Growth Gems

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Kenneth Schlenker

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10 insights on Monetization, Paid UA and Product from one talk or podcast, each with the quote and a link to the moment it was said.

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Monetization

Monetization

Early-stage, getting people to pay for your product is a strong signal you have something valuable. Build something good enough for people to pay for first, and figure out who these people are and how you can acquire more of them.

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Sylvain's take:

Kenneth mentioned that this is opposite to what other apps like Duolingo and Strava did.

Initially, he thought Opal would be mostly for Gen Z and students. But the people willing to pay were knowledge workers in their 30s- 40s.

This made me think of the Madhavan Ramanujam insights I shared in Growth Gems #85 (and his book): you prioritize your product roadmap based on willingness to pay.

💎 Growth Gems #85 - Monetization and Onboarding

Monetization

Possible growth phases for a subscription business:

  • Proving the opportunity: people are willing to use the product but also to pay for it. The main metric for this phase: direct blended ROAS
  • Working on the freemium model (users can start using the product for free), with smaller upsells than a subscription, in order to expand to way more people.
  • Expanding into other platforms and B2B

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Monetization

You need to get the paywall as early as possible in the onboarding, but not too early. What you’re looking for is the peak motivation moments. If this means you need a few screens first, do that.

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Product

Product

Subscriptions typically hit a growth ceiling at one point (e.g., 10-30 MRR). Working on a freemium model helps you anticipate the ceiling many subscription apps hit at one point (e.g., 10-30M MRR). It helps word of mouth to have more people using the product for free, and it’s a lot easier for users to talk to someone else about an app when it’s free.

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Sylvain's take:

He mentioned that 17% of their active users are paid subscribers, compared to 7.8% paid penetration for Duolingo.

Product

In phase 2 (freemium model), look at usage retention and ARPU. You want to increase usage retention while having an ARPU that is lower than before but doesn’t go below a certain level (above $2).

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Sylvain's take:

Wait! Lowering ARPU?

Kenneth mentions this because a lower ARPU is the strongest signal that you have more free users. But he also looks at usage retention to ensure they are active so they help with word of mouth. Those free users in the app must be a net positive in the long run.

One example he gave of doing this is making it easier to dismiss the onboarding paywall to increase activation. It’s a long-term play that might not work for some categories/apps.

Strategy

Strategy

One way to increase your testing velocity is to force yourself to release app versions at a specific frequency so you create an experiment rhythm (could be small or bigger experiments). Example: Opal had a 1 version per week schedule.

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Strategy

The next growth phase is expansion:

  • Expanding onto other platforms (e.g., Android, MacOS, etc.)
  • Expanding in distribution with B2B (companies, schools, etc.)

Lessons from 121 A/B Tests · Featured in Growth Gems #108

Sylvain's take:

Opal is still only available on iOS.

Data

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