has kind of something that surprised me too. like it, it blinds, i mean, it's like we, and not just the first order of like we're selling ads on TikTok, this like second order user generated content stuff, which i think is just fast.Madison: 00:19:35Yeah. and i, i think that again, it's, you just have to figure out how you can be on the platform if you want to. and there's really nothing to lose with it too, because it doesn't cost money to be on there and try things like you can have a podcast format on there and you can take clips of a podcast and put them on there.And people have a lot of success doing that, or just having their, reply with the video feature. there's a lot of different kind of structures that people it's not just. making skits or trying to use popular. Sounds popular. sounds do well, but maybe that's not for you. i think it's, brainstorming, trying things, seeing what sticks and if it doesn't stick, then try something different.And if that doesn't, then you can focus your energy somewhere else and realize that, you know, you gave it your best shot and maybe there's a different kind of opportunity that, comes up later or a new feature that's introduced later that works.David: 00:20:29On the, on the trend chasing, what are some examples of that with 1 Second Everyday that you feel like came off? well, and, and kind of, how do you, how do you attach yourself to a trend without that? hokiness cause it sounds like you've succeeded at that, but i imagine that it is a hard thing to do.So any tips on how to do that? well, Madison: 00:20:50We kind of get lucky sometimes. and i, that is kind of like how TikTok works is luck. and i hate saying that. David: 00:20:58Favors the prepared though. Madison: 00:20:59Yeah. i mean, it's good that we were onto it. it definitely helps, to be able to, to see what's going on out in the world, but we just had, a wall street journal article that was about this too, about TikTok in 1 Second Everyday.And how there's this trend going on on, tech talk, where people are making 1 Second Everyday type video. and there's a lot of trends out there that show it's like the 27 video challenge where you have 27 videos and you set them to a song. that's very, we say that's one. when i see vibes, when we ever like share it inside of our slack channel Jacob: 00:21:34I mean, the thing is, is like bad posts. nobody sees, right? like, Madison: 00:21:39Yeah, it's kind of, it's like such a tiny thing and that goes back to the luck part of it. and i think being able to, jump on a trend, it's like, you could have a great video and people think it's awesome and you show it to your friend and they think it's great. and it just doesn't do well at the time.And you could post it two months later and it'll do that. Maybe not for a trend it's randomness and kind of like just how the algorithm works with wanting to reward you sometimes. but i think where we've done well with, jumping on a trend too, is we had a, a video that took off with, one of my coworkers made, she, she helped me make it.She was just standing there with her phone and was having somebody else zoom in on her that said i recorded 1 Second Everyday of my life for the last year. and then it just rotated through like really, really fast imagery of the year. and that was the trend of people showing it, but it was like this, we just kind of twisted it a little bit to make it about 1 Second Everyday, but don't ever make it like an ad.It shouldn't be, it shouldn't feel like 1 Second Everyday is posting it. and that's really cool. we were getting a lot of positive feedback on the posts because people were like, okay, what's the app that you use.Jacob: 00:22:56Yeah. Madison: 00:22:56And, and that's not a bad thing. people think that's a bad thing to have people ask that, but it's actually not.It just means that they think that some random girl posted a video, not a brand.And I prefer Jacob: 00:23:07On your brand account though Madison: 00:23:08On our brand account. we get that all the time. Jacob: 00:23:11I mean, that's a good sign of success, right? Madison: 00:23:13Yeah. people don't really read the, they don't read the captions. maybe i'm not sure what it is, but they don't Jacob: 00:23:21Yeah. it's really understated on TikTok, Madison: 00:23:24Yeah. Jacob: 00:23:24Kinda like floating in the Madison: 00:23:26Yeah. i feel like it's a great thing. when people have no idea that it's coming from a brand, even when it's posted on a brand account and that's, i would say with trends, it should feel like that it shouldn't feel like, like i'm trying to think of an example. like if oreo cookies made a thing, it shouldn't feel like they are just trying to sell you cookies.It needs to be entertaining. it needs to tell a story. you can't just find an easy way to do it and hope that it works.Jacob: 00:23:55So how, how so you've had success with first party content? i have you used like user generated stuff as well. have you tried to, i've seen it a lot of apps do this where they'll, i, we know if we've had it on the podcast, people before who have had like TikTok influencers make videos and then use those as ads.Have you experimented with any of that?Madison: 00:24:13We haven't used any as ads—something that's kind of weird about 1 second, everyday too. I mean, it also just has to do with us being a small team, with not a lot of money to spend on ads. so we really lean into organic because organic has also done really well for us. so why would we spend a bunch of money? Jacob: 00:24:31It's too usually Madison: 00:24:32But my, yeah my manager who used to be the social media manager when she started at 1 Second Everyday started a thing, where they added a feature actually to get more spikes monthly. and that was to make it so that people could mash their month and share their month on social. and then they had a giveaway that went with it and we still have that giveaway.And that gets hundreds of people to enter by sharing their, their, their month essentially, of 1 Second Everyday and that just keeps that going and just feeds into it. and then the more people that post about us. the more people that download and then the more people that can then post about us again.So it's just keeping that stream.Jacob: 00:25:15Did you have, it does again, post to tech talk as well as like other platforms or is it like specifically. on TikTok.Madison: 00:25:21Uh that's for instagram, actually Jacob: 00:25:25Oh, really? cause like take that, sorry. i'm th this is i'm totally like a tick tock idiot, but like you can't actually like post videos into TikTok, right? or,Madison: 00:25:34No. You definitely can. yeah, yeah, yeah, yeah, no. and we, we share user-generated content all the time on instagram, and we're trying to do that on TikTok as well, but it's, it's not the same because you can't really just share a one second everyday video from a random person. that doesn't mean as much as trying to kind of make it more of that TikTok format or putting a little bit of context behind it so that people understand. David: 00:25:58So, and, on the, on the panel we were on, you talked about, how well it's done for y'all at 1 Second Everyday. can you, rehash what you already said, but on here, tell us more specifically about a couple of the posts that went viral and then being able to see the direct results on, in downloads.Madison: 00:26:22Yeah. So we started arctic talk, in december because we wanted to be able to launch it before the new year, which is our biggest time of the year, because that's usually when people don't. and then, because it's the start of the year, that's a great time to just start a thing for your life and then they'll wait a year to post it.And so usually we see like this massive spike because everybody wants to post their year. but this time, what was different is that i think it was the day before the new year a girl, i was just randomly scrolling through TikTok and a girl had made a video that was like, hey, i have an idea. what if we just recorded 1 Second Everyday of our life, and then we would have a life movie, and then i went, oh, that's our app.And it hadn't even been, i don't think it was even at 1 million views yet. and so i was like, i got to do a duet right now. and so i filmed a duet where i just was walking through the app. as she's explaining this idea and people even thought that we made the app because of her idea, like how did you guys do that?So fast. so then people thought it was like this new cool app. and, it started this like microtrends, through ticks hawk and her video. i think it reached a lot of millions of views. i think it was like 13 million or something crazy. and then ours got, like a million views and then everything after that for a couple of days, it's like a million on our own account because then everybody started translating her video into their own country languages.And so you had hundreds of people copying her video and just ending up on everybody's feed. and then everybody that had already downloaded 1 Second Everyday and knew about it was commenting inside of those videos saying, hey, download 1 Second Everyday. so they were doing our job for us really. Jacob: 00:28:11You know, and that's a sign of a great product, right? Madison: 00:28:14Yeah, it is. it's like we, we talk about it cause we go and it's again, kind of a lucky circumstance of having this girl think of this idea. that's really similar to our app, but also we were able to capitalize on, on it even more because we do edit with it. and then we were able to grow an audience that to like now we're at, i don't even know what we're at 20 k or something on a TikTok, but we grew really fast within that time.And then. kind of going back to being able to see download spikes is we got a number one in the app store that day for the first time ever had never had that happen. and it just, i mean, it blew the other numbers just away dramatically. and then, now we're able to see these little spikes every month when a TikTok is posted from somebody.We had one in france and you'll see all the downloads that happened in france. just. and then we had one in argentina and that spiked and uk. so being able to like, see that and also just learn from them, like what kind of videos are they posting? super simple them just saying I've been recording my life for this long people just think that's cool. cause they're like, you did what you recorded your life for four years. what, how do i do that? and then you tell them how they do it. and then they just, they're all like talking in the comments. it's really cool. and, but we haven't seen them. at all on the other years, it's only this time that we've seen these like massive monthly spikes too.David: 00:29:46Didn't, y'all hit number one again in may or something. Madison: 00:29:49We did for a different country. And i think that was argentina, which we had never done before. David: 00:29:55Nice. Madison: 00:29:56Country, but you could connect it back to one second.David: 00:29:59Wow. Jacob: 00:30:00We've seen, i mean, we had david smith on the podcasts a couple of weeks ago. and his app, would just meth, like exploded because of that. and like, he, it was just, somebody made a video, right? david, that was a story for his, like, it wasn't, it was the same thing. it was like not, they didn't pay for it, somebody to just like, show how to do a cool thing with this guy's app.Well, i mean, from our perspective, we talked about it on the podcast at the time, but from our perspective, we, we provide his infrastructure for purchases and we were like, what the hell is happening? like, it's, it's, it's amazing. i mean, i don't know it was like computer brain guy, but like what this like interconnected, like we've really like shortened the loop for like the, just like minimal.Energy to like move around. right? like people can like spike this stuff. and it's yeah, it's, it's it's mind blowing the capex cause we've seen it also, not just, we've just been, we've seen other apps too. like, you know, it's hard to move the needle for our infrastructure because we're thousands of hours.But in TikTok and like some of these, and to a lesser extent, instagram can still like drive events that show up on our graphs, like what the hell is happening? we had one, it was a paid one car, like a kardashian driven one that obviously it's different because you're paying an influencer. but, but, but yeah, it's, it's, it's incredible.And maybe back to your point about it being organic, right. versus, or like earned, you could call it too. right. it's earned as organic. watching it and being there, you know, for, for us, the first party, like to, to take advantage of that, i think is as important as trying to be like, you know, creating your own content.Right. it'sMadison: 00:31:39Yeah. Yeah. I mean, it wouldn't have gone as well if we didn't have, a presence on the platform too. and i think that just goes to show that you should just be on the platforms and have a voice on the platforms for that moment. you shouldn't be just jumping on. i think there's probably like examples of that with other brands, like, the cranberry juice, like ocean spray stuff that happened.I don't think they had a presence on TikTok, but then they caught on real fast. but just imagine if they already did have a presence and then people would want to be posting about them more. but i think, yeah, just having a presence on there too, when that's all happening Jacob: 00:32:17Oh, i was trying to place the meeting. that was the guy with the skateboard,Madison: 00:32:19Yeah, that's the skateboard.Sorry. yeah, yeah. no, it's, it was really cool to see that all happen and, and be able to show numbers because everybody, i mean, on the team, has everybody in general has opinions on TikTok. and when you're able to actually just correlate these things with numbers, some people, the people that are number of people were just like mind blown.They love it. feel like this is great. Jacob: 00:32:47It sounds like the algorithm is very capricious though. it sounds like it's very kind of, even, even you even suggested that there's like intentional randomness, like progressive randomness.Madison: 00:32:57There's yeah, there is. but then there's also, i've made a video like the four years that i had captured kind of video where you have something playing in the back, like the app i have in the background and me just sharing my story. i've done that three times, i think. and every time it's done. So you, it, it also rewards you for doing the same thing over and over, which isn't a good thing and that's how you can get trapped, but it is a nice thing to lean on when you're like, we need a spike.Let's do this kind of video. David: 00:33:27Did you follow the, the widget smith and homescreen customization thing that blew up in the fall.Madison: 00:33:34Hm.David: 00:33:35Okay. i was just going to get your thoughts on that, but, yeah, i mean like, like jacob said, he blew up on TikTok inMadison: 00:33:43I know, i know what you're talking aboutDavid: 00:33:44Okay.Madison: 00:33:45I, yeah, yeah, yeah. when everybody was customizing their screens to make it like a theme and everything. David: 00:33:50Yep. yeah. and so that's what jacob was talking about a minute ago was that widget smith was, was kind of the center of all of that and, and, they use revenue, cat. and so it just blew up. But but that was kind of, just this crazy viral wave where, what i thought was so cool about how that happened. and, we talked about on the podcast, i want to go super into it, but, she basically gave it to tutorial of how to use the app, which is like the best onboarding you could ever hope for. you know, it's like, it is a complex thing to like go set up a widget. and, configure all these, this stuff to get the widgets, to show up correctly.And it it's all a hassle that you would typically, as a developer have to think, oh man, i need to onboard the user. i need to convince them that it's worth all of this hassle to get some reward out of it. and then she goes and like, i forget it was like 45 second video, maybe even 32nd video. it was like, here's how you do it.Damn like, or actually i think she said like, she showed that like homescreen at how cool and aesthetic it was. and then, then she showed how to do it. and then she, it was like, she, it was like this perfectly scripted marketing. onboarding thing of telling you how to do it, telling you the result, telling you it's worth doing, telling you, you know, it's worth the hassle of going through these steps and then showing you the steps.It was just amazing how it wasn't an ad. it was totally user generated, just ended up being the absolute perfect ad because it was user generated. and because it was user-generated she felt like she needed to explain it all and like tell that story. so yeah, it was just a, it was just a really fascinating little blur lip.And then, and then, you know, a lot of apps have been going viral because of TikTok. since then, i forget there was another, another one recently that was like super random, like some kind of calculator or something that got into the top 100 in the app store. Madison: 00:35:50Oh, that's cool. David: 00:35:51Yeah, so it's just crazy. Jacob: 00:35:53Have, you all, thought about product changes to try to incent that behavior, to like try and encourage folks to make video as a aside from you mentioned the like sharing thing, but there seems like there could be other ways to kind of. plant some more of those viral spikesMadison: 00:36:07Yeah. something that we're working on. i don't know if i'm actually probably allowed to say what it is because it's not yeah. even secret. We have things planned where we're thinking about it. yes, we do. we think about ways that we can incorporate it in the app. and we want to think about more ways. i mean, we've had.TikTokers that have influenced product changes to just even the ability to flip, like mirror their video. i don't know if you know what that trend is, but there was this, effect they had on tech talk that would mirror your face and it makes it look bizarre when you flip it for some reason it's a psychological thing.And so then everybody was telling us that we need to have a mirror button so they can flip it back the correct way. and we made that change when people were really happy. so we definitely listened to everybody on social about stuff. and yes, we do think about product changes and are trying to think about more for the future to encourage people to post, but definitely making sure that there's no, paywall with that too.Jacob: 00:37:12You know, if you want to make hay off of like organic or viral or something like that, it has to be, i've worked on several like viral, organic or viral cheri features like stuff like this, the only ones i've ever had be successful are the ones that are like core to the product, which means like, you have to think about it early.Right? you have to think about. early on. i mean, you can add stuff later, but like, unless it's like consequential or like it's easy or interesting, like it's not actually gonna get to that viral coefficient. that makes enough of a difference. but, but doing the product work in some ways, it's going to be higher leverage than like trying to make your end video.Right. Madison: 00:37:50Yeah. Jacob: 00:37:50Making the product more shareable. uh Madison: 00:37:52Yeah. We have those conversations and people try to loop in the marketing team to, and pick our brains about, hey, we heard about this product request and we want to know on a scale of one to 10, how important is this for the success of the app? and like, how much is it going to affect it? and we'll talk about it and be like, well, that filter is not really that important.You can hold off for like next summer or something. it's, it's having those conversations. they're really important. i think everybody on the team talks together about the features. David: 00:38:24What do you think are, are some other ways, and specifically going back to the algorithm that, that helps you stand out. yeah. like so aside from trend chasing, i know the like popular songs is one thing, right? because if you use the background audio from a video that was trending, the kind of audio trends separate from the video, right.Or separate from topics and things like that. are there any other kind of tips and tricks to, to help your video stand out? even if you're not, you know, doing specific kind of trenches.Madison: 00:39:03That's a difficult one. cause that kinda comes down to like you and your personality and what makes you different as well. and that's a really hard one that can take a long time to kind of flesh out. but if you're not trend chasing, it's kind of playing around with features in the app and kind of seeing new ways that you can play with it.I know i had a video on my own personal account that was using their voiceover effect that they have, where the text is read out by a woman. and i would misspell the names of like popular celebrities on purpose. and i found out that i could actually drag the misspelling out of the video. you couldn't see it, but it would still do.It and then i could put the actual person's name so i could make it seem like this voice is just completely butchering these names in the worst way. and it went viral. just like thinking of these like random ways that you can use these features or like tricks is really important and it's super fun.And people love it so i think, yeah, just diving into using the app itself. there's so many features that go on and new ways that you can use them. and that's how you stand out just kind of making like a little bit of a tweak to something Jacob: 00:40:15So i'll, you know, just to look into the future because if it, you know, having seen, having seen myspace and then now, then facebook become cool and not cool. and twitter, i think twitter is not cool anymore.Probably i don't know. now i'm on there. so now it's my social media of choice and i take talks.The rising. cool. like, do you have any, like, i mean, imagine you're in a multi-decade career of doing something along those lines, do you, do you think about, or imagine like what, what might be next? or like what the kids, what the kid on the bus might be talking about in, in, in five or 10 years?Madison: 00:40:50All the time. yeah, but they're, i mean, i have been on new platforms all the time too, and they just flop sometimes you'll think it's a great thing. but it's often because people think they're putting out something different and they're really not. it's just the same thing, but looks a little different, different colors maybe, or you can't force people to use an app.You can only get people to like naturally kind of come over there. and a lot of companies will pay people to come and use their app. Yeah. to try to get people to come over there and generate fake viewers or a fake users really. and that doesn't work either. so i do think about it a lot. i haven't quite seen that yet for what the new thing is.I think TikTok has stayed around a lot longer than i thought, because i remember talking about it with people at vidcon a couple of years ago, where we went, when do you think vidcon is going to go? just because we were all scared because of. vine when that i mean, dropped it affected so many people and it impacted them in a positive way too, because some people had already set their sights on, youtube or doing TikTok it's either you chose short form content or long form. so just being ready, don't have all your eggs in one basket. it's kind of like the big thing and be looking and just be aware of what's out there. it doesn't mean that the thing will be the next big thing. it just means you should be aware of it in case it does become a thing Jacob: 00:42:17Yeah, i would say like taking your company brand onto very unproven platforms is probably not a great use of time. right? like you want to wait until there's something there.Madison: 00:42:26Yeah, i think it's with, smaller teams. it's definitely us trying to think is an hour going to really be worth it, or is it really more well-spent if it's an hour of me making some tech talks in my apartment, probably the tech docs right now,David: 00:42:42Yeah,Madison: 00:42:42Of a random thing, but it's. David: 00:42:44But but how do you approach it set then? because there is value in the experimentation. i like seeing what's next. so do you kind of think okay, i'm going to waste. two hours this week, checking out new. i mean, you probably don't timebox it like that, but there is some value in that experimentation. how much are you time?Are you spending on that experimentation? it sounds like that's, i mean, that's kind of been a theme of this whole conversation is try this, try that, see what sticks, see what happens. so, and there's value in that. so how, how much, how do you kind of view that time? that you're. throwing stuff against the wall.Okay. Madison: 00:43:25It can really range and not just depends on what apps are out. there are a ceo caesar's awesome at being in the loop with the tech world and kind of seeing what platforms are being talked about on twitter. so twitter still is a relevant thing for people talking. yeah, it is. Jacob: 00:43:42Early millennials, Madison: 00:43:44Yeah, Jacob: 00:43:45Out of anything relevant, Madison: 00:43:46Exactly. like, he sent us apps that were like, whoa, this is really cool. and even if it's not something that blows up, it can still help us with our app too. and like internally. yeah. we're like, that's a really cool onboarding video. i've never seen anything like that. that's super helpful.And that, that's just the team being curious about stuff. and i think that's so important. also, if you're in social media, you should just be, i mean, on social media and i am definitely on social media way too much, but that's what i do with my own time too. i'm not like making an account for 1 Second Everyday on every new platform that exists and like trying it out.I'm trying it out on my own own time sometimes like on my own account. and that's the best way is just to see how you like it and how it's working for you and your friends to you. i can't remember what the app was called. it's like paparazzi. i think maybe that's what it's called. Yeah. Jacob: 00:44:42Now went viral for four days or Madison: 00:44:44Right. went viral for four days or whatever. and it was great. and we were like, well, this is so cool. that's like one of the onboarding videos that were like, this is awesome. it's got like the, the phone was vibrating and stuff while you were like going through this onboarding experience. so it was so cool.We didn't stick with it, but that's also because we're like, we don't have as many friends as like a bunch of kids do. so maybe that's a different experience in their world. maybe they're all talking about it more. yeah, i think just getting on it and seeing it can be a valuable thing and using it for your own time and actually creating content on the platform is important.Jacob: 00:45:20It's not too dissimilar from how developers use new, like coding tools. right? like you try it for side projects. i mean, it's one channel for revenue. cat's talking about our own growth is like, we want to make sure. selling into bigger older companies. it's a little, sometimes it's taken longer route. we'll do it now, but like it's much easier to win.Like yeah. they'll like inconsequential or less consequential side project. and then, you know, ramp that into something bigger later, right.Madison: 00:45:45Yeah.Jacob: 00:45:46That is sometimes a better place for that experimentation. David: 00:45:49It's funny. i would say here. an app developers perspective. so we have the tools guy, the social media person at me and me is the app, focus. So exactly what you were saying is, is how you want to prove out your own app. like i've had apps where i send out a beta and people stop using it like a couple of days later.And so, you know, when you go onto this social media platform and you're trying it and your own personal use just drops off. then it's clear, it's not a sticky where most people would get on TikTok. it's like they're hooked and they're going. Jacob: 00:46:22Will not open the damn thing.Is to get, like, i got twitter enough in my life through ruining it. like i don't David: 00:46:29Yeah. Jacob: 00:46:30Other one. yeah. David: 00:46:31But for, but for the developers out there, you know, when you send out a beta, you know, your beta people might not be your exact target market, but you should have some level of like stickiness. in, in the app signs of product market fit. but anyways, i do want to talk a little bit and we need, we're getting short on time, but, you're launching a new community, feature with a community manager. or tell me about that. because i actually don't know all the detailsMadison: 00:47:01Yeah. I think you mean brand ambassador program, is that correct? that's what you're talking about. cause i kind of, i, yeah i had announced that on the panel that day that we were launching that and we. had over to just like 200 applications for people to join our brand ambassador team. and we have a marketing team of three people to manage that team.So we had to narrow it down a lot, unfortunately, but we had, you know, over 200 people submitting videos of why they wanted to be on this team. and this team is for us to be able to connect with people in the community, to kind of just start a brand ambassador program, because we've always wanted to do that.It's been talked about forever, so we just made the leap and we narrowed it down to, 26 people and announced them last week. and so we're getting them all onboarded and ready to go. and we've got like people from all over the world that are ready make some content about 1 Second Everyday but that's kind of the thing is they get, you know, connections with us and can have impacts within the app as well as like free merch and things like that, that are really fun.And then. we get some content from them in exchange, which is kind of like user-generated and hopefully we'll be successful and we'll see some like, really cool things from them. we're just excited to see what they create. David: 00:48:24So, so the, so the, goal is, is to be more directly connected with some of the people who are already creating content in the space. and then, and it's not a paid gig. it's, it's a, they, like you said, they get paid in, in, in merge, and, but i imagine that that's not. Jacob: 00:48:46March. you can't put a dollar value onMadison: 00:48:48Right? yes. Yes. exclusive. David: 00:48:50What, what, i mean, what was the pitch to them specifically?Madison: 00:48:54Yeah. The pitch to people, in general, was to be a part of the community to identify as a 1 Second Everyday fan, which we've got a lot of big super fans out there, who've been using the app for eight years to, you know, a year and they just love it. And they just want to be a part of that and really kind of make their own with it.If they're a writer, they can submit a blog post if they want. If they really like social media, they can focus on TikToks to make for us to post and kind of help give them shout outs. They just really want to have experience some of these kids are, some of them are like kids that want marketing experience.Some people are older that are just like, I love this app so much. And I promise I will make the coolest videos for you. And here's like what I do. And they're just so jazzed about it. And they're going to get like the younger people that are newer to the app, really excited, guided. So we're just excited to see them interact and everything.And then get content and like new ideas because I'm just a one person making stuff for social media. And I want to see kind of what people naturally make. We're not trying to force them to make anything. We're not telling them that they have to make this kind of video. It's just whatever they want to do.And then they can discuss within the community. Jacob: 00:50:11So, I'd like to take this opportunity to announce the RevenueCat brand ambassador program.David, figure out the details.David: 00:50:18Oh, thanks. Jacob: 00:50:19I don't know what this is just the sort it out for me.David: 00:50:22No, this is blowing my mind though. I mean, and again, the whole reason I wanted to have you on the podcast is you just are thinking so differently. I know brand ambassador is it, I just I've seen brand ambassadors. I know the general idea, you know, but I just never would have thought it could work for an app.So it's so cool that y'all are just trying this new thing and having users help with your marketing.Madison: 00:50:46Yeah. David: 00:50:47Then being so like thrilled to do it. That's just incredible. Jacob: 00:50:49So much better too, than like a bunch of like stale Facebook ads degenerated on Fiverr, right?Madison: 00:50:59Yeah. That's mostly how people find out about our app is through word of mouth and people posting about us. So it only made sense. And we knew it was the right time because we had all these people asking if we had a brand investor profile. And that's kind of like how we sold it to the team too, is being like, hey, people are asking, people are interested. This is the time to do it. And just try it. There's nothing to lose. Let's go for it. See what happens. And then hopefully from there, we'll be able to just keep growing it.David: 00:51:30Yeah. Madison: 00:51:31Like awesome connection with our user base.David: 00:51:34And what's been so cool about doing this podcast and talking to so many folks is that different things just click for different people. So, if you're listening to this podcast and you have an app that isn't content heavy, you know, maybe social media is not the perfect fit for you. And maybe you're not going to be able to have brand amabassadors and things like that.But the point is you don't just have to buy ads on Facebook. There are so many different avenues to explore, and this is one really cool way to do something different, and to very cost-effectively grow without just dumping money into ads. So it's so cool. And we do need to wrap up. Is there anything else you wanted to share?We're going to put links to your TikTok and 1 Second Everyday. But anything else you wanted to share as we wrap up?Madison: 00:52:23No, I think that's it. Thanks so much for having me. I had a really fun time talking about all this with you guys. This is my passion, so it's great to chat.David: 00:52:33Well, thanks so much for your time. This is super insightful.Jacob: 00:52:36Yeah, thank you. Madison: 00:52:37Thank you.

Aug 11

52 min 55 sec

Watch the video version of this show on YouTube »Andy Carvell is the Partner & Co-Founder of Phiture, a mobile growth agency. Here he has worked with some of the biggest apps on the App Store, including Headspace, Spotify, Triller, and VSCO.Prior to founding Phiture, Andy worked on the marketing and growth teams at SoundCloud. His team built SoundCloud's activity notification system, which delivered over 500 million pushes per month, and increased M1 retention by five percentage points in its first few months of operation. Andy has been in the mobile industry since the late ‘90s, when he started working at Nokia. Andy has a deep interest in technology, strategy and the execution of ideas.In this episode, you’ll learn: Andy’s user retention techniques The most overlooked component in marketing your app How to optimize your customer’s App Store experience Andy’s formula for maximizing your app’s notification strategy Links & Resources SoundCloud Headspace Spotify Triller VSCO Nokia RevenueCat Salesforce Intercom Elevate KiwiCo Braze Leanplum Iterable Andy Carvell’s Links Phiture Phiture’s Mobile Growth Stack Andy on Twitter: @andy_carvell Andy on LinkedIn Work at Phiture Follow us on Twitter: David Barnard Jacob Eiting RevenueCat Sub Club Episode TranscriptAndy: 00:00:00So the impact that you can drive with notifications is reach, times relevance, times frequency. What we learned from the time at SoundCloud was not all notifications are equal, and the really killer ones that are going to really supercharge your business, have high reach, high relevance and high frequency.And then, then you’re in that golden quadrant.David: 00:00:35Welcome to the Sub Club podcast. I’m your host, David Bernard. And with me is always Jacob Eiting. Hello, Jacob.Jacob: 00:00:42Hi, David. David: 00:00:43It’s a thundering in your neck of the woods, I hear. Jacob: 00:00:46It’s, you know, it’s cleared up now. I think we’re gonna make it.David: 00:00:50I’ve got a plumber. Our guests might have some construction workers. It’s going to be a fun one today!Jacob: 00:00:55Is it, David? You’re breaching the magic of podcasting and it’s going to get audited out.David: 00:01:01All right. Speaking of our guests, our guest today is Andy Carvell, partner and co-founder of Phiture, a mobile growth agency. At Phiture, Andy has worked with some of the biggest apps on the App Store, including Headspace, Spotify, Triller, and VSCO.Prior to find founding Phiture, Andy worked on the marketing and growth teams at SoundCloud.Welcome to the podcast, Andy.Andy: 00:01:23Thanks, David. A real pleasure. Thanks for inviting me on. Excited to be here.David: 00:01:27Yeah. So, you and I were chatting a little bit about your background as I was kind of prepping your bio, and you shared a really fun anecdote. So, I think I’m like, “Old man in the mobile space,” you know, or Jacob and I both; we both had apps on the App Store in 2008, you know, we were early. But you started in mobile a little, just a few years before that. Andy: 00:01:52Just a little bit more. David: 00:01:53Tell us about that. You were at Nokia making games in 1999.Andy: 00:01:58Yeah, right out of university, I graduated computer science in ‘99. I always wanted to be making games, and I was applying for roles in the games industry, and then the agent that was kind of helping me find those said, “Hey, there’s this company Nokia. They make mobile phones.”I didn’t own a mobile phone at that point. None of my friends did, but it was just kind of reaching the tipping point, and they wanted to put games on these things, and I’m like, okay, that’s sounds interesting.I went along to the interview. I really was very kind of amazed at the, you know, the R and D center there. It was like, like pretty space age, you know, they were working on some real next level shit.And, I was actually pretty excited by the idea of like cramming, you know, decent games into like 16 kilobytes, which is what I had to play with building embedded games on a black and white 84 by 48 pixel display.Jacob: 00:02:55So, I was going to ask, are we talking like Snake, or are we talking like Java level stuff?Andy: 00:03:00It was pre Java. It was an embedded game. So, I was coding in C in Assembly, and I basically had to like build the whole game from start to finish. We had this shared designer who did the pixel art, and I had to cram it into 16K and make it fun. Yeah.I wrote a pretty game called Space Impact there, which was released on the 3310 phone, which I think wasn’t available in America. But in the rest of world a lot of people played that game. It was like the first, side-scrolling arcade, shoot-them-up, on a mobile.David: 00:03:30That is amazing. Jacob: 00:03:31Well, it’s pretty incredible. Just even think like the iPhone wasn’t that far behind that right? Like you were doing 16K assembly and C, and like eight years later, we were going to have like open GL driven games. So just pretty wild.Andy: 00:03:51Yeah, it’s moved on a lot.David: 00:03:53So after Nokia, you spent some time at SoundCloud, and there’s a couple of things you did at SoundCloud that I wanted to dig into, because it seems like you’ve kind of continued that work at Phiture, and it’s really relevant to our audience in subscriptions. So, one of those is the mobile life cycle program, and this is something I think so much about.There’s such a huge story that’s hard to tell, and hard to really understand. It’s something like, you know, I think we can help with at RevenueCat that I’m constantly thinking of from a product perspective, and I think developers often it’s like, you get an install, you get them to start a free trial and they convert and like, but there’s so many other journeys and so many parts of the life cycle that, that need to be studied.So, tell me about this mobile lifecycle program, kind of the origins, and then, you know how you see it today?Andy: 00:04:53Yeah. Yeah. I was that SoundCloud for about four and a half years in the end. I was working on various teams, but ended up actually building out a cross-functional team focused on user retention, which is where I got really into the lifecycle topic.And yeah, it’s, you’re absolutely right. It’s, it’s a pretty complex topic. It’s one that we have continued to develop processes and, and, you know, best practice around at Phiture, where we’re helping companies like Cisco and, yeah. Blinkist actually is a, is another one that we’re working with, recently. But yeah, everybody seems to struggle with this because it is such a, a giant topic, as you say, David, there’s a lot to it.There’s a lot of different touch points you can have with the user. And it all comes, starts with understanding the user journey, right. And understanding users probably better than you currently do. And that, for me, always starts with asking them questions rather than diving straight into the analytics and looking at funnels.I think it’s something that’s really overlooked in, in tech companies. You know, we have all this data available. And so the instinct is just to dive in and look at the numbers. Now, I think quantitative tells a very interesting story and for sure you need to be tracking what, what users are doing to, to understand those users quantitatively.But, you also want to understand the psychology of the user at these different points. What are they thinking? What are they hoping for? What are they expecting? And you know, I think a great lifecycle program from, you know, actually user life cycle starts outside of the store right outside of the app, rather. So it starts in the stores.Jacob: 00:06:38Yeah. So did the need, right?Andy: 00:06:40Yes. It starts with a need or what? and then, you know, hopefully. Somehow the user discovers the app. It’s either through an advert or maybe a friend has mentioned it, or, you know, there could be many ways that they come to the App Stores, but then, you know, they’re all going to go through that App Store, which is why the Phiture.We also put a lot of work into App Store optimization with our clients. You know, you start the user journey there, you’re setting the expectation, in your ad creative and in your App Store page. It’s a great opportunity to. To sell the benefits of the app and qualify your users, you know? Well, because you’re, you’re really then.You know, setting, setting that expectation, which you then need to deliver on in the very first session in the app. So then you get into onboarding and activation and, you know, that can be both within the product, but also augmented by a multi-channel messaging approach, which is we did a lot of work with that at SoundCloud.Because this is like, for me, this is the kind of the hack, right? The magic bullet. Is that not that. Not that CRM is the most effective lever for, for engaging users, actually that’s product. but CRM is a great way to circumvent a six month product backlog and engineering backlog and, and, and rapidly iterate on ideas.And, and also it’s got built in measurement and, and segmentation. So you can do some really interesting stuff. Sorry. You had Jacob: 00:08:07So, yeah. So when you say CRM, I mean, like, I know CRM is like in my world, Salesforce, or maybe Intercom or something, I guess, but when I’ve heard, I’ve heard this used in the marketing world, but what is, what is the more, seems like there’s a lot more broad context or a broad definition of that term.Andy: 00:08:24Yeah. And there’s so many different terminology and definitions around it. It’s a, it’s very confusing as with everything in tech, but. Yeah. So when I say CRM, which is customer relationship management, and, and that goes back to the sixties and seventies, you know, classic business, you know, theory actually, it’s nothing new that we’ve invented it just with tech, but, when I’m talking about CRM in a mobile app scenario, I’m talking about leveraging a customer engagement platform like braise or Leanplum or, Iterable maybe.And, You know, it’s typically what you’ve got available in that kind of stack would be, something sort of rudimentary analytics enough to do sort of targeting and triggering of messages as well as basic measurement around like what the effects of those messages are. Although typically you’d want to pair that with.Your product analytics to get a deeper view on how it’s affecting retention or, you know, or monetization for that matter. but yeah, you’re able to sort of carve out segments of users and then craft, interaction. So, so the, the tools you mentioned there, Salesforce, IndyCar, definitely still in that mix.We don’t, we don’t see them so much specifically Salesforce. We see it more in enterprise. most, mostly. Let’s he around email as a channel. but you know, this sort of more modern or mobile first platforms such as prays, for example, you know, really kind of built to leverage, mobile specific channels, like, push and rich push, mobile in-app messaging, which is a killer channel for engaging users who are in the app.And it’s where it kind of bridges the gap between classic products. Classic marketing, because you can really kind of overlay an old man. New experiences on top of what’s what’s built in the product, which sometimes causes some tension with, with the designers. But, but actually you can make them look, you can make them look super native.And, yeah, you can test and iterate on them quickly, which is the real benefit I think of using a platform like that is you can, if you have testing on onboarding for example, and you’re looking at day zero users, you’ve got a fresh cohort every day. You can run. You know, if you’ve got enough, big enough cohorts, you can, you can iterate every day if you want, or at least every couple of days.Jacob: 00:10:45Yeah. As long As you’re getting a few thousand downloads, right. Or, you know, or even like even hundreds, right. If you’re getting hundreds of downloads, like those are significant enough cohorts, especially if you’re running, you know, tasks very towards that, very beginning of the experience. Right. So you get like lots of exposure, but yeah.And then it’s typically very high leverage too, right? Because we found this at elevate a lot. just the nature of funnels is that. There were all these like tests and kind of experiments we wanted to do further down the funnel, like, oh, how was like the last step look and all this stuff. And it turns out nine times out of 10.It was not really that important because what really mattered was the first step or the second step, because that’s just where the most people were. Right. It didn’t matter. We could get half the lift there, but it mattered more because they hadn’t decayed all the way through the funnel. Right. Which is, there’s a lot of these like unintuitive aspects of, yeah.I guess when you think about a CRM, it’s like, The pre-experience finding you getting into the app. Re-engaging right. That are in some ways, like there’s an overlapping piece with products. Right. But it’s broader, right. It exists like sort of outside of the, the, the specific software itself. and, and yeah.Thinking about it holistically, as David was saying earlier, it’s difficult. Right. It’s difficult because of the time-based aspects is to, because it’s, multi-platform, it’s difficult because, you know, The tooling still leaves something to be desired. but, but, yeah, I think it’s really interesting to, to, to talk about using your user interviews in that process, because, you traditionally think about doing that in a product process, right.When you’re like trying to talk to users about what to build, but you actually need to be talking to them about how, how do they, what do they, want? Like, why do they, why are they here? Like, why did you want to inform, like, you know, how are you contacting them communicating with them, et cetera. Andy: 00:12:32Pretty much so. David: 00:12:33Yeah. And then. So part of that, life cycle management is this multi-channel notification systems. And you’ve kind of already mentioned that a little bit, but, so in mobile apps and the clients that you’re working with at Fisher Phiture, and then some of the work you’ve done, you did previously at SoundCloud. how do you kind of manage the. The breadth of available channels. Now you’ve got email, you’ve got in-app, you’ve got push. you know, and have you seen kind of patterns in, in certain channels performing better with these kinds of mobile audiences?Andy: 00:13:11Yes, absolutely. I mean, I think to some extent it depends on the, the, the app itself and the audience for that app. you know, we still see SMS, for example, being a really impactful channel in, in some specific categories, like, you know, SoundCloud couldn’t send SMS. I think it would be a bad idea.Possibly in some markets, you know, maybe they’re a slightly less developed. They have all the funds, but I’d say it’s probably not a great channel for SoundCloud, for example. But, you know, we, we did some work with, with good RX, which is a, like a prescription yeah. discount service in America is huge.I think they, I think they might’ve had IPO recently, but, yeah, in any case, SMS is still a huge channel for them. because they’re, you know, a lot of their customers are older people. With, you know, with who are not necessarily engaging with, with emails or, or necessarily in app messages. I mean, I think an app is generally a pretty great channel for anyone who’s in the app, but actually with some, some apps it’s not a very valuable channel at all because the users barely in the app, if you’re thinking about sort of very functional experiences, like, I’d say Uber, Uber is a, is a good example.Like there’s definitely some room. To even with mobility startups to interact with users while they’re in the app, but you don’t want to get in their way because they’re there to book a ride and get in it. So you have like limited surface area. So yeah, really, you know, when we go in this Phiture, you know, our retention team goes into to build out a, an engagement strategy with a customer.We very much like to understand not just their usage. But also, you know, figure out what is the right channel mix. That makes sense. We actually put up, I think a while back a, a, a matrix, which kind of highlights the pros and cons of each channel and how they can be used in combination. Maybe a I can, I can take out the link and we can include it in the podcast. David: 00:15:02Yeah. And you know, it’s funny. I feel like I see all these like threats on Twitter about like, especially from like the kind of indie developer scene about like, you know, don’t, you know, do a newsletter, like email is evil and like, and then I’m always the one that’s like, I kind of liked newsletter. It’s like, as long as it’s not like overly aggressive.And then same with SMS. I found myself lately, just ended up with a couple of apps, like a thrive market. It’s like a shopping. it’s kind of like Amazon grocery ish kind of stuff. And they’re texting me and I kinda like it. And I never would’ve thought, you know, cause like they’re pushing notifications, they just get lost.But like I care about when my order shifts and I care. And so it’s interesting how I think, you know, sometimes we in tech underestimate. That when somebody really cares about something, they don’t mind. Getting notified about it, but that’s where you have to like, be really careful of where you draw these lines and how you do your messaging and what the user really cares enough about.But when they do, you know, you, you know, it’s always felt to me as a developer, like, oh, SMS is like, it’s just off the table. Like, I wouldn’t touch that. But then like, now I’m like, wait a minute. Like if it’s something I use, it really cares about like, it’s a Bible platform and as a Jacob: 00:16:21For transactional stuff, right? Like your ship order shipped and things like that. And then, you know, it’s becomes something you can piggyback marketing messaging or expansion or product marketing onto. Right. but I always, I was the, at that point is super validated across to you is your Twitter is not really.Right. and, and it’s totally true that like the developers and the communities and the styles that we have often as people who make software and our insiders is very different from the, the median consumer, which is not even a thing. There is a median consumer, right. You’re dealing with this huge distribution of users and different, they have different tastes and they have different appetites for, for marketing and all this stuff.And yeah, I always believe. Give them control. Like obviously don’t do anything on tour. Don’t message people. If they say not to write and give people like an opt in opt out, like, you know, as clear choice in the onboarding funnel. But yeah, you’d be surprised. Like people don’t have as much stuff going on sometimes or have as much noise in their, in their feed.Really want to engage. And those are the users that you really should be reaching. Right. Because they are like, they’re, they’re not only installing your app, but they’re willing to show some intent to engage with you. Right. Because they have a real purpose to be there. Right. As opposed to like a drive by or something like this.Right. And so, yeah. I don’t know. I think that that is. Goes beyond just this one particular topic. Cause like we, yeah, we hear developers all the time. Like being like, oh, I don’t want to tell. I mean, I even remember me going back to elevate again, being when we started to, we hired a growth marketer and started to work some of these new notification channels.I was very against it. Like I thought this was like disrespectful to our users. It was just growth hacking. It was whatever. Then I saw the numbers, right? Like, I don’t know the retention didn’t go down. All the other numbers went up. I was like, well, I guess people don’t care. Right. Or at least like the people that don’t care aren’t big enough to matter.I mean, they matter, but like, I don’t know, I’m building a business here at some point. Right. So, it’s, counter-intuitive,David: 00:18:17This goes to your earlier point though. And I was just going to bring it up up is 12 south. I just bought this forte stand thing. That’s like one of my favorite products I bought in a long time. It’s amazing. It’s like wireless charging for my phone. I can drop my AirPods pro on there and it charges a little ad for them real quick.But I went to unsubscribe to their email because they were sending me like two weeks. I was like, well, I don’t want to, I don’t want to unsubscribe. It’s actually like 12 south lake. They make good products. I love this product. I just bought from them. I want to know what they’re up to. So I go to unsubscribe because I was like, I just can’t, I can’t do two emails a week from these people.And then the, the email thing was like, Hey, do you want to just hear from us, you know, twice a week, once a week or once a month, I was like, once a month. Cool. Like, I’d love to hear from them once a month. I wish more newsletters would do that. And the opposite. I subscribed to Kiwi co boxes for my kids.And they email me like four times a week and I’ve even talked to their Twitter team and they’re like, we’re going to put you on the like slow thing. And they don’t, and I keep getting four emails a week, so I’m just going to unsubscribe.Jacob: 00:19:21A lot. It’s a lot, right? Like it’s a lot to, like, we’re talking about, I’m sure, Andy, you deal with this all the time. Like just getting that first version of like a marketing product marketing campaigns going, it’s hard to add in like, well, okay, you’ll have the, the one month and you know, it takes time to build those things up, so it doesn’t surprise me, but it is.Yeah, I mean, it’s interesting to, well, it’s a tough choice as product and builders. Right. We always have to decide like, what are the corners we’re going to cut? What are the, like the boxes we’re going to shove everybody in. Right. Because we’re not gonna be able to like, perfectly meet. Everybody’s like appetite for this stuff where they are.Right. That’s going to be impossible. and so, I mean, I feel like that’s where the measurement comes in, right? Andy?Andy: 00:20:00Yeah, so you’ve touched on so many interesting points there. I know we don’t have two hours to discuss them all, but I would love to just quickly pick up on it. before we get onto to measurement and, and personalization, I think it’s all going to flow. So, first point, you mentioned like, you know, developers. Maybe not the target audience for the app. That is so true. And I mean the less, unless you get, get up, you know, for sure. But, you know, for the vast majority of like consumer apps that are targeting essentially, you know, global audiences of more or less like, you know, broad audiences, like, you know, I don’t know, 18 to 30 males and females or whatever, who were into a particular.Sport or something like this. These people are not, they’re not engineers. They don’t hate notifications. Right? You know, the only way you can prove that as a growth marketer is by getting a little bit of surface area where you are allowed to run experiments. or as, as we, as my team tit in, in, at SoundCloud in the early days, we would run them in places like Pakistan.We would just, SoundCloud’s going to kill me when they hear this, but, you know, we would just. Just just not send them to Berlin, you know, where all the engineers were based, but we tested me the rest of the world, or if it was particularly something like a bit more daring, a bit more bold and you need to run Volvo experiments.Sometimes we would run them in Pakistan. We’d get a good feel for like, you know, what the uplift was and then we’d take it to the lawyers. Cause sometimes there was, you know, there were also even legal issues about where we could tread the line with user generated content and promotion. music licensing is a minefield, but, but yeah, my point.Jacob: 00:21:45Yes,Andy: 00:21:45It’s only when you can kind of come back with data and show it to, you know, the exec team and say, look, we just moved retention five percentage points. This is huge. then they kind of give you a bit more leeway to, to send a few more notifications. and yeah, like the, the, but, you know, we had so much resistance from, from the tech team and, you know, the engineers.Convinced we were going to destroy the product and it comes from a very, very good place. You know, they care about the product. They care about the users, they just, they just are not representative of the users. and that comes to my second point. Which is, I learned a lot from my time at SoundCloud and from building out a, real-time notification system that was, you know, from, was kicking out around 500 million push notifications per month.So it was, you know, we, we got there in the end with the, with the volume. but, you know, one of the things which I kind of distilled later when I was at Phiture, I kind of thought back to that time and distilled it into a formula. So the impact that you can drive with notifications, is reach times relevance, times frequency.And I’ll just break that down very quickly. So reach we’re talking about, you know, your overall channel opt-in rate. So how many people are actually opted in for push or in this case? I’d also like what if your segment that, that whole, audience then what stage of the funnel they’re at, which is to David’s point earlier about how you have a greater surface area or a greater reach as I would put it, earlier on in the funnel, because more users are still around.So. yeah, so that’s your reach and that’s a big lever on, on how much impact you’re going to drive with any particular notification. Is that is your size of your target audience. That’s addressable, second one relevance, which you’ve also touched on, in your examples there. if it’s highly relevant, users will tolerate not just tolerate, but actually welcome a high volume of notifications, which is th th the third, parameter there in that formula that the third variable, which is pretty cool.How frequently can you send this particular notification before people start to opt out and then it like brings you a reach down. So it’s basically like a, it’s not a Seesaw because there’s three elements to it. Right. But it’s some kind of 3d sea sore, where if you get the right balance and you’re able to tweak, tweak those things, there’s a tension between those three variables.Right. But if you’re. April to increase relevance by, by personalization, you know, by providing in SoundCloud’s case more relevant recommendations for content. Or, looking at what users have listened to before and, and telling them more things about artists that they’ve been listening to and things like that that would increase the relevance, which means you can proxy that by click through rate, they’re much less likely to turn them off and you can send more of those notifications.You can increase that frequency. And so what I learned from that, what we learned from the time at SoundCloud. Not all notifications are equal and the really killer ones that are going to really supercharge your business, have high rates, high relevance, and high frequency. And then, then you’re in that, that, that golden quadrant David: 00:24:51Would imagine. I don’t know if you, if y’all have built things out internally to, to Phiture, but I imagine that kind of 3d Seesaw is really hard to measure. It’s really hard to understand. Which, which ones are driving relevance, which ones.And especially once you get into personalization where now you’re not dealing with just massive AB tests, you’re actually like almost doing user level, understanding of what’s relevant and what’s not SoSo it brings us to the, to the next big topic and we can kind of dive into that aspect of it later, but you got to build out a stack for this.And so, and this is something I, I, you’ve done a great job of, of kind of boiling a lot of this down into the mobile growth stack. And I wanted to talk through a few kind of levels of the mobile growth stack. So a lot of apps. You know, I taught as developer advocate. I talked to a ton of revenue, cat customers.So a lot of apps all the way from like, you know, Hey, we just have an idea where we’re like thinking about subscriptions to Indies, to like huge companies. And, but you have a lot of people super early who are kind of overbuilding and then you have people in the middle, like, what do I do now? So let’s talk through kind of a stack for, for your MVP and then onto your kind of intermediate and then to your kind of growth stage.Like what’s the like, MVP I’m want to get this out, but I want to have just enough, you know, measurement just enough analytics, just enough data to, to start growing this thing.Andy: 00:26:28Yeah. Great question. And, and, yeah, it’s a, it’s a really good topic actually, because you know, this mobile growth stack framework, which, which, which I published originally at SoundCloud, and we continue to develop a Phiture, you know, it’s, it’s huge, there’s loads of stuff on this. It’s basically trying to encapsulate everything that, you know, Could form part of your marketing strategy and your, your growth approach to growing, growing a mobile app.So, so sometimes people misinterpret that as, oh, I have to do all of these things have to tick all of these boxes in order to be successful. no, absolutely not. Like, you know, you have to play to your strengths and also to you. So your company stage and your, your priorities, right. And for sure, if you try to overreach, you try to do everything.You’re going to do it all really badly, or at least most things, so much better to focus. And, yeah, I think this could be another good, blog post actually that I should write. But, but yeah, let’s, let’s dive into it now. Let’s let’s have a go. So like early stage, right. Prelaunch or, well, Let’s skip pre-launch for a second.Let’s say you’ve just launched into the market, with your, you know, with your new app. I think what I see often is a challenge with early stage customers and frankly why we don’t work with super early stage customers. Because they have unrealistic expectations. They, they think they’re ready for growth.But in, you know, accepted except in absolutely like, you know, stand out anomalous cases like maybe flappy bird would be a good example, that that was ready for hyper-growth pretty much from day one, I think just, just happened to catch the zeitgeists, but you know, you can’t bank on that. And most 99.9% of apps will not have that kind of success.So actually what an early stage. Team needs to work on is product market fit. Whether they, whether they think they do or not. They’re probably two, two or three years away from market product market fit. That means they need to iterate on the product and they need to iterate on the marketing and, you know, meet there somewhere in the middle with some level of, you know, kind of a retention curve that flattens out at least somewhere along that curve.Jacob: 00:28:34Was thinking about this, this, this product market fit meaning, and I don’t know, it’s one of these words that it’s, it’s, it’s, it’s constantly an enigma to founders and because nobody can tell you what it is, right. I think because it’s different for every product is different for every segment is different for every market.Like what it actually looks like in our, in this space consumer subscription space, it generally has to do. The, yeah, the, I think that’s the best, a very good definition of it. The pretension curves that do flatten out because like, you don’t get in this face, you don’t tend to get like, exp like super stable user cohorts.They always like drop off to some level, but you want to see like some reasonable level out in some like shortest period of time, which takes a while with subscription apps to really understand like 2, 3, 4, 5, 6 months, or like for the annual renewals, it takes a year to really understand it. but focusing on the product.Yeah, it’s really what you need to do at elevate. We actually, before we even launched and we weren’t subscription when we launched, but we. We had a, an just an or, yeah, we just released on, Android. So we had an Android app. We could, it was great. Cause we could release a new version every week, and do a beta list.And we could, we, we, we curated a list or it was sorry, it was Android and iOS. And we used like test flight, distributions. But, and we measured each cohort. Right. And it’s not talking about, we weren’t AB testing. We weren’t like driving in massive downloads or anything like this, but we were just looking like each, like some subsequent cohort, like what was their first.10, you know, what were these like how many signed up? How many finished? Like activated and we just watched and like watched we iterated on the app until we felt like that number was pretty good. And then we launched, but we didn’t do AB testing. We didn’t like massively like go over the top and tracking.Right. It was just like a handful, like really things. Cause the thing is you’re going to score. Right. Like AB testing is really hard. It’s expensive. Not because of the tooling, it’s expensive because operationally it’s really difficult to get. Right. And you gotta put a lot of people on it. So, that, that really starting simple mentality will save you a lot of headaches. I think.David: 00:30:37Yeah, we had a great episode with Doris Maura from reflecting on this about just, just that minimally viable, like shoot for product market fit. And, you know, don’t do sophisticated AB testing. Don’t do all this stuff you think you need to do. And then even some of the stuff that they, you know, you could install braise or like try and do these big things early. You can find ways around it. Like you can do simple email surveys, you can do simple user testing. You can, you can, you know, use Zapier for things to kind of like bridge the gap and don’t go build a ton of internal tooling around it, but like do the simple hacky things that don’t scale early on and then move on.So then let’s talk about like, okay, you’ve reached some level of market product market fit, you know, your, You know, your, your marketing seems to be resonating. You’ve got some decent retention and you’re starting to really pour money into user acquisition. What’s kind of that next level up, that you think companies should start layering on new new services and new sophistication.Andy: 00:31:46Yeah. So I’m talking here like primarily about, you know, growth stuff rather than Phiture building. I’m kind of assuming that there’s, there’s always more Phitures to build, although, you know, I would actually say. Probably people generally keep building Phitures when they should probably stop. They always think that another Phiture is going to be the thing, which really helps what right.Exactly. And can I say be detrimental to a point, you know, like when, when it becomes too crowded, so, but yeah, so talking about the, you know, the, the growth stack and the, the, the growth activities that would. Appropriate as, as you’ve got that initial traction and you’re looking to scale it, which is where Phitured can get involved.By the way like this. Typically we work with either kind of traction and growth stage companies, or actually more mature kind of increasingly like enterprise folks who maybe have a very mature product in the market. And they’re looking at they’re kind of plateaued and they’re looking to scale it, but yeah, in, in that growth place, super exciting phase, there, I think it’s really about. You know, you want to be able to start to scale. So that’s. You’re going to need to upgrade your analytics, probably in stock, trucking more stuff, to get a better understanding of, you know, deeper understanding of your engagement, your retention, and for sure the performance of your acquisition channels, whether they’re, whether they’re organic, paid or some mix.Because you’d likely to want to start adding layering in more acquisition, either scaling the channels that are working for you, or when they max out or start getting expensive, you know, layering in other channels. I would also recommend like, you know, I wouldn’t build it right at the start, but in this growth phase, it’s good to experiment with virality.Like, you know, I always say it’s, you can’t really plan for virality, but you can at least. So the seeds and see if they germinate, right? Like you, if you don’t cultivate the right conditions for virality to occur, it never will. but if you, you know, if you have like, you know, the ability to share content, if there’s a content app, if you put those share Phitures in, then at least you can kind of see what the kind of natural PR, prediction of, of users is to, to share to their users, to share to their friends.For example, the networks, then you, if you see something. Some traction there, you can, you can optimize it, but even if it’s just doing it a little bit, it may be it’s helping to keep your paid acquisition costs down and you have your blended acquisition. Costco is a bit more sustained. and maybe you see that actually you go super viral.You know, I’ve seen it happen. So I think like, you know, building potentially referral systems or content shares depends on your app, but I’d say if you do them in a fairly cheap way, but just at least at least put those in and see if that, you know, is going to be something that’s going to help you grow.Because if you find that it is for SoundCloud, virality was huge, you know, so, but of course it, it works better with, with social apps and content apps. Yeah. Apart from that, you know, I’d say like, you know, you’re going to be, you’re going to be continuing to iterate on the product. I’d say ASO becomes more important at this point.Like, so optimizing your App Store page for, you know, for organic discovery, making sure that you’re ranking for the right keywords. and also start to think about international. I think a lot of companies. Focus on their coal market and the one that they know best, which is often, you know, us or, you know, whatever country that, you know, the team is based in.They often start there and they know that market best. But, you know, I think one of the things which going back again to SoundCloud, what are the things they did very well was, you know, even though they were headquartered in Berlin, they didn’t have this German outlook actually that, that the founders were not even from here.And they built it global from the start, you know? So they, they basically, it was available everywhere. you know, when I came into to help them level up on, on mobile, you know, we made sure that we translated the App Store page into all the languages. When I came in, it was just an idea. but even English is a good start compared to, you know, most of the languages.But you know, pretty, I’d say at this growth stage, see, it’s about exploring you don’t necessarily, you know where those big leavers are for scale yet, but it’s about discovering them. So maybe, maybe it’s virality. Maybe, maybe there’s a market that you’re not localized in yet, which could. You just, you just catch fire in that market, you know, so it’s not about doing huge installations, the launches and doing a huge, you know, traditional kind of PR push in, in, you know, launching in us or whatever, but, you know, at least making sure the apps available there are, you know, in, in, in as many of your big markets as possible, make sure that it’s translated, you know, localizing the applicant, using the App Store presence and just seeing, you know, getting a feel for.You know, are you going to be a very local app or you, do you have a global, potential you have really trying to tease out, like, what are the acquisition channels that are going to work for you? And what are the, what are the other leavers for growth, you know? And, probably you want to start doing a little bit more in terms of CRM or customer engagement at this point. you know, Which, which does also doesn’t make sense when you, when you’re a superstar. But you’re sort of building the foundations for the next phase of growth and then leading into the things which are showing promise. David: 00:37:05Nice. And then we are coming up on time, but, can you give us a, like a 92nd, two minute, quick drill? I think, you know, I, I don’t know that that many, like massive apps are going to be listening to this podcast, so maybe it’s not even quite as relevant anyway. Jacob: 00:37:23David, I think I like to think every apps can be a massive David: 00:37:25Every app. Yes. Andy: 00:37:27Right. The massive apps of the future Jacob: 00:37:29Yeah, David: 00:37:30Once you get to that stage of a head space of calm of disco, you know, what, what is the stack start to look like there?Andy: 00:37:37So, when you get to that kind of scale and we’re working with folks like, you know, like, like this go, like, Blinkist, Headspace folks, you mentioned, an a and a whole bunch more, some that I’m not allowed to talk about, which I wish I could name drop, but, I’ll get into trouble. but some, some really big enterprise brands and some household names.And when you’re at that kind of scale, you know, when you’re doing, oh, I can mention Trilla trailer’s is a good one. I’m going to give them a call out there. They’re a customer of ours, awesome platform. anyway, when you’re at that scale where you’re just seeing like, Insane acquisition, just on a, you know, that becomes the norm to get like more than a hundred thousand thousand downloads, you know, like a day, which, which we see with some of the apps, when you, when you’re at that kind of scale.Even incremental gains can be really, really meaningful, particularly on monetization. Right? So I would say there, you really want to then focus on subscription optimization and revenue optimization, way more than you would in the earliest stages, because you’re, you’ve proven you’ve, you’ve got all the elements in place.You can really then start to scale. And if you can, you can increase your, you know, average subscription lifetime by a month, or you can increase your conversion rate even by like, Point one of a percent on your, you know, your subscription conversion at that scale, it’s it can be really meaningful.Right. So, I think activities which maybe you wouldn’t have spent so much time on before, maybe you’ve built out rudimentary stuff for maybe you have rudimentary tech in place for it’s time to start upgrading that stuff and, and going deep on these topics. So things, again, like, you know, ASO, it’s more like.You know, something which you need to keep doing. You’re constantly kind of optimizing there to get as many organics in as possible. You want to be of course, continuing to optimize your, your acquisition. But I would assume at that point, you’ve kind of got those things more or less nailed and it’s, it’s almost like a hygiene factor.It’s more than a hygiene factor, but sorry, you said to keep this quick. yeah, I’d say I I’d say like big focus on yeah. Retention because you know, again, it’s a slow moving metric, but if you can move it even, yeah. Point five of percentage point that’ll give such compound growth and also like, you know, knock on gains for monetization work a lot, you know, diligently on conversion optimization and starting to sort of segment your user base further, to provide more segmented experiences, you know, because you will have those cohorts in that scale where you can start to do really interesting stuff and, and lean into AI and personalization to, to really get to that increased relevance in your recommendations and community.Jacob: 00:40:13This is why it makes sense to really do AB testing. Right? Cause you can hire a team, right. To focus on it. You had multiple data people. You’ve got engineers, you’ve got, you’ve got to have an entire growth engineering and experimentation team. and that’s what you need. Andy: 00:40:28Bring in Phiture.Jacob: 00:40:29Yeah, there you go. Or, yeah, bring somebody in, right? If you need it in a pinch, you know?So, yeah, it’s, it’s, it’s a different game. This is how all of these things go, though. It’s like, you gotta every incremental compounding something like a business like this, like every, every, the next 10 X is always going to just be different, because, like different tools, different mindset, there’s going to be different, different returns on different actions, right?And I think, you know, when I talk to people at different stages, a lot of times folks get this, get this wrong. They, they, they think they need you. You were mentioning at the beginning, Andy, like just thinking we’re ready to scale when you’re really not. Right. And so it, there is a lot of value in just understanding how different a hundred thousand downloads is from 10,000, from a hundred, right?Those are very different numbers. All of those, like none of those tell me, like, you’re dead, right? It’s just a different stage. And, and doing the right things at this stage is super important. So I, I really like how you break this down into like, different phases.Cause I think that’s how, app developers should be thinking about it.David: 00:41:36I think as a, as a summary and talking through this with you and he’s really helped me kind of frame it finally is that when you’re early, you take big swings that don’t need sophisticated measurement to see the result. You don’t need sophisticated A/B testing. You don’t need sophisticated analytics.You need to take big swings that give you big results. Those obvious results. Then as you grow, you can start taking smaller swings that require a little bit more sophistication. And then as you’re scaling huge, that’s when you get into minutia, and too many small apps are getting into the minutia too early.So, big swings early, you can take those smaller swings later. But anyways, as we wrap up we’re going to put in the show notes your Twitter, Growth Stack, great places to follow. You’re constantly sharing amazing content there. Anything else you wanted to share with our fine cadre of a subscription app practitioners?Andy: 00:42:36Yeah, actually I’ve got a really exciting announcement. This is the perfect audience for it. At Phiture we’re hiring right now for a Subscription Optimization Lead position. It’s a super exciting role. You get to really be in on the ground floor, building out a team and an essentially a new P and L line that we’re going to breaking out from our existing services.I’m really doubling down on subscriptions because it’s like such a big topic, and we’re really looking for the subscription expert to come in and lead that team, you know, a fantastic place to work, et cetera, et cetera. You know, you’ll work with some AAA clients, some great names that I can’t talk about today.You work with a fantastic team of experts if you can come to Berlin and work with us here, because it’s obviously not in Berlin today, but Berlin is an awesome place to move to. We’d also consider remote, I think, don’t quote me on that, but, yeah. Get in touch. you can find the job spec to go to the Phiture site: phiture.com, and go to the careers page. You’ll find it there and to subscription optimization.Yeah, we’d love to get that out to your audience, because I’m sure there’s some people there that might be really interested in that role.Jacob: 00:43:44I’m looking at the requirements, here, proficiency in IAP management, you know, it’s right in my wheelhouse. So maybe I’ll throw my hat in the ring.David: 00:43:53Well, Andy, it was really great having you on the podcast. And, yeah, we’re going to have to have you back on there’s so much more, and Phiture does such great work. And we, we share some customers and so, you know, we see the, the results of the work you do on our end. And it’s really great.so, thanks for being on the podcast, and we’ll talk again soon. Andy: 00:44:15Thanks for having me on. Thanks, David. Thanks, Jacob. It’s been a pleasure.

E

Jul 28

44 min 36 sec

Watch the video version of this show on YouTube »Alex Ross is the co-founder & CEO at Gregarious, Inc. Gregarious is the company behind Greg, an app dedicated to helping people grow healthier and happier plants. Greg’s community has grown from 100 beta users in August 2020 to over 50,000 monthly active users today.Alex graduated from the University of California, Los Angeles, and studied data science and statistics at MIT. Alex has worked for companies such as Cisco, The Daily Aztec, and Cannon Trading.Prior to founding Gregarious, Alex spent 4 years as Director of Engineering at Tinder. Alex also co-founded Enplug, a digital signage company that was acquired earlier this year.In this episode, you’ll learn: The two critical steps in making a successful app An ingenious strategy for partnering your app with retail companies Why you should involve your customers in content creation Links & Resources Tinder Enplug fitbod app Y Combinator (YC) Alex Ross’ Links Greg app Alex’s Twitter: @AreteRoss Job opportunities at Gregarious Alex’s LinkedIn Gregarious, Inc. on LinkedIn Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingRevenueCat: https://twitter.com/RevenueCatSub Club: https://twitter.com/SubClubHQEpisode TranscriptAlex: 00:00:00The two steps in making a successful app business are make something worth using, and then put it in front of the people who would use it.If you have a plant, and you don’t know what to do with it, we solve that problem.So, what we did is we reached out to a bunch of plant retailers, “Hey, we will help your customers have a positive outcome with your product.”Can you put in our little QR code? And now when these retailers ship out a new plant, every single one of them has this little QR code in it.It led to our first 15,000 users, I’d say. David: 00:00:30Welcome to the Sub Club podcast. I’m your host, David Bernard. And with me as always, Jacob Eiting. Hello, Jacob.Jacob: 00:00:53Happy to be here. David: 00:00:55You sound incredibly happy.Jacob: 00:00:57It’s great. It’s a Friday, David. The sun is shining. They’re grilling a bunch of chickens in my hometown. I got nothing to complain about. It’s gonna be great.David: 00:01:05Our guest today is Alex Ross, founder and CEO at Gregarious, makers of Greg, an app to help you grow healthier and happier plants. Prior to founding Gregarious Alex spent four years as director of engineering at Tinder.Alex also co-founded Enplug, a digital signage company that was acquired earlier this year. Welcome to the podcast, Alex.Alex: 00:01:27Thank you guys. Good to see you. Thanks, David, Jacob.Jacob: 00:01:29Hi. David: 00:01:30So, I’m going to try really hard this whole podcast and not call you Greg, but I’ve made that mistake.Jacob: 00:01:36I was thinking like, I get like annoying company name questions. Sometimes. I’m like, I’m sure you get more worse than me.Alex: 00:01:43But I’m considering just legally adopting Greg as alias or something. Jacob: 00:01:48Yeah. You know, I mean, that’s a news cycle right there. A little bit of earned PR. David: 00:01:55So I wanted to ask you, so obviously, you know, director of engineering at Tinder that’s, I mean, what a rocket ship that must’ve been quite a wild ride. So, tell me a little bit about, about how you ended up at Tinder and then, you know, if you do have any fun, war stories from there, that’d be great to hear. Alex: 00:02:16Yeah, definitely. It was a rocket ship. Definitely some war stories, some wins, some losses. So, I came across Tinder and I was looking to get into like a consumer application. so I was interviewing with Uber and Twitter, and then I came across Tinder on an angel list. Actually the head of recruiting at the time reached out to me and I kind of took it on a whim.To be honest, I had not used the app before, before even interviewing or anything. that’s kind of a challenge for Tinder is like, do you, how many of the teammates need to use Tinder? Because a lot of people are married and in relationships, and those are great people to have on the team. And so it makes it odd, and kind of difficult or complicated. But, basically I joined when it was around 70 people, if I recall. So, it was a pretty small team. There was already a global user base, so it was one of the scrappiest, global brands I think probably has ever existed. Because this was all right before Tinder or right around the time that Tinder launched its first monetization efforts.And so there wasn’t really awareness as to like, great, there’s this like large, global, many millions of people are using this thing, but is it going to make money? Right? That was still an open question at the time that I joined. So, yeah, basically I joined and it was very, it was definitely still a startup.And, so there was not a lot of structure and I think my manager changed on the first day, like the person I was talking about working with's desk changed, but I had a great time and basically I ended up creating the growth team. So I became very focused on, growing the international user base.One of the coolest things that that team did is we decoupled Tinder from Facebook. And this was from Facebook login because like Tinder came to, came to fame by having, you know, you tap one button, it imports your Facebook photos. It basically made online dating as easy as it possibly can be because like you push a button you’re in and then you’re dating.Right. And by making it that simple, it made it so you felt less than desperate by using it. I think it was like one of the important psychological dynamic, because if you feel like you have to work to start using that application, then maybe it means that like you aren’t having as much success in dating in the real world.So, by making it simpler, it made it less stigmatized. More cool. Right? And so when we decided to then allow people to create accounts with a phone number that introduced all this complexity around like, well, are people going to want to do that? Then they have to add profile photos. They have to type in their name.You have to introduce an onboarding process. You have to worry about spam. So, in any case, my team led that decoupling of Facebook and Tinder, and this was like pre Cambridge Analytica, pre GDPR. So it was definitely pressure. And it was like, it was a lot of good foresight and it did lead. It was a very successful project.So, that was kind of what I cut my teeth on it Tinder. And then from there, I ended up creating the trust and safety team. So we then kind of took on anti-spam, which is a major problem for any global consumer or especially a brand that you’re introducing people to each other. Like you’re introducing strangers to each other.That is a spammer’s dream.Jacob: 00:05:32There has got to be just so much abuse on Alex: 00:05:34So much, and it was all stuff. I agree. Yeah. 24 7. and so we ended up creating a team kind of bottoms up. This is a cool effort. Cause it wasn’t like an executive side, like, oh, Tinder needs to needs to create this team. But rather. A collection of engineers that were very motivated to solve this problem.So, we created a trust and safety team again, before, before GDPR, like this was before the world was really focused on, privacy and data security and protect users. Very consciously.Jacob: 00:06:01It’s it’s interesting. Cause now, you know, even with like clubhouse recently have had issues here. I think now the expectation is you need trust and safety from day one, which even five or six years ago, wasn’t really the case. It was kind of like, well, I’ll just grow and then you’ll solve it later.So, that was, I would say early days for even that concept of like a whole dedicated team to those, those, those aspects of, yeah. If you’re meeting people in public mind, God, like you need good Alex: 00:06:28Real. Yeah. You really need to continuously try to protect people. Cause there are, there’s a rare selection of people that are not great. Right. SoJacob: 00:06:36Yeah. David: 00:06:37So then, tell us a little bit about the transition from being a tender to founding a company, because you had founded companies before and plug, and been at, other large companies before Tinder, but Yeah. What, what led you to, to found Gregarious? Alex: 00:06:54Yeah. I actually saw Jacob and I shared an experience interning at Cisco systems. Is that right? Did you, yeah, Jacob: 00:07:01Wait, when were we at the same? Like onboarding. Alex: 00:07:04No, no. I was actually in the finance organization, so I was doing internal auditing. it was crazy. I was on a team that like investigated other people for like, you know, abusing their corporate cards and stuff like that. So there’d be likeJacob: 00:07:19Interesting. internally. Alex: 00:07:21Internally. yeah. it was a very, Jacob: 00:07:23We’ve had interns on that team. Alex: 00:07:27It was a unique, it was definitely the only inboard,Jacob: 00:07:29Yeah. Wow. I was testing, I was testing phones, so I’m actually not sure which one of those is more boring. I think actually you might’ve had me. So Alex: 00:07:38That’s for sure. yeah, so I got exposure is Cisco is interesting for anybody who doesn’t know cause you have to drive between meetings. Right? Cause the campus is so large. Jacob: 00:07:48Campus. Alex: 00:07:49Yeah, Yeah, Talk about, oh my gosh. Culture. Yeah, so the, the process leading up to, to starting Greg was very deliberate. because I had done a startup before and that company had gone to success a successful outcome, but it was a lot of hard work was honestly grueling.Definitely like, hardest challenge of my life. And so I knew that I wanted to be involved in starting a company and building a culture from the ground up again. but I knew that I wanted to do it differently. and so basically there was a lot of preparation thinking about really the main thing I was thinking about is what is the industry that I want to be working in, because I think that startups often don’t go the way you expect.But you can learn so much. And so I was really thinking like, okay, what do I want to become an expert at? Right. Like what do I want, if it doesn’t work out in the way we expect, what would I like to have learned four years, five years, seven years worth of information about.And, I really kept coming back to science. and I wanted to, to kind of use my engineering experience and pivot that into, more real world, like physical phenomenon. Right. And like learning how the universe works. David: 00:08:59That’s amazing. Alex: 00:09:00And so that’s really, a lot of the thesis of Greg is that we apply computer science and software engineering to this specific domain of how to plants work.Right. And, and basically the, the dots kind of connect looking backwards, but it was a process of discovery of like, what’s an area that’s emerging and like kind of changing, like where is there an opportunity, right. Because I think it’s helpful to position yourself at a place where either you can cause change or this change already happened.And, right now, like a lot of people know there’s climate change. and there’s also a lot of, rapid things happening in plant science world, specifically around like CRISPR and plant genetics and stuff like that, really at the deep end of it, which we can get into, but it’s like way deep. but, but basically, this was before the pandemic.So we were actually looking into plants before COVID and already there was like the rate of people bringing plants into their homes was growing by 50 to a hundred percent per year. And we wanted to validate like, Jacob: 00:10:03I really like, that seems like that seems like a thing that would be fairly stable, like, is it, is it, is it a, is it a generational trend, like millennials or younger folks being? I have a lot of people on Twitter. I follow that seem very interested in plants more than I’ve ever been. Alex: 00:10:20There’s a couple converging trends. Yeah. I think that part of it it’s associated to like the mental wellness movement. So it’s kind of this trend line follows a one that’s very similar to like meditation and yoga just five years later. So I think it’s a very, it’s a lot of adjacent interests there, but then there’s also an aesthetic component to plants where like, people are kind of decorating their spaces and they’re getting more like trendy in how they, you know, how they, even people who are eating, like you want to have like a space that you invite someone into and it’s very nurturing.Right. so yeah, there was definitely a generational kind of tailwind already happening. And then COVID just like crammed that up. Right. Cause then everybody’s on zoom and you look in the background, some people have plants and you’re like, oh, that looks kind of nice. Like I’d like that.Jacob: 00:11:04I have this. I have, I still have this like barren white wall back here. That is embarrassing. Yeah, I need, that’s why I was excited. I, I, I installed Greg today and I was disappointed. I couldn’t buy the plants in the app yet. So we’ll have to talk about that as we get a little Alex: 00:11:17That’s something that is coming. That is the client segment. Yeah, definitely. yeah, so we kind of saw an opportunity and we did some due diligence, some interesting things I think, to identify like, is there a revenue opportunity in my favorite stat that I like to share that blew my mind when I learned it is home Depot, is a publicly traded company.So you can look up their, you know, annual statements and you can see how are they making money. And if you look up their statements, you’ll see that they make more money on indoor garden than on any other product segment. Like home Depot sells lumber, paint appliances, all these other the Jacob: 00:11:54That’s like, that’s like actual revenues. Is that also margin con? Cause I would imagine these are high margin items as well, I would guess. Alex: 00:12:01Yeah. Depending on where you fall on them. But yeah, they’re, they’re, they’re pretty hard margin. and no, we only looked at revenue, but they make like last night, like $11 billion per year in revenue. Which is, and, and they’re like 10 or Jacob: 00:12:15Store, right? That’s, one. Yeah. And there’s like, every town has four of these. Alex: 00:12:19Exactly. Yeah. And home Depot is like 10 or 15% of the plant retail market. Probably. It’s hard to estimate.Jacob: 00:12:26Okay. Yeah.So, it’s like roughly like a hundred, a hundred billion dollar a year kind of thing in the US. Wow. That’s it. That’s the size of in-app subscriptions for anybody. Who’s curious, like, roughly like in that ballpark.Alex: 00:12:39Yeah, yeah, exactly. Like Apple’s app store, subscription Jacob: 00:12:42Oh yeah. Sorry, app store. It’s not even subscriptions. I think that’s the app store broadly. Yeah.Alex: 00:12:47So we combined the plant Tam with then the app store growth in subscription revenue. And there’s our business model.Jacob: 00:12:56There you go. Did you, did you, I mean, yeah. You mentioned like wanting to get into something physical into something science related. Did you have like a passion for plants or was this something that is like deep in you or, or was it more like me and an app subscriptions, which is like, wow, this looks like a good thing I can work on and I actually care about it and know a little bit about it.Right. So how, how did it, how did you go? Like, Yeah.This is what I want to do. Alex: 00:13:17That’s a great question. It was like 75% the ladder. So the same as you, where I was kind of, I got exposed to it cause I started getting plants and I realized I did like them, but there was no brand to guide me. And there was definitely no science to help me keep them alive. Right. but I, I grew up in the mountains and so like, I, I, my family, I lived in Mammoth Lakes, California for any of the listeners know where that is.And so I, you know, I, I went on like a solo backpacking trip, like shortly before starting all of this and kind of communed with like being in nature with no people around me. And maybe that put me in touch with the plans a little bit more. but it was mostly, kind of identifying, this is a realm of science I’d like to work in because plants are mostly.Physics-based, this is something a lot of people don’t don’t realize, but because they’re stationary, you can almost view them as like, like a civil engineer would a bridge. so there’s not, so you can kind of really think about like the water physics, the light physics. And so they’re a really great vehicle for learning, just physics generally, and also how like the sun and earth orbit matters to that plant and that location.There’s so much science there that we learned that there’s a depth. That was, we were very interested in diving deeper intoJacob: 00:14:31Yeah. Not to mention, not to mentioned biology, right. Alex: 00:14:33There is, but Jacob: 00:14:34As an intersection, right? Yeah. Alex: 00:14:37Yeah. Biology is difficult though, right? Like if you’re like an engineer, who’s trying to approach it,Jacob: 00:14:41Right. Yeah. Alex: 00:14:42it’s messy, you know, I Jacob: 00:14:44Yeah, exactly. Alex: 00:14:46Yeah, yeah,Jacob: 00:14:47But if you think about it, it was a closed system, right? Like yeah. You have it. It’s potted, it’s planted, you know, lumens in, you know, water in, you know, nutrients in, you can, yeah, you can, you can make some approximations, right. As we like. Alex: 00:15:02The closed system is really important. I can. so what Greg does is Greg predicts when a given plant is going to need to be watered. And that’s like the super simple, like simplified functionality. It’s one of the main things you need to know. And the way we figured that out talking about closed systems is kind of a fun fact. you can very accurately measure the amount of water that a plant loses by weighing it on one day and then weighing it the next day. And the change in weight is the water lost in grams. And it turns out, so what we did is we did that for like 700 plants for like six months. And we, we then graft what was the grams of water lost per plant per day?And you get this beautiful pattern. It’s like it random, like this is a very clear, like almost a heartbeat of a plant, which is a great fit for like machine learning.Jacob: 00:15:56Yeah. So, so, so how did, how did you pull this off? Like practically, did you have like a big garage or warehouse or something like that? That’s, that’s more work than I usually do for software. So tell me what that process was. Alex: 00:16:09It definitely did. So at one point I had like 150 plants and they all had a plastic, little pots and I had like labels. I named them like a one through nine and then C one through whatever. Cause I had to keep track of it. Right. It’s all in our progress database. And but that didn’t scale. And so like me and my co-founders, we were all measuring every day, every single day, hundreds of plants, but that didn’t scale.So then we went on Craigslist and we started saying like, Hey, we’re looking for people to weigh their plants every day, twice per day for a couple of months. And we had hundreds of responses, like people, people care about their plants and they thought that it was cool to be doing like citizen science.Right. And so we ended up with people in Berlin and, and you know, Sydney.Jacob: 00:16:48All right. Cause it doesn’t have to be local, right? Yeah. Alex: 00:16:51And actually it needs to be in like Southern hemisphere versus Northern hemisphere because the location of like the sun and solar radiation effects that. Yeah. So we needed a global distribution for sure.David: 00:17:01This is like way off topic for, for subscription apps. But, but if you, if you squint it’s, there are a lot of similar problems in understanding user patterns and user life cycle. And like, there’s so many hard to understand variables. Alex: 00:17:18Yeah, David: 00:17:18But one thing I’m curious about on the plant science, like how much does like humidity and other things play into that.So if you, if you have, you know, 40% humidity, one day and 60%, the next does that actually impact things. Alex: 00:17:31No humidity. We don’t really need to model humidity very much. it’s actually, there’s a couple of things that are misconceptions. You don’t really need to worry about missing or humidity and you don’t need to worry about fertilizing. Like all of that is overdone. for the most part, like there’s some cases where it, matters, but, I’d say for like 99 out of 100 plant types that you’re likely to own doesn’t matter.And even more people don’t realize that the humidity reading that we see in the weather is what’s called relative humidity. And it, it not actually like super scientific way to measure, like how the water in the air relates to a plant. You need to look at absolute humidity, the whole totally different calculation.There’s basically relative humidity changes according to the temperature. And so I see as humidity, you can almost, and to be honest, like, ignore, except for a couple of plants, like really evolved to be in, like, you can picture it. you know, in England, like, United Kingdom, like BHAG, right. Where it’s just so much water, like, okay, well does like some, some ferns like are from like the Pacific Northwest, like Washington area where it’s like constant rain forest, those types of plans.Yeah. You’re going to have a hard time if you’re not, in a very human environment, but the vast majority of EBI don’t have to worry about it.Jacob: 00:18:47I have, I have more questions on the plant physics, but I think, I think I will let, I will, I will have to like save my curiosity.David: 00:18:55Well, we’ll have to do the, we’ll have to jump on your podcast and talk, talk points. Jacob: 00:19:00Plant Club, just invite V2 to newbies on there. Just to ask questions. We’ll be there. David: 00:19:05So from, from all of this, you, you started to alluded to it a bit, but one of the things I was really impressed talking to you a couple of months ago, was just how I’m vicious. Your plans are with Greg. So you’re, you’re kicking it off with a consumer subscription app. but tell me a little bit about like, where you want to go from there.Alex: 00:19:25Yeah, definitely. That’s a part of like, going back to like how we started it, why we started it. I have seen, or like I’ve worked at companies and like not naming names that are very, very revenue focused. Like just purely prime directive is we just need to make coin and as much of it as possible. Right.And then the question is, well, if you get there, then what do you do? Because if you do accumulate a level of avenue and a lot of influence, you kind of inherit a social responsibility, right? Because like you’re accumulating all these resources. If you’re like a Facebook or an Instagram, I think there’s like general consensus.Like you kind of need to think about the impact that you have. Cause you’re too big to not think about it. Right. And so with Greg, like we really thought about if we manage to navigate this very challenging process of getting to scale. Well then what? Right. And our goal what’s really interesting that people don’t realize is that plants in our homes are just plants that were taken from various places in the world and put in our homes, right?Like there there’s no such thing as a houseplant, it’s actually just like a giant jungle tree that somebody took a cutting from and then transported it to England and then ended up the United States. Right. so the physical principles that govern, being able to predict how to keep those plants alive is, are the same as the physical principles required to predict how to keep like crops alive.Right. like plants that are grown for our food system of which there are like billions. Right. And those plants, like it turns out plants are really like an infrastructure piece of our planet, right? Like plants are our like big support system on spaceship earth. And it’s kind of interesting. Jacob: 00:21:10It’s, the, it’s the first stage of catalyzing, the sun’s resources, right? Like, Alex: 00:21:15That’s exactly it. And a lot of people don’t realize this, that basically all of life gets its energy from the sun. Like that is the input of all of energy into what we know as life, as you know, maybe there’s more on other planets that works differently. But as far as we know, all of life depends on solar energy.Jacob: 00:21:31Yeah, Alex, you’re leaving out some very, very, sensitive, bacteria that live by vents. Okay. That, that Alex: 00:21:40I love that you noticed.Jacob: 00:21:43I’m D I’m disappointed in myself that I can’t think of what they’re called. They’re extremophiles some kind of, I Alex: 00:21:47Yeah. Jacob: 00:21:48All, it’s all, it’s all discovery documentaries, so Alex: 00:21:51There’s a vanishingly small number of, like living things that, thrive on geothermal energy from the earth score. Right. But that’s like less than like 1% as far as I know. What people don’t realize as an example is that like plants. A lot of people think that plants are just taking things out of the ground that is sucking nutrients out, sucking water out. They’re actually also putting things back into the ground at all times. And so plants, like, for example, they photosynthesize. So they take energy from the sun and they are the only thing on the planet that takes energy from the sun and then converts it into energy that all other life can use. And it’s not only insects and birds and mammals like us, but plants are also depositing sugar into the soil.So it’s a bi-directional flow and that sugar feeds the bacteria. Jacob: 00:22:38Is that an active process while they’re alive? Is it, or is it during decomposition? Alex: 00:22:42No, that is an active process. Like plants are actively depositing sugar into the soil and that, that those sugars feed the bacteria and fungi and those bacteria and fungi are responsible for breaking down the, inorganic, nutrients like nitrogen into a format that plants can absorb because plants can’t just like stop nitrogen.Now they depend on. Those organic, you know, facilitators. And so it’s a very symbiotic relationship and there’s growing awareness now that like having a quote unquote, living soil is crucial for our planet. And I’ll tell you like an example of how, how much awareness there is around this. during my due diligence for Greg, I went to a plant genetics conference.This is like for any engineers in the call, like imagine like AWS reinvent, accepted the geneticists. Right. And so they’re like presenting, like how they run their projects. And it’s, it’s a really cool parallel world, but half of this conference was dedicated to soil like microbiomes, because that’s how important it is.It’s like truly like a resource. It’s an infrastructure for our spaceship earth. Right? David: 00:23:49That’s amazing. So, so one of the things, yeah, you and I talked about was not just, you know, consumer subscription to then like funding science, which is kind of what you’re talking about now, but then also the potential to take this from, from B2C to B2B. So like you have, nurturing these who have to manage the planets before the people buy ‘em.You have office buildings that have thousands of plants. You have, you know, commercial facilities like there’s, you know, plants existed on so many different layers of are of, of, of use, So tell me a little bit about kind of the long and short term plans of potentially transitioning or not transitioning, but, but kind of building on top of what you’ve done for consumers to then expand into more B2B, use cases.Alex: 00:24:42Yeah, definitely. Some other examples. people don’t realize that cities have to like municipalities have to maintain the plant inventories, right? Like there are people who manage the inventory of plants. Exists, you know, or there are small businesses. there are people in most towns, I grow food for their farmer’s markets, for example.And so those are like smaller scale farmers and then there’s large scale farmers, right? And there’s a real dearth of like talented software teams, writing applications for any of those parties. And that’s really the long-term opportunity to be spotted. If we can pull together a talented team to make products for those people, that’s a longterm opportunity.And my, my thesis on this, which I think we’re aligned on is that, like delightful, simple consumer user interfaces, like simple software is appreciated by everybody. Right? Jacob: 00:25:35Okay. Alex: 00:25:35like enterprises don’t want to use complicated integrative Jacob: 00:25:40There’s tastes now in software, right. And all levels of, employment. I think it’s, it’s a bit of like our gen my generation aging into the, the enterprise buying world. And, also just like people have enough software experiences in our lives. They’ve learned to discern like, oh, this is good.And, oh, this is bad. and I think there’s, yeah, I think it’s really, I mean, we I’ve, I’ve done it a ton in making revenue count. I came from the compute super subscription world. I learned a ton of lessons about onboarding and, and, and, and creating delightful experiences and like, you know, playing, playing against and into people’s like, you know, habits and things like this that you carry into the enterprise world or B2B world, and it can really supercharge software.And it’s probably what we’re going to see. Yeah. I think. I think there’s still, there’s always this like technical leap or not technical in the sense of computers, but technical in the sense of processes and whatnot, when you leap from consumer to, to selling to businesses. But as you said, you bring those teams together, you, you build your data set, you learn more about Alex: 00:26:45Right, Jacob: 00:26:46Act of growing plants, then someday you, you, you can, you Alex: 00:26:49Right. And there are some, some famous examples of this. I definitely see it with RevenueCat. Cause like you compare the UI to a SAS that was created 10 years ago and it’s just more of delightful. Right. It’s like simple. And I know to use it. I’m not like getting a headache while I’m on it, but it’s nice.Right?Jacob: 00:27:05It’s very nice. Very nice of you to say Alex: 00:27:07Yeah. Bye-bye But, but like some examples like strike became famous, right? Because like they had a good Jacob: 00:27:14Same. Yeah, yeah. Say my mindset. Right. Just like, make it easy, make it simple, make the, make the shortest possible path to value. Right. Alex: 00:27:25Or, slack would be another example. Right. Whereas it was almost a consumer level application that just took off like wildfire because individuals liked it. Right. Jacob: 00:27:34And then they added enterprise grid, whatever they have now, or whatever to sell it to, to, to Alex: 00:27:39And then nothing is things, Jacob: 00:27:41Need that to begin with.Alex: 00:27:42Right? David: 00:27:43Yeah. So it’s just, it’s really cool that there’s, there’s just such a direct path from selling to consumers right now, and then selling to municipalities who are managing their plants in a few years, and then selling to, you know, the, the company should have to manage this at scale and then selling to farmers.That’s really cool. One of the things that, again, that you’re not talking about, you and I talked for like two hours a couple of months ago. And so there’s, there’s so much that I would, I would’ve loved to have recorded that and released it as a podcast. But, Jacob: 00:28:20Glad I can glad I can contribute. David: 00:28:23Yeah, one of the, one of the fascinating things that you talked about was kind of your view on marketing. And so I’d love for you to talk about that more broadly, but then specifically what you’re doing with nurseries is just such incredibly smart marketing. Like, I mean, it, let me say tangent for a minute.So it’s just so obvious talking to you that you’re not the average like app founder, you know, like none of my apps have had even, even like when, when hundredth of the due diligence and market Jacob: 00:28:55Why I was gonna say, I’ve never, I’ve never bought some, like, I’ve never had a physical warehouse of plantsDavid: 00:29:02Yeah. and so it’s just, it’s just so clear that you, you think about things in a way that, that most, you know, at people don’t most software people don’t most even founders don’t. and, and so I think, you know, we’ve talked about this on the podcast before, is it just so many apps are trapped in this?You know, we just, we have to advertise on Facebook to grow. We have to do this. And like that clay book, I’ve just, you know, dumping money, a bunch of money in ads, I think leave so much on the table. And so I just love that you’re, you’re going to do that. And that we’ve talked about that, you know, you’ve got to do paid marketing and, and maybe I’ve already started experimenting with it, but, but yeah.So tell me about what you’re doing with nurseries and then just kind of, you know, some of your thoughts on, on marketing and virality and stuff. Alex: 00:29:51Yeah, definitely. I think broadly, like what I would, I think I’m definitely aligned with that where, your broader point is that like building an app is half technical and UI design and getting the product really, really, really right. Right. But the other half that people are often uncomfortable about is needing to get it in front of the right people.Right. And so in my mind, the way I break this down is the two steps. Like I have a theory that like the two steps in making a successful app business are make thumping worth using, and then put it in front of the people who would use it. Right. And it’s like remarkably hard to do either one of those, but, Once we had, the beginning signs of retention.So we got our first, like, I don’t know, 5,000 users by like posting on Facebook and on Reddit and like that kind of stuff. Then we started thinking about, what is like the most optimal time for people to be introduced to grade. And what we came up with is, well, we solved the problem of, if you have a plant and you don’t know what to do with it, how to keep it alive, we solve that problem.And so the most natural moment would be when you get a new plant, right. Because it’s like, that’s a moment. And you’re like, oh crap, I have this thing. What do I, how do I keep it alive? And, so what we did is we reached out to a bunch of, plant retailers, like online in-person brick and mortar all over the place.And we basically said like, Hey, we will help your customers have a positive outcome with your product. Right. And so let’s do this trade where like, we will give them. at this point we had a subscription tier. And so we said, we’ll give them free subscription tier for N number of months. At first it was six.And now it’s three. and in return, can you put in our little QR code flyer, like nicely designed four inches by four inches recycled paper card that has a QR code and it takes you to download. Great. Right. And so we did that and now like when these retailers ship out a new plant, every single one of them has this little QR code in it.And it’s almost like a digital companion to your unboxing experience. Right. And so that was definitely like a very natural fit and it, it led to our first, probably like 10 or 20,000, 15,000 users, I’d say.Jacob: 00:32:10So can I ask, like, did you do that yourself? Did you have somebody on your team? Cause like, yeah. I’m, I’m in the camp that that’s outside of my experience. I don’t like calling the pizza person. Like I, you know, I, I don’t know how to do that. So how, how did you, how did you delegate that and, and Alex: 00:32:24Yeah. Jacob: 00:32:24The resources and a small team to pull that off. Alex: 00:32:27Definitely. so I I’d say I provided the, the oomph behind it. but then I have a good friend, who I’ve worked with in the past named Colin, who does like growth marketing stuff and that’s his comfort zone. Right. And so I definitely did reach out to a bunch of the biggest partners in the beginning.Because the thing is that like with early stage stuff, founder led sales can be great, right? Like you don’t always need it. It’s better if you don’t need it to be Frank. but, we were so early and we had no partners at all that I was like, I ha this is crucial for us. Like, we need to have a better source of user acquisition.That’s like our next major challenge to solve. And so I did reach out to them and then call in kind of like took over and scaled that. Right. Cause like, I, I ultimately like I needed to be writing code and stuff. and so now he owns that relationship and he’s been able to keep that going further.Jacob: 00:33:22Yeah, it’s just one of these unique channels. you know, I don’t know, you can, as a, B to C app founder, I think David’s points exactly on, I think we’ve a lot of us have settled into this world where there’s one or two channels to like get growth and that’s paid, paid marketing.There’s a lot of good, growth resources out there. oh yeah, there’s a lot of good growth books. I’ve read, moving into the B2B world that say there’s like seven channels or whatever. There’s only like so many like ways to get and in and in, and in B to C we tend to be like, well, yeah, there’s these two, essentially, but it’s not really true.Like you can try seven, I guess the trick is finding stuff that two things, one is approachable. Like, that’s why I asked about you. How did you make it happen? Well, you were able to start it off and then you had somebody to work with you to, to, to bring it to scale. But then the other thing is it has to move the needle. Right. And so, and so you have to figure out and like for a price that’s reasonable, right? And, and that sometimes is hard to find as well. Because I think with this, you have this adjacent high velocity market of users. You have a place, your users are going every day, which isn’t maybe always the case for all apps.Right. It’s hard to find there’s no meditation store that people are going to day. Right. Alex: 00:34:33Yeah. I thought about this. Jacob: 00:34:34That’s your, that’s your advantage? You know?Alex: 00:34:37I thought about parallels. Like I wonder if like fitness apps have tried partnering with gyms. I’m thinking like fit. Jacob: 00:34:44I’m sure the gyms wouldn’t be as eager maybe. Right? Alex: 00:34:48Well, I mean, possibly I’m just thinking like, if, if like, Jacob: 00:34:51This also like there’s also this like benefit right from the, for the Alex: 00:34:54There has to be. Yeah, yeah. But I would just, I just like theory, graph, like I’m thinking if there’s an app That helps you track your workouts. Like I use football, I’m a user, it’s a great app and, and it’s a complete compliment or a gym. Like I can’t do gym without, I can’t do football about gym. I don’t really do gym about that.So, I, there might be a thing there, or like with meditation, I’d be curious if, like yoga studios. Cause here’s the thing is Jacob: 00:35:21Find the adjacencies right. Alex: 00:35:22Yeah. And so here’s the thing about a mobile app business that I have found is that one of our strengths is that we’re building an audience, right? Like mobile apps only really work with retention.And so you’re like building up this audience of people that are committed to your app and your brand over time. And these smaller businesses are looking for ways to get audiences. Right? And so in the scale of a mobile app is such that you might actually be able to accumulate an audience that is valuable to those small businesses.That can be a part of that trade. And so we’ve actually talked about that with our partners where we basically say like, well, you’re referring users to us. We can refer users back to you. And our scale is large enough that it could actually be a meaningful number. so I think you can kind of get, it’s definitely a B2B strategy where it’s like, I’m thinking of the strategic value I can provide to my partners in return for them providing value.Which might be why it’s less common in the, in the B2C, like mobile app world, right.David: 00:36:16Yeah. Any other, experiments that you’ve done or kind of things that you’re working on in the, in the marketing realm that you’ve seen fail or things that are being successful right now Alex: 00:36:27We really want to tap peer to peer referrals and that has not been easy. And so that, that is one Jacob: 00:36:33Have you seen, have you seen the new store kit to stuff? Alex: 00:36:36Not Jacob: 00:36:36Yeah, they did. This is, I don’t know when this is going to go out, but they, they dropped in, in, in the dub DC, this, this, this week they announced there’s a new API. That’s going to make that kind of possible. Now you’ll be able to, you’ll be able to like extend somebody else’s subscription, based on some sort of like action. I think I, I, I don’t know if they made it as like, for extending, for like a customer support use case. So there might be a case maybe Apple’s like, no, we didn’t want you to use it for incentivized referrals, but it could Alex: 00:37:09Yeah, Jacob: 00:37:09Make incentivize referrals work and like a really smooth way. Sorry, I’ll derail. But, Alex: 00:37:14I love it. Jacob: 00:37:15It’s, kind of a change.Alex: 00:37:17Well, it’s probably useful to listeners. we have definitely hacked around incentivizes invites using promotionals that will say RevenueCat has been helpful.Jacob: 00:37:26Oh, so, and so you guys are, you guys are pushing folks, but they have to go through like this, like a user-driven process, right? Alex: 00:37:33They do. Yeah.Jacob: 00:37:34Is friction.Alex: 00:37:35It’s friction. It has been fine, but it’s not quite as productive as we like. So that one. Jacob: 00:37:39Have a lot of users that get confused about the process. I would imagine. Alex: 00:37:42Yeah. And it’s like a deep Linky thing. So it’s like not super transparent. the thing that’s worked better, the one that I’m most excited about is I love this one. we, created, user generated content loops. so, basically people, there are certain things you can do in our app that like publish web pages on the web.And so for us very specifically, People like Greg, we don’t have a database of like every plant in the world yet. Right. There’s like 400,000. It’s really complicated. And like, that’s actually, one of our core IP is, is developing that database. And the only way we can do it is if we allow users to contribute to it.Right. and we need to be like a crowd source, like model and we get really good at curation so people can create new species in Gregg. And then we curate that and then we publish that page on the web and then it starts showing up in Google search traffic for other people searching for information about that species.Right. And so I love the theory of this and like check back in, in a year to see how it turns out. But I love the thing. Because it’s like, okay, a user publishes a web page, which then more users find our app through. So then they join the app and then they publish more webpages. And then so more users find the app and then they publish more web pages.Right. And so it’s like a very like positive reinforcement loop. And I think those types of recursive positive reinforcing user growth loops can lead to very healthy, growth curves, right?Jacob: 00:39:08Yeah. I mean, that’s the, the challenge of these apps. You said it with retention is the big thing. I think you, you you’re you’re you’re you’ve got some tables. Keeping a plant alive plants live a long time. Therefore, hopefully your app gets used a long time, but then, finding these things that can take what is inherently like a decaying process, which is people leaving your app and turning it into something more stable, which is how you build this, like yeah.Long-term business. And then, you know, for, in your case, like use this as a platform to move into other segments and whatnot. but, but but moving away, from this, like get them in, monetize them, let them go. Right. Model, which like, it seems just like the whole world is pointing us against right. With, with the way that ad tracking is getting less easy to do and all this stuff.Alex: 00:39:54Yeah. Jacob: 00:39:54So I was gonna say SEO, that’s one of the seven good channels. Right. So you’ve hit at least three, Alex: 00:40:01Do end up dependent on, on Google. AndJacob: 00:40:05It’s something can change in Alex: 00:40:06Yeah, Jacob: 00:40:07Or. Alex: 00:40:07But like I’ve been wanting, I’ve been watching SEO for a while and I think that generally, as long as you’re not doing shady things, you don’t have to worry about much. Right, Jacob: 00:40:16Content that people click on and find useful it will work. Right? Like, but when I did our blogs for revenue cat, initially the ones that got really good traffic for us kind of got us off the ground. Like I didn’t, I didn’t think, like I thought a little bit like, oh, what are people going to Google?Whatever. But no, I was just like, I’ll just make plus that people will read and spend time on and share. And like that’s all it took. And you’ll find the posts that some of the posts that I did that were intentionally like, I’m trying to be like, SEO smart. Didn’t do that. Well, the ones where they were just really good posts and like contained a lot of really good content and get referenced a lot. Those are the ones that still generate traffic for us. So like, which is nice because you don’t have to be like an SEO master anymore. You can kind of just make good stuff and do Alex: 00:40:56Yeah. Jacob: 00:40:56Things. Yeah, David: 00:40:57Yeah, I was going to ask, I think we talked about this, but have you, have you done some paid marketing and how’s that gone for you? Alex: 00:41:05Yeah, definitely. We did use paid marketing to like, scale up, by like a two X factor. So did that add a little bit of extra? And, so we’ve been running on Instagram and Facebook, and it’s been pretty productive to the point where it’s almost NetSpend zero. it’s like we spend a dollar in advertising and then we make a dollar in revenue.We’re still very early. And so we haven’t had enough months. Like the, the, the pain point is if you do a trial. It’s actually a much longer, payback period or like what finance people would call a float. And then a lot of people expect, because let’s say you have, we’re generous. We have a 30 day trial, which is like a bit much for a mobile app, but we do it.And so 30 days, and then the user subscribes, and then you get paid and then apple will pay you a month later. Right. So you actually end up with like up to a 90 day float. and so that’s not as tight as I would like hope for, but it’s better than nothing. And I think that’s the key is that like, because we’re a revenue generating app we’re able to do the ad spend in like a reasonable way.I think if that weren’t the case, then it’d be very difficult.David: 00:42:12Yeah. And, and at some point, I mean, with, with your other strategies of referrals, of SEO, of building a base of users, that then you can get more and more partners, you know? So, so if you went to home Depot, 10 million active users, then that’s a much more attractive proposition to them. so at some point, you know, spending at a loss might actually make sense, but it’s amazing that the subscription, model enables you to even spend break even, but keep that flywheel going, which is it’s.That’s incredible.Alex: 00:42:52And I think the NetSpend break, even that creates an interesting exercise because then it’s like, it becomes, we didn’t get into like financing, but like if you fundraise That’s then a good reason to fundraise because then if you have more capital, you can put that capital to work. Because if you know, you’ll make, if you have a dollar, now you’ll have a dollar again in 90 days, as long as you can carry that float.Well, then at the end of 90 days you have a dollar and a user Jacob: 00:43:17Yeah, which is like, has, has value, right? Like you’ve increased the value of your user base has adult, you know, dollar per user active value essentially in the venture market or revalue reevaluate. Right. So, it, it does make sense. So yeah, I w I want to ask, like, You guys, it seems like your apps pretty developed for how long you’ve been working on it a year and change.Right. and you mentioned, you mentioned this, like finding iterating to like a retention goal. Like how did that go? Did you start with just like the basic function, like the most basic thing and then add stuff until you got, and what, what I guess specifically, like what metric were you looking at to say like, okay, retention is good now. Alex: 00:43:58Hmm. Yeah, that’s a great question. So we did start with the most basic core functionality, and I think one of the things that we did that I would do again, We just solved our own problem. So like I, so we, we started at the beginning of COVID, so like New York where I live, locked down basically the day, almost the day that I left Tinder.Right. And so and so I remember I’ll never forget things were shutting down. So I ran to the nursery nearby plant nursery, and I bought like 30 plants. Cause I was like, I need to have the problem in order to be deeply motivated to solve it. Right. Cause like, if you actually have like over 10 plants, keeping track of them kind of socks a little bit, it’s hard.And so I knew that I needed the problem and that motivated us and, and our whole team really, we basically just wrote like a prototype app to solve our own problem. and once it was working for us is when we started bringing like beta users in, we did like a test flight, version for a month brought in like maybe a thousand or I think it was 2000 beta users total and there in like August, 2020.And. Jacob: 00:44:59Did you, how did you get that list for the beta? Just Facebook and Alex: 00:45:04Facebook. It was, it was mostly Facebook like groups and stuff like that. Jacob: 00:45:07Mm. Alex: 00:45:08Yeah. and it posted on Reddit. Reddit is hard. but, we did a little bit Jacob: 00:45:15Rip off middlemen made easy. That’s my favorite. We posted, I posted right. It was where we launched two and I have this, this favorite hater quote that I have like screenshot it on my desktop that I will hold on to until we IPO. Alex: 00:45:27The hater codes or something people should be prepared for, I think,Jacob: 00:45:30Yeah. Alex: 00:45:32But let’s see. So we solved that. Here’s the key is that we specifically, for our app, we wanted to solve the retention piece first. And so he chose the behavior in the app that would be associated with retention because the way that I personally think about retention is that right.What happens is you have a trigger. So a person needs an external trigger to think about opening your app. Right? So it could be a feeling that they have like Tinder, it’s a feeling I’m bored or I’m lonely. And I want to see people, and that’s an external trigger that causes a person to think about your app.Then you need value to them to actually open your app. Right? Like, okay, I have this trigger in this app can adjust that trip. Sure. So for us, we didn’t have like an emotion, but we did have, the need for reminders. And so basically we, leveraged push indicator very heavily. Our whole app is like a water reminder app right now that’s the core value.And so we built that specific functionality, water reminders before anything else, because we wanted to validate, is that a sticky behavior? Is that something that people will actually want to do and use over like six months? Right. And because we knew we wanted to get six months of data, we had to build it first.Right. Because you have to really think about how long it’s going to take to get that validation. and we were bootstrapped. And so we knew that like, well, we can’t bootstrap for forever. Right. And so we needed to front load the questions that we knew investors would be asking when we went out to fundraise.David: 00:46:57So speaking of which you just raised $5.4 million seed round, how, tell us about the process. It sounds like you were, you know, having been at Tinder and been in Silicon valley and in the industry, that was your goal that you didn’t come into it thinking you were going to bootstrap this forever. and you were specifically kind of building up some of those retention numbers and other things that you knew investors would ask for.So, how did fundraising go having kind of iterated into that direction? Alex: 00:47:35It’s definitely hard as hell. I don’t know, like you don’t ever say that it’s not. but it wasn’t, it wasn’t like excruciating. I think recruiting is actually probably a little bit more difficult, especially right now. There’s a lot of, a lot of movement in the, in the why people are working, how they wantJacob: 00:47:51It’s easier. It’s easier. to write a check than it is to take a job. I think, you know, like to give it to somebody to do, do Alex: 00:47:57You can write multiple checks. Right?Jacob: 00:47:58Yeah. It’s not your, it’s not your every day, you Alex: 00:48:02Exactly. Yeah. So, let’s see. We actually, to go back to your first point, we weren’t, completely, we hadn’t decided that we were definitely going to raise VC capital. and so there was like, like we did work through that as a team and we ended up deciding, various specifically. Our mission is one that we believe would benefit from us being good at raising capital, because we think that if we can bring capital and talent to this industry and this problem domain, that’s a good thing.And then even from a life perspective, like we wanted, we want to move quick, we want to be able to grow. You want to be able to like, build delightful things for lots of people. and so that was, that was the main motivation behind the VC capital. I think it’s a big trade-off. so we, we definitely did not take it lightly and we did deeply evaluate Jacob: 00:48:49Closes, off a lot of paths, Alex: 00:48:51It does. Yeah, Jacob: 00:48:52You kind of really narrows what your future, I mean, Alex: 00:48:55Yeah, Jacob: 00:48:55You on a trajectory to something potentially much, much bigger, but it Alex: 00:48:58Yeah, Jacob: 00:48:59Of like brings down your, your options. Alex: 00:49:02It does. Yeah. And I think you just have to think about like, am I okay with needing to focus on eventually providing an exit to these people who trusted with their capital, right. Yeah. And I think maybe something that people don’t think about is like the CEO, whoever is fundraising. Like you, you build a relationship with your, your, your VC partners, right?Like I consider them like life journey partners at this point. And so it’s not that like, it’s certainly not an adversarial relationship. It’s more like I have a true responsibility to these people because we had a clear, like, this is the agreement is like capital and then they have obligation to their investors too.And so, you know, I’m aligned with that and I think you’re right. You just have to think about like, is that, is that aligned with my vision for this, this journey, right. David: 00:49:45And then speaking of, of an exit, you shared with me, you have a very unique approach to employee equity. I’m actually curious to hear at, Jacob’s take on this, having gone through the whole thing, himself, but Yeah. Tell us about your equity structure. Alex: 00:50:05Yeah. We, we definitely are, experimenting and trying something different and I think there’s pros and cons.Jacob: 00:50:12Investors love that, by the way. I’m sure those were easy conversations. Alex: 00:50:17Surprisingly most investors were, were okay with it. I definitely had a couple that were concerned about, the implications in the medium term, but here I’ll get to what it is. So, yeah. Okay. So basically, like we, wanted to distribute as much of the financial ownership of the company across as many of the early teammates as we could.And the reason for that is like the real thought that I had that whether or not other people think about this kind of thing, I would, I would encourage people to ask the best, which is, if I have an exit, how big of an exit would I really want to feel very fortunate about. Right. And like, really think about like how much money do I actually need.Right. Because I think that there’s a lot of people who get caught up with like, I want a billion dollars, right. Or like, I want like a hundred million dollars. I’ve been fortunate enough. Like we pointed out earlier, my first company was acquired for like a fine amount and then Tinder totally exploded. I didn’t own as much of it, but it is still a positive outcome.And I can say that like they didn’t change anything. And I know it’s a very cliche thing to say, but I think it’s a productive exercise that if anybody was founding a company, I would recommend asking, at what point am I again, feeling fortunate about the outcome, right? And then what we really thought about is our ability to recruit a great team.And basically the decision that we made is that, there’s really two aspects to equity. and I’d be curious again, Jacob’s take on this there’s there’s compensation for risk. So early teammates take more risks, quote unquote. Right? And so that, that’s a typical, like reason for, founders taking a large, large Jacob: 00:51:52Costs risk mostly. Right. But Alex: 00:51:54Opportunity cost and risk.And then the other dimension that I think about is. Where, early stage companies are hard for everybody who’s involved. And my prior experience pointed towards like the first 20 people who joined the company, or at least definitely 10 or 15, all worked, pretty much as hard. And definitely at least not like 10, it’s impossible to work 10 times harder. Right. And so, Jacob: 00:52:19And with less M with less glory, to be honest, Alex: 00:52:22With less boring. Yeah, Jacob: 00:52:23Don’t, they don’t get all the likes on follows on Twitter or whatever. Right. Alex: 00:52:27Exactly.Jacob: 00:52:28Try to distribute it, but yeah, it’s, it’s, it’s, it’s a grindy place to be for sure. Alex: 00:52:33Not getting the glory is like a, it’s definitely a double edged sword because I think that that glory is also a responsibility. Right. But, yeah. And so basically we decided to try this approach where we wanted to do this exercise of distributing that equity as equally as possible. And so he set up a mathematical curve where whenever I make an offer, I just look at this math equation.What is the amount of equity that this next person gets. Right. and, and so, and we did that and basically projected out like, okay, each person gets to like, like if we reached a billion dollar company, each teammate should have an outcome of something like $10 million or more, right. Like something, something above that number.And it was really important to map that out because otherwise it can go forward. And, yeah, basically that, that was our exercise. I mean, basically they decided like, okay, can we, can we turn that around a little bit? And, the side effect that I like, so again, we’re, we’re early in this, like, we’re, we’re an eight person team we’re in a 15 and it may turn out to be complicated.And again, we check in in a year, but what I like about it is it, did enable a completely transparent cap table. Right. And that’s nice. Cause like, I don’t think it’s like maybe required, but I do like being able to show people like this is who owns this Jacob: 00:53:50Who owns with you? Right? Alex: 00:53:53Yeah, exactly. Yeah, so that’s a positive side effect.But there’s definitely it’s complicated.Jacob: 00:54:00Yeah, I well, so David, my take is actually we do something very similar that’s I like also like, so interestingly and, and inside, inside baseball, I think, it it’s it’s we, we did, something similar. No, we weren’t as scientific with it for the first, like we had like a rough rule, but it was like the same, like X, each number, like the number like decreased, like, but this backoff curve, I’ve found it a very, it’s a very hard problem to reason about, because you want, you want to think about this, you want the hundredth employee to have some skin in the game.Right. But you, you need to balance that with like, Hey, like come join this company that you’ve never heard of. And like probably has like worst benefits and you know, who knows it’s going to be, it’s going to be a mess. Right. And so like, finding that balance is really hard. and, and, you know, Looking at where we’re at 30 people now, and the complexity definitely grows. And then I think also you start thinking about like recruiting leverage and like, what, you know, what, how much equity do I need to offer to be able to like, recruit these different types of roles and things like that. And your systems get more complex, but, but, but it’s still, did you guys, did you do something special on special on founder equity to create like more, more room on the cap table?Or did you ha how many co-founders do you have?Alex: 00:55:11That’s such a blurry line. I don’t know if this is just me by name or no, like, well, is that the fourth person? Like, I mean,Jacob: 00:55:18I guess that’s true. yeah. Alex: 00:55:20Yeah. Jacob: 00:55:21A, maybe that’s a, it’s a YC thing is where they’re like very clear, like who are the co-founders and who are not But, but yeah, I, I agree. It’s probably mostly a, a label.Alex: 00:55:32I feel like we have six co-founders. realistically there were, there were two of us that were like, thinking about this, you know, like that’s not true. There were three of us that were thinking about this, like two years ago. so we, I, I called them co-founders and so we’re all on this same plans.Like we have this graph where like, I am the first black. Yeah. Yeah. Yeah, It’s Jacob: 00:55:51Interesting. Alex: 00:55:53Like as much as possible. And so the hardest, this plan is definitely hardest on the first three people and it requires incredible cultural buy-in to that because it means that the outcome, like, I, I definitely worked on this for a lot longer than like the people who are joining today.Right. And like, it was stressful and hard, but here’s, here’s my, my, my personal take. And, is that I actually think the risk of doing startups and I feel like YC, you may agree with us. The risk of doing startups is like so much lower than most people realize for people who have the fortune of having a safety net.Right? Like if you’re, if you, if you have a family and you don’t have savings, then like, of course that is a, that is a risky proposition. for people who are relatively early or mid stage in their careers and they have savings and they’re not actually gonna end up in a really dangerous spot, then I think that startups are almost always a net positive.If you really apply yourself, because the amount that you learn and grow by solving that many problems, only accelerates your career. Right. And so going back to the risk versus there’s also opportunity costs, and then there’s effort. I personally discount the risk for people who are fortunate enough to have that safe space.I discount that risk almost to zero, because I think that it’s just such a, even this time around for me, my second startup, I have learned so much and it’s been such a good life experience that even if it didn’t work out tomorrow, net win. For sure. Sure.Jacob: 00:57:17Yeah. David: 00:57:18So part of the reason I brought it up was that I, when I joined and I’ve told Dick at this, when I joined revenue, this is way inside baseball. Goodness a open, an open enough on the podcast. But when I joined Romney, I thought more along the lines of you, Alex. Like I thought, well, why is Jacob getting so much more of the company and, and revenue Katz, like the first 10 employees and then the next 20 it’s actually, it’s very generous compared to the industry, like take a, did an incredible job and has been great with equity.So, but, but early on you, you’re at a startup and you’re like, wow, I’m working really hard. He’s working really hard. Like why, why, why is the outcome going to be so different? But honestly, 18 months in and Jacob having raised a series B and like taking a lot of the hardship, like you as a founder are going to have to do things and be under amount of stress.And like, there, there really is. And I, I don’t, it’s probably somewhat true for maybe those, you know, those first early employees, how carry a little bit of that load, but the F but a founder just has to carry a different load. And so. Jacob: 00:58:29It’s always going to fall on that first two, you know, whatever people on the cap table. Right. Whatever it’s going to keep rolling until it hits you at some point. And, you know, as it gets bigger. yeah, yeah, yeah. You know, I don’t know. It’s an, it’s an interesting, this could very easily devolve into like the nature of capitalism and ownership.Right. Because it doesn’t, it plays very much against this, like, you know, constant, like Marxists debate about like labor versus capital and like, what are the value and what is like value and like, cause you know, you like, you had this whatever period it was one month, one year or whatever. That’s like such, you know, if you build the Greg of your dreams, which is a billion dollar company, that’s touching all parts of agriculture and plant, like how much, how much of that is from that one month.Right? Like, why do you get, why do you get such an outsized return? Right. And not, yeah. I don’t know. Maybe it’s, you know, maybe that maybe that’s when the, the, the there’ll be at my gates with pitchforks and stuff like that. Not all deserve it, but like, but yeah, no, it is, it is, yeah, I mean it’s and for, for, you know, I think folks, our listeners is interesting because when they’re trying to make this decision of like, am I building a, B Corp, am I building an LLC with my friends that we’re just going to share revenues?Am I going to go venture? Am I, you know, one thing I kind of went into venture a little blindly, like, I didn’t understand all of these aspects before I filled out the YC application. That was basically like, I’m doing venture, I’m going to fill out the YC application. And luckily they kind of like. Taught me like, okay, this is what this means.And like, I’m still learning it as I go. Like, and now I think I kinda know like what I’m in for. but I think it’s something undereducated on and like, it’s hard to do without firsthand experience. And like you’ve been in other startups and had exits and things like this, which are great educational experiences.But, it’s not something to be thought on lightly because it really will kind of, it’s really hard to change paths after a certain point. Right? Like you can go bootstrap to venture, but going back is almost impossible. you can even even doing something like an LLC where like you split it between a few people.Well, okay. Somebody leaves, like, what do you do? You know, there’s not a clear path for that. These are really things like you have to understand, when you’re, when you’re taking your app into a business or deciding what you want out of, you know, your work and your life. So, It’s great that you’re playing with it though.Like, I think it’s great when we’re, when I think it’s founders, sometimes we don’t push the limits enough with, with just the status quo. But it’s, it’s how, it’s how things get better, like is, is, is by, by, you know, people with a little bit of leverage thing. Like we should do this, right?Alex: 01:01:09Exactly. And I think that that’s the key is that I don’t think that like, our approaches is better. It’s an experiment and I think it has trade-offs that are equal. It’s just, what is your desired outcome? Right. And so what, what we were really solving. Is, we wanted to end up with a team in four or five years of people who are very bought into still being at the company.Right. Because we really wanted to build a place where like, we’re not trying to graduate out into an exit to like another giant enterprise, like are very clearly Telegraph to our VCs that our desired outcome is an IPO. We do have to provide an exit to our investors. and who knows what will happen?Like, gosh, that’s like, so, so pie in the sky, right? hopefully we get there. but in any case, that’s the problem we were solving for us. I was thinking about like, ultimately I’d wrap this up into working backwards where like we thought about our end state and I wanted to have, you know, a hundred teammates that were like, I felt very authentically, really just as bought into this as I was.And so I optimize. For that objective function. Right. But then it comes up other trade-offs where like, David you’re completely right. That like the amount of stress that I have gone through in the last, you know, year and a half is soul crushing. it’s like acknowledging, and even I do have thoughts, like, well, why don’t I own like twenty-five percent of the company or something.Right. I definitely do not. but I am very at Jacob: 01:02:32Which, by the way that’s, that’s that’s, I mean, I don’t own 25% a company anymore because like a deletion and all that stuff. But like at that stage, that’s, that’s, that’s pretty like very open-handed right. Like you’ve shared a lot. I know you’ve got other founders obviously, or, you know, but I, that was the clarifying thing that makes what I think what you’re doing so unique is that you started with employees zero, right?Which typically. More of common practices that you have some like group that you call co-founders, they get some, like chunk of the pie. And then like you have like an option, you set aside some amount of equity for, for employees and you work backwards from there. Like we set a goal to be at a certain percentage of employee ownership by the end, and we worked backwards from there.But I think that’s the whole point is that you do have to start with this end state and that’s not just for equity planning, that’s for all of this. Like what is the end state have an idea because you got to convince a hundred other people to go there with you. You’ve got to like convince yourself that you’re going to want to do this that whole time.And so, you know, we’ve, we’ve, we’re pretty settled on that, that IPO path as well. Like of course it’s a very far journey and like, lots of can happen between here and there. And like, I can’t promise that I, it, it is an unlikely outcome just by the definition of it. But if, but it’s useful, even at this stage to be like, that’s where we’re going, we get there.I don’t know what the journey’s going to look like, but that’s where we’re going. So I, I think it’s a smart way to run it. David: 01:03:48Yeah. And then what you said earlier, Jacob is so true too. And I think a lot of the people listening will fall on a pretty wide spectrum from just, you know, indie developers. Like I was, you know, a few years ago where I still had to think about this and I actually made mistakes around this. You know, oh, let’s build an app together.We’ll do it. 50/50, no exit plan. No, like what if things go wrong? What if we bring in a third person? And I learned through hard knocks that like, you, you need to look at that in-state and figure out what can go wrong between here and the in-state and, and make some decisions early on that account for those things.Because if not, you’re going to put yourself in a bad spot. So, so anybody working on a, on a business, or any business needs to think through these things? Like How do you split up ownership? How do you manage potential exits? How do you invest the ownership over time? So that if somebody leaves early, they’re not having an outsize return on a minimal investment.But anyways, I really appreciate you opening up about this, Alex, and then Jacob, I kind of put you onJacob: 01:04:59It’s fine. David: 01:05:01I think what you’re doing with revenue Canada is great. And I mean, I, you know, I felt like I was, you were very generous with me on stock and, and, and the first Jacob: 01:05:10We’ll go ahead and we’ll go ahead and link to David’s compensation package in the, in the, show notes. Alex: 01:05:14I love the point that like, it is, it is philosophical, right? And I think it is worth like entrepreneurs talking about the options. It’s fast. Sometimes there are companies there’s like the whole open comp model, like buffer, you know, actually in their, their salaries and equity and stuff. and, that’s an interesting approach, too. Jacob: 01:05:33Yeah. Being intentional about it, I think is my advice. Alex: 01:05:36Being intentional. Jacob: 01:05:37Just don’t fall into it. Like not, not having a point. Right? Think Alex: 01:05:40I agree. Jacob: 01:05:41All, not a lot necessarily, but do think about it.Alex: 01:05:44Well, and really like what is your desired destination? Can you kind of picture that world and then reverse engineer? What steps will get you there? Because that’s really, that’s also product development. It’s company strategy financing. Like if you are raising capital, you have to be able to discuss where is this capital going to get us? Cause it’s not going to last forever. It’s always going to last less long than you think it will, right?Jacob: 01:06:06Right. David: 01:06:07Yeah, well, there is so much more I wanted to talk to you about, but I think that what we did talk about was really fun and interesting and honestly, really different. You know, we’ve had a lot of podcasts that talk about monetization and talked about retention or other things. And so hopefully this is a really unique take that I think a lot of people can get get some value from.So, yeah. Thank you so much, Alex. And, definitely looking forward to talking to you more in the future as a RevenueCat customer. So, I’m going to put links to your Twitter and to the Greg app in the show notes, but anything else you wanted to share as we wrap up? You’re hiring, right?Alex: 01:06:49We’re hiring senior engineers, staff engineers, and a product designer and a head of brand. So, if anybody wants to apply machine learning and help machines grow plants so that we can make the ecosystems and the food system a little bit better, reach out to us.Jacob: 01:07:04That’s a great pitch. David: 01:07:05And get early in a very unique experiment where you’re going to get more equity then you typically wouldn’t have startups. That’s, that’s a huge pitch.Alex: 01:07:15It is. Yeah. David: 01:07:16Yeah. Okay, cool. Well, we’ll put links to your hiring page in the, in the show notes as well. So, but yeah, thanks again so much for being on the show. Jacob: 01:07:23Yeah. Thanks, Alex. Alex: 01:07:24I loved it.

Jul 14

1 hr 7 min

David Smith is a full-time independent app developer. Since 2006, David has owned and operated a small company focusing on creating applications for the iPhone and Apple Watch.David has built many successful apps over the years. His most recent app, Widgetsmith, went viral and hit #1 on the App Store. It has over 50 million downloads. David’s other successful apps include Watchsmith, Pedometer++, and Sleep++.David also co-hosts a weekly podcast called Under the Radar, where he and his co-host Mario Arment discuss Apple-related topics.In this episode, you’ll learn: How to transition from a hobbyist to a full-time app developer Two big mistakes to avoid when starting out as an app developer How customers find new apps in 2021 The biggest waste of time and money for an app developer Links & Resources The LibriVox project Mirror app Launch Center Pro app David Smith’s Links David’s Website Audiobooks app Widgetsmith app Watchsmith app Pedometer++ app Sleep++ app Under the Radar podcast David’s Twitter: @_DavidSmith iOS Version Stats Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.Episode TranscriptDavid Smith: 00:00:00I’ve launched, I think it’s 56 or 57 apps at this point, and all but about six of them have completely failed. I say that mostly because I’ve launched more failures probably than anyone in the App Store in some ways, and that’s the way that you can end up with success, I’ve just kept trying, and it got me that little baseline of income that it was like, okay, I’m not just wasting my time here.David: 00:00:19Welcome to the Sub Club podcast. I’m your host, David Barnard, and with me as always Jacob Eiting. Hello Jacob.Jacob: 00:00:43Hi David Number one, How are you?David: 00:00:46I’m good. Our guest today, maybe number two, is David Smith, long time indie developer and podcaster. Starting with Audiobooks in 2009, David has built many successful apps over the years, including Widgetsmith. Pedometer. His most recent app, Widgetsmith went viral on TikTok, and hit number one in the App Store.Welcome David.David Smith: 00:01:10Thank you, It’s great to be here.David: 00:01:11Yeah, it’s great to chat. We’ve chatted in person a few times, and bumped into each other at WWDC over the years. You’ve been doing this pretty much since the very beginning, right? Audiobooks came out in 2009, when did you actually start working on that?David Smith: 00:01:27So, It wasn’t even my first first app. I think my first app that never went anywhere, it was launched in 2008. So, I mean, I was within a couple of months of the App Store launching. So I’ve been doing it essentially as long as you could, and I think I started working on, oh yeah. Audiobooks, the end of 2008.And it’s just kind of grown from there. So it’s about 13 years in the App Store.David: 00:01:46Like me and Jacob, actually, we both had apps...Jacob: 00:01:50In the on days of paid up front, and only 200 apps on the App Store, and all that. It is a good time. Were you a developer, like a Mac developer before that? Or how did you trip into iOS?David Smith: 00:02:06Sure. I was a web developer before I did this, and so, I mean, honestly, I started writing apps before I even actually owned an iPhone. I just, it seemed like a good opportunity and I wasn’t particularly happy where I was at work and it was just something that I thought would be interesting opportunity.And I started learning and didn’t know what I was doing for a long time, but just kept at it. And so it’s just one of those things I got into mostly because it seemed like a good opportunity at the time. And so, you know, I just, eventually I initially was doing some web consulting as well as my iOS work.And eventually they just, the web consulting disappeared and it became iOS full-time, and that’s sort of been the story for more than a, you know, like 10 years now probably.Jacob: 00:02:47Yeah, no, I was, Kind of similar, like I just saw it coming and it was like, Hmm, maybe I should. And I went and picked up the Macco OS, the the Hillegass book and learned Mac OS programming, like, yeah, because there wasn’t the iOS book, right. There was no iOS, it was iPhone iOS. But yeah, it was a different time, fewer apps way, smaller community.So, yeah. Interesting decade.David: 00:03:15I do want to start by digging into the story of Audiobooks, and, I think one of the, one of the interesting things to me, because it happened to me as well, is how having this kind of foundation app that, that started in 2009, that did well enough. And, and I’m, I kind of jumping ahead here a little bit, but I, I think if I know your story correctly, Audiobooks is kind of what helped you make the leap to be full-time indie. And then once you become full-time indie, you started to have the time to experiment with all these other apps, and a similar thing with me, like I’ve had a couple of key apps over the years that kind of provided that like foundation of income that let me keep going.And then, that allowed me to experiment with all these different apps, like launching a pro ended up coming out of, of already having income to be able to take this big bet. and then mirror came along where it was doing really well, and I was able to take other bets. And so it seems like that’s somewhat the story of Audiobooks.So, so let’s, let’s dig into that. So it was 2008, you had had a failure and then you, you start working on Audiobooks in late 2008. what was the, what was the inspiration and, and, and, and how did how did you kick off that?David Smith: 00:04:31Audiobooks was an app that it’s essentially, it’s a, it’s a wrapper and a player for a free public domain Audiobooks. that was all it was, and it was essentially just coming into the market because. at the time, I mean, there were there, wasn’t an easy way to listen to any Audiobooks, on the iPhone at that point.And there wasn’t an audible app there wasn’t, apple didn’t have anything and it was just, you could, I guess you could listen to Audiobooks, I think in the music app potentially, but it was...Jacob: 00:04:57Yeah, you can buy them on iTunes. Right. And they were like, 20 bucks a pop.David Smith: 00:05:02Yeah. And So that’s where the idea for the the app came from, and it became, and it’s just sort of, it, it just, it took off in a way that I wasn’t really expecting and it was successful.And because it was an app that had a very broad appeal, it was something that I think, as you say, it’s sort of like built a platform for me to. Then continue to experiment and try things. And, I mean that, that app has gone through originally, it was paid up front and then it went free with ads. And then I tried selling my own ads for awhile.I sort of went through lots of different models over it over the years, but, it was certainly the app that I think was my first thing that was commercially viable, where I don’t think. On its income. Initially I would have been able to go into, but it was the kind of thing where it became a client for me when I was doing consulting work.And I would say like, you know, it would buy my time because it would start generating enough income. And at first it was like, maybe it would buy me 10 hours a week that I could work on my kind of like independent stuff and then make the event, it would do better. And, and now could buy 20 hours a week of my time and eventually it bought all of my time.And I think that model worked really well for me to have that initial success that I could then keep trying things. And I mean, I’ve. Launched. I think it’s up to, I think it’s 56 or 57 apps at this point. and all of it, about six of them have completely failed. Jacob: 00:06:18That’s incredible.David Smith: 00:06:20And I say that mostly because it’s like, it is so easy.It’s like I’ve launched. So I’ve launched more failures probably than anyone in the App Store in some ways. And they’re like, that’s the way that you can end up with success though, is, is that it’s just like, I’ve just kept trying. And I think Audiobooks was a useful one because it got me that a little baseline of income that it was like, okay, this is not just, I’m not just wasting my time here.But it allowed me to then just keep trying and lots of things that, you know, lots of ideas and lots, lots of things went different places. Some of them had their moment in the sun and then like failed off. Like there was a period in the App Store where you, the classic model is you had a paid up front app and you’d make, you know, a reasonable amount of money in the first two weeks.And then it would make almost no money ever again. And that was just the way it was. And like that’s a model that. isn’t very sustainable, but you know, it’s like if you had something that had a bit more, you know, regular income as a baseline, you, you could make work.Jacob:00:07:13And that’s how you incentivize a developer to make 60 some apps it’s still like,David Smith: 00:07:17Exactly.Jacob:00:07:18And I just said it like a curiosity. Did the Audiobooks in Audiobooks, what was the source for those are those like prerecorded public domain or.David Smith: 00:07:27Yeah, exactly. So there’s a thing called the LibriVox project where people volunteer to read, classic Audiobooks, such as, you know, essentially, you know, Dickens or Jane Austin or things like this that are out of, out of copyright. And so people volunteer to read them. And then, those are just available on the internet.And this, essentially my app was just a wrapper for that. It was just a way to, get into that. And the people who act, who run the liberal box project were actually very happy with it. Like they, they cause for them. There was no easy way to get their audio onto an iPhone. And so they were delighted that there, you know, this app is just creating a venue for their project to get a lot more visibility and interest.Jacob:00:08:06And he got an incredible like App Store parked name, just Audiobooks. That’s a great one.David:00:08:12That’s exactly what I was going to dive into. Like how did, did, did that, was that just kind of a happy accident or in 2008, did you already start to notice? Cause it took me like. Three or four years, I’m a little slow on the uptake to, to realize that these like naming a keyword instead of trying to create a brand was actually a fairly successful strategy for a lot of apps.So did you just stumble into that or was it somewhat intentional?David Smith: 00:08:37No. I mean, I think it was largely just a result of, I didn’t have a name. I didn’t have a better name and because the content of it was so generic, it wasn’t like there was a natural branding that I was doing this and it’s like, yeah, it’s the related to the App Store. So you could just pick a proper noun and it would be available because there only a few hundred.Grow a few thousand apps in the App Store. And so I picked it, I tried it and it certainly has turned out well in that regard that it still has reasonably good, you know, search, search, search optimization and things. Cause if you want an audio book and you go into the App Store and search Audiobooks, it’s an exact name match.So, you know, audible likely, still ranks higher because it’s has more traffic, but, it’s going to be in one of the top, couple of hits. and that’s just a natural thing. And I wouldn’t say it was intentional. Like this is part of some grand plan, but, it is certainly something that. I found useful. I mean, many of my other apps, like I have an app called pedometer plus plus, and sleep plus plus, which, the plus plus when the App Store is doing its algorithm for searching, typically just sort of drops off.And so they start, they rank very well for those terms for sleeper pedometer. and then, but I learned though that it’s important to have something be somewhat trademarkable just for, legal reasons and copycats and those kinds of things. And so. Having something additional to it, was helpful that I could trademark those terms and go after people who are, are being, you know, sort of trying to, trying to get that benefit from the, any sort of success I’ve had on it.But I think in those tricks, they’re always a bit tricky cause like they, they are useful at the time, but they’re not really long lived and you can’t rely on them. Like. It’s something. If apple just tweaks their algorithm slightly, then it goes away. So it’s not worth chasing necessarily, but it certainly in this case, worked out well for me and was useful, but know less and less of a factor now.Jacob:00:10:24If you, if you made Audiobooks today, it would be Audiobooks, degree sign, tiny cross, probably.David:00:10:31That’s I was going to ask though about, you know, algorithm changes over the years and things like that. Did you, have you seen a, cause you took it free in like 2010 or something, right? Like pretty early you switched to the in-app purchase model. so like, what I saw with my mirror app was that once I switched it to, it was like mirror by app heavy or something.And that switched it to mirror with like a little, Unicode symbol that looks like a mirror. And so then it was the exact match for a mirror. And then it just really took off and it was, it it’s been the number. And I ended up selling that app in 2017, but it’s still the number one, one hit for mirror on the App Store.And, I got to, I think around 2015, there was kind of a peak of like five, 6,000 organic downloads every single day. And then even though, even though like the ASO didn’t change, like it still ranked for all of these keywords and everything else, it did slowly kind of start to dip. And, and I kind of wonder if that was, if that somewhat follows the kind of people going to the App Store searching generic keywords, it was like the iPhone more and more people were buying them more and more people were coming like first time into the app.So you can either confirm or debunk my, thesis here that, that. There was kind of a wave and then a, a, a crest and a, a fall of the, of these, organic searches on the, on the App Store.David Smith: 00:12:06I couldn’t speak with authority about it, but that seems consistent with my experience where I think they’re in the early days of the App Store, there is definitely a higher sense of just curiosity that people would open the App Store and just be browsing and just not necessarily looking for anything in particular.'Cause they didn’t know what their phone could do. They hadn’t like that they have a phone and they knew it was going to be good for, you know, texting an email, but, oh, there’s an App Store. Let’s see what it does. And I think that phase is certainly behind us that I think people know what they know. They know what they’re to know.They know what they want to use their phone for. And very often they’re going for a particular thing, not just like browsing. And I th and I think if you were. and similarly, I imagine if you’re just one looking for a generic term, you may not start in the App Store, even if that’s where you gonna get the app, you may start in, in Google or YouTube or somewhere else.Yeah. Like you’re, you’re, you’re, that’s because there’s a mature enough ecosystem there. That there’s a better way. Find that even though the App Store is a great place, but it’s, I think that’s some, those kind of just generic, organic downloads are much harder to sort of define at this point. And I think that that’s just the reality.David:00:13:15Similar kind of build and crest and fall as far as like. Since, since Audiobooks is so heavily rely on organic installs you don’t. I mean, from my understanding, you don’t do any paid advertising for it. did it kind of pressed around that 20 14, 20 15 and then, or have, have organic downloads been pretty stable?David Smith: 00:13:35Yeah. I mean, I think I know, I couldn’t tell you a date. I don’t know if it, I actually look at the numbers, but it certainly isn’t that way that there is that I think there have been a couple of phases of the App Store and there was the early first, maybe four or five years. you had that much sort of just higher interest and it was easier to be, be seen.And I would say sort of in the last five years, the ACQUITY user acquisition. Reality of being in the App Store is very different. That it, it is, there’s a lot more either like, or just organic, organic is more and more challenging. And, I D don’t do very much paid, but I think if that would be the only way that I’ve actually wanted to affect change, to my downloads beyond kind of just word of mouth and natural, sort of, I think at this point, a lot of my downloads are coming from.Sort of the word of mouth version of organic, rather than the someone coming to the App Store with a need and then trying to find it. and so that’s just, that’s just a guess, but I think there certainly is those, there, there, the App Store has changed dramatically in 13 years. I think there’s, there’s certainly no doubt about it.Jacob:00:14:31User base too. I mean, I think about the way that, that what we were talking about as I was thinking about like my usage patterns pre and kind of post that era. And I think one thing that has changed is kind of, I kind of found all the apps I needed by 2015, you know, I kinda got, I got my podcast app, I got my, this app, I got my, that app.I don’t really go in there just doing that, that way. You’re talking about, the, the like, oh, what can I find for my phone anymore? Right. It’s just not something I do. I still occasionally get a recommendation or I find something organically or whatever, but, you know, and yeah, like. In 2021. This is very few people’s first smartphone, right?This is like somebody’s fifth iPhone plus. And so it’s just like, there’s less curiosity, I think, but I guess that’s exactly what we’re arguing here. Okay.David:00:15:18So you mentioned you you’ve probably failed more than any developer ever on the App Store, which is really cool. I mean, I, in some ways feel the same way. I mean, I’m, I’m not nearly as prolific as you, but I mean, I’ve had gosh, like 26 apps and maybe four or five have been reasonably successful. But so I’m going to put you on the spot here.Are there any, any things that really stick out of like, you know, and I can think of one app, cause I’m still working in this space w your weather app, but are there any apps that you can point to and say, you know, I learned a very specific lesson from this, in those failures. Cause I think a lot of people who’ve only ever had one app and that one app was super successful.There’s kind of a confirmation bias. Like I’m awesome. I did everything right. But it’s like, they don’t even know what they do. Don’t know, they don’t know what they did wrong. They just happened to like hit some level of product market fit. So any, any specific apps and lessons you learned from these failures?David Smith: 00:16:18Failure is obviously a complicated thing because I think I learned something from all of them. And so in some ways they were, they were useful. But I think from a financial perspective, it’s mostly what I’m talking about when they’re sort of a failure on that. And I think the two areas that the biggest mistakes that I’ve learned is one is under.To try to really understand and having an honest evaluation of the size of the market you’re addressing. and some of the things that I’ve launched are very focused. were very niche and. That kind of a thing. It it is possible to make it work, but the economics are incredibly difficult and you’re dealing with a very uphill battle.If you’re dealing with something that, there is only ever going to be useful to 10,000 people then great. That for that 10,000 people it might be really cool, but it’s very unlikely. You’re going to make a sustainable living on an app at that unless your economics can be so high, that each one of those people is giving you a substantial amount of money on an ongoing basis.I think some of my failures were things where I was like, Ooh, this is really cool. And it’s an app that does something, very specific and it doesn’t really end up working out. I think the other thing that I found too is just having that sense of. that apps understanding what are the ongoing costs of related to an app going to be, and making sure that the economics of that can balance out.So, in your example of my weather app, ultimately like the app was successful. It had, a reasonably good user base, but at that, this was, it existed in a time before, subscriptions were a thing. Like they just did it didn’t exist in the App Store. And so. The economics of trying to make it so that people could continuously, you know, pay for the weather data that I had to buy for.It just wasn’t there. And at a certain point, it became, it’s like a change from being a business to a charity because I was spending more money on the backend. than I was, you know, getting people on an ongoing basis. And that was something that I don’t think I really it’s easy when I’m building something to just ignore that because the costs, especially early on are so low when you look at these things and especially with, with, with most, if you’re some kind of data service or some kind of hosting provider you often will have a free tier or something that like the E and if in some ways, success can be your own failing because you haven’t taken into account that, oh, if this, you know, if I get any amount of volume, then suddenly I’m going to be spending thousands of dollars a month.Supporting this app. And if the economics aren’t balanced for that, then it can, you have to essentially shut it down and deal with that. And I think those are two things for that. It’s usually when an app has failed it’s because either I didn’t fully understand what the ongoing constantly going to be, or I didn’t sort of real it.Wasn’t realistic about how big of a market it is.Jacob:00:18:54Yeah, the unit economics are tricky because at the beginning, it’s, it’s hard to get good to data because everything’s so small. It’s like, oh, I can’t really tell. I don’t really know what my CAC is or what my cost to service cogs are. So you’re just like, whatever. And then by the time it matters, it’s too late.Right. And in some cases,David Smith: 00:19:12The two that you just used several terms that I have no idea what they mean. and I think this is another failing on my part that like, you know, Kat Mike hack and my Sasser service caught, like, I dunno, like it’s it’s, this is fun. That was just fine. I think. But that’s...Jacob:00:19:24An educational moment. Cost of user acquisition. And what’s the cogs cost of goods sold. Sorry. Yeah, those were like, those are the things I didn’t learn until I had a SAS company though, to be honest. Right. Like it’s, it’s interesting. Like, yeah, the different. Which, which, which, I mean, just highlights kind of the world we’re in now.Right. Which is where most app developers are running a SAS business. Right. would you, would you wear with the weather app, you just didn’t kind of think about it in those terms. It was like an app with an API, but really it was a SAS business. and, and, that’s why we’re here@subclub.com to educate people.Actually, it’s not.David Smith: 00:19:58Yeah, well, but I think there’s definitely that teachable moment in that insofar as it’s just it’s that’s another aspect of that failing is I think it’s so easy coming at it from an engineering background that I can get too excited about the engineering aspects of what I’m doing that. I think that, oh, there’s this cool, cool new API.There’s this fun new feature. There’s this cool problem I’m solving. And I can go down, you know, spend a month of my time building this app. And then in the end, I haven’t. Really thought about the marketing side or the economic realities or all of those things. And in some ways it’s like, that’s fine because part of what I’m like, what I’m good at is the engineering.And if anything, I’ve been able to just engineer my way out of this problem by keeping I can just keep building. And eventually I’ve had enough things that just kind of naturally hit. and it isn’t necessarily the most efficient way to do it or the way I’d recommend it. But I think that is an aspect of my failing, where it is.You know, and it’s, it’s also the reality of being an independent, independent developer where. Like, I don’t have a staff. I don’t have anyone else in that regard. And so it’s not like I have a business, a business, a business team, or someone doing user acquisition or any of those things, which on the one hand is great because it means my costs are really low that, you know, my, my revenue is divided by one and I get to see, you know, and I keep it.So if I was a team of five people and I’m dividing my revenue by five, it’s quite a hard thing to, you know, Have five times to five X the revenue. And so it’s like a trade-off that you, in some ways it’d be great if I had both have both, but I’m not sure if it’s actually reasonable or practical too.Jacob:00:21:29I mean, really though, that’s, it’s a good algorithm for finding a new, new API APIs are the apps or version of the market shifting, right. It’s when something gets created, right? There’s a new opportunity. So exploring those and understanding those and finding out how you can remix those with existing ideas that might, that, you know, as a, as a team of one where one is an engineer, that’s kind of your strategic advantage, right?It’s might not, might not be ASO. It might not be acquisition and all these other things. it might be like, Hey, what can I do? Cool stuff with computers. And I think historically that’s been a pretty good, ROI for, for a lot of companies. So I wouldn’t, I wouldn’t necessarily call that a weakness. though it’s both right, but yeah.David:00:22:12Yeah. And that, that specifically has been part of your strategy, right? So like you, you know, I mean, Widgetsmith, which we’ll, we’ll get to in a little bit, but even, watch plus plus, but domino plus plus, or Widgetmith’s sorry. yeah. Tell us about your thinking around using these new API APIs to get attention.Doing something that’s never been done before as marketing, which, which is, is, is a great way to do it.David Smith: 00:22:42Yeah, well, anything. So this is certainly something I’ve done time of day. And again, that like predominant or plus plus, which is, after Bridget Smith, the most successful thing I ever made was the first pedometer app in the App Store. And it was, you know, when the iPhone 5s launched apple introduced to put a step counting ship into it.And it was the first app that took care of it. And it’s like for a few weeks, even it was the only one. And it was. Probably one of my strategic advantages is the fact that I’m just one guy who really likes to program and is pretty good at doing things quickly. And that means that I can be there on day one.And I think that’s beneficial in sort of two main ways that being out there early is something that often gets Apple’s attention and. It’s ebbed and flowed in terms of whether that’s important for apple featuring you or not, but it’s never a bad thing for a, for apple to feature you or to get on their radar.And, you know, as an independent developer, that’s one of the few things that I have that I can kind of pull on that apple gets excited about where on day one, here’s this app that takes care of this new thing that they’re trying to sell their new phone withJacob:00:23:44Yeah. And that speed, that speed. Even like a one person team compared to like a three or five person team. There’s a real advantage. If it’s just one person like no communication overhead, no, nothing. Like you can just do it all in your brain. And like, it’s really hard to be. I mean, now I’m saying this is watching, I haven’t watched our company grow so much.It’s like, wow. The just like getting all these folks coordinated at the same time really is a different world than when it’s. Just yourself, like trying to put things together quickly.David Smith: 00:24:09Yeah. I mean, I think that, that, that’s just such a, the other aspect of this, just so much. It’s so, so often I can do something faster than anyone else. Not necessarily because there’s something magic about me, but it’s just, I don’t have it. There’s no, it’s not like it does that. Oh, there’s a designer who will, you know, do a bunch of specs and then that’s going into it.We’ll have it, then we’ll have a sprint planning meeting and we’ll break up the features. And it’s this whole thing that like, that’s not my process. I just open up X code and start working. And so it’s an, you know, maybe it means that, I, you know, it’s like, and I ended up with as long as I have a good idea in my mind, I can just be driving towards it.I don’t need to go through a lot of infrastructure to get that. Like, I don’t have. You know, a roadmap with tasks, with, you know, sort of issues that I’m working through and burning down my, like, whatever, all those software things that you need to do, if you have a big team and are valuable, but I just don’t exist for me.And so there’s that extra multiplier. And I think being there early. Is just, it gets, it gets attention and it creates opportunity that there’s a vacuum. It’s, it’s a short-lived thing. You know, the, if I, if I had launched Widgetsmith a few, a few weeks later, I don’t think it would’ve mattered. It would have been complete.Like it is this very ephemeral, like thing. It wasn’t, you know, once a year, there’s this giant opportunity for me and I’ve done sort of dove in and taken advantage of it several times. And sometimes it’s worked and sometimes it hasn’t, you know, like my message App Store apps didn’t go anywhere, but. That turned out that was a market that didn’t exist, but I spent my summer making sure that I was there and if they hadn’t, if they hadn’t been really important and was super cool.Cool. And apple cared about it a lot, then I would have been there and yeah. Or know that ahead of time, unfortunately, but that’s, I think just something that a small team can benefit dramatically from is like taking advantage of that and being okay with too of not shipping things that are as robust and complicated as fair enough.If I was. A five person team. It could do more or have more capabilities or, you know, be localized into more, more languages or also launch on Android or whatever those things that, that you would imagine would be beneficial. I don’t have those, but like, it’s just a trade offJacob:00:26:09Yeah. Search your marketing channel primary. Right? It makes a lot of sense. We did this at, when I was at elevate. This was a constant strategy for us was what does apple interested in? Even, even for us, we were a team of 10 or 20 at that stage, but like, yeah. Adding APIs. Oh yeah, sure. It kind of makes sense.Okay. Yeah, we can add that. Like it’s not on our product roadmap, not really something, but like yeah, the, the benefits were tangible, but as you kinda mentioned, it has gotten at some point, I think for a team of that size, the benefits of being in the, like what’s new, I forget what the, they used to always have a feature like what’s new in iOS, whatever.And you would get Nat and it would be a pretty good feature, but that has gone down over time. So now it’s like, It’s exclusively the, to the benefit of really small developer teams, right. That they can take advantage of.David Smith: 00:26:53Yeah, well, and it’s just, I think that the impact of being fee, because to your earlier point about, I think fewer people are searching for apps. so being in a featured list in the App Store is not as the, is not the thing that it used to be. That I remember the first time I got featured in the App Store and it was.I just rev. It was completely, mind-bending where I would go from like, yeah, you lasted a week. And I went from, you know, maybe having like in the tens of downloads a day to suddenly I’m having like tens of thousands of downloads a day and it was just like completely mind-bending, but that’s not the reality anymore.Like that, that multiplier isn’t there in, the same way. Like, it’s It’s lovely to be featured, but it also is very muted now because it’s not for a week. It’s kind of on this random algorithmically driven basis, where if you’re the app of the day, you’re actually the app of the day, only for one person necessarily.Like it’s not like everyone in the world got it that day. Um it’s and so those, those things lessen the impact of it. and Their benefit becomes more in aggregate rather than kind of in an acute way.David:00:27:52One of the things you mentioned kind of in passing there was, not having to wait on a designer and that’s something I actually wanted to talk about. I, you know, as much as it’s like the apple ethos to be pixel perfect, and to like, have these like amazing, you know, leather stitched icons back in the day or whatever.I regret spending as much as I did and kind of letting design in some ways, overly drive the process. because as an independent developer, where every penny I spend is, is money. That’s not going into my pocket. I spent tens of thousands probably over well, over a hundred thousand dollars on design over the last 13 years.And from what I understand, you’ve spent very little, so, so I mean, it sounds like that’s intentionally part of your strategies. Like you, don’t one you were saying, you know, you’re not a team of five, so you keep your expenses down, but two you’re, you’re also not waiting on them. So yeah, it was at, have you spent much on, on design over the years or have you done it all yourself and then has that been a very intentional for, for speed and cost?David Smith: 00:29:07Yeah. I mean, I think I’ve certainly tried spending money on design and it over the 13 years, like I it’s, it’s not that I’ve never done it, but it’s, it, it, I, it was never, it never paid off for me enough that it would. For it to be something I continued doing. And I don’t think I’ve done it in five, six years now.And at this point, the only design that I typically will ever pay for is, icon design. because that’s just something that I can’t do very well myself, but even like recently, like Widgetsmith, the icon I made myself, cause it’s just a blue round direct, like I could handle that.Jacob:00:29:41That’s a good icon.David Smith: 00:29:43Which has been it’s fine.Jacob:00:29:44And it’s number...David Smith: 00:29:45Think, yeah, like.Jacob:00:29:47Icon designer actually.David:00:29:48Yeah.David Smith: 00:29:49And I think, but it’s to the point of like, I think eight. It’s easy enough to like, if you try to learn basic design and get competent at the basics, you can go, that can take you a very long way. And I think really elegant, new fancy design that’s doing really like groundbreaking or cool things with fancy animations and all that stuff.Like I love it. And we’re using an app that does that, but that kind of design, like that takes a tremendous toll on your development process. And I think. A M like a, if you’re a thoughtful to the developer who wants, is willing to put in the work to just kind of like study what the basics of design are, you know, you can get good enough that you can do a lot of it yourself.And I think that’s something that has worked really well for me. and I think it’s also been to my benefit that it isn’t necessarily that I’m not waiting on a designer. It is that I’m able to, I’m a better developer because I understood, I took the time to. Study what makes a good design for an app.And so I’m w that informs my development, and then it allows me to build things that’ll be easy that are structured, such that the design will naturally flow from it. And those types of differences that if I just was being hand handed a list of like, here’s a, you know, a handful of mock-ups go and build it.And I don’t really understand why things are structured the way they are. Then I would often find myself in kind of, I’d pay myself into technical corners that, if, if you, if you are responsible for both the design and the development, you’re that the two are blending together really well. And so I think it’s something that I certainly recommend.And I think like, I mean, some of the best apps I think have come out of the one developer, one designer teams, like I think that is a can, we can be a useful model, but. For me, it’s just something that I think, you know, in the same way that often I’ve, you know, I’ve known many designers who learn just enough coding to be able to sort of, to make the basics of the key, to the same thing and go the other way that, a developer who puts in a little bit of time and is a student of what, like, if you’re using something and you start paying attention to why is this good?And you don’t try and overreach and. Like try and do things that are beyond your capability. Like, I can make a really nice clean UI. I can’t make a, you know, something that is, is clever and fancy and that’s it. That’s fine. And I’ll just, if I scale my scale, my applications to fit, what I can do, then I’m fine.Jacob:00:32:13Yeah, I, I’ll share it. Not like we’re revenue count. We didn’t have a, it, I mean, we have a full-time, product designer now that helps with like dashboard work and stuff like that, but we didn’t have, I was the only person doing design for the first two years and very similar, like I, I knew going into it.It was my weak spot. So I spent a few weeks, one summer just like taking. I took an online color theory class. And then I just like learned, did some like basic tutorials got really good at sketch and like made some mock-ups. And, you know, I had worked with a lot of great designers and kind of had knew what the process was like.But yeah, again, it’s like, what’s your advantage? And in your case, it’s the API APIs and being first to market and all that stuff. And so you’re not likely to get a lot of like, Yeah, leverage or whatever out of having really great design, you just needed to be functional. You needed it to be good enough something.That’s not going to turn people off right. When they see the app on and that’s, and that’s kind of the bar and yeah, I agree with you. I think it’s actually pretty easy to achieve, at, you know, with a, with a minimal investment.David Smith: 00:33:14Yeah. And I think you also, it’s, I’m very, I very much like a model where the initial upfront costs are as low as possible. And if I need to double down on something and like, it becomes a situation where, oh, now I need design resources or I need something more graphically oriented or like things arise.Like. I’m delighted to spend money on an app. That’s making money.Jacob:00:33:36Yeah, exactly.David Smith: 00:33:37it, rather than spending the money on something before it’s even proven itselfJacob:00:33:41Yeah. We’ve spent a lot on design since like revenue cat’s hit like our stride, but in the early days it was like, not like this API is like the design of the Jason is more important than the website.David Smith: 00:33:53Exactly.David:00:33:53Yeah, and it does force this kind of function over form approach. And I think that’s where your apps have really succeeded. Is that there is it, you focus on them doing things well, Like serving a specific purpose and serving that specific purpose very effectively. And that’s where I think a lot of the kind of form over function design either within apple.I think apple still makes this mistake a lot of, of focusing too much on, on how things are going to look and how things are gonna, come across versus like, well, how, how is it actually going to be used by people? And, I, you know, that’s where I think I’ve fallen down a lot, as well as like spending so much time on these pretty graphics.And then, and then everything then like the user you can’t like iterate quickly on a user interface based on feedback when it’s all so polished and pixel perfect. Like it’s so much harder to do iterative design. To enhance the usability of an app when, when there’s so many barriers and then so much already kind of like set in stone because it was designed this way and you can’t, step back out of that as easily.So, yeah, I think, I think it’s great the way you’ve, you’ve done that.Jacob:00:35:12The one thing that resonated with me that you said David was, just how a designer, if they don’t fully. And I love designers, all of my designer, friends are gonna hate me for talking bad about designers, but I think one, one universal experience of developers when you get handed something that. It’s it looks great and like functional on paper, but like, there’s just like, because there isn’t like internal knowledge of UI kit.Right. And just like this thing that looks like, yeah, I know it’s just pixels and it should be really simple, but like, it’s actually going to add hours and days to my, to my, and, and you know, if you’re not an assertive developer, that’s going to be like, no, I’m just not going to do it. You can do that on your business.Right. But like, Because you own it, but, but if it, you know, if you work on a team or whatever, sometimes there’s a lot of loss there where a developer will feel. And also like, I feel like it’s a challenge, right? Like, oh yeah, I can do that. Right. And they ended up over investing in these ornate, user experiences or use user interface elements.It just like you talk about like ROI and whatever, like just not there, you know? so I think it’s a very like prudent approach.David:00:36:22So I did want to touch on real quick and. I want to get to Widgetsmith and talk more about that. But, I wanted to touch on the, your iOS version stats. So, it’s something I’ve really appreciated over the years. There’s a flurry has, has published stats here and there that your site has been like my go-to place to say, you know, how’s I was 14 adoption going, how are so you published publicly?The, the version stats of your Audiobooks app, which is a fairly broad market app. It’s not perfectly representative probably of the entire market. but yeah. Tell me about why you publish that and then do you actually run a customer analytics to power that, or, or do you have a third party analytics provided that you just pull the stats in front from.David Smith: 00:37:09So, I mean, that came from, I think there were certainly, I mean, I’m running it for years and years, because in the early days of the App Store, there just wasn’t good data on this kind of thing. And it was so I, I remember finding that it was just so frustrating. Right. I, I couldn’t get. Basic sense of like the different device distributions and, iOS adoption rates and things.And so I just wrote something, myself to do this, and I sort of shared it because it was really helpful. I thought, I, I, I, if it’s helpful for me, it’s going to be helpful for someone else. and Audiobooks was the best app. I had to make the public version of this for, because it was my broadest kind of user base, that it wasn’t as like pedometer is great, but it’s.Dealing with people who are fitness oriented. And so like my, at some of my adoption numbers are like th there’s a skew to it and it’s a bit less mass market. but it’s all built in custom. I I’ve used analytics packages and things before, but, in the, in, especially with apple being. I think it’s a sort of like the privacy consciousness and things.It became something that I just didn’t want to have. I want to have it the minimum amount of third party code in my apps as I could. And something like the, the kind of analytics I’m collecting is very easy to do as just a little, sort of custom thing that I wrote. That’s just, you know, it’s just a little website.That’s collecting some very basic stats and being thoughtful about making sure that it doesn’t log essentially anything except for very anonymized. aggregated things just so I don’t collect any user level information whatsoever. It’s all just being collected, at, at, at an aggregate level. And it’s just something that I wrote and it’s, it’s a basic thing.And I think it’s a useful tool because this is sort of to the same thing of a question about philosophy. It’s like, you can’t know when you can drop all the old devices or which device to optimize for. And this, you actually collect that data and you actually look at it. and so like right now, for example, send that, I re like I always try and optimize my apps for the iPhone 10 R because in all of my apps, it is by far that screen size.So the it’s the F1 10 or the iPhone 11. those are by far the most popular phones in the world right now. And so like, that’s my primary testing device. That’s where I start, but I wouldn’t know that if I wasn’t collecting that kind of data and. You know, sort of, I wouldn’t have guessed that necessarily.And especially because I live in the like apple tech ecosystem and I wouldn’t, you know, in my mind, oh, it’s probably just like the pro size, you know, like the, the, the 11 pro is probably the most popular phone because that’s what all my friends have. But, that’s actually not the case. That’s, you know, that is a popular phone, but it’s by no means the most popular.And so. Having that kind of data to back up my choices and making sure that, you know, like, I, I, I, if am doing a design, I’ll optimize it for that and then adjust it for the other ones rather than going the other way around. Or if I’m doing screenshots for the App Store, I make sure that my screenshots.Are perfect for that one. And even if, sometimes I’ll do you know, for the, my, the more minor phones, I might just say, like use the scale down the assets for something else, but that’s a size that I’ve we’ll for sure. Use. I think also it’s speaks to, there is, I think there’s still some of this, but maybe a bit less, but in the earlier days of the App Store, there was a, I felt like there was a group of.People who were kind of, we felt like we were in this together. And, like, especially among kind of indie small developers, we tend to try and like help each other out. And so like I made that public, it was an internal dashboard. And then I just like, well, let me just publish this to a different URL. because if you had to kind of just help out.And I think that was a nice thing that I think there’s just, there are fewer Indies than there used to be. but it’s certainly an aspect of the community that I think is still nice when there are, there are some aspects of it that still exists.Jacob:00:40:52It’s also really nice to have. usually I would caution people to roll against rolling their own. Right. but I think there is this like somewhat unserved niche of some of these tools get really expensive, even like an amplitude or a Mixpanel or whatever. They’re, they’re more. There, the pricing often is more favorable towards a B2B and like smaller headcount kind of, or smaller like user based size apps.And you can lose this, this like kind of information. I, and I gathered not an App Store connector. It’s probably crappy if it is. David Smith: 00:41:24Like some of it’s in there, but not really in a way that like abstract connect sometimes has some of the stuff, but I like, I like just having it myself and there’s also, it means that I can do additional beyond just, demographic collection. There are a few things that I will do in here where I can add in a hook and say, Oh, like, do, does anybody ever open this page of the app?And I can do a little basic, like those kinds of basic analytics things that you can’t do on that, do an App Store connect. and so I can put, you know, put this into my system and do those kinds of basic collections, which a more sophisticated analytics packages, just like, that’s just a basic feature of it.But, it’s a, it gives you that kind of middle ground and it’s, it’s just, it’s a tricky reality of, you know, apple once, you know, I have to put in my privacy things, all the, you know, all the things that I do. And so. I start using a third party thing. I have to be completely on board with everything they’re using my data for.And so sometimes it’s easier to just roll it. Have it be basic and simple. I mean, the actual, these apps are not complicated or I think the initial version of this was actually, I just based it on the error log of a, engine X server, where I just ran it and they would make, they would make the record.They would just. Yeah, they would just make the request and they would actually just all 4 0 4, like the trend analytics requests were just 4 0 4 and I would just parse the error log and add it to a SQL file. And it’s like that, that was super straightforward and easy to build. And it’s just a script and it’s...Jacob:00:42:47Mixed panel, basically like in...David Smith: 00:42:49Like, You know, and like that’s where I think mostly just to say is it doesn’t have to be like super sophisticated and fancy.This is a backend utility tool. So you can very easily, like you could go crazy making it fancy, or you can just, you know, write a little scripts to process a log file and it’ll get just as much data out of it.David:00:43:09Yeah, that’s great. I did want to touch on, on witness Smith. You you’ve talked about it at length, so, There’s a great episode with you and Marco. I think what came out like two weeks after we just hit number one. And so that’s a really fun episode. People can kind of go get the history, but it’s a cool kind of, culmination of this story of launching 56 different apps, trying all these different things.And then you, you go after these brand new features with the widgets in iOS 14 and. somebody picks the app up on Tik TOK. It goes viral. It hits number one in the App Store. It’s just such a cool story as an indie developer to hit number one. And, and, and again, you’ve told a lot of that story. other places I don’t want to just rehash the whole story.But there were a couple of things that I wanted to go over and I don’t know if you’ve talked about it, since so one of the things that I think would be to follow up on is just how the, Durability has been. So like you hit number one, it stayed there for like, gosh, like weeks, right. Or almost a month.And then, yeah. So how has it, how has that gone since, and like, you’re still like number five you’re you’re in the top 10 of productivity regularly. how has the app been durable? download wise and revenue wise, like how, how has it gone after hitting number one? Like.David Smith: 00:44:37I mean, I think it is, it certainly continues to be my most successful app. And I think it probably, it seems like it will be for, for, for quite some time. And obviously the first couple of weeks were insane and completely. Like mind bending and, you know, I think I exceeded my luck like to date App Store downloads.You know, of all my apps over the last 13 years were in a few hours of it when it kind of hit that crazy moment.Jacob:00:45:03We’ve seen a couple on revenue casts, a couple of viral events like that, and I am blown away every single time. It’s it’s more like it outpaces the App Store featuring like by 10 or a hundred X. It’s insane. David Smith: 00:45:15And I think that, and let me say that it was really cool and fun and exciting and a little bit like scary and like terrifying. But I think it’s, what’s, I didn’t know where it would have, where it would settle down to. And it’s like, where is that? Come see the nature of. Something being a flavor of the moment is that like, that moment ends and it just vanishes like the, the driver behind that, you know, it’s not like it’s being featured in Tik TOK videos anymore, at least not in the same way.And so the durability, I believe now is largely just coming from the fact that that initial spike generates enough kind of ongoing word of mouth advertising, that the nature of. Especially the nature of what it does is it puts something cool on your home screen. And it has that natural. If someone sees your home screen or you show them something or you share a screenshot and it has the name of the app in it, and it’s like, it, it has that natural, oh, I want to do that to witness to it.And that seems to be where the durability has come from because, I’ve. Tried sort of like the, the sort of like the paid marketing things to try and keep something going. And for me, it’s a model that gets very, it’s very hard to not just like, lose your shirt on it because you can.Jacob:00:46:22Yeah.David Smith: 00:46:22Spent a way out, spend what you’re getting back or not have.Jacob:00:46:26Someone else’s money to blow.David Smith: 00:46:27Yeah. And so like for me, it’s just, it never makes sense. And so, like, I w I wonder if something’s going to be something that I keep working on, it needs to be sustainable kind of on its own. And for it, it’s still, you know, it still continues to do really well on a, on a, on a download basis. And it’s also, it’s, you know, it has, it’s monetized both with advertising and with subscriptions.And so. You know, th the two together create a really nice, sustainable, revenue for me that it’s based mostly on usage rather than, needing necessarily to have big spikes in downloads to keep it going. It’s like as long as people keep using the app, that they’re opening, it they’ll see ads, or if they’re, you know, power users who really want like the pro features of it and they’d pay for a subscription, if it’s continuing to provide value to them that they’ll continue subscribing.And so it’s, that durability has been there. I think largely it certainly is easy to be durable when you have. This wild spike at the beginning to kind of kickstart that, effort. but it’s, it seems like the there’s enough ongoing utility of it, that it keeps people keep using it. And, that has a natural sort of knock on effect of people just telling their friends about it.And I mean, it’s kind of a cool thing that, even after. You know, many millions of downloads, it continues to find new art, find it, find a new market and people will continue to sign up for the subscription. And it’s, it’s that’s happening sort of on its own without me having to necessarily do anything other than just keep adding, you know, features and improvements to it.I don’t need to worry necessarily on that side of things as much.David:00:47:56Yeah. One of the things that I was, initially taken aback by, but now see the, the maybe accidental brilliance of how permissive you were with the feature. So, and I mean, I made a mistake with launch center pro. I was actually trying to kind of ride your coattails with my app and. I was much more aggressive with the paywall.So I pay walled one of the like more prominent features instead of, instead of paywall and some of the lesser features. And then to your point earlier about like user acquisition, you know, part of how you make user acquisition work, is it, you forced, you can’t pay $5 for a download. If you know, one out of 200 people are paying you.But we just Smith going viral. It went viral in part, because you were so permissive with the features. So like, how did you decide where to draw the line in the paywall? yeah. How did, how did you make those decisions?David Smith: 00:49:01Yeah. I mean, I think, I think a lot of this comes from a place of my goal is to, I want a business that lets me keep developing, like what I love and what I enjoy is programming. That’s that’s, that’s, I’m gifted in it. I enjoy it. I love it. And I will just keep doing it. Like if it wasn’t my job, I’d probably still be making apps.But, and so I don’t, I’m not chasing some kind of like wild exit or something dramatic. And so I think, I, I feel like I want to make things that people will like using, and that will won’t be annoying or irritating. And, that I can feel proud of at the end of the day, like that. I’m not, you know, like the people who are paying for my subscription.Or paying it out of a genuine desire to support the app, to do the really advanced, like these are my super fans who really care about it. and there are the people who I’m sort of sort of going after for that. And so I don’t didn’t feel necessarily compelled to make the paywall up all in your face and be limiting features and kind of doing those types of things.And in this case, it worked out really well because it, it created a. it created its own marketing machine as a result. And like what I gave up potentially in having a less permissive market, pay paywall strategy I made up for in essentially free marketing for, because the app is used by so many more people.And I think that trade off is something that’s easy. It’s like I don’t have, or I don’t necessarily want to spend the capital. To acquire those people, but in some ways I’m spending that capital by just making my paywall more permissive and making it have a natural, more virality to it. and that, for me, I think works well for everybody that like more people are getting more out of the app and, I, I benefit from it.It’s sort of coming along and I don’t think it was, it’s not like that this grant. Strategy that I had for it. It was just in general, if someone’s going to pay me something I want for what they’re paying to be something that is super clear is super straightforward and is compelling. That is something that I feel like I would pay for that.It isn’t an arbitrary restriction or something that feels kind of. mean-spirited, that’s sometimes a lot of paywalls can ha you can run into these limitations that feel completely contrived, that there isn’t a reason for it. Like most of what I’m people paying me for in Widgetsmith are things like my weather data, the tie data, and some graphical assets, things that I have to pay for that there are, they are ongoing and tangible costs that I have to pay.So I can’t make those free because then I go out of business because millions of people are requesting weather data. Like that doesn’t work for me. And so, yeah. Making it paid feels good to me. And if anything, it works well, but I think that’s definitely something that you can get. If you’re too stingy with you, with what you offer, you’re kind of like shooting yourself in the foot because you’re ma you know, you want to make that first run experience feel so good that people want to keep coming back.And if you get too uptight, that the first thing, the first thing the app does when you open the app is ask for money. Like if I open that app, I’m just closing that up and deleting it. Like, I don’t want to, I don’t want that, that, thatJacob:00:52:05I mean, that’s, that’s...David Smith: 00:52:06Be them asking.Jacob:00:52:08That’s an app that’s for distribution basically is what you can tell. And if you’re not then like, I mean, I think this is not a comment on an uncommon strategy, but, but, but, you know, optimizing for distribution early, Becoming not a monopoly because there’s other apps like we just missed, but becoming a dominant player or like the best app, you get data, you get usage, you get word of mouth, you get a brand.And then in the future, if it becomes an operational requirement that you make more money per download or whatever, like, oh, you have a lot of levers there and you can go about it more thoughtfully than if you try to like, Try to shoot blindfolded, like from, from the start, there’s just no way you can, you’re going to be able to get, I talked to a lot of people getting ready to make their subscription apps and whatever.And they’re like, ah, they’re going back and forth. I go, what should I put on my paywall? What should I, whatever. I’m just like, just don’t think about it too much. Just don’t do something stupid. Like just see something reasonable and normal and don’t try to be too clever. And then, you know, be prepared to iterate and change like over time.Cause inevitably, well...David Smith: 00:53:06That’s good advice. David:00:53:07This is such a fascinating time. I wish we could talk another hour just on, on, on paywall strategies and, and freemium. I think a lot of developers do make the mistake in the subscription space of because they’re spending so much on user acquisition, they have to be more aggressive with the paywall, but then in the long run, you’re, you’re, you’re paying for users that you immediately ostracize.You know, if you’re, if you’re only getting, you know, 10% to start your free trial, and then only 50% of those convert. It’s like, you’re paying for all these people who ultimately have a bad experience in your house. And so it works cause that’s their model, but, but they’re leaving a lot on the table long run by not having a more, permissive freemium strategy where you can get people in using the app, finding value and then over time bringing them along.And it seems like that’s part of what Smith has done well with, like, you didn’t start with ads. Ads came later, right. And then. The paying for assets, I think came later as well. so like exactly to Jacob’s point it’s like you just got out there with a great product, you know, found that product market fit.It went viral. I mean, you know, it probably wouldn’t be the success it is today without that, but, but then you’ve kind of layered on some additional moneymaking over time. And so that’s great. but anyhow, we’re, we’re at the top of the hour and need to, to wrap up, in the show notes, we’ll have links to your, Twitter underscore Smith, underscore David Smith, Jacob:00:54:35Oh, my God. I never realized that pun Widgetsmith, Dave. Oh my God. I’m so slow.David Smith: 00:54:43Yeah.Jacob:00:54:44The brand is just so it’s perfect, but we’re on your lap. It’s so great.David Smith: 00:54:49That was a, as soon as it was one of those names where once I, once the name came to me, it’s like, yep. That’s theJacob:00:54:53Oh, it’s even, it’s a good name on its own. Right.David Smith: 00:54:55Yeah.Jacob:00:54:56I just love when things are like tidy and tied up like that. It’s so perfect. Sorry.David:00:55:02Anyways, anything else? anything else you wanted to share or, anything else you want to mention as we wrap up?David Smith: 00:55:08Yeah, no, I mean, I think we covered some good things and I think it is, I, I always like sharing my story as an independent developer, because I feel like in this industry, they’re like, there’s a, there’s an aspect of it. I know this is something, you know, I’ve listened to this podcast before. Like there there’s a, there is an industry in a branch of this.That is very data oriented. And if you’re built almost like you’re building a machine to try it, like a business machine to try and like spin off money. And it’s all about how you’re getting your conversion rate value to this, and then you can put it into this and the eights. There’s a very like, and I respect that and understand that, that, that is a very viable business.But I think what I, I was like sort of to share the other side of the story where it’s also possible to just make cool things and have them have just have enough, enough of a business in them that it makes a good living for you, but you don’t need all of that infrastructure and all of that other things.And I think to our point, we’ve made many times is if you have something that you take the approach of simplicity and straightforwardness, and Craftsmanship early, you can shift and pivot and change as you go. And if you start to numbers driven and you start to like kind of cold in that way, I think you can lose just as many opportunities, as, as, as you could.And I personally, I enjoy this way. I think this is fine. I, you know, I’m very excited about WWDC next week, because it’s the, the time that I get to just discover what I’m going to launch this year. Kind of thing. And so I’m very excited to become about that. I think that excitement is something that I wouldn’t have if I was building something that I didn’t enjoy doing in quite the same way.David:00:56:52Well, thanks, David so much for your time.Jacob:00:56:56Good luck next week. 

Jun 30

57 min 16 sec

Our guest today is Ben Bajarin, CEO and Principal Analyst at Creative Strategies. For the past 20 years, Ben has been studying the consumer tech market and providing actionable insight and strategic recommendations to many of the top technology companies in the world.In this episode, you’ll hear about: The results from Ben’s survey of iOS developers Why positive developer sentiment is invaluable to platform owners How much developers think is fair for Apple to charge Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingBen Bajarin: https://twitter.com/BenBajarin

Jun 23

1 hr 5 min

In this episode, you’ll hear about: The pros and cons of selling an app on your own versus going through a broker What to watch out for during negotiations What to expect after selling your app Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingEric Owens: https://www.linkedin.com/in/ericowens/Here’s the Outline of Our Interview with Eric:(1:00) Eric and David have worked together before!(1:25) How Eric became an app broker.(5:09) The top reasons app developers decide to sell their businesses; capital gains taxes; David’s experience selling his first app.(8:03) Why people buy app businesses.(10:11) Do app buyers typically purchase successful apps or fixer-uppers?(13:35) The benefits of selling a successful app “prematurely;” David’s Mirror app.(15:25) The challenges of selling iOS apps: iCloud, Passbook, Sign In with Apple, Catalyst; Gas Cubby.(19:13) How app business valuations are calculated; the App Store Small Business program.(23:34) Adding subscriptions to an app increases its value to buyers.(26:51) What kind of documentation you should have in place before selling your app.(28:34) How buyers approach purchasing an app from a solo developer.(30:27) Finding app buyers.(33:33) App business sales increased during the COVID-19 pandemic.(34:00) The pros and cons of selling your app on your own; Flippa.(39:17) Going through a broker helps you stay emotionally detached during the negotiation process.(40:35) Fiduciary duties; representing app buyers versus sellers.(42:38) What to watch out for during negotiations; low-ball offers; due diligence.(48:17) The app sale closing process; escrow.com; closing costs.(50:21) Brokerage fees; working with Eric.(51:00) What comes after an app sale? Non-compete agreements; handoffs.(57:00) Connect with Eric on LinkedIn or get in touch at appbusinessbrokers.com.Quotes:“Any business with any kind of subscription revenue is always going to sell for higher, no matter what it is. Buyers love that... The one move you can make in any business that will increase your valuation is to add some kind of subscription revenue.” - Eric“As I get later in my life, [I’ve realized] brokers are amazing. Think about it: as an app developer, you spend 99% of your time being an app developer, right? And then you have this 1% critical action, which is the sale… It’s really useful to have somebody on your side who’s done this before and can tell you what you’re doing that’s wrong and what you’re doing that’s right.” - Jacob“If you’re an inexperienced seller of something, get somebody to help you out.” - Jacob“I forget what I paid Eric; it was probably $20,000 or $30,000. But to me, I saw it as worth every penny because he helped bring the market that got the highest and best value of the app… Having access to that pool of buyers and having Eric’s experience helping me walk through it, I think it made up the [cost] of whatever I paid him in the valuation that I got in the sale.” - David“I’ve sold three apps, and it’s been huge for me. It’s helped pay off debt, it’s helped put a little money away, and helped me sleep better at night. There’s a lot of reasons to do it.” - David“There’s a lot of people who can’t make [apps]. I think as indie app people, we just kind of take for granted — because we hang out on Twitter with a bunch of other people who know how to make apps — that it’s not that unique. And it’s a tough business; it’s not always easy to make an app that’s going to make you a lot of money. But if you factor in… the fact that not everybody can make these things, that can be a really useful tool for you to unlock liquidity earlier than you would otherwise.” - Jacob“I think people should have the mindset… that you are building an asset that you can sell someday if you want to. You don’t ever have to, but build something that is sellable. If people can treat it more as an investment, that can see people through some of the dark times, the challenges of being an entrepreneur.” - EricLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

May 19

56 min 6 sec

Our guest today is Leon Sasson, Co-Founder & CTO at Rise Science, a company dedicated to helping people overcome sleep challenges, feel better, and be more productive.Since its inception in 2014, Rise has primarily focused on elite athletes, helping some of the top NFL, NBA, and college football teams with their sleep. But in 2019 they decided to enter the consumer subscription space, which became even more important in 2020 as COVID challenged their B2B model. Leon and the team at Rise went from no experience in consumer subscriptions in late 2019 to over $500k in ARR today.In this episode, you’ll hear about: The blurring line between B2B and consumer SaaS A/B testing and subscription lifestyle analysis How to create a fantastic onboarding experience for your users Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingLeon Sasson: https://twitter.com/leonsassonHere’s the Outline of Our Interview with Leon:(1:25) Leon’s background in sleep research and the founding of Rise; FitBit.(3:38) Rise started as a solution for elite athletes; the NFL; sleep hardware devices.(4:38) How the COVID-19 pandemic prompted Rise to switch to consumer subscriptions.(5:26) The difference between the B2B product and the Rise app.(7:13) Pre-launch user cohorts and test strategies; TestFlight; Typeform.(9:36) How Apple responded to the switch from B2B to consumer app; Notion; the Apple App Review process.(11:32) Selling digital services to enterprises; Salesforce.(16:01) How other products are investing in enterprise; Slack; Calm; Headspace; Kaiser Permanente.(18:08) App user licenses; Family Sharing; Business vs. Personal SaaS.(23:00) User onboarding best practices; Leon’s controversial opinion on adding friction.(32:18) A/B testing and statistical significance; user research.(39:31) Simultaneous experiments; R.(41:52) The downstream effects of A/B experiments; counter-metrics; monthly subscriptions and free trials.(47:57) Subscription lifecycle analysis; RevenueCat charts; Amplitude.(50:00) Pricing consumer apps; the freemium model.(51:56) Connect with Leon on Twitter or by email at leon@risescience.Quotes:“The most important thing you can do for your health and energy during the day is sleep.” - Leon“I would suggest to anybody who’s in that pre-launch phase, if you can get some situation … where you have a trickle of users and you can start to make decisions integrated with user feedback, that’s so much better than flying blind.” - Jacob“The activation energy of one consumer subscriber is so much lower than one enterprise deal.” - Jacob“You need to figure out who’s the person that buys your product at a company—and what do they care about and what do they need to justify the budget? And if you do, it’s great because they can pay more than consumers. And I think that’s sort of the holy grail. You can sell the same product for more expensive because they get more value [out of your product].” - Leon“There are ways to sell services outside of the App Store. It’s just generally a way worse experience for users.” - Leon“The [purpose] of onboarding is never to show people how to use the app. People don’t really want a tutorial—if you need a tutorial, it’s too complicated. They just want to know how what you’re doing and what your product is doing affects their lives and why they should care about it.” - Leon“The key for your onboarding … is that you match intent to friction. Part of the reason best practices around onboarding are to reduce friction is because people come into so many apps with so much less intent… You just have to match that.” - David“Testing is not going to make a great product. Having a really good A/B testing organization and team that can A/B test is not going to lead to the best product ever.” - Leon“You can much more easily A/B test your way into a bad product than into a good product if product isn’t the focus around the testing.” - DavidLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

May 5

52 min 22 sec

In this episode, you’ll hear about: Why most apps should do at least some paid user acquisition How paid user acquisition has evolved over the past decade How to think about marketing in the post-IDFA era

Apr 22

1 hr 18 min

Our guests today are Majd Taby and Jasper Hauser, co-founders of the Apple Design Award-winning app, Darkroom.Prior to founding Darkroom, Majd spent time at Apple, Facebook, and Instagram working as a product-focused engineer. Alongside Darkroom, Majd has also published a photobook documenting the Syrian Refugee Crisis.Jasper is a 3-time Apple Design Award winner, with 18 years of industry experience in creating digital products and mentoring people. Prior to founding Darkroom with Majd, Jasper founded Sofa, which was acquired by Facebook in 2011.In this episode, you’ll hear about: What Apple looks for in a featured app Why getting press isn’t always great for conversions The benefits and drawbacks of bootstrapping your app Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingMajd Taby: https://twitter.com/jtabyJasper Hauser: https://twitter.com/jasperhauserHere’s the Outline of Our Interview with Majd and Jasper:(2:06) Majd’s feature on The Launched Podcast; Jasper’s feature on Design Details.(3:08) Majd’s background at Instagram and passion for photography; Matt Brown.(5:00) How Darkroom was founded; iOS 8 PhotoKit.(6:04) What differentiates Darkroom from other photo editing apps.(9:23) Jasper’s background in design and photography; joining the Darkroom team.(11:19) Why Apple featured Darkroom so heavily after launch; The Factory; Rdio.(13:46) Darkroom’s pricing structure and business model; VSCO; Snapseed.(18:09) How useful is it to have your app featured by Apple?(19:03) Frustrating aspects of App Analytics traffic attribution.(21:39) What happened after Darkroom launched—and plateaued.(24:36) Product-market fit: Darkroom had 450,000 MAUs and was making $70,000 per year even after Majd stopped working on it; Heap.(30:58) Combining Apple’s design principles with Facebook’s analytical, process-driven thinking.(33:06) User feedback, experimentation, and lessons learned.(37:04) The switch from in-app purchases to subscriptions; grandfathered IAP users.(40:28) Is the subscription model right for every app?(42:46) How users reacted to Darkroom adding subscriptions.(45:40) The CSS Flywheel.(46:00) Why Majd and Jasper haven’t taken VC money.(50:40) Darkroom’s $5M goal; diversification and optimization strategies.(57:50) Why Facebook ads aren’t right for every app; organic growth versus paid acquisition.Quotes:“When Apple features your app, it’s great and you get a lot of downloads. But those are often very low-intent users.” - David“Apple featuring you in and of itself might not be always the most valuable, just from a conversion perspective. But when you think about it from a legitimizing you as a company or product perspective, it is extremely useful.” - Jasper“Part of why a lot of indie apps just don’t ever make sense or get built is like, if you can go make $200k+ at Facebook, $120k really is not comparable. A lot of indies are sacrificing to keep the app going.” - David“Indie is still an investment. I don’t think we as an industry actually appreciate that. Majd made an investment. I made an investment. Not by putting cash in the company but just like living literally off our own savings.” - Jasper“The hardest part… is having the conviction that the path is worth going on and will lead us to a place (and then scale) that is worth spending the energy to get there. And the second part of that is saying no to every opportunity along the way to just like go chase the money.” - Majd“We had tried really, really hard to make Darkroom a smooth experience for our free tier. We removed so much friction that people started slipping.” - Majd“We tried a lot of different things. There wasn’t like one thing we did and then the revenue doubled—no. It was like we tried 15 things and all of those cumulatively led to revenue doubling.” - Jasper“Always be eager and looking for the easiest path forward and the path that’s most likely to match what you care about… I think that’s important. You’re the ones who are going to wake up every day and do this thing, so do what you want.” - JacobLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Apr 8

1 hr 2 min

Our guest today is Ryan Jones, long-time indie developer of Weather Line and Flighty. Before going full-time on his apps in 2019, Ryan spent time in operations at Apple and as Entrepreneur-in-Residence at McGarrah Jessee, a full-service product marketing agency.In this episode, you’ll hear about:(3:53) Ryan’s background in mechanical engineering and the oil industry.(6:35) Ryan’s first app, Weather Line, hit #12 in the App Store(11:09) Weather Line’s Super Forecast(16:21) Networking with famous app bloggers as a growth hack; the “reply guy”(34:41) The fine line between zero tracking and anonymous tracking.(44:31) Integrating customer feedback into your app; user studies.(46:22) Ryan’s controversial opinion on customer support.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingRyan Jones: https://twitter.com/rjonesyQuotes:“When I talk to people about apps… the first thing that they say is, ‘What makes it different?’ And I have to answer that question. And in my head, I know all the tiny little things that add up to make it different. But [that question] really does cut through what users are trying to figure out… just tell me what makes it different.” - Jesse“Being clear and clearly communicating that value prop is more important than it being clever or this, like, amazing brand.” - David“If you’re helpful, people pay attention. If you’re not just… asking for stuff [and] saying stupid stuff… If you talk to press, if you talk to influential people, if you’re actually helpful and give helpful responses and [are] insightful and blog about things and talk about things—that’s how you get people’s attention.” - David“A good way to bootstrap a following is to have something interesting to say.” - Jacob“There is a niche market for privacy-centric digital products, and that niche will probably grow—but as a percentage of the entire market, it probably is a single digit-percentage. And maybe it’s going to grow… but I doubt we’re going to see half the market reading those things and picking apps based on privacy labels and stuff like that.” - David“I was a pretty big [user tracking] naysayer before I had more experience. I was like, ‘You don’t really need that—just listen to your users, talk to them in customer support and Twitter, and do user studies. [But] you… can’t really get a replacement for [tracking customer behavior]… You just have to do it in a respectful way.” - Ryan“User studies are key, and it’s a thing I constantly remind myself to do. And it’s freaking painful, if we’re being honest. It’s hard work. They just want to tell you the small little fix that they want you to do. But nine times out of ten, the reason that they want that small little fix is because you failed at something way upstream—and you have to keep digging at it to get it. And it’s hard.” - Ryan“The people who email you and ask support questions, they’re the ones who care. They’re your real customers. The people who don’t care, they just stop using the app—they’re gone, they’re out.” - David“It’s not a bad sign when you have lots of support [tickets]. That’s a good sign, actually.” - Jacob“Who writes in? It’s folks that have found the edge of your product. And that’s super useful as a product creator. They have found where your product doesn’t quite meet their need, or they have been frustrated. Sometimes it’s a simple thing… and you answer that question, but you learn a little bit… It also gives you some data around the trade-offs you’ve made.” - Jacob“You have to make a decision: Is support a cost center for your company? Or is it part of the product?” - JacobLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Mar 24

54 min 3 sec

Our guest today is Ed Zitron, the founder and CEO of EZPR, a media relations company based in San Francisco. Ed has worked with everyone from drone-maker Skydio to game-maker PUBG to app-maker SmartNews. He has a unique approach to media relations and is quite effective at helping his clients get results.In this episode, you’ll hear about:(4:41) Why PR is so much more difficult these days; Facebook; Cambridge Analytica; Theranos.(11:37) Joanna Stern may be the best tech journalist working today; The Verge; Engadget.(12:55) Does cold emailing tech journalists still work?; DoNotPay.(16:42) How to pitch your app to a tech journalist; Sarah Perez.(18:38) Getting press coverage in large vs. niche publications; catering to journalists’ interests; Skydio.(26:40) Make it super easy for tech journalists to write about your app; hero images.(27:57) You should hire a PR agency if you truly have a special app; Wyze; Meater.(30:04) Don’t waste money on a press release—you don’t need one; Unbox Therapy.(33:13) PR vs. direct marketing; Cheddar.(46:15) The best way to interact with journalists: Be human, be useful, and be respectful; Suhail Doshi.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingEd Zitron: https://twitter.com/edzitronQuotes:“Journalists generally want to hear about things they’re interested in or their readers might be interested in. Seems obvious, but it is not. Indeed, many PR people do not act that way.” - Ed“I feel like tech journalism needs more [joyful enthusiasm]. It is a lot of fun watching someone whose job it is to be critical genuinely be won over by something.” - Ed“The big secret of PR is that every journalist pretty much tells you what they want if you go on Twitter and read their tweets and articles.” - Ed “If you’re working with a PR agency, go month-to-month, first of all. Don’t sign on for multiple months—just don’t do it. But also I would argue you want to make sure that there are actually journalists writing about this sort of thing.” - Ed“As an app developer, there’s nothing wrong with you reading a whole bunch of stuff and emailing the reporter with 90-110 words and saying, ‘This is my app, this is what it does, this is why it’s good.’” - Ed“You have to think about [a journalist’s] motivation, what their job is. Their job is to inform readers, and cynically, at some point, it’s also to get clicks. There is an aspect of understanding their business model.” - David“When you’re early on, the best thing to do is go look for those niche publications, niche YouTubers, niche sources of attention that are really so deep into your target market, and that’s going to be 10X more effective than cold emailing TechCrunch. And then as you grow and have a broader-market app, then you can think about working with Ed.” - David“An agency can cost between $8,000 and $25,000 a month. If you look at that and it’s going to be make-or-break money for your business, it’s the wrong time to do PR.” - Ed“Start smaller. Start with people who are going to really care… People who are really into what you’re doing are so much more effective than a lukewarm writeup on TechCrunch.” - Ed“[PR] is not this one-in, one-out thing. It’s this beat of a drum. You’re building… a brand. Sometimes brand leads to downloads. Sometimes it leads to hiring people. Sometimes it leads to investors. It’s building this portfolio of social proof that you’re something.” - JacobLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Mar 10

50 min 38 sec

Our guest today is Faye Keegan, co-founder and CTO of Dipsea. Part technology company and part story studio, Dipsea is the first audio platform for women's sexual wellness. Prior to founding Dipsea, Faye spent time at Neighborly as a software engineer and Bridgewater as an investment associate. With a background in economics and investment analysis, Faye isn’t your typical startup CTO.In this episode, you’ll hear about:(4:16) The growing popularity of audio as a medium; Headspace; Calm.(11:21) Building a content library for a SaaS app; content analytics; Elevate.(17:00) The challenges of building a sexual wellness app for the app stores; HBO’s Game of Thrones; the Showtime app.(22:59) Dipea’s tech stack; Firebase; RevenueCat.(34:29) Scaling a SaaS app team; hiring for different strengths and a shared product vision.(36:55) How Dipsea is expanding into new uses cases: self-improvement and sleep.(38:28) User engagement; getting feedback from users on what to build next.(40:00) What’s the future of Dipsea?Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingFaye Keegan: https://twitter.com/itisthefayeDownload Dipsea: iOS Android Quotes:“Subscription … is an exploding space. People are getting so much more used to consuming premium media on their phones and paying for it.” - Faye“There can be an advantage, tactically, to raising [money] before you’re in market because maybe you don’t get that product-market fit right away. Sometimes what’s inside the box, if the box is closed, is a little more enticing to investors.” - Jacob“The number-one rule I have for tech stack is if you’re building it from scratch, you probably haven’t googled it… There are so many great tools out there.” - Faye“I’m a huge fan of … Firebase and RevenueCat. I don’t have stickers on my computer, but those would be the two.” - Faye“The majority of consumer subscription apps — you’re not building new technology. You’re building a great product and a great experience. You should spend your engineering time on things that matter.” - Faye“Generally, it’s about leveraging really great tools that offload your engineering time into the stuff where you have an edge as a company.” - Faye“There’s going to be one thing your company does that’s different from every other company — and that’s the thing that you should put all your energy into. And then everything else, just solve for as quickly as possible [in a way that] doesn’t compromise the ability to achieve the one thing.” - Jacob“The learning curve once something is in market is totally different — it’s like a totally different universe — than the learning curve of you and your friends talking about it.” - FayeLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Feb 17

40 min 44 sec

Our guest today is Eric Crowley, a tech investment banker with GP Bullhound, focusing on consumer subscription software (CSS), enterprise software, and financial technology. With investments in companies ranging from Spotify to Fishbrain, and clients such as AllTrails, Partnerize, and Motif, GP Bullhound provides transaction advice and capital to many of the leaders in the consumer subscription software space.In this episode, you’ll hear about:(8:52) Prediction: There will be 50 more publicly-traded CSS businesses in 10 years.(25:38) Web 3.0 is subscription-only CSS services.(32:30) Cost structures for CSS vs. SaaS; Calendly.(49:08) The evolving investment ecosystem: what does the future of CSS look like? Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingEric Crowley: https://twitter.com/crowxuQuotes:“An easy bet to make is that there will be 50 more CSS publicly-traded businesses in 10 years than there are today.” - Eric“My thesis is that if you fast-forward 5 years or even 2 years, I bet most people will be subscribing to 4 or 5 different things — through their phone only. And I bet that’ll be closer to 10 in the next 3 years.” - Eric“The exciting thing about this space is that entrepreneurs are building better products.” - Eric“Consumers have been conditioned, just like CTOs and businesses were, to pay for software — because it makes your life better.” - Eric“The thing that I get excited about with CSS is that it can be done with very little capital raised.” - Eric“I think you’re going to see people see value in these services because they streamline your life. They make things easier, either in your professional work or your personal work, and the idea of $10 a year for something is not that material.” - Eric“Looking at all these trends — people paying for podcasts, things like OnlyFans and Substack — we’re seeing these financial gatekeepers, or barriers to the direct exchange of value between very disparate creators and consumers, coming down.” - JacobLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Feb 2

51 min 51 sec

Darius Mora is the Chief Marketing Officer at Reflectly, the world’s largest journaling app. Reflectly is consistently in the top 5 Health & Fitness iPhone apps in the US, competing with companies 10X its size. Over the past 6 months, Reflectly has broadened its scope, acquiring 8 new apps in the mental fitness space.Darius has been in the app space for almost a decade and founded 4 app startups prior to joining Reflectly in 2018. He’s been focused on ASO, free marketing, paid user acquisition, and retention for both Android and iOS apps.In this episode, you’ll hear about:(2:58) How Darius joined Reflectly.(4:48) How Reflectly added subscriptions and grew to 12 million users.(13:40) 3 solutions for getting past the growth “glass ceiling;” second product-market fit.(18:57) User retention and churn; the “leaky bucket;” Apple’s 85/15 revenue split.(24:52) A quick and easy hack for boosting retention: add paid subscriptions.(29:28) Split-testing strategies; Amplitude; Mixpanel; RevenueCat.(44:43) Advertising on TikTok vs. Instagram.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingDarius Mora: https://www.linkedin.com/in/moravcikFollow Reflectly: Website App Store Google Play Store Instagram Twitter Quotes:“I’ve had 25 apps on the App Store, and I feel like I’ve learned more from the failures than the successes.” - David“[With my first app] we made all the usual mistakes… we spent half a year building it without talking to a single user, released it — crickets.” - Darius11:30 “I think in SaaS, but also in consumer apps, the need for capital is going down… infrastructure can be rented, things can be experimented with and scaled very cheaply. It really doesn’t take what it used to to get something off the ground. And I think, strategically, it’s really smart because the leaner you are, the more options you have — and options are leverage.” - Jacob“It does feel like we’re in the middle of a gold rush. There’s just huge opportunities and shiny objects every day, all around. So the hard thing is staying focused — and are you willing to wait out 5 years until you start generating that recurring annual revenue?” - Darius“Most of the things that vendors are selling at conferences [solve] problems that are fixed by a better product.” - Darius“Unless you have really good retention, you shouldn’t be doing anything else — none of the other stuff will matter.” - Darius“You can’t fix bad retention with better growth strategies.” - Darius“Retention is a metric that measures product-market fit; it’s not a goal in itself. If you don’t have retention, it’s not a retention problem — it’s a product-market fit problem.” - Jacob“The truth is, a lot of times monetization is easier than retention. If you can figure out how to build an amazing product that works, monetization is not really difficult.” - Darius“It’s nice to get annual subscriptions because you get all the money up front, but a lot of times companies will get more money from doing the monthly because you can price it higher compared to the annual. And you get a higher LTV down the line, but it comes after a couple of months instead of all the money up front. So depending on what stage you’re in and how much pressure you [have for] scaling, you can decide which one you’re going to push more.” - Darius“When you’re running ads on any platform, it’s quantity over quality. Don’t show the market what you think is good. Show them everything you’ve got, and they’ll tell you what’s good.” - Darius

Jan 20

54 min 47 sec

Today on the podcast we have two guests from Big Sky Health: Vu Pham, who works on the product team, and his colleague Nick Robinson, Chief Business Officer.Big Sky Health was founded to help people live healthier, longer lives with the help of technology. They are currently working on 3 apps: Zero, the world's most popular fasting app, Less, an app for more mindful drinking, and Oak, a meditation and breathing app.In this episode, you’ll hear about:(6:07) Zero helped create the “fasting app” category.(9:17) How Zero is scaling health advice to millions of patients; Dr. Peter Attia.(13:13) Striking a balance between free features and paywalled premium content.(25:44) Data tracking; long-term revenue goals and retention.(32:38) Balancing a mission-driven mindset with paid conversions and return on ad spend.(41:33) Business success metrics; ARR; volume vs. conversion.(46:15) Forecasting ARR with auto-renewal status; A/B tests; churn.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingVu Pham: https://www.linkedin.com/in/vuprofile/Nick Robinson: https://twitter.com/njrconceptsZero Fasting Links: Website App Store Google Play Store Instagram Twitter Quotes:“We’re in this place now where we have these small apps that are really interactive, engaging, content delivery platforms — and they allow these people with value to add to people’s lives to reach them in a way… that television, radio, books, or podcasts never could.” - Jacob“It’s using content plus technology, forming community modes around it — but it’s all about amplifying these niche desires, these niche needs that people have. And you kind of turn into a mini TV network that’s better and it’s optimized.” - Nick“We know a lot about you as a user, what your goals are, where you are in your health journey, and we can contextually provide content to you in the moment of need.” - Nick“Working with RevenueCat made our steps leading up to launch a lot easier.” - Vu“I hear this all the time from devs who are nervous about this transition. They’re always nervous about, ‘Oh, what are these people gonna say?’ And there are a lot of public examples of apps getting beat up about [monetizing], and I’m like, ‘Listen, you were subsidizing them — they really weren’t your customers. They really didn’t see the value in it that you do. It’s your product; you’re resetting where that value bar is. So if they’re upset, it’s like, ‘Well… it was good while it lasted. I’m sorry, but I’ve got to move on.” - Jacob“[Free users] are huge vectors for growth for a business like this because those people, even if they’re not paying you dollars, they’re telling their friends, they’re using [your app], they’re engaging more deeply.” - Jacob“It’s crazy the number of people that do a first download of Zero from a text message. It’s huge.”- Nick“For the same revenue earned, would you rather have a small user base and a really, really high conversion rate? Or would we rather have a really small conversion rate, but a huge user base?” - VuLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Jan 12

47 min 29 sec

While in college Zach built Hashtag Expert, an app for finding top-performing hashtags. After growing it organically for a bit, he started doing paid acquisition and quickly scaled it to hundreds of thousands of dollars a month in revenue. You can see exactly how much Zach spent to grow Hashtag Expert to that level because he publishes an interactive dashboard that shows the past couple years of income and expenses. Zach is now writing an email newsletter on his process of building a new app business with the goal of earning $100k in profit within the first 6 months.In this episode, you’ll hear about:(2:28) How Hashtag Expert was born.(7:58) Reporting in Facebook ads; Zach’s ad strategy as a bootstrapped app company.(19:40) Pricing and paywall placement experiments; the elastic demand curve; Jake Mor.(35:10) Zach’s latest project: a meal planning app that helps with weight loss; Weight Watchers; MyFitnessPal.(41:11) The status of the $100k app challenge 3 months in.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingZach Shakked: https://twitter.com/zachshakkedQuotes:“[Hashtag Expert] definitely changed how I think about branding an app. If you make an app, it should have one really good functionality. And then if you want to build another piece of functionality that’s similar but not exactly part of it, then separating it out into its own app can be another way to get way more users because you have a whole new set of organic traffic to get.” - Zach“If you get somebody on a subscription, you know that they’re willing to pay, and so then you can push those to all your other subscription apps. It’s a smart strategy.” - David“[With paid ads] you’re basically building a money-printing machine. Even if you’re at break-even, if I pay $10 to get somebody and they spend $10 and I don’t profit immediately, the next year or the year after, I could make money. And that just allows you to build a substantial revenue monster.” - Zach“If you had a machine where you could literally put in one dollar and get back two, how much money would you put into it? Literally every dollar you had! Once that clicked in my head, I started spending on ads a lot.” - Zach“Something about showing the product as like, ‘Hey, this costs money; this isn’t a free product’ — that changes how people view it. It’s like, “Oh, OK, I have to pay for this.” - Zach“Meeting people where they’re at and giving them more options to pay, I think, is compelling.” - David“The narrative that subscriptions in general are a way to trick users into paying more money is, I think, more and more not becoming the case.” - Jacob“That’s a really savvy thing, I mean, outside of app businesses in general. Validate — just get some validation, some heat.” - Jacob“I think sometimes entrepreneurs can get caught up in themselves and believe some demand exists for something because they care about it — but you really have to take that extra step to be like, ‘Are there 10 other people I can find that also care?’” - Jacob“There are dozens of different use cases for every app, and if you’re at scale advertising and you hit a ceiling and you’re trying to unlock additional channels for revenue, then [multi-channel optimization] is naturally the next point.” - Zach“I never saw somebody being super, ultra-transparent about how they’re doing things — like literally documenting exactly how they named their app and exactly how they think about an app idea. There’s a lot of high-level advice out there but not a ton of micro, super focused, super transparent advice.” - ZachLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Dec 2020

44 min 53 sec

Since Apple’s big announcement about upcoming privacy changes in iOS 14, mobile app developers have been scrambling to understand how these changes will affect their businesses. With IDFA effectively dead in the water, developers will no longer be able to use device-level attribution and high-resolution tracking to send targeted ads to their users. So what can they do?In this week’s episode, we asked mobile marketing expert Eric Seufert for his take. Eric has had quite a career in mobile. From VP of user acquisition at Rovio to his recent consulting projects with subscription app companies, Eric has a depth and breadth of experience with mobile apps and games that few can match. He’s also a prolific writer. He wrote a book on freemium economics and has written hundreds of insightful articles on his site Mobile Dev Memo.In this episode, you’ll hear about:(1:07) Managing user acquisition at Rovio; freemium app dynamics at scale.(6:30) Why it’s hard to determine the effect of a specific ad channel; holdout testing.(9:10) The difference between mobile and traditional advertising: response time; Pepsi Super Bowl ads.(22:10) Why Eric doesn’t like the term “user acquisition.”(31:00) Why post-IDFA is more work for advertisers but provides a bigger opportunity.(37:43) How App Store changes have shaped the entire mobile app market; Top Charts.(44:25) Prediction: SKAdNetwork changes will most likely go into effect this January.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingEric Seufert: https://twitter.com/eric_seufertQuotes:“When you’re spending a lot of money and you’re showing a person five ads a day, incrementality is critical in figuring out how much value did this particular ad contribute? … That’s the more interesting question because when these budgets get really large, you get these signals coming from all these different mediums, and figuring out which of those actually drives value is more important.” - Eric“That’s what’s so interesting about the mobile ecosystem: that immediacy, that kind of lack of friction.” - Eric“Just doing the fun clicking around Facebook Ad Manager, that’s not performance marketing. That’s advertising operations or something.” - Eric“Google’s always going to tell you to spend more money. Whatever question you ask Google about improving your performance, it’s like, “Oh, just pay more money!” - David“These systems were designed to sort of alleviate that need, on the part of the advertiser, to not have to have this big team of data scientists working on these models. Like, “Hey, we’ll do it for you!” And to be honest, Google could do it better than any individual advertiser could — it’s Google. And just the fact that they’re syndicating all that data across all these different advertisers, they just have more data than any single advertiser could. And that’s a good thing.” - Eric“This is something I think Apple has failed at since the very beginning of the App Store: understanding the way their individual, seemingly small decisions end up shaping the entire market… Now we have SKAdNetwork, we have one ConversionValue, you can’t update it in the background, you can only do it once, it has these weird timers… the entire market for apps is going to reshape around the shape of SKAdNetwork versus it having been shaped around the existing tools.” - David“There’s billions and billions of dollars being generated in the App Store, and it’s such a tiny little market, so people put in the effort to find ways to game, to maximum advantage, any point of leverage that Apple gives them. So now people are poring over the SKAdNetwork documentation just trying to find ways of like well, “How can I best use ConversionValue?” It will shape the design of apps. It’s going to be a totally new design paradigm.” - Eric“I just get really scared because ultimately if [Apple gets] it wrong, we’re gonna see apps moving in a direction that just is for them to extract the most value across the ecosystem and not necessarily provide great experiences for each user. I think lower resolution tracking, in this sense, actually can lead to that.” - JacobLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Dec 2020

50 min 8 sec

In This EpisodeApple recently shocked the App Store developer community with news that small developers with revenue of less than $1M per year will pay a commission of 15% instead of 30%. Within hours of the news dropping, David and Jacob recorded this episode with the hottest of takes, exploring what this means for the future of the App Store.Here's what we cover in the episode:(1:32) Is this a good thing or a bad thing? (For once, David takes the cynical view!)(4:39) 97% of developers using RevenueCat qualify for the program.(7:13) What this means for ad spend, CAC, and LTV ratios.(9:26) Doing the math: How much of a difference can this really make?(14:16) 97% of developers are affected by this change — representing only 5% of all App Store revenue.(18:56) What happens if you cross the $1M revenue threshold?(26:00) The $1M “magic number”; the 85/15% split.(36:35) How Apple could help different types of businesses succeed in the App Store; Kindle.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingQuotes:“Indie developers can hire out more things, like customer support. You can afford to do a lot more as a small developer and spend on tools and services and help and designers — there’s so much you can spend that money on that will improve your product, that will help you build a better business, that will lead to more innovation.” - David“What this does is it make small developers more competitive in the bids because we can spend more, so on the ad spend side of things, I think it’s a huge boon to smaller developers.” - David“I still think that the App Store economy generally is more limited on innovation not because of money but because of App Review. VCs are making decisions whether to fund or not fund a mobile company based on App Review, not the 30%. VCs recognize that the marginal costs of digital goods and services is zero. So you can stomach a 30% tax on zero-marginal-cost goods, if you can build a great product.” - David“From a more strictly innovation standpoint, it’s not the money that’s limiting innovation — it’s Apple’s stranglehold on what can and can’t [succeed in the App Store].” - David“I do think this is in some way, the perfect non-action for Apple.” - Jacob“We have to keep asking for the things that developers need, and making more money is always good! That's our mission at RevenueCat; I'm always a fan of that. - Jacob“This is a step, it’s something, and it's not insubstantial. And it's well targeted and well thought out.” - Jacob“Apple gave us a raise!” - David“Ultimately I think all these things that [Apple] could do — like changes to App Review, creating a program to reduce the App Store fee for businesses who can't make it work — all those things ultimately benefit Apple in the long run. As developers are more innovative, as more apps are able to be on the App Store, as the platform grows, they're going to make even more money. So it’s a win all around.” - DavidLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Nov 2020

43 min

Starting a mobile-first subscription app business can be tough — there are a lot of decisions to make. Should you bootstrap or raise investor funding? How will you classify your business? When is the right time to monetize your app?Fortunately, you don’t have to go it alone! One of the best ways to chart your course is to learn from the experiences of developers who’ve been through the process before. And one of the best ways to do that is to go through an accelerator like Y Combinator.This week, David and Jacob caught up with Jake Mor to find out how he navigated the process of building a subscription app from the ground up. Jake is the founder of FitnessAI, an app that builds personalized weight lifting plans to help people achieve their goals without having to hire a personal trainer. The app was released in early 2019 and quickly grew to over $85k in MRR! Based in part on that growth, FitnessAI was accepted into the Y Combinator Winter 2020 batch and raised a seed round coming out of demo day.In this episode, you’ll hear about:(4:38) Jake’s first accelerator experience; co-founding Shopturn and going through Techstars.(8:44) The fitness app opportunity: market size, structured data, and machine learning.(13:20) Pricing experiments; users are willing to pay more than you think.(18:53) Scaling ad spend; what Jake learned from his first $20k.(19:02) The importance of mentorship; Bryan Welfel; JSwipe; The Beard Club.(22:15) Pro tip: Put your ad spend on a credit card to sync up with Apple’s payment schedule. (But be very careful to manage your debt!)Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingJake Mor: https://twitter.com/jakemorLike this episode?Subscribe to Sub Club on Spotify or Apple Podcasts to get the latest news on mobile subscription apps.

Nov 2020

42 min 2 sec

We’re at an interesting point in the evolution of the subscription app ecosystem. Mass adoption of smartphones, consumers’ increasing willingness to pay for digital services, and a better business model — Personal SaaS — are all coming together to create a huge opportunity for mobile-first subscription app developers. Just how big is this opportunity?(Full disclosure: Nico is so bullish on the future of subscription apps, he recently invested in RevenueCat!)In this episode, you’ll hear about:(4:10) The formula for a breakout SaaS business: engaged users.(5:00) Stickiness, engagement, and churn: B2B SaaS vs. consumer app businesses.(6:56) Identifying nascent markets before they become mainstream; meditation apps (Headspace & Calm).(14:00) The lines between consumer and business use cases are getting blurry.(19:51) We’re in the early stages of figuring out subscription app pricing; Salesforce.(24:46) Pricing your subscription app: balancing adoption, data collection, and user price sensitivity.(39:55) Increased mobile spending and subscription fatigue.(48:26) Sophistication of today’s apps and technology; Oura ring.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeitingNico Wittenborn: https://twitter.com/ncsh

Oct 2020

51 min 48 sec

Welcome to the Sub Club podcast: a deep dive on building and growing subscription app businesses. Hosts David Barnard and Jacob Eiting will guide you through the ins and outs of subscription apps — sharing insider tips, predictions, and insights from industry experts.In this episode, you’ll hear about:(00:58) Meet your hosts David Barnard and Jacob Eiting.(05:11) Sub Club is the first podcast focused on subscription apps.(05:15) Personal SaaS is a nascent industry.(6:18) The first billion-dollar mobile subscription companies; Lightricks, Calm, Headspace.(16:50) How to submit feedback and suggestions for the Sub Club podcast.(37:19) New platforms and form factors; AR(44:15) The “AWS-ification” of mobile app development.Follow Us:David Barnard: https://twitter.com/drbarnardJacob Eiting: https://twitter.com/jeiting

Oct 2020

50 min 49 sec