How Best-In-Class Retention Propelled Flo to a $1B Valuation

It was the essence of our vision to take period tracker as kind of a entrance point, a driver of retention, and then to build a big platform with deep knowledge and insight based on that. It was vision from the very beginning. We have had thousands and thousands experiments and at any moment we have between two to 300 of active experiments and these experiments have had immense impact on metrics. When we started optimizing our onboarding and paywall, we start from conversion like to try like 2% and now it's like I don't know, maybe 16, 17, 18%. It means that we increase conversion eight times, 800% because of such experimentation. Flo became the single product at the market not just with good retention, but also with good monetization and sustainable monetization. And this way Flo became the biggest health app in the world.

>> Welcome to Subversive, [music] a podcast dedicated to sharing stories from the best consumer subscription apps in the world. We'll bring you lessons for how to grow your consumer subscription [music] business, including insights and inflection points that led to exponential growth from leaders at category-defining companies and innovative startups. >> [music] >> Let's get into the show. My guest today is Dmitriy Gurskiy, the co-founder and CEO of Flo, which helps women monitor their menstrual cycles, predict fertile days, and track pregnancies.

Flo recently raised a $200 million Series C round at a valuation over $1 billion, making it one of the largest and most successful women's health apps in the world. In this episode, I talked to Dmitriy about what inspired him and his brother to launch Flo in 2015, about why category-leading retention rates have been the key to Flo's success, and about the company's recent decision to launch Flo for partners in 2023. All right,

welcome Dmitriy to the Subversive podcast. I'm excited to talk to you about Flo today. This is an episode I've been looking forward to for a long time. And let's get started with just a little bit of background on you and the unusual backstory that led up to Flo's founding in 2015. >> Hello Phil and thank you for inviting me. And you see now we are making this record from our office in London and it's the Tower of London behind me, but originally I'm from Belarus and I spent most of my life in Belarus and Flo was founded in Belarus and our journey was quite long and interesting. We started like from growing potato and gathering mushrooms to sell and then we writing articles together with my brothers and we worked for 10 years for book publishing and then we switched to apps and last 16 years or so we have been doing mobile apps and we were doing that quite successfully and we have Flo which is

the biggest health app in the world, but also we have had five or six exits up to this moment and some pretty decent stories like for example Lensa what was the most recognizable and downloadable app three years back in App Store like simple as nutrition app with 150 million revenue like some acquisitions which were done by Facebook and Google. It means that we got quite an experience and it was quite a journey. >> Yeah, well congratulations on all your success and it's been quite the path to get here. I guess one thing I want to start with I listened to a couple of your other podcasts and you tell this great story about growing up on a farm and how you were a mushroom picker and that all the kids were were sorted into either picking mushrooms or picking berries and you picked berries if you wanted a stable income and you picked mushrooms if you were more willing to take risk, but there was more upside.

And so, I guess what lessons did you learn in those early days about your own personality and and maybe how you were wired to be a bit more entrepreneurial based on that experience? And I'm I'm also curious what that sorting process looked like and how they knew, you know, which kids should be doing which jobs. >> I definitely learned that for me interesting journey is more significant than the result. And because mushroom gathering was very risky way to get money, but it was very interesting because like it's so many kilometers of walking through the wood, new places, changing landscape, animals like birds, everything. And berries gathering you just like I sitting on the same place and taking like like a berry by berry, berry by berry and it's very predict able way to get your income, but also super boring. And I think I always have had preference to stay hungry, but >> [snorts] >> to have potential of instant journey.

>> Yeah, I mean it sounds like you were wired to be an entrepreneur from very early on. And so, fast forward to 2015, it sounds like you and your brother Yuri had been incubating a number of mobile apps, but Flo really starts to show some early signs of promise and traction. But at that time there were already dozens if not hundreds of other period tracking apps in the App Store. And so, what was

it that made Flo different in the early days or maybe another way of asking that question is, how did you manage to get early traction in such a crowded market? >> We just celebrated several days back 10 years anniversary of first version of Flo. It was published October 3rd of 2015. And it was big moment for deep reflections. And to be 100 percent honest, that time we didn't see see or even dream like that Flow one day would become the biggest health app in the world with 80 million monthly active users with almost 300 million in revenue like like unicorn like we we should like raise the biggest round in digital health last year. Like it was all these achievements they they would have been absolutely impossible to dream about 10 years back.

And because of several reasons. And one very big reason that that time it was impossible by any same calculations to predict that uh app might even so much. And why? Because that time uh a subscription business model didn't exist for apps altogether, maybe just for magazines. And all the like people were paying for apps like a dollar or two like like sums like not so significant sums of money and pretty rarely and uh uh to get to this sum like Flow has now like and in a quarter of this year we will be pretty close to 300 million in a annualized run rate uh we should have assumed not just immense audience but also that people would start paying not like one two bucks but dozens of bucks or even hundreds of bucks per year. And that time when subscription business model was not even allowed for uh apps it was completely impossible. It means that uh very often all our long-term projections they absolutely wrong because we can't

predict such significant changes in landscape. And in 2015 it was impossible to predict that like Apple would allow subscriptions for the apps. Then uh like a Netflix, Apple and other big companies like would double down on educating people about subscriptions and then they would start raising prices gradually and people would get habit to pay more and more and more for subscriptions and it was very long process even for Netflix and Spotify.

They started from several bucks and each year they were raising like bucks by bucks by bucks by like getting people to accept the idea that uh uh digital products may cost like a dozens or hundreds dollars per month and I remember that that time I was uh like I came from book publishing and average book cost 10 or 20 bucks or 30 bucks and I was almost kind of asking myself in despair why it's normal to pay for a book which has like a cost of production like one bucks like 20 bucks and but people don't want to pay the same sum of money for app which is much more difficult and much more expensive uh like to create and but it's just a habit. It's just a habit to pay for something like a like a more or less like like more people are like kind of habitual when they think about is it expensive or not.

Yeah and uh you know that like my reflection that that time we didn't have uh ambitious or dream or even like wild dreams that Flow would become so big and honestly no benchmarks existed but what we definitely understood even that time that market lacked like products with depth for this segment and >> [clears throat] >> our motivation from the very beginning was uh to create not just a new period tracker because at time hundreds of period trackers existed and nowadays thousands and each month we register between 10 to 20 new period trackers.

Our idea was much bigger than to create period tracker. And our idea was based on our previous experience from book publishing because we published the many books for mothers, for children, about health and we understood that uh this uh knowledge has huge demand and this knowledge is rather scarce and uh we almost had the idea almost like to convert content to digital form and to bring like a quality of knowledge we had in book publishing to the world of apps and that time like apps uh with uh good and deep content and medically correct insights, they were very very scarce. We called that like like the world of period trackers and that's like a pink calendars and pink calendars means that they were very superficial and shallow products and the most of them and still didn't have ambition to go deeper than just to be a small utility and it was the essence of our vision to take period tracker as kind of a

entrance point, a driver of retention and then to build a big platform uh with uh deep uh knowledge and insight based on that and it was vision from the very beginning. >> Well, and if I'm hearing you correctly, it sounds like that vision was very complimentary with the state of the market at the time because Apple and Google hadn't yet allowed many mobile apps to create mature subscription businesses that were really efficient and then on the consumer psychology side of things, people weren't yet used to paying significant sums of money for subscriptions. And so you enter the market in 2015.

And if I'm understanding you correctly, you gave away the period tracking for free, but you found ways to monetize deeper and more acute use cases that were associated with a woman's cycle, and that ultimately became the revenue driver for the business, but at the center you have this highly retentive period tracking use case that a user did not have to pay for. Is that correct? And if so, what what sort of advantages that did that give you versus these more superficial competitors?

>> The story was more complicated than the more interesting uh When we started Flow, we had a very vague understanding on how we would monetize this uh product. And at that time, it was not so much about subscription because like subscriptions uh it was even difficult to get uh uh technically allowance of Apple to have subscriptions in the app. It was possible, but quite uh difficult. It became like easy by default just from 2017.

At that time, we were thinking more about uh like telehealth consultations, sounds like uh that, but it was very vague understanding. We just uh had feeling that uh like a good product should come first, and then we would figure out monetization. And uh it happened exactly this way, and very big luck that uh our subscription business model was unlocked uh because without subscription business model, um I don't see how it would be possible to build such a significant uh company.

But I remember that it was all the even with subscription, it was uh a bit of journey because when we discussed uh to start uh monetizing part of our content and insights, we almost got a riot inside the team because [snorts] it was uh quite a wild idea for the moment uh at the beginning of 2018 or so like to have subscription business model for apps like Flo and now it's like it's like a 100% normal but that time it was something had never been seen and it was very unusual for people to think this way. Uh but then yeah, this business model became like a driver of our success but also it became a driver of almost like a product quality because what's unique about subscription business model that this business model is uniquely aligned users experience and needs because if experience is not good and user is not happy this user maybe would pay once and churn and business model would not work and it

creates very natural incentives to make product better and better better and better and especially long-term experience for users because it's a single way how to be successful like a long-term in this business model. >> Yeah, that's exactly right and you've heard me talk about this framework that I call the subscription value loop and at the center of that is a unique and enduring core value promise. You're saying it needs to be enduring because unlike a hardware product or an e-commerce model it's not a one-time purchase, right? The user needs to continue getting value over time or they're going to churn. Uh but it also needs to be unique and you said that in

the early days there were all these other period tracking apps but most of them were very superficial. So what were some of the core product innovations that you all invested in early on that allowed you to be different than those other products? >> We had two big ideas and both ideas were quite leap of faith I would say and quite contrarian for the moment. And the first idea was that okay, you know that period trackers are very popular and they have good retention and uh why not to use Period Tracker as kind of uh so core product and surround Period Tracker by more sophisticated health features like uh articles about health, insights about health, like uh different patterns, uh chatbots, like everything [clears throat] users uh have nowadays in Flo.

And uh users will start using uh app and continue using app because of Period Tracker, but also they would engage naturally to this more sophisticated health features. And we definitely knew because of our experience from other apps and observations that without this driver of retention uh this ecosystem would not uh work. It's the same as uh like a uh like Google Plus ecosystem. If you take out Gmail from this ecosystem, it would just crumble. It's in But also like if it's just Gmail itself, it would not be like uh specially monetizable.

Just like a system together like uh Gmail Plus all these apps and services connected with Gmail is sustainable and the same with this idea of uh surrounding Flo by more sophisticated health features, but also our big decision was to put to the same app different modes for different stages of life like uh separate mode for trying to conceive stage, for pregnancy, for perimenopause, for teens, and it was quite contrarian move because at that moment the common sense in the market and all competitors they followed this uh common sense was like to create a standalone app for each user case for simplicity. But our thinking was that uh no, the most significant is to uh preserve long-term retention and because of that transition from uh stage to stage should be as smooth as possible.

But again, we didn't know like would they really uh like transition from mode to mode, it was a leap of faith. And uh And at that moment, the biggest question was like would really like users of period tracker engage to all the sophisticated features around period tracker? And it was impossible to understand and predict that without building it almost kind of like a we uh must have built it to see and it was very expensive experiment.

But uh but it was right idea and users engaged to these features and all ecosystems started working very well. And because of that uh Flo became the single product at the market not just with good retention, but also with good monetization and sustainable monetization. And then flywheel of growth was unlocked cuz like monetization means uh like just money to build even better product and to spend something for marketing. And then we are getting more users. More users means more money to make product even better and to spend even more marketing and uh And then like And this way like Flo became the biggest health app in the world.

>> Well, and the way that fits into my mental model, I think the reason that the conventional wisdom is keep your consumer products simple is because consumer attention spans are so short. And for so from an acquisition standpoint, if your product is too complicated, people won't know how to use it and they'll move on to the next thing. But some of the most successful consumer subscription apps, let's take Duolingo for example or Strava, started with a single use case. So for Duolingo that was language learning, for Strava that was cycling. But then as they really gained traction, they were able to expand into adjacent use cases. And so for Duolingo that is now reading and math and music and chess. And for Strava it was running and other outdoor activities. It sounds like in your case you had this two-pronged approach because period tracking was such an natural acquisition use case. It's

something that literally every woman beyond the age of puberty experiences. And so, it was a great simple way to acquire a new customer, but then because the retention of a product that's built around something as unavoidable as your monthly cycle is so high, you can bolt on these additional use cases that people have more potential to pay for. And you brought up conception, pregnancy, perimenopause, menopause. And so, that's played into not only longer-term free user retention, but also increased average revenue per user because you're able to convert more subscribers with those use cases.

Let's talk about some of the growth playbooks that propelled Flo's early growth. I'm sure word of mouth was part of it, but you also brought up some of these articles that you all were putting out there with really interesting data and insights that were spinning off of the products you had built. How did that contribute to organic growth through through SEO or or through word of mouth from people talking about that content?

>> We have had really several stages of growth. And the first stage of growth was that we just created a very good simple, but very good product. And this product was highly rated, maybe 4.9. And because of that App Store and Google Play started to promote this product. And maybe in 1 year we got like positions number one or number two like for all significant keywords. And it was just like a driven by quality of product and nothing else. And of course, we had some optimizations for keywords like in descriptions, but ultimately it was just driven by quality of product and that the fact that we had 4.9 rating.

But then something more interesting happened. Because of good retention, we started gaining active audience. And when active audience became significant, word of mouth unlocked. And nowadays, [clears throat] we still have mostly organic traffic, but most of our organic traffic is driven by brand awareness and word of mouth, but not of this generic search. And my claim that really there is just a single reliable way nowadays for apps to get organic traffic is to have retention and to grow active audience. Because you might start from uh paid user acquisition, but with good uh retention uh app would get a significant audience, and significant audience would unlock uh word of mouth, and gradually uh organic share of traffic will start growing. And it means that uh retention is the key to organic traffic, and uh people just don't It's very rarely understood how like retention is correlated with organic traffic because

it's the single reliable way to get organic traffic nowadays because optimizations in App Store difficult like optimizations in TikTok uh easier, but still difficult. Uh but if product has a good retention, then uh growth of audience will inevitably bring organic traffic in form of uh word of mouth. It's almost inevitable. And then uh uh we didn't have any paid user acquisition uh or any marketing uh 2018-19 at least in significant sums. And then then when our monetization became successful, we started spending uh money in paid user acquisition, and now we spend a lot. Uh I believe this year our marketing budget is 70 million or so like 70 70.

And uh we are getting maybe half of our growth because of paid user acquisition, and uh or semi-paid like for example TikTok is a um I talk about TikTok as a semi-paid channel because it's a mix uh of paid and organic, but still like we still mostly uh growing organically. >> Yeah, well, and I think that's so well said that retention is the foundation of everything else, and people often don't step back and think about how so much of word of mouth is really just driven by consumers spending enough time with a product and getting enough value from it that they then feel compelled to tell family members, friends, and colleagues about it.

>> It's not what you observe is not even linear because uh when like one of your friend would say that I use product X, you say, "Yeah, interesting." But when you see uh like two of your friends would say, "I use this product for three." Then you would inevitably try this product. It means that it's almost kind of exponential, but not linear. It means that with growth of uh uh active audience, word of mouth is growing exponentially, but not linearly because of this effect of kind of peer pressure, I would say.

>> Yeah, no, that makes a ton of sense. Well, and a lot of marketers will tell you it's it's an overused and overgeneralized rule of thumb, but it's sort of like the average consumer needs 10 brand impressions before they'll remember and appreciate your brand. And my guess is it's similar with word of mouth. It's one thing if you have one friend tell you, "Hey, you've got to go try this app called Flo." But if you have three, four, five of your friends telling you this is this is the greatest women's health app out there, you're you're much more likely to trust it and give it a real shot, and then much more likely to turn around and tell your own friends and family members about it. So,

you've posted on LinkedIn and you've talked about how more than 50% of Flo's MAUs and more than 50% of your subscription revenue is coming from users who've been on the on the app for more than a year, who installed the app more than a year a year ago. So, let's just start with how does Flo maintain such high long-term retention rates? Because every consumer app wants retention rates that are that high, but we all know retention is the hardest metric to move. What's been the the key to Flo's success?

>> Part of it just naturally high retention of period trackers. >> Mhm. >> Uh and all period trackers, they have relatively high retention. Uh it's the just nature of user case. And there are not so many such user cases in health and fitness category. I would say period trackers, step trackers, like everything what's connected with devices. Maybe I'm a bit sleep trackers and pretty much the end of story. And this like a potential user cases and you you you may see that like what's common among all these cases.

Something what is natural and inevitable and happens without effort or even I would better say without choice because like I'm yours. You're walking anyway, like like a period would come anyway, like a sleep would be and and it creates like natural uh foundation for good retention. Other cases in health fitness category, um they're much more nuanced and and because of that uh it's difficult to find products in health fitness category with uh uh substantial audience because Flow has 80 million then like maybe like a Strava may have maybe I don't know 20 million or so of monthly users, but all other apps, they rarely maybe three or four of them would reach 10 million, but worldwide among all apps. And the rest of them, they're below uh 10 million despite they may have like a dozens of millions sometimes of installs per year because of a big user acquisition line. Uh they're not retained in the same way as

like a chain of gyms would sell like 100 more memberships than they have places because they know that people uh would not visit because people kind of people are people. >> That even in my mind that plays back in your point around word of mouth because step one you need strong retention so that people are using the product enough to talk about it. But then step two there are so many apps where the use case is so episodic that people are only going to be talking about it at certain times of the year. And fitness is a great example of that because so many people they make their New Year's resolution, they go to the gym for a few weeks, and then they peter out. But in the case of >> It's like exaggeration. I would say that by my observation for two days.

>> Yeah. Yeah. You're more of a realist than I am. But yeah, that's right. And so if the window of opportunity to get people to talk about your product is that narrow, then it just makes it much more difficult to get the flywheel going. But in the case of Flo, you have this use case that applies to just about every woman in the world, just about any time of the year. And so it helps to get that organic flywheel going.

>> But you know like what's interesting about the health and fitness category, very often retention of subscription in health and fitness category is higher than retention of usage. What like sounds like a phenomena. But this phenomena exists absolutely the same way in case of gyms. For example, many people they will just like renew gym membership all the time because they hope that next month or after Christmas they would definitely change life. And for them to stop paying for subscription it almost kind of kind of I'm desperate. Like no chance. Like I'm surrendered. And again, here's the same like sometimes it's the same pattern but uh ultimately really successful products they should have both. And uh like retention of usage and retention of subscription.

>> Yeah, I agree. And you certainly do have both and it sounds like some of that is just built into the use case, but are

there any particular experiments or AB tests that the Flow team has run in recent years that have had an outsized impact on either MAU retention or paying subscriber retention? >> We have had thousands and thousands experiments and at any moment we have between two to 300 of active experiments and these experiments have had immense impact on metrics. The most maybe the most interesting number that when we started optimizing our onboarding and paywall like we start from conversion like to try like 2% and now it's like I don't know, maybe 16, 17, 18%. It means that we increase conversion eight times.

800 percent because of such experimentation with a pretty much the same product. It means that yes, such experiments may be really impactful, but I would say that retention and especially long-term retention is the most difficult metric to move. >> Mhm. >> In [clears throat] our case we definitely see like very significant correlation between how active people use product, how many active days they have and how good is long-term retention and monetization as well.

And uh uh and I would say that the biggest experiment which influenced like retention and and it's just like a quality of the all product like in combination. It's not It was not something like okay, we changed like a color of button and then retention got a huge impact. But all of maybe the most impactful the most impactful among all decisions was to have all the small in the same product because we are just not losing this users when they move from stage to stage and it saves like a lot of long-term retention and in case of flow long-term retention means like years and uh uh yeah but But like it's it's very interesting question uh how we think about retention and what is good retention and I have very different point of view than most investors about retention and uh when I trying to understand uh mm is it retention good or not uh for me like absolute number of like okay like retention is it like 40% after 90 days,

30% or 10% is absolutely meaningless. What I'm trying to see is shape of the curve and what I'm trying to see is uh uh any evident pattern in this shape because some products they might have this plateau like really like not so high maybe 5% 10% but because all those such products might be very mass market products and they might pump many users they ultimately ultimately kind of like a gold mine. Ultimately they would gain a lot of such users and this core user base would become huge and this product would become big and uh And ultimately my question about retention is not a absolute number but more like a two questions uh uh what's shape of the curve and how the shape of the curve looks long term. And second question is how big is the town? It means that how many users might try this product? Is it possible like to mine this gold of core like engaged users and uh And when answer to this questions yes,

to both of these questions. Even with relatively low retention, like this company may become quite significant. >> So, a lot of people will point to B2B SaaS businesses where net revenue retention can be over 100% because you can land and expand. You can acquire a new customer and then either upsell them into higher price subscription tiers and or add more seats, which leads to net revenue retention being over 100% because even if some users churn, your most valuable users end up becoming more and more valuable over time. So, this

idea of relative net revenue retention that you've talked about, if I'm understanding correctly, it's as you get into year two subscribers, year three subscribers, year four subscribers, the retention rate from year to year gets higher and higher. Because once you've been using a product and paying for it for three or four years, the chances that you're going to churn are very, very low. And so, the relative net revenue retention in the out years gets very high. Can you say a little bit more about why that metric is so important?

>> What's interesting that they most of investors, they don't understand consumer subscription business model all together. >> Mhm. >> And they can't make right decisions because they're trying to apply standards of SaaS business model >> Yes. >> to consumer subscription and they're making very wrong conclusions because for example, they say, "Okay, if retention of annual subscriptions is lower than 40%, this business is bad."

But it doesn't work the same way in case of consumer subscription uh as in case of B2B SaaS because for example, in case of B2B SaaS, if a customer has churned, it's almost impossible to get this customer back. It means that like churned customer is like a lost customer. Uh consumers like behave absolutely differently. If you're like a customer of Netflix, you might buy Netflix for one specific show then you switched off Netflix for six months and another instant show, you switched it back. It means that they like have this like back and forth behavior. They continue like a coming like and renew subscription when they see value or see discount, for example. And in case of Flow, we have ton of such win-back customers. It's driven by different situations. For example, they may switch to another mode, they may have specific needs, they may get like very good discount, but I believe maybe 25% or so of our

subscriptions comes from such behavior. And second, uh uh very interesting behavior that in companies like Flow or Spotify, they are getting conversions for very long time, not immediately. It means that some of users, they install app, but then they may use this app for years without paying. And then, when right moment uh came, then they would convert. And uh And because of that, like if you just analyze like Flow metrics from like looking on by standards of business sales, this business would be not especially attractive.

>> Mhm. >> But then, [clears throat] if you look on revenue retention, it means if you take cohort of users we acquire this month, and then you look like how much money you would get from this cohort first 12 months, then next 12 months, and then next 12 months, it would look something like 100, 70, 70, 70. It means it's starting from year three, there is no revenue churn because the of course the core users stay, but also like we are getting win-backs of users who churn, and more users convert with the time. And this like kind of stabilization of revenue over long term from uh cohort happens. And also, we even see some growth of net revenue retention.

For example, year four to year three, it means year four may be bigger than year three. And why? Product is becoming better. We invest like just like the product like a million dollars per year to make it better and product is getting better and users see more reasons to convert and even if they don't pay or if they paid before, they convert again and because of that we like a revenue from cohort of year four would be bigger than like a revenue from the same cohort of uh years three. But again, it's impossible to see if you just analyze like a retention of subscription or like or any other like a metric from business SaaS.

>> Yeah, well and I think part of the reason that investor attitudes on this is oversimplified is because if you look at the vast majority of consumer subscription apps, RevenueCat has this stat that more than 80% of trial starts happen within the first 24 hours, which usually means the first session. And a lot of smaller consumer subscription app startups are optimizing for day eight ROAS. Why day eight? Because they have a seven-day trial. So they're trying to pay back their ad spend within eight days just to make sure that their unit economics

work. But the very best apps, the Duolingos, the Stravas, the Flows of the world, they have a number of the characteristics you're describing. They have high reactivation rates, meaning even if users churn, they'll often come back to the product later on. And they also have this longer tail of free users who end up converting into a trial or subscription weeks, months, or even years after they start using the product. So that brings me to one other important question, which is as a freemium app, how do you balance free monthly active user retention with monetization? Cuz obviously there's a tension there between making sure you're leaving your free users happy enough that they continue to stick around and use the product, but then also you're converting and retaining enough of your subscribers to generate revenue that you can reinvest back into the business.

>> It's always balance and because of that we always have retention as a health metric. Means that our monetization experiments should not harm retention. Or like a monetization improvements should be really significantly bigger than harm to retention. And again, we would not tolerate significant harm to retention because we believe that growth of active audience and loyalty of users is ultimately our growth flywheel and our organic traffic depends on that a lot and all future monetization and overall even mission of Flo depends on that and recently I even rechecked are we doing good or bad with that? I asked to prepare for me on the same uh graph kind of like a curves of all all monthly curves for last 5 years.

It's very crowded graph. You may assume because there are many many curves like that like on the same graph like 50 or 60 of them. And now we kind of in the middle of this kind of flock of curves. It means that uh uh kind of we can't say that we aren't retention too much. Like it means that like we had moments when it was worse. We had moments when it was better, but now we exactly at the middle of this kind of like a family of curves and means that like approximately we stayed with the same retention for last 5 years or so despite more sophisticated monetization because of this uh controls.

>> And I'm sure part of that is just a function of the product getting better which you mentioned earlier. Even if you're pushing a premium product harder, if the product itself has gotten better, then you can maintain the same retention rates even with more aggressive monetization. >> very explicit goal that all free product should be better than other free products in the market. It means that and when we are making our product decisions, we also not like looking just on retention, but also we are thinking okay, would be possible that users would switched out of Flow because other products are better. And we also like limiting a lot in monetization based on this logic.

>> Yeah, because that then has huge impacts on acquisition costs. Both because your paid ads are going to work much better if your free product is strong, but also because you get more word of mouth which leads to more organic growth. >> Organic traffic is super significant to make a company attractive for investors and to achieve significant valuation. I would say that without dominance of organic acquisition in Flow, and uh it would it would have been impossible to raise as successful as Flow did because investors they don't like businesses which depends too much on paid acquisition because they think that is not a specially sustainable. And I think they're right because this platform they're changing like algorithm all the time. Traffic is getting like more and more expensive. It means that long-term uh businesses which depends on paid acquisition are really difficult uh to predict. But organic traffic also

depends what type of organic traffic because uh Flow is sustainable because of most of our organic traffic is brand driven and awareness driven uh traffic. Because in United States uh 25% of all women younger than 40 are monthly active users. And uh and you may see and our unaided brand awareness is like 70%. Like Flow is the default solution and because of that like Flow is installed by default. And it's very sustainable. But for example, if our traffic would still be mostly because of generic searching uh App Store like period tracker for keywords like period tracker, it would not be sustainable because one small change in algorithm of App Store and you would lose this traffic. And like just one month back like many many many many companies like uh like lost half of traffic because Google just switched like to new form like to the AI search and like immense number of businesses like lost

half of traffic because uh all growth machine was built just on on Google and optimization for Google and our case it's much more sustainable because most of our organic traffic is driven by like word of mouth and overall brand awareness and the status of default solution. >> And all of that goes back to having a great product and owning a strong brand in the minds of your customers, which you all have done a remarkable job of.

And that brings me to the last topic I want to talk about, which is the recent launch of Flo for partners. So, you and your brother founded this product that is now the number one product digital product for women's health in the world in 2015, but recently, I think it was in October 2023, you launched Flo for partners that actually allows men and husbands and and romantic partners to be part of Flo's product themselves and and be able to better understand their partner's cycle for things like conception and pregnancy tracking. So, what inspired you and your team to expand the appeal of Flo to men and walk me through what that launch looked like a couple years ago?

>> The conversation with users because we listen all the time to feedback of users and we have many many many user research and sometimes we are doing research okay and what you need from Flo what Flo lacks and uh the most significant demand was the tone I also want like my partner to be educated like about different questions in female health and how I'm doing like and uh and we listen to users and also we uh saw successful apps like peers at the market it was like not the most significant that we saw this app the most significant was that like when we proposed to users to choose among maybe 20 different features, it was the most desirable feature like in our user research. But then our approach like to build this feature was very different than our competitors tried to do because we our what our competitors tried, they just shared kind of like a statuses about what stage of cycle now like or

like what symptoms we attract. And our approach was more kind of like educate partners and provide them insight and help them to be like kind of a better and more supportive and partners like and it's more kind of like [clears throat] it's much more based on education and insights rather than just sharing what's going on with your partner. And it's like kind of a product itself and it has ton of content and even like a quizzes like mini almost mini games for for the pair and this feature is quite popular and all of this feature this feature is super viral.

For example, we got a TikTok post about partner mode in Latin America which got 2 million likes and 200,000 shares and then like several dozen of similar posts and in several days we got 100 million views in TikTok for free and 350,000 installs. It just be and it was completely organic. Overall like for four world TikTok is very significant and we are getting 15% of our traffic from TikTok and organically. But this this case was very interesting and it also shows that features also should be understood not just from prospect of uh user experience It by default but also from point of view of marketability, like is this feature good and interesting enough to become viral on TikTok, like to become like a point of attention in paid acquisition or in media campaigns? And sometimes like this effect of such features may be much more significant because of this marketability of such feature rather

than because of direct impact for current product. And In case of partner mode, both [clears throat] elements are significant, but it's very marketable feature of Flo. >> It's very marketable and it goes back to some of the key criteria you talked about before, right? It significantly expands TAM because previously it was half of the world's population that Flo could be relevant for, roughly half now. Arguably you've you've doubled your potential market size. Number two, there's certainly a ton of organic acquisition and word of mouth potential because now you have men entering the chat or women who are romantic partners of other women.

And third, I would imagine that it also benefits retention because now if you have a couple who is both using Flo for things like conception, getting pregnant, managing a pregnancy, or dealing with menopause, right? Like now you have to have two users turn rather than one for you to lose a potential paying customer. And so I would imagine it has all three of those. >> on all metrics including metrics of retention and engagement. It's yeah, it's very interesting, very powerful feature for Flo.

>> So what do the early results look like to this to the extent you can share? What what percentage of Flo's current MAU users and subscribers are partners? And how do you expect this to change in the coming years? >> Now we have more than 2 million partners as active users. And it's growing. I think it's very realistic to expect that maybe 10% or so of users would be actively connected with partners and what would be maybe 10 million in case of Flo, but it's quite significant because 10 million as an independent app, it would be like app which would be in definitely in top 10 the biggest health and fitness apps stand alone.

>> It's very exciting and congratulations again on all of the success and all of the momentum and as a partner myself, you know, I've been married for 11 years and have two kids and sadly we missed we missed the boat on Flo when we were having our children, but as we enter other stages of life, I'm sure that >> This year we launched the like our new mode for perimenopause and perimenopause is super underserved segment and because of different reasons like cultural, historical and uh this segment is super successful. We just launched but this year I think uh we'll have already 3 million users and maybe 25 30 million in revenue from this mode and also this mode shows the highest propensity to pay among all our modes and also like kind of like a uh we had a research which showed that and it's different in comparison with other modes because all our our other modes like like pregnancy mode, they had

competition. Uh some apps existed and were popular when we were launching like this product and in case of perimenopause there are no big solutions uh women have awareness about and the pretty much like kind of we established Flo as a default solution for perimenopause and uh quite successful I would say and it's very interesting example like how this platform may be very successfully expanded to new audiences and new values.

>> Yeah, when you gain so much trust and momentum with your younger users who have grown with you. And so as they reach perimenopause, I'm sure that even if there were competition, they would be looking to Flow. And it sounds like there isn't very much competition, which is which is nice. >> Yeah, Flow is is super huge among uh uh younger users in United States among like 18 20 years old women, like almost 40% of monthly active users, monthly active users. And in United Kingdom, almost 50% of all women in our this age group are monthly active users. But we have much smaller share among women older than 35. And with our like a health additional like health solutions and this period mode, it's a very big uh hope that soon we will have a significant popularity among 35 plus year old women as among this younger cohort category of users.

>> Yeah, it's a huge growth opportunity and it's also solving a very real need. So I'm glad you're investing in that area.

Let's get to our lightning round. We'll we'll finish up here with a few quick questions. Um the first one I always like to ask is just what would you say is the best part about working at Flow and what's one thing that you would change? >> It's super meaningful. Because uh there are plenty of companies with huge user base or uh hundreds of million in revenue. But I don't know any company with so significant positive impact on life and health of users. Because uh we're improving health and health education of uh hundreds of million women in around and uh like um dozens of million babies born with help of Flow. We have For example, United States, 40% of all women who trying to conceive use Flo. Like 30% of pregnancies are supported by Flo. And we always have been super focused on medical accuracy. We have a significant medical team, medical board, and we have published many scientific papers, including three

papers in Nature. And this feeling of this immense impact is the most significant and instant part of this job and it's part of our mission. And I'm especially proud that we're trying like to provide Flo for free for women who can't pay. And we open Flo for free in more than 60 countries, like in poor countries, like in like Nigeria, for example. And we already have gifted 27 million subscriptions. 27 million subscriptions already gifted to women in need. And we have published like a papers and we scientifically proved to that it has a positive impact on health knowledge and health outcome.

>> Yeah, it's a very inspirational mission and I can only imagine how much impact it's already had and will have in the future. Anything you would change about the company, the culture, or or anything else? >> I think that like everything has kind of like a good and bad sides, like it's like always like two sides of coins. For example, Flo is a super data driven and thoughtful company and we analyzing everything very thoroughly, experimenting. But sometimes I feel that maybe we just need kind of like a uh to be be more brave, like just in making bets and move faster because sometimes I feel that maybe like we are getting like too much in this like a endless like checking, AB testing, like analysis paralysis.

Maybe this one, like maybe like not like a fully, but maybe for 20% of our resources, maybe just okay, it's like a good vision, good intuition, just let's just try, but let's do that fast. >> Yeah, it's one of the inherent challenges of getting larger cuz you have so much data that it's easier to just sit and analyze it, but you got to maintain that culture of being an early stage startup and and sometimes you just got to make a decision and go with it.

Um what would you say is the worst product decision you've ever made at Flo and what did you learn from it? >> I have like my own philosophy about that and we have failed thousands of experiments and then quite sure that you wasted 75% of resources we spent for development and what probably should be measured in hundreds of millions up to this date, but it was a way to learn like what doesn't work to find what works and because of that I can't say that uh yeah, like like we have failed like 70% of our work and we wasted hundreds of millions because of that, but without that it would be impossible to find what works and because of that uh I would say we didn't have uh a single bad decision is a decision which was not reflected about even like if you have like a proper reflection and your next step is more informed than previous step, then even this bad decision was right decision.

>> Yeah, I mean that's a very growth mindset approach and and I agree. Like if if we knew which AB tests were going to succeed and which were going to fail, our jobs would be much easier, but the reality is even the best teams generally have at least 50% failure rates on their experiments and so the trick is to just experiment and learn. >> of failure rate. I think we have 20% of success rate. >> [laughter] >> Well, and I've often told my teams like if our hit rate is too high, it means we're not taking big enough swings and we're not taking enough risk. And so it's all it's all about learning and I really like that answer. Um so next one, you've talked about how retention is often a function of use case. So if you weren't building Flo, what is another product or product category within consumer that you would you'd be excited to build for it given the retention profile.

>> It's pretty interesting question because consumer habits they changing now like super drastically because of ChatGPT and other LLMs. And we have seen that for smaller extent in 10 years of Flow existence and we had to adopt. For example, when we started Flow, people were still reading like long articles. And content of Flow was in form of articles. Then because of Snapchat, Instagram, like people stopped reading and we had to transform our content to form of stories. What was very wild but at that moment like like to have like stories in health app and now it looks super natural. Then like people stopped reading even short content and it was a transition to short videos and maybe like some interesting because of TikTok and some interesting phenomenons like short dramas for example emerged because of that.

And now it's like the biggest change we need to adapt and this change that like that people they kind of they [snorts] expect to get like answer in ready form. It means that they don't expect any exploration. And because they don't expect any exploration then it's like our product also should adopt and now we're building like all the kind of Flow intelligence when it will be possible to talk with the Flow like with ChatGPT. We spent significant resource to make it medically accurate. But the idea of this is that I don't know but I just know that like when consumer habits change so much is necessary to adapt a lot and very like a new generation of products will come and we see it in some categories for example in health and fitness now it's a huge wave of uh AI based calorie trackers.

And >> [clears throat] >> we have we had like an idea to create such kind of app like almost 10 years back with my brother but that time we tried to use kind of like a cheap labor behind uh the app like just to make like a to recognize what's on the plate because technology didn't exist. But the idea that is now to make like a photo and then like it would be recognized behind this idea 10 years back but it didn't work properly because it was huge lap between like a when this photo is done and when result was was gotten but now this technology arrived and this idea which we had like 10 years back now implemented in hundreds of apps like CalorieAI very successful and well I don't know but what I know that when uh a big change in technology happens and when big change in consumer happens change it's a huge opportunity to do the same but better and that's huge opportunity for new companies to come to

old segments and what we don't want in Flo is to be disrupted by such newcomers and because of that we are trying to build and change our product by ourself. >> Yeah, I couldn't agree more and in consumer in particular I think when technology takes something that previously required a lot of work and makes it significantly easier and the example you gave was okay now I don't have to enter everything I ate I can just snap a photo and the AI will automatically detect and analyze what the macros look like that can take a market that was previously not viable and suddenly make it viable. So that gets me to my next question which is how do you think AI will change the world of women's health over the next two to three years or maybe since it's the lightning round a simpler version of this is what is one very important change that you think AI will have on Flow or or other women's health apps?

>> A big change might happen uh in the world of kind of casual apps, not like medical devices and not like medicine, because medicine is uh super super super difficult uh regulatory barriers, and everything is changing super slowly in real medicine, and I think in real medicine, in real like health in 2 3 years probably not so much. >> Mhm. >> In case [clears throat] of uh apps uh many things might change uh because of uh the biggest driver will be this change of uh consumer habits and consumer expectations because of ChatGPT, and it almost kind of it's almost kind of like it it paves the path to new generation of uh products, and the essence of [clears throat] these products will be that users will expect uh to get uh answer or kind of a prepared answer without any exploration. It's it will be the biggest change which will happen because of because it's like it's the biggest change in comparison of ChatGPT with

Google. What's the biggest change? It's like it's like you're getting just your answer, you're not making any exploration, and the same uh they will expect from uh apps. >> Yeah, instant gratification and also hyper-personalization. So, not just getting any generic answer, but getting an answer that's tailored to your unique needs. Uh well, the last question I'd like to wrap up with here. You've mentioned on other podcasts how important you think it is, especially in the latter part of life, to devote part of your your time to giving. And so, I'm curious if there is a particular cause or set of causes that you are passionate about, and and how you find time or resources to give to that cause.

>> No, my main passion and uh is Flow, and it occupies everything, and I don't have any time and energy for any other questions, honestly. I even don't have time to fish, which is my biggest hobby. When I used to live in Belarus and I emigrated 5 years back, I founded a charity with a mission to educate children in villages in a STEM in computers, robotics, and we were opening like an educational centers and uh we have we opened several dozens of them and it was quite meaningful and inspirational task that time because in countries like Belarus it's a chance for to have better life, like to learn how to code, like to have career in tech cuz it's like pretty much in such countries like Belarus uh pretty much is the single like choice which you gives like a relatively high income and relatively good job.

And then Belarus in Belarus political crisis happened. I moved out of from Belarus. All charities were closed in Belarus including my charity, but it was very interesting and very meaningful experience and I think uh and what I definitely learned from this experience that charity is more difficult than business, like to do a charity efficiently because it's like the same as business but with many difficulties business just doesn't have.

Uh Yeah, but I think that when my page with Floyce closed, I think I will be back to such like an meaningful activities I I liked them a lot especially when it was very personal when we when I saw a very concrete result and very concrete influence on lives of these children from village. >> Yeah, I couldn't agree more and education in particular is one of those causes that is so powerful because it compounds over time. My wife has spent most of her career in the nonprofit sector and specifically on youth education and workforce development and it's one of these things where as you empower the next generation to succeed it just has these compounding effects that benefits generations and generations and and has broader impacts on society. Well, this has been a real pleasure to meet you.

Thank you so much for coming on. I knew I knew it would be a great episode and it has been. Any parting words you want to leave leave with as we wrap up here? >> Recently we celebrated 10 years anniversary of Flo and I reflected what have been my single advice to myself like 10 years back. My single advice to myself 10 years back would be don't listen critics. Just move forward.