Insights from RevenueCat’s 2026 State of Subscription Apps Report

From early 2022, roughly 2,000 subscription apps were being launched per month. In January, 15,000 were launched. That's a 7x increase, right? Our thesis when it comes to the whole Cambrian explosion of AI apps is that because the cost of developing this software is going to go down to to close to zero, people can go after niches that weren't economically viable before. you can niche down and and find these really interesting pockets of opportunity. And I don't think that we're running out of niches to cater to anytime soon. You're on Twitter, you see somebody every other day say, "Hey, Dolingo is making a billion dollars, but you could build this in 2 hours." That's not true. You could probably make something that looks and feels like Dolingo for the first 30 minutes, but then it'll be done.

Distribution and community, I would argue, is still very, very big. The apps that manage to make people feel something and bring people together, that's just a very difficult thing to build from scratch. >> 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. This episode is brought to you by RevenueCat. The world's best apps use RevenueCat to power purchases, manage customer data, and grow revenue on iOS, Android, and the web. Join more than 100,000 apps that are already using RevenueCat to grow their businesses and track more than $10 billion in spend, including category leaders like OpenAI, Notion, and Ladder. Learn more at revenuecat.com/subversive.

My guest today is Rick Hrickchman, the VP of growth at RevenueCat. Since launching in 2017, RevenueCat has grown into the world's largest SAS platform for subscription apps that need help powering inapp purchases, managing customer data, and growing revenue. Over the last four years, RevenueCat has 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 Rick about the most important data and insights from Revenue Cat's 2026 report and their implications for subscription apps looking to maximize their revenue growth, particularly given all of the ways that AI is changing the subscription app ecosystem. All right,

welcome Rick to Subversive. super excited to have you on today to talk about Revenue Cat's state of subscription apps report which is something I've been avidly consuming for several years now. Hugely helpful to the subscription app ecosystem and everybody who works in it. Uh we're going to spend a lot of time today talking about the data and insights in that report. But before we do, tell us a little bit more about what Revenue Cat does and how you found your way to the company in 2022.

>> Revenue Cat is the infrastructure layer that that powers inapp purchases and subscriptions for over 100,000 apps now. And we do that across Apple, Google, web, Amazon so that developers and the team building products can can focus on just that, right? Building building building great products. Um, I've been here for three and a half years now myself. Before that, been in developer tooling for a little bit, but probably more relevant is that I ran growth for freetoplay games for like a decade. So, I have a lot of hands-on experience with figuring out ways to make people pay for the things you build.

>> Yeah. And I find out some of the best marketers I know came out of the gaming industry and free-to-play games is about as competitive as it gets. And so, uh, it's cool that that's where you came up because that's a ruthlessly competitive environment. And so, I'm sure you you you've been steeped in a lot of the metrics we're going to talk about today for a very long time. Um, and that

brings me to what inspired you and the Revenue Cat team to start this report a few years ago and how has it evolved over the last two or three years? >> I think the thing we saw was was two things. Um, on the one hand, a lot of operators work in isolation. >> Mhm. and and you know uh we're on LinkedIn and Twitter and and where have you so we we every once in a while we see somebody else or we go to a conference but by and large you're kind of just looking at your own numbers your own dashboards day in day out so it's very difficult to to know um am I doing well um is this uh is this is this conversion rate is that good uh should I be aiming higher so on the one hand you have a lot of people that don't actually know how everybody else is performing.

Then on the other hand, we're sitting on what is most definitely the biggest crossplatform monetization data set there is. So if you put those two things together, we figured that we can build something useful for the industry. >> Yeah, I think it's spot on. And as somebody who has spent the better part of a decade working in consumer tech and and primarily consumer subscription apps, finding benchmarks is just really hard. And even when you find them, they're often unreliable, either because they're so apples to oranges or because the sample size just isn't large enough to be reliable. So the fact that you guys now have a data set of over 100,000 subscription apps using your SDK just means that at the very least you have volume. And with volume also comes a little bit more apples to apples comparisons because you can start to drill down into category and into region. And I know that's a lot of what

you do in the report. >> Yeah. And I mean you you've seen this report a couple of times. You'll have noticed that it gets longer every single year. And um that's if not by design, it's because we don't constrain it. When I talk to other people that are in like more traditional marketing roles, sometimes they ask, "Why do you put out a report that's like 300 pages long and takes you four months to write?" >> And it's because we think that there's enough to share, right? We think that there's enough information out there that is going to be useful for somebody and that hopefully helps somebody make make more money.

>> Well, as an end of one, I can definitely say it's been hugely valuable for me. And then as somebody who's worked with over 30 clients and who has built my own subscription value loop calculator off of your tool, I know I've gotten a ton of value out of it. Um, and and I don't think the report would still be around if it wasn't adding value to the rest of the ecosystem. So let's jump into the 2026 state of subscription apps report uh which you just released. And um I'm going to start with this point which is that the report concludes subscription

apps are becoming a winner takemost market. And there's data to back that up. So the top 10% of apps grew by over 300% year-over-year. Um whereas the median only grew 5% year-over-year. So why do you think the gap between good versus great apps is widening so rapidly? Like what might be some of the factors driving that? This has always been a topheavy market, right? It's always been true that that the biggest apps make up the most uh or capture the most of the value being created. Um the the reason we think it's accelerating is there are three things happening.

There's very obviously an explosion in supply and um we can see that pretty clearly in the data. Um our friends over at App Figures contributed to this and and gave us some like meta data on on what's actually being launched out there. >> Mhm. the uh from early 2022 when off the top of my head roughly 2,000 subscription apps were being launched per month. Um in January 15,000 were launched. >> That's a 7x increase, right? And more apps is more noise makes it very much harder for you to be discovered as an individual app.

>> Mhm. >> So that's one, right? Way more supply. Uh the second one, that's always been true. Uh top performers compound advantages. You have better data, you have better teams, you have better strategies. There's always a lot of incremental performance in segmenting your audience, but the bigger you are, the narrower those segments can be. Um and then lastly, I think we can see in the data that user expectations are just rising. Consumers have been trained to increasingly pay for software, which wasn't always true, right? So, by and large, you see that um conversion slowly but surely is is improving. People pay more.

>> We can see that people are actually spending more when they pay. >> Uh but churn is also increasing. And that's that's that expectation just being higher. People are also a little bit more sophisticated. uh they know what they're paying for. They're they they pull the plug a little earlier. So those three things combined uh just create this widening gap. >> Yeah, that makes a lot of sense. And so to repeat back a couple of the points I heard you say there like at the top end of the market you have consolidation and it's always been true that the majority of the subscription app economy has been driven by about a dozen major categories. Categories like education, media and entertainment, productivity, health and fitness. And in every one of those categories, you now have a top two to three players who are uh taking a lot of the economics off the table. Uh you also have a couple new categories that

AI has created and I know OpenAI is is one of your customers um at RevenueCad and and they've generated a ton of value. So at the top end of the market, you have these uh juggernauts that are generating hundreds of millions of dollars in revenue. But then you also have this rapidly expanding denominator of vibe coders and indie developers and solarreneurs who in many cases have apps that just aren't doing very well. And and in some cases that's exacerbated by the fact that the ad networks like Meta and Google and the app stores have gotten so crowded that distribution has become a real challenge. And so that

brings me to another question I wanted to ask, which is to what extent do you think this delta in the top 10% versus everyone else is being driven by sheer product quality versus distribution? Cuz more and more it feels to me like distribution is becoming the bottleneck. >> Yeah, that's the differentiator. Uh product quality, well, you can look at it from a different couple of different perspectives. product quality. If you're purely talking about something looks and feels polished and finished, that's now table stakes.

>> Uh we we just wrapped up our shipyard hackathon and what we did is we we selected a bunch of influencers and those influencers had ideas for apps and then we had the community build apps. Our second biggest hackathon in in the last 12 months. We also every year in summer do a shipon very very big tens of thousands of people participated >> for shipyard which ended roughly 5 months later 15% of the number of participants so way fewer people participated it's just like a smaller a smaller thing twice as many finished products delivered >> and having judged those products personally that bar was so much higher >> it's like the number of almost carbon copies of very successful apps that really just felt finished. Uh I was honestly a tiny little bit shocked. Um so if that's what you mean by quality then then that's product quality then that's the that's now table stakes. There's still there's

still product depth or breath and that's more difficult to like vibe code your way out of. Um, >> and and then the go-to example, uh, I mean, you're on Twitter, you you see somebody every other day say, "Hey, uh, Dolingo is making a billion dollars, but you could build this in two hours." Um, that's not true. You could probably make something that looks and feels like Dolingo for the first 30 minutes, but then it'll be done. that first example or that first impression of product table stakes and then yeah distribution distribution and community I would argue is still very very big.

>> So the the apps that manage to make people feel something and bring people together that's just a very difficult thing to to to build from scratch. I couldn't agree more and I think network effects were already critical. Like if you look at some of the biggest winners in consumer tech over the last 15 to 20 years, many of them had really strong network effects because that creates a sustainable defensible mode for the business. But that's been supercharged with AI because now you can create apps in a weekend. Even non-technical founders and developers can create their own apps. So the ecosystem is more competitive than ever, which means people driven network effects have become more critical. There's also now this concept of a data network effect, which is the better your product is, the more people use it, the more people use the product, the more product usage data you have, which drives better

algorithms, which drives better user experience, which drives more usage. And so uh the combination of people driven network effects and data driven network effects, I think, will definitely crown the next set of winners in consumer tech in the AI era. And and this sort of relates to the next topic I wanted to get to. you already alluded to this. So,

um, in the report you talk about how AI has caused new app launches to explode. Um, they've grown 7x from 2022 to 2026. You had already mentioned that stat. Um, but apps launched before 2020 are still generating close to 70% of all the subscription revenue, >> which goes to how in some ways AI is a sustaining innovation for a lot of these larger companies. It's making it easier to um, launch new apps, but I would argue it's actually making it harder than ever to scale these apps because there's just so much competition. So as somebody who spends all of your time at a company that supports app developers u building new products how can new entrance break through against some of these category leading incumbents in today's ecosystem >> I don't know that um today is much different than things were a year ago or a year before that and um the example I like uh pulling out is uh is Cali right? Very topical. They just got

acquired by my my fitness pal. >> And everybody focuses on the fact that uh you know they were 70 year olds initially. They didn't know how to code. Um but they did the work, they did the homework, they found the users, um they built a product for a very specific group. those basic the fundamentals of building something for an audience and then finding that audience >> those haven't those haven't changed. >> So like breaking through the noise it it starts with building something that matters >> ideally building something that matters for uh a specific group of people that you can go find and um and then scale together. I think the uh a a recent example that I think is always um quite compelling is uh shotsy. Do you know Shotsy?

>> Yep. >> The GOP1 app. Um >> uh I think it's ya >> y >> that built that. >> Yeah. So but the way ya got started was ya was taking GP1 medication was part of a Reddit group. Uh everybody there faced the same struggles. She built something for herself and there for that group and then it snowballed, right? So it again it started by building something useful for a specific group of people and then going to those people like go to go to a conference uh find a message board.

Those those kind of things I think still work >> well. And I think you're hitting on something really important which is I think you're right that in the last year maybe not that much has changed. the factors have just accelerated. But I

would argue that over the last five years, one of the most profound shifts I've seen is that you're seeing the nicheification of consumer subscription apps. And what I mean by that is 10 years ago, I don't know that building an app for um calorie tracking or nutrition would have really been viable at all. And then five years ago, you know, My Fitness Pal at some point starts to hit critical mass because the technology gets better and more people are uh getting enough value out of the product that it can support a hundred million plus business. But then now Cali's secret was um they went after a specific niche which was a set of users who didn't care as much about their macros being perfect every day, but they wanted to be able to get the answer very quickly with a single snapshot. And I was reading a blog post recently by Mike Fischer, the CEO of My Fitness Pal, who was talking about how the audiences for

Calai and My Fitness Pal are actually quite different. My fitness pal prioritizes accuracy, whereas Calai uh prioritizes speed. The aggressor is accuracy still needs to be good enough for Calai or nobody would use it. But as long as it's good enough, then AI allows it to generate a good enough output much much faster and that targets a different audience which made it a very complimentary acquisition for My Fitness Pal. And I'm seeing this across every category where now because the the um costs of software development have gotten so much lower and u the ability for nontechnical founders to come in and build something they're very passionate about has gotten so much easier. It means that you can go after this much smaller niche and still build a viable business that can do 10 million 20 million in ARR. How do you think that's going to impact how the app ecosystem evolves over the next few years as you

have all of these really passionate solarreneurs or or uh indie developers building these apps for their own use case but that suddenly can become real businesses. >> That's partly the same widening gap thing we talked about. >> Y >> um because when we talk about the widening gap and we say hey there's a lot happening at the top and there's a lot happening at the bottom. um at the bottom by and large more people are making money >> and they're not making millions or tens of millions or billions of dollars but they're making money and they're by and large then making enough money to to live off and and and that just wasn't true before. So I think our thesis when it comes to the whole Cambrian explosion of AI apps is that because like you mentioned uh the the cost of developing this software is going to go down to to close to zero. People can go after niches that weren't economically viable

before and in those niches they'll find people that just didn't have a thing to pay for before. Right? And my my my go-to example is like a goat massage app, which might be too niche, but um yeah, you can niche down. You can niche down and and find these really interesting uh pockets of opportunity. And I don't think that we're running out of niches to cater to anytime soon. >> I agree. Yeah. And what it means too is that authenticity is king because if you're just building another generic language learning app or another generic fitness tracker, you're not going to get anywhere because you're going to have hundreds of copycats out there doing the same thing. But if you're a runner and you go build the running app for serious athletes who want to train for their next marathon or you're a and you go build the GLP1 tracker for people who want to lose weight using these new medications and you're really passionate

about this very specific problem that needs to be solved in the world. I think you can break through very easily. And

then and then also I'd love to ask you about this because more and more I'm seeing founders uh and early employees do this thing where they're building in public and they're using Tik Tok and Instagram and other social channels as a way to sort of broadcast the day-to-day life of their founder journey and people are really resonating with that particularly Gen Z but but you know even others it's it's really appealing to see somebody put their whole story out there and share the ups and downs and trials and tribulations of being an entrepreneur. Why do you think that has struck a such such a chord and and do you think that's part of what can help some of these smaller companies solve the distribution challenge?

>> If what you're trying to distribute is something for other people that are building in public, then it's a very good way of of doing it. Well, but that's the thing, right? So yeah, I think building public um works. If the public is your audience, then I think it works to not like talk about ya for the entire episode, but her being in that Reddit group with the actual users and building it public and getting feedback.

>> Yeah. >> Led to her building something that is actually for those people. So, >> when people start thinking of it like as a growth hack or just a a way to get more eyeballs, I don't know that that's the most sensible way to to spend your time. Um, but if you can if you can become a part of that community that you're building for and then you share your progress, yeah, that's super powerful. >> Yeah, I think that's spot on. And it gets to product channel fit, which is you don't want to be building in public for the sake of building in public and broadcasting your story everywhere you can. You want to you want to be putting it in the places that matter. And so for a that was this Reddit group. We have a client called Studyfetch um that is building an AI native um edte tool for college students. So for them it's a lot of Tik Tok, right? Because Jensen students are going on Tik Tok to try to

find help with their homework or to try to figure out how to adopt better study practices. And so that's been really effective for them. But the key is understanding who your customer is and then going where they are and being authentic to that to that audience. Um, I want to talk about AI for a little longer and then we'll get to some other topics that came through in the report.

One of the data points that stood out to me was that AI AI apps are generating 41% more revenue per payer, but they're turning 30% faster. And so, let's just start with why do you think AI apps are struggling so much to retain users in certain cases? A partner data point to that is that they do way better at reactivation than other categories comparable to what you see in media and entertainment where where people hop, right? I have Netflix, but then Stranger Things is done and then when the new season comes, I sign back up. you see a very similar behavior kind of pop up in these AI apps where it's something I use and then if there's something else that does the same job and I think it might do the job better, I'm just going to move there.

>> And because everybody's continuously launching new models one after the other, you get this uh this zigzag where people hop from one product to the to the other. There's not a ton of like brand loyalty here. uh for most users these are tools. It's not always true, right? There's there's obviously some exceptions. Um was it uh was it GBT4 like they they >> OpenAI decided that they were going to sunset this particular model and people went up in arms because they had >> well slightly parasocial relationships with with their AI with their AI assistants. But those are exceptions, right? by and large uh very much seen as tools. But then if you take something like um Tlen that you know it's very much AI but it's uh it's AI where the relationship and and and like building this bond and and understanding is very much part of the of the value prop then my expectation would be that the retention there looks wildly different.

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Learn more at paddle.com/subversive. So Tolen has been a client of ours for almost a year now. And and so I obviously won't share anything sensitive, but we've been working with them for a very long time. And one of the things that's really impressed me about Tolen from the beginning is they had such an opinionated vision for what an AI companion should look like. And that really just shows through in the craft, the craftsmanship you see in the product, right? Their onboarding flow is so unique. It's like it's like nothing I've I've seen before. And so within the first 60 seconds, you're building a bond with this AI alien being that is your tollen. And that leads to a very strong emotional attachment, which leads to higher activation rates, which leads to strong subscriber conversion or retention rates. Um, but it all starts with taking a really novel and differentiated approach to what an AI

companion should look like as opposed to just copycatting character.ai or replica uh companies that have already existed in the marketplace. And that kind of goes back to what we were saying before around >> the ecosystem has gotten so competitive >> that as an AI product in particular, you've got to find a way to stand out otherwise you're just sort of dead in

the water. Are there any other patterns you're seeing or or or implications of the the competition being generated by AI that developers should be paying attention to as they look to build durable AI products that that offer lasting value? Well, there's there's a lot of stuff that's not uh it's not necessarily obvious. Also, the how we define AI products uh become becomes a bit of a question because there's a lot of rappers AI rappers out there that somehow the core functionality is dependent on uh you know the OpenI API or the the Gemini API. And this is everything from uh image recognition to text generation all these this is a this is an entire category as a category we see those struggle and and and there's a couple of u there's a couple of reasons that they struggle. Uh probably the the biggest reason is that >> um there's no such thing as a free user for these apps because usage is uh API

usage and API usage means you're you're paying you're paying OpenAI or Google at at one point. um they have to be very aggressive at monetization and that just has impact on on how you acquire users on how you treat users. That's an interesting dynamic. And then by virtue of most of these functionalities slowly but surely being absorbed into the big AI agents themselves. >> Yeah. >> You know the the question is if I can just point to GPT to a thing and ask it what it is, what's how can an identifier app still be differentiated? And there are ways to do that. And you see that the ones that are sticking around are actually differentiating. Um, interestingly enough, oftent times by by pulling from from gamification and and and some of the things that uh that gaming has been doing for a while. So now I'm building collections.

>> Uh, one of the like an archetype of app that we've seen been popping up is like the the Pokedex but then for something else. That's such a fun and engaging format where it's like got to catch all the house plants. So now I'm using my house plant identifier app to build my Pokédex of house plants. But then you know you're you're thinking beyond the the simple uh trick of the AI can tell me what the plant is. >> Yeah. Um, and then you can kind of you kind of get back to the point where, you know, the people that end up winning are still the people that think about product and experience and craft engaging um, well, engaging digital experiences for their users.

>> Yeah, I think that's right. I mean we we have talked about how distribution has become the bottleneck and has become more important than ever. But going back to the Tolen example, craft and product vision and um and style for lack of a better word still really do matter particularly in competitive categories. You brought up an important point there which is around monetization. And so one

of the biggest shifts I've seen with AI is it used to be the marginal cost of serving a subscriber for most digital subscription apps. think Dolingo, Straa, Tender, it's close to zero, right? But now, if you're supporting AI powered features that depend on LLMs, >> your marginal cost of serving a subscriber is definitely not zero. And in fact, the more that subscriber uses your product, the less profitable they may become because if you have a flat subscription price, but they're using the product 10, 12 plus hours a day, which in some cases they are, then they could actually be unprofitable because they're racking up so much compute cost.

So, how does that influence? Let's start with trials because one of the data points in the report is longer trials convert better than shorter trials. But if you're giving somebody a 14-day free trial and they're racking up lots of underlying AI costs in those 14 days and then they don't convert, that's not that's not a sustainable business model. So, how do you think AI is changing some of these calculations around trial and hard payw wall versus premium?

>> Well, they they don't do trials. They don't do premium. Uh, and if they do trials, they're very short. Um, >> and and it's one of the things we saw in the report was, and this is a pet peeve of me, so I'm going to go on a little tangent. >> Um, every single year, for as long as we put out this report, we see that longer trials convert better every single year. >> And every single year, the share of short trials goes up.

>> Everybody knows that the longer tri the longer trial converts better. Everybody knows. But everybody just gravitates towards the shorter trial. And that's been more true this year than uh this year than ever. And yeah, that's about um you know protecting uh protecting the economics of just like running running the business. So yeah, either very short trials, loads of no trials, um loads of no trials at all. And when there is some kind of premium model and more in general um people are increasingly mixing uh subscriptions and and consumables and then very specifically some kind of metered credit system, right? So I'm a free user, so I have X amount of uses per week.

>> I'm a paid user, I get Y, but now I can also buy incrementally. Um, and you know, for people from gaming, that's very familiar. Um, but for for a lot of apps, this is uh very new, but also it's exciting because it makes it makes it possible to drop the floor and raise the ceiling, right? you can make it possible for a lot of people to pay you a very small amount of money, but also to take your most engaged users that probably also just value what you do more and and and make it possible for them to pay you for that value.

>> Yeah, I think that's right. In a way, I see BTOC subscription apps adopting some of the best practices that have existed in B2B SAS for a long time. Often times, it's gone the other way, right? because B2C is so competitive that a lot of enterprise SAS or proumer subscription businesses have figured out ways to optimize their onboarding flow or improve their um life cycle marketing communications based off of what they seeing happening in consumerland. But on the monetization side, I think it's now flipped where uh you mentioned a lot of consumer subscription apps are layering on multiple subscription tiers, right?

So instead of just one tier, you'll have a basic tier that offers u exclusively noni features, but then if you want the AI features, you have to pay extra. Dualingo is a great example of that with the recent release of Duolingo Max. Uh you also have cases where they're shortening their trial durations, right? And so Tolen's a good example of a company that had a 7-day trial and now they have a 3-day trial. And part of that is just protecting um their exposure to runaway AI costs. Um, and then there's a third example which is layering on consumables or inapp purchases so that even subscribers once they've subscribed to the premium version of the product have to pay extra if they go beyond a certain usage limit.

So we're seeing all this innovation on the monetization side, but it's all being driven by the fact that the marginal cost of service subscriber is now non-trivial and you and you have to account for that in your monetization strategy. And I think that's a good segue into hard payw wall versus

fremium. So you have this data point that shows hard pay walls convert five times better than fremium 10.7% versus 2.7% install the paid rates. Uh but after one year the retention is nearly identical. So so why do you think that is and how should app developers and teams be thinking about this critical strategic decision around offering a hard payw wall versus a premium product? People take this this data point of a hard pay wall uh converts five times better and in and they look at that in isolation and they conclude every app should have a hard pay wall. for us obviously incorrect um because at the top of the funnel this has has rather dramatic consequences, right? Uh and that's very difficult for us to um quantify because by definition we only see the user when they're where when they're in the app.

But uh by and large a premium app has a much much much broader uh audience to pull from including many people that are are really just looking to explore and are then uh a potential conversion later on. Um I don't remember the exact percentages off the top of my head, but we look at this further on in the report, right? Where um by virtue of a hard pay wall being what it is, everybody converts on day zero or whenever the trial ends, but that's the conversion window. There's nothing else.

And uh when there's a soft payroll, when there's some premium type of experience, theoretically two years in, you can still convert somebody. >> Yeah. The main thing I always discuss with premium apps in particular is that for that to be the sensible choice, you need to build the app and build the experience uh build all your life cycle messaging around those free users at some point converting because otherwise what you're doing is just a charity, right? It's also nice. Maybe that's the business model, but for most apps it isn't. and they just don't think about the fact that okay, somebody didn't convert in the first session. They're still using the app. Uh well, that's that's a user I don't have to acquire anymore, right? That's my user to convert. So, investing in your life cycle messaging, investing in like contextual upsells.

So, there's some kind of gated feature I run into. Show somebody a payw wall sounds very, very obvious. There's a lot of apps that either don't do this or then show somebody the exact same payw wall they got during onboarding, >> right? >> While while ideally, and this is like uh uh one of the features of the soft paywall model, ideally as that user is using your app, you learn something about them. So that when you show them a pay wall later on in their like life cycle as a user, you take whatever you've learned and you really build the offer for them, right?

>> So I I see that you mostly use this feature. So this is the thing I highlight. >> The premium apps that succeed that do really really well all do some kind of variant of uh uh of that. >> I think that's right. And to really boil it down, the way I tell our clients to think about it is your users need to be generating value for the business in some way if you're going to continue to serve them. And that either needs to be because they ultimately convert into a subscriber because they view ads in the case where you're a premium product that serves ads to non-subscribers to monetize those free users andor because they generate value in the form of organic acquisition. And that could be through word of mouth. It could be through user generated content that drives SEO and AEO, but they have to be generating value in some way, shape, or form. Otherwise, it really is a charity and and a for-profit business can't

can't afford to operate as a charity or it won't be in business for very long. And so, a couple examples of this, right, like Quizlet was a great example of a company that drove 90 plus% of its user acquisition through SEO and word of mouth. And so, for them, it made sense to continue to support a user base that 90 plus% weren't subscribers because they were generating value in so many other ways. and it created this huge moat and really really inexpensive blended CAC for the business. I think chess.com is a good example of a company that has stayed premium for a very long time, but part of the reason that's worked is because they've gotten very good at the contextual upsells and the life cycle marketing communications you talked about. So that even months or years after registering on chess.com, you might convert into a subscriber because you're you're finding more and more reasons why it makes sense to shell

out the, you know, the 80 or $100 a year uh for the premium product. But you have to have a strategy to support premium. Otherwise, it's increasingly obvious, especially with these underlying AI costs, that if you if your free users aren't generating value for you, you should just go with the hard payw wall because it's definitely an easier way to maintain a profitable business. I want

to talk about one other thing before we get to our lightning round and that is onboarding because one of the data points that I have most uh gravitated to in your report over the last few years is the percentage of trial starts that happen on day zero and I remember when you first started publishing your report a couple years ago it was around 70%. And then last year it got up close to 80%. And this year, I was looking for this data point the moment I opened the report, and it said 80 to 90% of trial starts now are happening on day zero.

Half of conversions and 55% of cancellations on 3-day trials also occur on day zero. So, it's it really is pretty make or break. Whatever happens in that first session has a huge impact on whether or not you have a viable business. So, let's just start with what implications does that have for developers who are building new subscription products today? The cynical answer to this is that your your app's success is really dependent on your user acquisition, your onboarding funnel, and your payw wall and everything after that's crazy.

>> Uh that's the cynics answer. It's not entirely true. It's also not entirely untrue. Um you you can spend millions on acquisition, but if your onboarding doesn't actually convert those users, you're you're just burning money. Um and and we can just very clearly see that users make decisions about an app almost immediately and um in in categories like business in particular. I think there were were actually over 90% of trial starts happening uh on day zero. So what you see um or what what we see and what you probably also see is that um that the biggest and most successful apps tend to treat onboarding as a product by itself with PMs and and proper resources. They invest as much in design and engineering in the first five minutes as they probably do in almost all the rest of the product. Um, there's a lot of testing, a lot of personalization, and really trying to get somebody to get that aha moment before they see a pay

wall. Uh, and ideally before they even engage with the core product. Um, and yeah, I think it was Hana uh Hana Pvas uh who who talks about this in um in the report as well where um it's it's just way more important that than most teams treat it. It's those first few minutes that that really uh build the trust um get people out of the default behavior which is I'm going to X out of everything. I'm going to cancel every single screen. I'm definitely not going to pay for anything.

>> Um you want to break them out of that behavior and that happens in the first few minutes. I will say it's pretty obvious for solarreneurs or any developers that if you don't have your onboarding dialed in, then you're just not going to survive to earn the right to invest years in building a great core product experience. But even the much larger, more sophisticated companies, I think for years now have recognized that they need to have a PM and an entire pod devoted exclusively to onboarding. And they continuously iterate and optimize that onboarding experience indefinitely because it has such a house-sized impact not just on new user registration, activation, trial start, and subscriber conversion rates, but there's a lot of um research that's shown that actually a great onboarding flow leads to better long-term retention because that that first impression you make has a lasting effect on people's emotional attachment

to the product. So, I think onboarding is more important than ever has been. I guess last question before we get our lightning round is how are you seeing AI

create new opportunities for product developers to deliver an a a truly spectacular aha moment within the first 60 seconds? I can think of a couple of examples myself, but any examples of apps you've seen that do a particularly outstanding job of that? >> Well, without calling out very specific apps, a lot of fitness apps do this very very well. Now, um, well, having read a lot of these reports, you'll know that Health and Fitness historically outperforms almost everybody in everything. They've been a bit ahead of the curve in in most of these things.

And one of the things that Health and Fitness has always done is ask you what your goals are at the start. and increasingly they've just been asking more and more questions, >> feeding that into an LLM and instantly and magically configuring those first couple of workouts for you or matching you to to the right trainer or um really collapsing that time to value that previously might have taken hours. Um, so yeah, I think that taking a lot of data and very rapidly collapsing that into some some personalized experience is something AI just does exceptionally well.

>> And I will call out one particular example I've seen in health and fitness, which is ladder. Um, I know they're also a revenue cap customer, but Greg has talked on this podcast and others about just how much time and attention they put into their onboarding experience. And I think part of the reason you're seeing this there there really three factors. So one is um the more questions you can get away with asking in the onboarding flow obviously the more you can personalize the first-time user experience which leads to higher activation and retention rates. The second is um if you can get users to spend a little bit more time in your onboarding experience and obviously that depends on generating enough value as they go. But if you can if you can get them to invest enough of their time and attention into that first session, then there's a little bit of this sunk cost where once they once they hit the payw

wall, they've invested enough time already that they're more inclined to at least start a trial if not just directly convert into a subscriber because they've already invested a lot of their time and energy into um the onboarding experience. And then the third is you have all this valuable information now that you can pass back to ad networks to more efficiently target the right users. And that's particularly true in a web- based onboarding flow where you you get deterministic data as opposed to a mobile based onboarding flow where you have to deal with scan restrictions. Uh and so there's all this innovation that continues to happen on onboarding experiences. Uh and for good reason because it it can have a really outsized impact on a company's uh success or

failure. Well, with that there's so much more I would love to talk about but we are coming up on time. So, let me get to the lightning round. Um, I'm going to ask a series of rapidfire questions and would love to just get your quick responses to these. I always ask the same question first, which is you've been at Revenue Cat for a while now. You guys have such an amazing culture. What is your favorite part about working at RevenueCat and what's one thing that you would change?

>> Oh, uh, topic dumb ideas is the f is my favorite thing. And this is slowly but surely made it outside of the company. There's a slack channel. It's called topic dumb ideas. You can drop any idea in there and it's a judgment freeze up because the default expectation is that the idea is going to be dumb. >> And so much of the very cool things that we've done over the years are >> uh were originated in that uh in that channel. Um our app growth annual conference was topic dumb ideas. Do you think we can do this in three months?

And yeah, turned out we could. are app store rejection socks. Um that right it's very much and and I think it's emblematic of the company culture. It's very much a a judgmentfree zone, right? If you have an idea, uh it's not going to get shut down. >> Uh not going to shut not going to get shut down anytime soon. >> Well, I know you um I I have to say this because you and I have bonded over our mutual love for Ted Lasso. And to me, that's a very Ted Lassoesque tradition, right? It's okay. I'm a football coach.

I don't know the first thing about soccer or football in Europe, but uh I'm going to throw these dumb ideas out anyway. And every once in a while, you strike gold. And so, I do think that you guys have such a playful and irreverent culture at Revenue Cat. And I do think that's been a part of your success. But what's one thing you would change? Because I am going to force you to answer that part of the question, too. >> Uh what's one thing I would change?

Well, and I mean, uh, this is, uh, um, it's also being recorded, which is is not great, but, um, I I do think that we would probably be more effective if we were in an office >> every single time, cuz I'm going to go to to San Francisco next week, uh, visit a bunch of customers, go into their offices. I'm always jealous. Uh, I'm always jealous. and and obviously the remote thing has its benefits, but it is difficult to like put your heads together and rapidly hash something out.

Um, so it's not so much a cultural thing as there's like a just how we structured the thing. Uh, in all in all fairness, I probably wouldn't be working here if if it was in office because I'm very much in the Netherlands and nobody else is. Um, but yeah, I think Revenue Cat in office would be would be pretty magical. >> I think you know this when I started my growth advising business, I didn't even expect to hire anyone, but at this point, we just hired our second employee and it just turns out they're both in Colorado and now at this point I plan to build the whole company here because the value of having even if it's a small team just colllocated, it's it's it's very difficult to to replace or substitute.

>> Yeah. >> Uh, all right. All right, I'm really excited for your answer to this one because you are a repeat entrepreneur. You've built your own company in the past. Um, if you had time to build any subscription app right now, what would you build and why? >> Oh, so actually, and you can't see this, I have uh uh a Mac Mini here running Open Claw that's pretty much building apps 24/7 now. >> And I'm not act I'm not actually um I'm not thinking about the distribution part. I'm using it as like an exercise of can I build the thing, can I launch it, can I implement revenue cut and it's pretty much continuously turnurning out continuously turnurning out apps and the the the commonality in all those apps is that I'm niching down.

>> Mhm. >> So the the thing that is almost ready to ship is uh a medication tracking app. >> So uh you know you need to take this pill, did you take the pill? press on the button focused entirely on accessibility. >> So all the fonts are huge, contrasts are huge. Uh but like totally built specifically for an audience of like 65 and up. Uh so yeah, I I would build for for niches. >> Yeah, I mean it's very in line with what we talked about earlier in the episode and I think it makes a lot of sense.

Also a you better watch out because it sounds like Brick's coming after your market. Uh, what's your favorite thing to do outside of work and what do you love so much about it? >> Well, my family, you know, but I have five kids. That's uh that's that's a second full-time job. And then when it's not the family, uh I'm in the gym every single day. >> It's where it's where I start my days. I honestly at this point don't know if it is because I like it. It's just what I've always done. And then if I don't do it, it doesn't feel right. Uh >> I'm I'm the same way with running. I I I ran track in high school and I run every single weekday religiously. And I tell people, they're like, "Wow, good for you. You you're so dedicated." And I tell them like, "No, it's the opposite."

At this point, my brain is addicted to the endorphins. And if I don't run at the beginning of the day, I'm miserable to be around the rest of the day. So, just is what it is. >> You predicted my next question, which is in addition to being VP of growth at Revenue Cat, you have five kids. So my question as a fellow father who only has two is how in the world do you find the energy for it? And what's one tip you have for busy dads?

>> Well, work remotely is a good tip for busy dads because the thing is we're globally remote, right? And that means that I work with people in Australia and I work with people in California and everything in between. >> Um, by definition, my mornings start, my days start really early and they end very late. But what that allows me to do or what Revenue Cat allows me to do is in between just plan my time how I see fit. So the way my day starts is I have a meeting, I have breakfast with the kids, I bring them to school, I do some work, I go to the gym, I pick them up from school. Um it's it's a very specific type of work balance that's uh not for everyone. It's also not achievable by everyone, but it it works very very well. At school, they're always confused uh by how often I am there. They think I don't have a job.

>> Well, it does sound like it's almost the opposite of the way my life looks. I I'm very compartmentalized. So, for me, it's like I wake up, I run, I meditate, I help take the girls to school, and then it's like I work, and then I come home and at 5:00 I'm done, and I don't sign back on until the next morning. In most cases, you have the opposite. you've just integrated it into your life and so it's a bit of both all the time.

>> Yeah. >> Um okay, last question here. Um and that is other than using revenue cat, what is one thing subscription app founders should be doing to prepare for all the ways AI is changing the subscription app ecosystem? >> Tinker. Tinker. But I think that that's true for everybody in every role. I tell it so I'm responsible for a lot of people in revenue and I tell everybody take an hour two hours a day literally take just just don't do your regular job and tinker play around with perplexity computer use madness uh do an open claw thing um >> because the technology and the capabilities are changing so fast that uh you're going to have to continuously invest >> and whatever you invest now is almost certainly going to pay dividends in productivity or speed almost immediately.

>> Um, we did a we did a big push at the start of this year where we got everybody onto Manis and and use use Manis for like very complicated projects now. And that was a little bit of work, but everybody's just so much faster now. >> Yeah. Well, it's the U-shaped curve, right? When you start using AI tools, your productivity goes down because you have to set aside the time for it and be disciplined about that. But then eventually you come back up the other side of that curve and it starts to play positive ROI and then it compounds. But the trick is you just got to get started somewhere and it's much easier said than done. But hey, if Rick can do it, he's got five kids. So for those listening, you have no excuse. Get started now. Um this has been awesome as I knew it would be. Rick, any any um parting words for the audience before we wrap up? Yeah, download status encryption apps 2026. Or

actually, don't download it. You can just read the entire thing ungated on the website. That's fine as well. And then Yeah, I hope it helps you make more money. >> Yeah, and and I know it will cuz I've I've used it multiple times now. Um, thanks so much, Rick. This has been a real pleasure. >> Thanks for having me. >> Thanks again to RevenueCat for sponsoring this episode. If you're building a subscription app, you can use RevenueCat to power purchases, optimize pay walls, offer discounts, handle refunds, manage customer data, run AP tests, generate insights, and unlock more revenue. I work with dozens of subscription apps, and most of them are already using RevenueCat to power their businesses. Learn more at revenuecat.com/subversive.