Insights from RevenueCat’s 2025 State of Subscription Apps Report

often for a given product there's sort of a natural retention rate that you're going to get to once you've played all the tricks and that's going to be defined by product quality. I only think there's so much leverage for what you can do on the payw wall versus what you can do in that onboarding experience leading up to the payw wall and like how premium can you make it feel like how much can you convince the user that this is for them to get that trial started.

It's it's just like somewhat classic economics, which is just like allow your people who want to pay more to pay more, right? Like if you have a store where the most people can spend is $8 a month, you're not capturing surplus demand, right? I just think everybody's going to have to move faster. If you still have like mid2010s mindset on how fast app iteration should go and how long it takes to build stuff, like I have bad news for you. You're going to have your lunch eaten by like 10 Gen Alpha founders who building the same thing way faster. Welcome to Subversive, 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 business, including insights and inflection points that led to exponential growth from leaders at category defining companies and innovative startups. Let's get into the

show. My guest today is Jacob Iding, the founder and CEO of Revenue. Since launching in 2017, RevenueCat has grown into the largest SAS platform for subscription apps that need help powering inapp purchases, managing customer data, and growing revenue across iOS, Android, and the web. Over the last 3 years, RevenueCat has also published an annual state of subscription apps report that provides the industry's most accurate and comprehensive subscription app benchmarks. In this episode, I talked to Jacob about data and insights from the 2025 report and their implications for subscription apps looking to maximize the growth of their businesses. All right, welcome to the podcast, Jacob.

After being on your Sub Club podcast a couple of times along with David, it's nice to turn the tables uh and have you here on Subversive. So, welcome. Thanks for having me. I'm I'm I'm rarely a guest on a podcast. I'm just a like, you know, interloper and comment maker on most podcasts I'm on Sub. So I'll I'll see we'll see how I do. We'll see how I do. We'll see how it goes. And now I feel so special. Uh so I'll try I'll try to live up to certainly in our domain like in our in the domain that I normally talk about. So I feel I'm like where's David? I need to talk to David, but I'll be right. We should have invited David, but that's all right. We we'll forge ahead. Okay. Um well, as you know, Jacob, I'm a huge Revenue Cat fan.

obviously uh indebted to the community that you all have built and have enjoyed uh being a small part of it, but I particularly love the state of subscription apps report that you guys have been putting out for a few years now. And so we're going to be focusing today's discussion on your latest and greatest report, the 2025 state of subscription apps report. But before we

jump straight into that, let's just get a little bit more background on you and what led you to found Revenue Cat in the first place. I know you were a software developer for a long time before founding revenue cat in 2017. Um what caused you to build this company? Desperation uh in a word. Uh but but maybe like many of you who who remember the prec times or you know have done this yourselves. I was an engineer working on a team at at a company called Elevate uh which was a brain training app that launched in 2014 13 or 14 something like that. Um and yeah, we rolled our own which you had to back in the day, you know. Um and subsequently suffered as that as that business attempted to scale and did scale despite the like technological and like business challenges. Um and we were just investing a ton of time, you know, building systems often without examples, right?

We were having to sort of invent them. Um and so, you know, it wasn't rocket science, but it was work and it was a distraction from our core business. Um, and yeah, I was telling somebody today actually it's like that was in 201 oh jeez that was 2014 maybe maybe early 15. Revenue didn't get started until 2017. Yeah, I was probably going probably one of the most expensive mistakes of my life. But hey, maybe the company would have been a martyr if we had gone out that early. Maybe timing wasn't right.

But yeah, that was the impetus is like we looked for something to solve the problem for us. Miguel, my co-founder and I were working together on that team. Didn't exist. And I was like it doesn't make sense that this doesn't exist. So, I just sat down one day and like emailed 10 people who I thought had the same problem and they were all like, "Yes, problem. Yes, this is a problem." And uh that was it. And then we just we once I got those like answers, I was like, "All right, let's go." Like, we got to sprint. And that's as they say, the rest is history. Oh, it's always such an advantage to be solving for your own problem. And it sounds like you did some early customer discovery and made sure you weren't the only one or that Yeah. just make sure like I there were others, you know, cuz you know, you just don't always pull your head up and meet with people, you know, working on similar stuff. And then I yeah, I did a

little bit of validation. I did some napkin math to make sure like the the economics of the business would work and had some idea. Honestly, like I I don't want to like say I was prophetic or whatever. Um but I was pretty prophetic. No, I mean the document I wrote in I should share it at some point. It' be actually this would be a pretty good interesting like ex thread or something. But um a lot of what was in that thread came true.

um or in that doc came true but it was very basics like hey this is like a basic business problem it's a business process problem it's an infrastructure problem and like and then I think secondarily it was sort of a I don't know if I had the conviction I had seen elevate be somewhat successful at you know before I before I left and they've gone on to be quite successful without me I could kind of see that there was like room for real businesses here right and that was that was as much the bet as as like this would be you know a product that could somebody would buy it's It's a bet on the market because at the time the market was 20 times smaller than it is today, you know, it was something like less than 10 billion in subscription revenue um on the app stores and like that's about as much as revenue does alone now, you know, uh which is pretty crazy. So I I I I captured the entire TAM that I set out

to like capture at the beginning. It's just that the TAM has grown 20 times since then. So yeah, you know, good timing. I get good timing overall. I'm not going to complain. Not going to complain. I mean timing is everything but building on that point you made around this prophetic vision document. So I imagine revenue when you got started was solving a much narrower use case like a very specific painoint and then over the last what 7 8 years now you've probably evolved into a much broader platform. So where did revenue

cat start? What was that entry point and then what services does revenue cat offer today? Yeah. So I I think this is a subtle point, but I think like one of the important you there's not much that's novel in Revenue Cat. It's JSON like we transform JSON and we enrich it and stuff like that. But but one of the things I think was somewhat novel was a combination of two unnvel ideas which was we we were both a like processor of the payment experience and entitlement tracking. So like the the the piping and the plumbing of a purchase. Um, but also marrying that with the analytics side because like they're just naturally together. You know, you have your purchasing pipeline or your purchasing stack and then that would typically feed into a BI process that would like generate your your your revenue data. And so it just made sense to merge these that's like where the real getting the first right is what

allows you to get the second one right, you know. And so that was maybe the unique insight we had was like, hey, we're going to make this like both a a loadbearing infrastructure pillar of an app, which that's also what generates a lot of our like stickiness as a company. It's like makes us a product that people really invest in and stick to. And then there's the analytics layer um which is something like you benefit you get for free and that's how we justify like hey like we continue to take money because like hey we're giving you this stuff continuously make sure it's right. Now that wasn't actually necessarily in the initial vision. So really the very first version only had the infrastructure part. Um there wasn't even price tracking in like the very first version of revenue cat. Um and it was very quickly I showed it I started using the product with some people and it just showed you you know price tracking was a

little bit tricky. So we deferred it and then I was like okay we need price tracking. And then um we had launched a basic version with like one chart and then it was very clear like we're going to have to have this analytics basic analytics like basically a BI tool um before we like can properly launch or the product just feels empty even though technically the data was there it just didn't feel like a complete experience like a place to go and so that was like the that came a little bit later and and honestly like you know forwarding through your question like that that sustained us for a while you So basically basically there were three pillars of the product for the first couple years. It was the the infrastructure part I mentioned the charts I mentioned and then uh and then also integrations that was like the third piece that came in last and that was I think those three once we had those three that's kind of when we saw

our like product market fit moment and things really started to started to accelerate on their own. Well, one key thing I'll emphasize there, I feel like the best products when you're solving a really deep painoint can be very simple for a very long time because the pain point is severe enough that you can go a long way with a relatively simple. You just have to be above water, right? Especially when there's no competition at which there really wasn't at the time. It's like the alter we are better than the alternative. That's really all you need. Price isn't really if the price is like reasonable, right? Um and it was but yeah when we added integrations we realized that was a key use case for a lot of folks is like yeah they wanted their data yeah they needed infrastructure but really it was like hey the problems multiplied when you're like I want to use amplitude and I want to use adjust and I want to use this and

that and like suddenly you realize that like having crap data was this problem that was going to cost way more and so when we launched the integrations and and the the fun story I always like to tell for starter people is like we Uh we launched integrations, Quotify Fingers. Literally all we did was put up a web page with nine integrations that we had not written yet. Um and like they had they had contact us buttons, right? And so and it would take us two or three days to turn around, you know, we had an event system and we knew, you know, public specs for these things and we kind of knew they would all basically work because we'd used a lot of these tools in the past. Yeah. Somebody would be like, "Hey, I want to use the blank integration." and Miguel would over the weekend or whatever and then we'd ship it and that was great cuz like I think it honestly took us 2 years until we had to like pay the debt of all nine of

those or whatever till the last one was finally requested and totally you know it's you can call that lying I don't know we it wasn't lying it just was like just in time you know product development right no it's a classic smoke test right let your let your customers guide you in the direction of the most valuable product features and it sounds like that's what you did well one of your latest features maybe not a product feature, but a company feature is this state of subscription apps report. And as somebody who lives and breathes consumer subscription growth for my career, um this is the best version of the report I've found out there. You guys have been doing it for a few years now. The latest is the 2025 report, which uh just came out on March 17th. If I'm getting my numbers right, it's now 75,000 consumer subscription apps representing more than $10 billion in revenue. So, a lot of data. And we're

gonna spend a lot of time on today's conversation talking about data. But before we do, my first question is a little more light-hearted. Right at the beginning of the report, you give your founders letter and there's a picture of you with a pirate patch. So, briefly, what's the story behind the pirate patch? No, I I'm I'm I'm the I was the inspiration for uh Cojima's uh uh Big Boss for Metal Gear Solid. No. Uh my daughter cut my eye with a piece of paper. Sorry, that's probably needed a needed a content warning. children are great. And uh yeah, I had to go into the dock and they sent me home with an eye patch and I was like, you know what? I'm just gonna this is kind of a look. So, and Rick was like, I have two options for the photos and that was one of them.

And I was like, we have to use that one. That one's great. This is destiny. Well, I feel like that playful culture permeates Revenue Cat. So, I appreciate it. We try not to take ourselves too seriously after it's just computers after all. You know, life is too short. But let's talk data. Uh that's what everybody's here for. So, I'm going to start with one of the questions that I think is probably on every certainly every founders's mind, which is you guys have done three years worth of this report. Now, you're getting better at better sort of identifying uh what some of the biggest shifts have been in these metrics from year to year. So, what are

what are some of the biggest changes that you and your team noticed looking at the data this year versus uh back in 2024? Yeah, I mean I think the biggest one and this goes back to our first report um but we definitely saw like a continued decline in um retention which I I think it's hard to say exactly there there there's it's it's also possible there's some like population mixing you know as revenue cats be revenue cap becomes bigger and you know our sampling of apps changes every year but you know also I think it's reasonable and like this is anecdot but like to say the app store is still getting more competitive.

The letters A and I are on here a handful of times on our notes, but like I think the the bar lowering as to what it takes to put an app out will continue that trend and like when consumers have low cost or low switching cost multiple options like they will switch, right? Um and so I think we can expect to see that in the aggregate. I think like how that affects I think the top top the best of the best I think will be somewhat immune to those trends because like I think I I I I should perhaps do some some data to try to back up this theory but like I do think that like once people find their forever apps and if you build something good enough that somebody will be like okay I have a handful of forever apps right that I will subscribe until I you know I no longer have absolutely no need or whatever just because I'm habituated to it and it and and everything, but they're all great. They're all I don't

have any crappy forever apps, right? They're like all top tier and so I do think there's some immunity to that at the high end. But I think it's it's likely and I don't want to say this to dis discourage anybody from getting into the game because I still think there's like as as fast as competition is growing though, like surface area of opportunities to build for is also growing. Maybe we'll get into this some of your questions later, but like you know I think for an undifferiated category like you know plain straight I don't know let's say it's a running app or like Strava. Let's say you're going to compete with Strava. Don't compete with Strava. Strava's one like you know maybe you have some very unique differentiation you put there but like it's probably not smart to just compete directly with Strava, right? And that's kind of the case I think in in every category. like you're not going to it's

going to be very hard for you to displace an incumbent without some very unique differentiation. And there are plenty of places to find that unique differentiation. But there will be like people are going to continue to build straa clones and like whatever clones to like, you know, at low cost to like try and flood the zone. Um and I it's my theory that maybe that's part of what's driving things down. Um cuz like I see for every every you know we saw this with Chad GBT rappers and everything else like for every top tier app there's a thousand you know every kid with a laptop and a in a in an app store account will like try and fast follow these to like get rich or even just confuse a few consumers frankly like in the search rankings. Those are not what I I imagine the listeners of this podcast are trying to build. So yeah.

Yeah. Well, and I'm glad you led with retention because there are so many examples of top consumer subscription apps, companies that have stood the test of time and reached billion dollar valuations. You you mentioned Strava, obviously, Dolingo as an example. Spotify is an example. And the key to surviving the long game is subscriber retention. That is ultimately the foundation of the business, particularly for subscription apps. Let's talk a little bit more about retention specifically. I mean, this really is the metric, if you could choose one, that determines category kings. Uh, one of the things I pulled out of the report is that top decile apps, apps in the 90th percentile, have 2x higher annual subscriber retention, 3x higher monthly subscriber retention relative to median apps. To the extent you have thoughts on this, like what is driving best-in-class subscriber retention rates? You

mentioned differentiation. I think that's certainly a part of it. You just got to be unique, right? But what else? What what can apps do to try to improve their retention rates? H I do think like fighting in the me in the middle is tough. You know what I mean? If you're like a P to 50 and you're like just trying to I I and maybe you can maybe you have a counter counter feeling to this Phil but I don't know if a game of inches is going to win. You know what I mean? Like I I I think like you may be better off figuring what are the big swings I can make that might put me into that P90, right? Like the top ones didn't get there by like a a five basis point increase in retention every quarter, you know, quarter over quarter OKR over OKR. That's not I don't think how it's done. I think they did it by being I mean obviously they do all the smart things on retention and like all of the like you know table stakes

things. This was my experience and you know at at apps I've worked on but often often for a given product there's sort of a natural retention rate that you're going to get to once you've played all the tricks and that's going to be defined by product quality right and and sort of like actual natural usage of the product and what it means to a person and why are they using it and what is the core loop right think of something like Dropbox like or or or products that like are designed to to to elicit stickiness right and and and and and make you want to use it and just kind of habituate you to use it every day because that's where you get the most value. They're naturally going to have higher retention, right? And it's it's not because they optimized their payw wall. It's not because they had the best marketing life cycle, whatever. That stuff matters and you should do it all and you should think about it. But um

you should think about like, okay, if I'm in the if I'm slogging it out in the P50 of retention, like what radical changes and I I don't mean I I do mean in somewhat radical. I think I think sometimes sometimes apps are especially if you have a somewhat of a good thing going. So let's say you're P50 retention your median retention. Um but you've scaled it and you're like a sole small team. You scaled it to 30k MR like that's reasonable. That's a business that's like worth working on. Not that all businesses are worth working on, Phil. I want to point that out. But like that's a business that like kind of justifies further investment probably, right? because you've kind of gotten out of the killing zone like the long the long zero and like you've gotten into like something you can like iterate on and scale but yeah if you're like kind of stuck like I I think people I think people will even with that amount of

velocity or momentum I think they'll get some sort of risk aversion right they'll loss aversion they'll want to oh we can't mess with this or we can't mess with this core loop because whatever and it's like you probably need to in order to like unlock that next thing. Um, and that can be hard. You know, you have you have customers who have a certain expectation about the product and like all of this, but also if you're going long and you're early relative, like most of your customers are still in the future. So, like think about it in those terms. And then, you know, I'd say second and third, well, second, it's just like general craft, right? I just think the top apps, there are some exceptions, but I think the top apps are pretty good. Use them. They're pretty good. Even if they're not like winning Apple design awards, like they're well done. They they they serve the user.

They're they're not an obvious scam, you know what I mean? It used to be maybe not the case on the app store, but I feel like the app store has gotten better at like promote downranking apps that that that have bad reviews and things like this. And so, yeah, you got to have craft. And then, yeah, I mean, I guess that's just the intent. Retention is such a great metric because it's purely intrinsic versus like conversion can be really adjust. Well, I guess retention in some ways too can depend on the audience, but like it's harder to game though. You're right. Yeah, cuz like the conversion event is like a it's like a kind of a filter. It's always going to it's always going to like the the the user base is going to be pretty homogenized like after the conversion event. And so I do think it's and and as you mentioned before because of the nature of the equations like it tends to be the highest leverage one, but it also

can sometimes just be the hardest to move as well. It is. Um so yeah, I feel like it can be a very frustrating experience. Ask me how I know. Like I definitely worked on this at Elevate like trying to like inch that. I can imagine, right? Yeah, brain training and meditation already. Yeah. Competitive and like we were differentiated but we hadn't quite figured out how to communicate our differentiation and all that stuff early days. So yeah, it was it was it was and also we didn't know what was good which is like nice with the SOSA report now. Like you can at least know where you're benched and like what's you know that's something we've talked about in our podcast on the SOSA report is just like make sure you're working on metrics that are bad. Like don't work don't work on your best metrics, right? Yeah. Work on the metrics where you have the most upside.

And I know you guys released your own benchmarking calculator as part of the 2025 report. Uh we've also collaborated on the subscription value loop calculator which I'm excited to do the second version of over the next month or so. But to recap what you said on retention and I think this is really important. I guess the way I look at it and this sounds consistent with what you just described. There are sort of like three levels of optimizing retention.

The first one is just picking the right category because certain categories lend themselves to much higher retention rates than others. Once you've selected a category, then it's a matter of building a product that provides unique and enduring value. If it's not unique, people aren't going to give it a chance in the first place. If it's not enduring, they'll churn after the first few months. And then there is this final bucket which is on the margins. You can run the Dualingo playbook of motivation features and streaks and badges and that'll take any app up 20% or whatever, right? Like but those are only those optimizations are maybe going to move retention by 2 3 percentage points on the margin. They're not going to drive 10 20 30 percentage point gains and retention. And so it is the both the highest leverage metric but also the hardest one to move. And if you're in the 50th percentile either you need to

be an indie developer or a very small team that's just keeping things lean which can be a very effective strategy or you need to take bigger swings in order to resolve that issue. So then

let's talk a little bit more about AI. You mentioned the letters A and I. Everybody's talking about these letters these days. I've heard of it. Um, one of the data points on the report is that AI apps are making 2x higher day 60 revenue per install or D60 RPI versus median apps. But the question I have is how sustainable do you think that is? Right? There's this tourist effect that investors and operators are talking about right now where because AI is so hot and everybody's using chat GBT. It means that nobody wants to be left behind. There's there's fear of missing out. There's FOMO and so people are trying all these AI apps just to make sure they know what the latest and greatest looks like. But then turn rates are often pretty high. And so how do these AI apps, this new wave of consumer uh companies sustain this growth and make sure they're retaining subscribers over time? I think I'm probably more

bullish than bear. Well, I'm both because I think like there's going to be one I think a lot of these AI apps just provide way more value than apps have previously. It's better technology. It's just incredible technology and it's now in your pocket. And even just like you you say Chad GBT, the Chad GBT app is like a thin wrapper around their their whatever. Who cares? No, no consumer cares. Like they don't whatever. It's it's this magic, you know. my my wife who's she's fairly technical but she's a Chad GBT DAU like forever now like it's her it's her extra brain and I and I and I think you know that might be the the example that's like a you know the the big one but I think that you know a lot of these apps that are getting built obviously there's a lot of slop out there too but like a lot of these apps just are I mean the photo manipulation stuff is just crazy good and you combine that with like a little bit of craft and

like I I'm not sure. I mean, I think there's there is probably some effect where like everybody is moving adopting personal technology that they never had before. And so, there will be some amount of like, okay, I'm going to buy this. I'm going to like I'm going to have a photo an AI photo manipulation app. They may splurge one year and then like switch around and and as that space becomes more competitive like maybe those I guess like economics would dictate that the price will go down, right? as like replaceable competitors like AI apps won't be able to charge as much of a premium. Mhm. But I don't know that there's the flip side of that which is that like hey if these things are just providing a ton of value there may not be and and you combine that with you know Chad GBT is another good example of like there's a million LLMs out there now million but there's a lot and some of them are cheaper but Chad GBT kind of

has a brand you kind of know who they are they Sam's been on the cover of whatever right like it's been in the newspaper it's synonymous I don't think people know that that's a company versus like a technology like I just spoke at my high school my my old high school for career day and everybody talked about Chad GPT He didn't talk about AI, right? And so, and I think that that effect can happen. I think hasn't necessarily fully happened in other categories yet. This technology is accelerating everything and like I think we'll just have to get used to the cycles going faster and faster and you know, expect there to be disruption on a faster time cycle than there we've been used to. One effect is AI is just fundamentally better technology. You use those words, right?

We've pushed the paro frontier further out which means there are more new consumer applications that can be built using this technology and existing applications can be improved on. So you mentioned Straa earlier and in general it would be foolhardy to go after Strava given its network effects and what a great product they've built. But there are companies like Runna that are using AI in order to innovate in certain areas where Straa maybe doesn't have as much of an advantage because they're going after more serious runners who are running marathons or who want, you know, more advanced metrics on their running performance. So, one effect is because it's a better technology, it's creating these new opportunities and and nichification of of more apps that couldn't have existed before. Another effect is the exponential decrease in the costs to create software as well as the accessibility of building map even

if you're completely non-technical. Costs have gone down and also like the number of people who can conceivably do it has gone up and I'm not sure how much that it totally equates to but it's significant. So my theory and I'd love

to hear your thoughts on this is there's going to be this sort of biodal distribution where you're going to see the existing category kings get richer because they will leverage the technology to further their advantage and there will be some new drama can adopt AI faster than you can get straas networks basically. Yeah. So I think existing winners are well positioned and I think that there will be some blue ocean opportunities that get opened up and those will create new billion dollar plus venture scale businesses. Then on the other end of the distribution, the the second mode is there will be a lot more small indie developers or 5 10 person teams that hopefully if they're smart, don't raise a lot of venture capital, stay lean, but they're able to create 5 $10 million ARR businesses and do very well as long as they're smart about how they finance the company.

Yeah, I would argue it's not even biodal. It's just going to be like fully longtail or fully like log distributed. Um which the second point yeah about the the rush in of new people building apps and competitors both increases competition but then also because of the technology there are new opportunities created by the capabilities of the technology. There's also the fact that like barriers are lowered so more niche and novel techn problems can be solved with technology because now there's a crit because you like always needed a critical mass of like high technology people to care about a problem to solve it if it's a niche problem.

Historically, there's just a lot of probably niche problems. I don't know. Like I I I know them when I see them come in Revenue Cat and I click on them, I'm like, "What is this?" And I'm like, "Of course, this needs software." But I didn't even know this was a problem. Um, and I think there's probably two to 10x more of those than we see right now. Um, that just haven't been addressed because the the bare I mean, just think about it like the cost of an app. Let's let's assume 2019 cost of an app, it's tens of thousands. tens of thousands minimum for a crappy app, right? Uh for like not crappy but like rushed, you know, like you want a good app, it's $100,000, $250,000 probably, right? That's insane money, right? For something that may not, you know, and now let's say we can even if we just 10 10 times reduce that cost. That's before you add in a whole new supply of labor, right, of people who can actually do it.

So now the costs are down, that might actually further reduce the costs. So, so actually I I will say there will be a modal transit that that we will continue to have this like fat tail like that we we have currently. I mean I would say apps are apps compared to SAS. I don't know SAS is probably constructed this way too but like there's there's a fat middle and that's actually a part of one of my favorite customer segments of company. You were mentioning like million dollars a year up to like $10 million a year. It's a great businesses, great teams, often problems solving real problems with real customers and things like that. But then they'll I think there will be a like total like explosion of the long long tail. Agreed.

And some of those will be viable, some of them won't. Um but uh but there will definitely be software moving into niches that were previously like too expensive and too small to serve, which is great. I agree. Yeah. To me, there's going to be this Cambrian explosion of these smaller apps and a lot of them will fail, but some of them won't. Yeah. And some of them are they're going to be moving into markets that we just never really support all that much, at least today. But I don't know, the world's changing and growing and and who knows, right? Um, but yeah, I just think more software is probably better in my opinion. So, well, this relates to

another topic I wanted to talk about, which is that the top 5% of new apps generate 400 times more money after their first two years versus the bottom 25%. This was one of the other highlights uh in the summary at the beginning of the 2025 SOSA report. So, what are these top apps doing to break through all the noise? I know that most of the report focuses more on activation, engagement, retention, and monetization and acquisition. But do you see any patterns in what's defines these top 5% apps other than just building a great product? Yeah, I mean it's somewhat the nature of like power laws, right? That these as they evolve, the top is going to continue to get a higher and higher um multiple of the bottom.

And then also as we were talking about the evolution of distribution as the bottom gets longer and smaller the the multiple compared to the top will will continue to widen. But uh I mean in terms of what they're doing, I don't know. I mean, definitely there's been a virality factor in a lot of this AI stuff that I didn't that we I don't think we saw necessarily before. Deep Seek Weekend was a good example, right? Where there's like a new thing and like maybe wasn't that interesting because it was just another LLM, but there's more virality right now amongst these apps because of how novel they are. TBD if that continues or is sustainable. It's often virality driven by like legitimate technological novelty like or like technological innovation where it's like oh this the PA app or something can do some crazy thing with video or like do you remember gosh that was two years ago I think now the uh like the profile

pictures the AI profile pictures like that was like one of the first and there were so many apps just exploded overnight doing that and I'm not I mean we had that prior to the AI explosion but I I think it was starting to peter out like I think it wasn't kind of you know this reminds the early app store days when there's just so much novelty that like things would blow up, you know, like something stupid like Flappy Bird, right? Even I don't think would happen today, but it just took a little bit of novelty to like really to really blow up. Um, and yeah, that's probably transient, I would guess. But well, and some of that comes back to timing, which you talked about in the context of Revenue Cat at the very beginning, wishing you started it two years early, but there's a huge amount of value that acrus to first movers. Yeah. And then the second is craft, which you also talked about. And that is it pays to be

an early mover, but you also need to build a product that is a little bit more polished, a little bit more unique, a little bit more enduring than the rest. Doesn't need to be an order of magnitude better, but it needs to be better in order to sustain that advantage. I'm going to turn the question around on you cuz I think Yeah,

go for it. What do you think the the leverage or participation or importance of like a traditional growth team is in these? cuz that used to be there was a period there on the app store where that's how you kind of had to like you you apps wouldn't really grow. You got featured by Apple or a couple other things but like building these growth teams was all there was. They still exist. Yes. Is it like a focus now? Is it like better just to build something insane and like hope it goes viral? Like what do you think the what do you think the state of it is? Yeah. Well, a number of the top growth thought leaders right now, Andrew Chen, Casey Wyinners are writing quite a bit about this. And what I've heard them say is there was a period in the early app store days where growth teams emerged really for the first time. The modern growth team, I think Facebook was the first example, right? Where they realized that their

core product was their best asset for compounding user growth over time. And so traditional marketing teams continue to be important, but product driven growth uh arose. That's this new discipline that was very very important. But then as the mobile technology wave played itself out, um the amount of differentiation that growth teams could drive through these playbooks started to reach diminishing returns. Everybody had the playbooks, right? Yeah. Yeah. Everybody Everybody knew the plays and so there just wasn't a whole lot of new and interesting things you could do. But with the rise of AI now, we talked about this earlier, producing software, producing technology products has gotten cheaper and more accessible than ever. And it's creating some of these new channel opportunities for growth leaders or growth teams to find alpha, to find upside. And so I actually think we're going through this

renaissance right now where growth teams are delivering more value than ever. And then I'll speak from personal experience on one particular point, which is a lot of these AI companies, the best ones anyways, are being founded by technical teams who know how to build really good software products, but who don't know the first thing about how to grow them or how to monetize through a subscription revenue model, which is how a lot of these early consumer AI companies are monetizing. And so that's another opportunity for a growth team to come in and and add a lot of incremental. Yeah, there's there's almost a lack of need to optimize right now. We're kind of just in like build build mode. Um but yeah, definitely it's felt different. It's felt a little bit different than we were prior to this explosion. Um that you know, I mean, we still have a ton of people that are coming in on monetization teams for

these things, but it doesn't feel like that's the you normally it would be like you stand up a product team, then you do growth, right? It almost feels like in some ways you can skip that second step for now. You know what I mean? It's just like build a product. I mean, you got to share it a little bit and like, but it also maybe now in if you're an AI company, it's build a prototype, raise money, then build another prototype.

It's kind of what people are doing. I think a I think a lot of AI companies are getting away with that right now. I do think some of this goes back to the tourist effect. And obviously, the best defense against, you know, losing your advantage over time is just building a great core product experience. Yeah. But there's also an element of when you're getting tons of free users through viral organic growth, the best time to be investing in these product driven growth loops versus if you wait too long and growth starts to slow down, it becomes much harder to do that. Yeah. If you if you have a tiger by the tail, like don't wait, you know, don't just like wait for that growth to slow down to invest. Like you want to ride it on the way up. It's probably not relevant for most people, but I mean we talk about this 400 xers, the ones that are so much bigger than the others, like they're in that

category. I think Perplexity is a good example. like a company that's doing a ton. I don't know. I I won't speak to how effective their marketing is, but they are certainly doing a lot of marketing, right? Um for a product that's it's differentiated, right? But it's like fighting a bit, right? Um but but they aren't waiting just for the product to only speak for itself, right? They're they're also doing a ton of ton of growth and traditional marketing stuff. Yeah, that's right. Well, and they're a client, so I won't say much, but they recognize that distribution is going to be very very important. Well,

let's get to monetization because you talked about one of the things that growth teams work on is monetization and there's been a lot of innovation recently around moving beyond the single consumer subscription tier which for most consumer apps have has been the norm to both offering lifetime subscription plans as well as inapp purchases. So why do you think that is happening more and more? Why are consumer subscription businesses investing so much in innovating on their monetization model and do you expect that to continue? You know, we talk about the the retention slog, you know, sort of these game of inches. I think it's in some ways a game of inches, right? It's like I've done X, Y, and Z.

I've got like a a monthly and annual and I got a trial and I've got I've got all the basics. What can I try next? Um, lifetime is not a new thing like that. we were doing that in 2013 or 14 and it has some some advantages but also some trade-offs but like you know I think we we've seen more of I I think is interest non-gaming apps and exploring consumables like obviously uh Tinder is kind of the early example of this where they they gave some opportunity to like yeah I don't know some gaming mechanics where they could you know basically I say exploit I don't use that word lightly but like exploit people who are desperate I think I don't know nerdy syn but um Humble Flex. Uh but Dolingo being the other example with like streak extensions and stuff like this. I mean the classic it's it's just like some somewhat classic economics which is just like allow your people who want to pay more to pay more, right? Like if you

have a store where the most people can spend is $8 a month, you're not capturing surplus demand, right? Um, and so I think probably every product like I mean I I would say I think you would be it would be challenging for you to say like there's any business out there that's that's successful at some scale that doesn't have a way of capturing all of the demand that is present, right? I think like I was thinking about Disney was came to my head. It's like yeah spend $10 of $15 a month or whatever it is probably 30 now on on plus but then uh but then you're going to the parks, you're buying the toys, you know what I mean? like you're spending more and more. Um, and and you know, yeah, it's got to be the case that that that that that you you have an uncapped ability to spend for your customers that want to spend more, right? Now, you got to do that with with taste and and value. Like the Disney parks are good, right? That's

why people can charge you charge $200 a day or whatever. But I think I think more apps would benefit from this. Honestly, my theory is why we're working on this is that I think it's a technology problem. It's hard. Like it's it's not hard. none of us that it's not impossible but like a a monetization team cannot alone build these kind of features right it's going to take a product some some angle from product some angle from data from monetization from infrastructure like it's going to be all that we're building we're working a plug something but we're working on a virtual currency product that will will is meant to serve this niche because I do think more apps should be trying more stuff um here because there's a lot especially if you have content or like perhaps you have yes social graph or like there is some sort of gamification or something like that. I think it's it's definitely worth experimenting.

It's I think this is one place where the the the the term whale is definitely porative but like you bring your own sort of spending biases to the equation. Often like developers undervalue their own product, right? And then they do I do I do think there is some like probably baseline, you know, same reason you use the term whales. It's not something nice and I don't think it necessarily, you know, and like in gaming it truly was like, oh, okay, let's exploit these like sort of uncaptured gambling addictions in people in their homes essentially. So, I think there's some baseline resistance to do it, but like be thoughtful and do it with taste and do, you know, don't build something you're not proud of, but like um you know, I think these are consenting adults, so they should be at least. Um, so let them let them spend.

Have something valuable they can buy. Make sure it's valuable. just make sure whatever you're selling is valuable and then like you know nobody can feel bad about it. So yeah. Yeah. Well, in the report it says 35% of these consumer subscription apps are now offering lifetime plans andor inapp purchases. And I to be honest I'm surprised it's taken this long and I just expect this number to go up and up and up. Technology problem. Revenue's going to solve it. We're going to give you tools and then it's going to unlock. That's going to be they're going to be talking forget AI's out. We're going to be talking about RevenueCat's virtual currency feature next year. Yeah. Well, I'm excited for that feature and I do think, you know, if you look at proumer subscription or enterprise SAS, one of the great advantages they have is you can land and expand and you can upsell into higher price tiers. But with

consumer subscription, if you've only got one tier, it's it's just matching. It's just being able to like to to match to each person's propensity to spend separately, right? Well, a couple more

questions here. So, one is I think everybody at this point recognizes just how important onboarding is, but one of the other data points that stood out to me in the report was that 82% of trial starts happen on the day of install. And top decile apps, apps in the 90th percentile, boast three times higher trial start rates versus the median as opposed to trial conversion rates where they're only 2x more efficient at converting trials into subscribers than the median. So, onboarding and payroll optimization have a ton of leverage.

What are you seeing some of the best consumer apps do when it comes to just making sure they're capturing that user intent during that brief window when it's at its highest? I I would almost wonder if that that what amount of that effect is accounted for who is showing the payw wall and on boarding probably like that is just such a huge uh unforced error that so many apps make um for a number of reasons psychologically I think um but that is just going to be your your easiest and and most most likely games is like and then the math on like why it's 80% of trial starts on the first day it's like a nature of retention right it's like most of your users I mean being becoming a user and using the app on the first day are highly correlated, right? And so everybody who's a user is probably going to use it on the first day and therefore most of your users are going to be on their first day and like so therefore

most of your trial stores are going to be on the first day if you throw them there and you should optimize for that, right? And then the fact that you you mentioned like the the differentiation squishes at the conversion from trial to to to paid well makes sense too because like trials trial conversion is a semi-passive event, right? like you don't have to be using the app at that point for the the trial conversion to go through. So yeah, I think this is also one of those areas where it's going to come down to I only think there's so much leverage for what you can do on the payw wall versus what you can do in that onboarding experience like leading up to the payw wall and like how premium can you make it feel like how much can you convince the user that this is for them to get that trial started. I I I find some apps just s I mean you're going to make me come up with an example. I'm not sure. It might not be off the spot, but

like some apps just have these amazing onboardings where like you feel like you've been a user forever before you even get to the end of the onboarding, right? Or you're already a user of the product and whatever and you've you've been sold on this life post conversion like, "Oh, this app's going to solve all my problems, right?" I think developers pull back because they feel uh yeah, they just feel they don't want to seem too too aggressive or greedy.

This is this is more promising in indie developers. I think anybody who's like making a serious run at it knows to do this. Definitely worth investing in in that in that first 2 minutes of a user's experience. Like at Elevate, we built a whole game like we built a whole multimedia 3D or not 3D, multimedia 2D like interactive thing that was like leading a user through their like first first like 2 minutes. Um and you know this was 10 years ago now, but like and it mattered like it it it sold the product on premium. It increased our retention. It did all the had all these effects outside of just that like that localized like trial start rate. Yeah. I had somebody ask me recently, how often should you be AB testing your onboarding experience? My answer was if you have the resources to do it, you should just continuously constantly. Yeah. Cuz it's like you have so much so many trials uh little t trials like like people going

through that funnel. You can do you can actually experiment with a lot of small stuff on the on the onboarding. Like as as stuff gets further down, it takes longer to get test results. But like if you have like a reasonable number like hundreds or thousands of downloads a day like you can be running an experiment in a couple days and get results you know and if you could like do that on a weekly basis like be running a couple experiments like you could be gathering a lot of data really quickly which should be good. Yeah. So to recap that I heard two buckets of things. The first was do the obvious stuff right payw wall view rates. Jake Moore who founded Superwal talks about getting payroll view rate over 80% in the first session because if the user doesn't even know you have a premium product then obviously subscriber conversions can be lower using SSO options like Apple, Facebook and and uh Google in order to

streamline registration. And there are a number of these things that are just fairly easy and obvious to do. And then there's the harder part, which is making sure that this immersive onboarding experience you're creating is unique and compelling enough that users get really excited and are more likely to pay for the product, which is going to be limited by how differentiated your product actually is. But then it's also going to be related to that that word craft we keep using. Like is your app really great and does it look great and does it make consumers feel like it's a premium product? Um, and I think that's that's probably some factor of of it as well. Yep. Absolutely. All right, one

last data question and then we'll get to our lightning round. So looking across nearly all of the key KPIs in the report, North America continues to be an outlier. It outperforms most other regions across most of these metrics. Has that changed at all in recent years or or does that continue to just look pretty consistent year-over-year? I knew you this is going to happen. I have no idea, Phil. What's the report saying? I have to go back to the data.

Fair enough. Fair enough. Uh but one thing I was I was is amusing rather than an answer but like we should probably normalize these per region things by like either GDP per capita or like PPP. Um because like I mean I think it's no surprise like North America still for revenue cap like I don't know what the exact split is but like US Canada is like still like our number one place people make apps as well or like close uh and so they tend to be oriented towards these markets and then also I just think like we're one of the we're we're I know I make some generalizations but like America the United States at least is a very consumer culture like we're very used to like consumption as lifestyle. Uh that's not necessarily the case in in other places even if they have a similar like you know GDP and like free income and stuff like that. So yeah, I don't know if it's been changing, but I will say

I'm not surprised and I don't expect this to probably invert anytime. I don't I don't think there's any there's no there's not enough tariffs in the world, Phil, that's going to like make us not want to buy apps. He's trying. Oh, I didn't How would you even tariff an app? I didn't even think about that. Now you give me a new nightmare unlocked. Thank you. Good point. Um, no, but that that resonates with me. I mean, I've looked at the data over the last few years to a degree, and as you would expect, North America is relatively affluent. There are a lot of companies producing apps in America and in Canada. And so, there are just some built-in advantages that are going to make it easier to monetize. And to me, the implication of that is if you're a US company looking to expand internationally, just make sure you've looked at the numbers because it is much harder to build a profitable and costefficient business outside of the

US. Now, let's let's go back to that like 10 or 100x reduction in cost. That actually means that I think some of these niches that we're talking about could open up in some of these secondary and tertiary markets. Agreed. Um where you could make I don't know if this makes any sense, but the runa for Turkey or whatever, right? like uh these maybe and and potentially those are like small to mediumsiz opportunities for like this these this new kind of vibe coded app developer or like I think there's going to be I I'm not I don't have a ton of confidence that the straight vibe coded app is going to really disrupt the market too much but I do think the like the step one step past that right like the vibe coding enhanced small team of people who care is going to change the app world and like those are the folks I'm excited to see them tackle things and regions and needs that haven't been tackled yet which I'm excited Yeah,

that's a really good point. I mean, we talked about the impact of AI reducing the cost of producing software on certain categories and niches now becoming viable. But I think it you're right, it will have an impact geographically. You're already seeing a lot of these developers in Eastern Europe emerge as like lower cost basis alternatives to to US companies. And I think we'll see more of that. And Turkey, Turkey, I don't know if you noticed, Turkeykey's blown up. They've been given a lot of like incentives to app developers. Um Turkeyy's trying to make like apps It's like a thing for their economy, which it's great. It's awesome. But another another aspect of that, it's not necessarily like the Korean version of Runner. It's like what are problems that are unique to Korea, right? or like unique to these regions that like previously it would have been too niched down to like justify software

or like for for some really small countries or like countries without like traditional technology like native technology ecosystems like now it's going to be much easier for native people to like build stuff for their their own like countries and cultures potentially maybe I don't know um I think this is going be hard I feel like you can throw out 10 predictions on this stuff we'll be lucky if one of them actually hands out cuz I just think there's so much so many butterfly effects and chaos and all this stuff in in the system. But hey, I mean I was saying at the beginning I was very prophetic about my own cat prediction.

Yeah, give yourself more credit. Maybe maybe it'll be more obvious. I I will tell you I I knew I was taken This is sort of off off of the the topic of Sosa, but it's related. The effects of AI on the macro for my business I did not see as clearly. Like we've talked about like more apps and stuff like this. Um that's the first order effect, but like for us there's like second and third which is like one being the top dev tool in a category now has even more lock in because the LLMs are you know I was looking today it's like our third biggest like uh source like where how did you hear about us like AI tool recommended it. I did not see that and then I also this thing I I I'm acting like I knew that the like cost of development was going to go down and like more apps were going to get made. I totally didn't. I mean, I I kind of thought I just thought all existing engineers would go faster, which also

happened, but I didn't think about the fact that there's just going to be way more people writing apps than making code and the barrier to building an app. So, those have all all kind of hit me in surprising ways, but now I just get to like, you know, pretend I knew and like was, you know, put this business in the right position to capture this uh the whole That's okay. You can you can claim the credit. It's an exciting time to be in technology for sure. Well, let's

transition to the lightning round. So, I'm gonna ask you a series of rapidfire questions. You give me quick less than one minute responses. First one, sort of a softball. What's the best part about working at Revenue Cat and then less of a softball. What's one thing you would change? I'll keep it short. Helping developers make more money. It's our mission. And I mean that t like literally in the sense of like I love just meeting with everybody building apps and like helping my job's great.

Like I there's stuff I have to do that's hard to keep the company running. But the best part of my job is every day I just get to show up and figure out like how do I make all apps in our portfolio even better and faster and give them more tools. And I love that. U makes it somewhat easy just what do you need and then I can like see what I can build. And then my biggest mistake we kind of talked about there's one thing I would change started two years earlier. I would have started in 2014. Then again maybe I wouldn't have been able to raise money and we would have spun out and like given up and then somebody else you know you'd all be using some competitor of ours now. I don't know. Well, timing is everything. But you timed it pretty well. I won't complain. I won't complain. Yeah. Uh number two. What's your favorite consumer or proumer subscription app and why? Okay. Uh right now, this is just like Jacob's pics, but

like I uh I just got a bird buddy smart birdhouse. This is like a hardware software thing, and they have an app sub with subscription that that adds some like cool. So, let me let me pitch it for you. It's a birdhouse with a camera in it. That's the TLDDR. Uh and it takes pictures of the birds that go to your bird feeder, which cool, but you never you never see birds up close like that. They're really cool creatures when you get like a it's like a high depth camera. It's really great. Yep. And then the app gets I might mess up what's behind the pay wall and not, but you get push notifications when you get a bird.

You get like summaries. Now, here's the AI magic. I don't know. They do some image detection to like differentiate individuals. So, you can like name a bird and it'll say like, "Oh, this bird's back." And uh and and they've gotten some fair and I think this is all behind the pay wall. They have some fairly sophisticated Yeah. like image recognition to like recognize even like subreeds and stuff like this that that seems fairly fairly accurate. Um, and yeah, it's kind of like having a static Pokemon catcher. You just get to take a picture of a bird and you save it to your collection and it's kind of nerdy and fun and uh, you know, and it's got good sharing features and and stuff like this. Anyway, well, and my parents just retired in the last couple years and they're both avid bird watchers. So, I'm going to Everybody should buy their parent a Bird Buddy. Like, I think that is like it's$100, $200, $300 some low

$100. Definitely, if you're like a if you're like a well- earning millennial, you need to get your parents a Bird Buddy. It's totally like within the budget. So, you've solved my 2025 holiday gift question. And then get them the subscription, too, because we need Bird Buddy to keep sustaining. So, like uh that's the the high margin long play for them, I'm sure. There you go. All right. What advice do you have for first- time founders launching a subscription app? Um we've talked about this differentiate like I think right now again, don't run up against Strava.

Don't run up against something that exists and and and find a niche that you actually have a point of view on. I see too many founders. I I say this from a a place of a place of privilege because I picked like the one thing I was like differentiated to do, but I passed on like nine other ideas that I thought were cool, but like I didn't have a unique advantage in. And I guess that says also like start early to like differentiate your value personally.

Like what do you know that you can bring the world and then translate that into an app. And I think that's going to go a lot further than like um than like you got to know a thing. I think all this is like for my this is not quick not lightning round Phil but uh I think all like outsized outcomes come from knowing something somebody else doesn't right um in the alpha I guess is the what they call that um so yeah know something somebody else doesn't and then build an app for it um and then yeah you also messaged like don't raise capital until you absolutely know you want to like I think that's that's changed in the last decade it's it's really better to bootstrap as far as you can um these days so well and I think that advice is timeless but it's only become more important because With software development costs going down, they're just going to be more and more apps.

It's going to be more and more competitive. So, you need some sort of unfair advantage. And then I would also add, you need to be passionate enough about the space that you're willing to spend 10 time. It's a grind. It's a grind. So, you got to have some reason to love it beyond because the the money might never come, right? So, you got you got to love it for other reasons. What's an example of a time that you and the team at Revenue Cat failed and what did you learn from that mistake? Uh, I wrote down 2021 large S. Um, so, uh, yeah, we raised our series B. We were probably a little too early. I mean, we had the metrics, I guess, if somebody was willing to write write a check, and I'm grateful for that. But, um, in terms of maturity, I'm not sure we were ready to like understand and ingest what that meant. And like, we were still, you know, I I I think there's just like a period for founders where you have to

like go through, you have to take a certain number of hits and like make a certain number of mistakes or sort of fixed number of mistakes. And we had to work through those through 21 and 22 and then into 23. Just really did not grow super fast. I don't think we delivered super well on product. I felt like we were letting our customers down and like we were just focused on a lot of like the wrong things. BS. I don't know if we can customize this podcast, but BS. Like we just focus on a lot of stuff that in hindsight I'm now like that did not matter in any sort of way. And so yeah, it's rough. I I don't know. I I don't know if I can even advise founders to avoid that. But I think you kind of just have to live it and go through it and get your licks. This is Okay. So the the one distillation I would say if it smells like BS, it probably is BS. So like, you know, if you're a founder, you probably have the right sense for it. So

yeah, avoid it if you can. Yep. Good advice. Well, and I imagine that the timing didn't help you either. I mean, coming off of the pandemic, there were all sorts of tailwinds consumer apps were riding that went away in 2022 and 2023. And a platform that's monetizing on that wave, it probably Yeah. Yeah. Yeah. So the macro hit us and then also like sort of incompetence kind of combined at the same time to create what I call internally the dark times. Uh but we've since we've since Yeah, we're doing great. Well, it definitely shows. You guys seem to be doing great. All right, last question.

How do you believe AI will impact the subscription app ecosystem in the next one to two years? Obviously, it's going to change a lot, but if you had to pick one or two things, anything in in particular? I just think everybody's going to have to move faster. Like I I which seems trit but like the expectation for how quickly you can iterate on basically everything is going to go up. And so like if you still have if you still have like mid2010s mindset on how fast app iteration should go and how long it takes to build stuff like I have bad news for you. You're going to have your lunch eaten by like 10 like gen alpha founders who building the same thing way faster. Even if you don't think their product is good or you don't like React Native or whatever, too bad. Like consumers don't care. Nobody cares about your like uh your perfect architecture and your swift UI, whatever. Like you just got to be able to build really

really quickly. Find out a way find a way to make it quality and differentiate. But like and I think that's that's that's a little terrifying. I think it's and this is maybe where we get AGI takeoff, but I think like the economy is just going to start moving faster than humans can at some point. And maybe that's that's what fume looks like, but I can feel it happening. Or I feel I feel like a hard time keeping up with stuff. I feel it, too. Yeah. Yeah. Yeah. Um especially if you're a technical contributor like I think for sure. So yeah, move fast and break things and gold plate later. Well, great. This was a real pleasure. Jacob, thanks for coming on the podcast. Any parting words or uh anything you want to say before we uh end things here. If anybody hasn't used revenuecat.com, I suggest checking it out. Check out the report, revcat.com/report. You can find me on Twitter tweeting much the chagrin of my

employees and investors I'm sure at twitter.com orx.com I guessjiting uh which maybe we'll link in the show notes but other than that no Phil it's been great it's been nice to it's been nice to just show up and talk um and and and not be not be overrunning the guest I am the guest there you go you got a platform well thanks for coming on it was it was a lot of fun and I will say RevenueCat is a great product most of my clients use it and um uh thanks for sharing the insights from report. It was a good discussion.