Blue Throne

Blue Throne pays a premium for apps that already have product market fit. It buys consumer apps for seven and eight figures, targeting about $400K to $15M a year in revenue, then scales them. It has run this thesis for about five years.

It has 70 people across R&D, QA, growth, monetization, CFO and HR. Josh, who leads M&A, did six years of mobile M&A, including three at Plarium buying game studios for eight and nine figures.

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Zero to one is easy now; one to ten needs multi-channel expertise. A first $1M to $2M ARR takes hard work, a decent idea and one distribution channel. Reaching ten takes expertise across several channels, which most founders lack.

A founder does not need to be the best at A/B testing or UI/UX to hit the first million or two. Josh says the thesis is unchanged from two years ago.

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A fast-growing app sells for the same price on about half the revenue. A growth story with 30 to 50% EBITDA margins can earn up to 6x run rate, so about $17M ARR can reach $100M. A slower app is valued on trailing 12 months, so it needs about $30 to 33M ARR for the same $100M.

The question underneath is whether the app's best days are ahead or behind. Josh frames his advice as six rules, while saying they are not "an actual science" and drawn from one buyer's experience.

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Judge run rate on a steady stretch, never one month. A fitness app peaks in December and January, so one month misleads. Buyers may extrapolate from a quarter or six months depending on stability.

Choppy revenue or downloads should not be extrapolated at all.

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Narrowing the category makes a number-one claim, and a moat, believable. Flow could not claim top health app, so it narrowed to women's health and cycle tracking, claimed number one with 70M+ monthly active users, and raised $200M+ from General Atlantic at a $1B+ valuation. Runna aimed to be the number one Couch to 5K app and was later acquired by Strava.

Flow became the first women's health unicorn, and its metrics, funnels and testing were strong too. Early on it may have called itself just a period tracker.

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Go narrow, but not so narrow the category looks ridiculous. A real category has competitors, its own life cycles and its own ecosystem. Sleep noises inside wellness works; GLP-1 trackers could go narrower, to Wegovy or fitness peptides, if the market is big enough.

Josh sizes markets by cutting categories on Sensor Tower and looking at the top performers, since the top 30 apps are often the lion's share. New categories appear fast, such as food scanning, started by Cal AI and fed by LLMs.

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Plot retention for your top 20% most engaged users; it should flatten. Tourists pay once and leave but still count in MRR, while sticky locals earn an outsized valuation. Josh takes the top 20% by the app's own engagement metric and checks that their curve flattens, ideally high.

Engagement can be session frequency, session length or daily logins, defined per app. Revenue multiples are present value math on LTV, and cohort retention is the leading sign of LTV.

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Year-one resubscribe rate is the cleanest sign of real value. A good paywall can trick someone into paying once; the test is whether they pay again after a year. Josh calls 50% amazing, 40% good, 30% okay and 20% bad.

Dating apps run much lower. DAU mostly reflects download volume, and with a free tier, day 7 and day 30 retention also matter a lot.

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Organic share above about 35% is good; under 20% means a UA treadmill. Josh lists 35 to 50% organic as good and 50% as great. He leans toward counting TikTok as paid, since it costs creators, creative iterations and time, with unpredictable returns.

Joseph Choi's split: $100K of UGC that later shows up as App Store searches looks like paid UA, while one founder video that becomes a trend is closer to true ASO.

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Buyers value a repeatable viral machine more than the last hit. Josh asks how often the app goes viral and how fast it can turn one winning creative into 20, 50 or 100 videos.

ASO is getting harder, with 80% more apps submitted this year than last and legacy apps holding top keywords. Of the four or five founders he talks to daily, none name AI search as a growth strategy.

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ChatGPT's $20 a month raised what people will pay for apps. Before it, about $60 a year was the ceiling. At $4.99 a month, $30M ARR needs about 500K payers; at $20 it needs about 125K.

Fewer payers also means less ad spend needed to reach the same revenue.

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Waking Up shows a premium price doing the work instead of volume. The meditation app charges $20 a month or $150 a year, gets about 25K downloads a month and earns over $1M monthly, roughly 10 times the usual revenue per download.

The figures are Sensor Tower estimates, and premium examples like Waking Up and Purpose lean on a famous creator's audience, so the price often rests on borrowed trust.

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Sell before growth slows; the price drops fast once it does. Under Armour paid $475M for MyFitnessPal in 2015. Francisco Partners paid over $100M less in 2020, after growth slowed.

"The biggest predictor of your exit price or the success of your exit is your alternative to the exit."

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Strategic buyers pay most; shape the story for their synergies. Strava bought Runna as the front of its funnel for beginner runners.

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Ask acquirers which skills moved the needle on past deals. Ask whether returns came from adding ads, price testing or product features. That shows what they will do with your app and what they lack, so you can pitch a strength like a distribution engine as the complement.

"Really ask the buyer what their main skills are moving the needle."

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