10 Takeaways From the Success of FitnessAI, Bloom & Tea
After a year and a half of COVID-19, the tech community is back to in-person networking. Braavo recently partnered with NYC Mobile Apps for Mobile App Pivots, its first event in 18 months.
Michael Chiang led an illuminating panel discussion at Betaworks Studios, sponsored by Braavo, with Jake Mor, founder of FitnessAI; Leon Mueller, co-founder of Bloom: CBT Therapy & Self-Care; and Roman Khaves, founder of Tea. Their fruitful dialogue covered how these subscription apps got off the ground and what it took to scale successfully.
Here are our 10 biggest takeaways for mobile app developers.
1. Find your market fit through users
Will your app be loaded daily? Or collect digital dust in the back of the app store? Finding the right product-market fit makes or breaks your app’s marketability, especially when it comes to user retention.
For his part, Mueller didn’t find Bloom’s market fit until after launching his first app that focused on micro-learning videos from thought leaders across a number of different topics and industries. The team found users responded most strongly to content about mental health and therapy. With this insight, they launched a new app by identifying how to help users with cognitive behavioral therapy and a way to tackle mental health without the need for a psychiatrist. The user base immediately scaled up and the company turned a profit.
2. Don’t spend a lot of money on marketing until you’ve proven your market fit.
As Mueller demonstrates, great user experience and market fit are critical for any subscription app. You know you’re on the right track when people talk organically about your app.
Mor further explains that having no organic user base shows the product fails to fulfill a genuinely important need for users. Spending money on marketing at this point just brings more equally unenthusiastic users, forcing you into an endless cycle of more user acquisition rather than fully reaping the benefits of a stable subscriber base. A dedicated subscriber base also gives founders access to new financing options, such as cohort-based funding.
3. Choose your lane: equity, acquisition, both, or other?
Not everyone enters the tech industry to become the next Steve Jobs. Clarify your endgame from the start: to collect revenue from an app you own outright or to build a company with outside investors and eventually get acquired for a massive payday? Effective management and funding strategies are dependent on your endgame goal.
For example, in the VC route, Mor advises never to look at Facebook ads as a sustainable source of growth. Social media advertising should only supplement well-financed ventures. If your goal is to simply generate sustainable revenue from an app, bootstrapping marketing and slowly scaling up Facebook ads yields incredible ROI over time.
4. Leverage social media ads and influencer campaigns for the right products
One of the most vital tips for mobile app developers is to remember Facebook and Instagram remain some of the best social platforms for driving growth through advertising. Developers love them because they allow for fine-tuned targeting with a high CPM.
On the other hand, working with the right influencers can drastically lower your CPM — but only if their audience is the right fit for your app. Don’t be fooled by follower counts, though. Pay attention to the engagement on their posts, especially sponsored content.
Khaves, who built a social influencer platform for marketers called SocialReach.ly, said an influencer with a low follower count with a highly engaged audience can result in better performance than an influencer with a high follower count but the engagement is poor. The economics for each install will likely be better as influencers with higher follower counts usually require a higher budget.
5. Match your marketing spend with current revenue
If you’re not relying on VC money to aggressively scale your user base, you have to be strategic with your ad spend. For example, if subscribers pay $20 per month, you shouldn’t spend more than that to retain the current subscriber level. Only spend more if you’re in growth mode and you know the LTV of your paying users. Develop a process for creating and testing new ad targeting techniques and content. Test and refine this process, then follow it religiously.
6. Create a narrative with your investor pitch deck
Your deck doesn’t just show current revenue and provide stats — it’s an opportunity to tell the story of where you’ve been and where you’re going. Highlight your personal stake in overcoming the pain points your app solves, the lessons you’ve learned, and the obstacles you overcame. Mueller, who has pitched to more than 100 VCs over the last few years, says one of the best ways to tie all of this into a cohesive story is to answer investors’ questions before they ask them. Consider what questions the investor may be thinking from the information provided on each slide, and on the next slide you should answer that question.
Include pertinent information about user acquisition and revenue potential, but never let it be the driver of your deck. At the end of the day, investors invest in people. Every commitment is fueled by the idea that investors have about you and what you can achieve with your app.
7. Connect your pitch to emotion and humanity
An emotional pivot point is key to your pitch, so make sure it also tells your story as a founder and entrepreneur. Once you’ve sent over your deck and any other information requested by the investor, the only thing that can change before the meeting is the story you tell. The in-person pitch can overcome deficiencies in your deck and even your product.
It’s better to feel out of place overselling an idea than comfortable and underselling it, resulting in no investment. For subscription-based apps, a number of new financing options don’t involve traditional equity dilution, keeping founders in charge of their company — so it may not be necessary to fundraise at all.
8. Secure target investors by getting their friends to invest
Bandwagons are real — people hate missing out. One of the best tips for mobile app developers is to reach out to investors’ friends. If you succeed with a member of one social group, people in their circle are your next best leads. Don’t waste time on introductions from people who pass on funding your venture.
You can also meet with other developers who’ve secured funding as they can provide great insight into what investors are looking for and oftentimes meaningful introductions.
9. Don’t ever waste money
An obvious takeaway, but an important one to remember. If you’re relying on Facebook ads for growth, test different content and targets before scaling up with larger budgets — and constantly analyze results. Khaves even suggests isolating channels and testing individual strategy on them, one at a time. The biggest mistake you can make is to cast a wide net and never retarget or get a good sense of ROI. Just like with proving market fit with a small group of core users, solid ROI with a small ad budget is the biggest indicator you’ll succeed when you increase your ad spend.
10. Retain equity with subscription-based apps
The growth of the subscription app market presents an opportunity developers have dreamed about for years. Rather than grinding for constant user acquisition, they can spend more energy refining their product for existing users and increase retention. The steady stream of subscription income makes it easier to project cash flow and prioritize when to invest in updates to build more enterprise value. In turn, happy customers evangelize about the app to friends and family. While equity certainly has a time and place, it no longer has to be the first or only funding solution.
The Rise of Cohort-Based Funding
Finding market fit and retaining cohorts of subscribers is now the industry’s holy grail. However, many founders may still need to invest in growth that their current revenue doesn’t allow for.
Fortunately, subscriptions are opening new funding options based on projected revenue. With cohort-based funding, a new model offered by Braavo, founders take advances based on future subscription renewal revenue for upfront capital, without diluting equity in their company. Founders can use this funding for many things such as refining their apps or driving user acquisition and quickly recouping expenses from new subscribers, ultimately driving a compounding growth machine.