How To Not Screw Up Switching Your App to Subscriptions — Matt Ronge, Astropad
The Sub Club PodcastJanuary 05, 2022
30
00:49:0467.63 MB

How To Not Screw Up Switching Your App to Subscriptions — Matt Ronge, Astropad

On the podcast we talk with Matt about how to not screw up switching your app to subscriptions, why offering lifetime subscriptions might not be a great option, and what it’s like when Apple ‘sherlocks’ your product. Our guest today is Matt Ronge, co-founder and CEO of Astropad. Having worked at Apple, Garmin, and founded several companies of his own, Matt is an experienced engineer and entrepreneur with a passion for building creative tools.

On the podcast we talk with Matt about how to not screw up switching your app to subscriptions, why offering lifetime subscriptions might not be a great option, and what it’s like when Apple ‘sherlocks’ your product.

Our guest today is Matt Ronge, co-founder and CEO of Astropad. Having worked at Apple, Garmin, and founded several companies of his own, Matt is an experienced engineer and entrepreneur with a passion for building creative tools.

In this episode, you’ll learn:

  • How to switch your app to paid subscriptions
  • Should you offer lifetime subscriptions?
  • Why you should be charging more for your app’s subscription
  • Tips for limiting subscriber churn

Links & Resources

Matt Ronge’s Links

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Episode Transcript

00:00:00 David:


Hello, I’m your host, David Bernard. With me as almost always, RevenueCat CEO, Jacob Eiting.


Our guest today is Matt Ronge, co-founder and CEO of Astropad. Having worked at Apple, Garmin, and founded several companies of his own, Matt is an experienced engineer and entrepreneur with a passion for building creative tools.


On the podcast, we talk with Matt about how not to screw up switching your app to subscriptions. Why offering lifetime subscriptions might not be a great option, and what it’s like when Apple Sherlocks your product.


Hey, Matt, welcome to the podcast.


00:00:56 Matt:


Hi, thanks for having me on.


00:00:58 David:


Yeah, I’ve been looking forward to chatting with you. You’ve got a lot of fun stories to talk about today.


00:01:03 Matt:


Yeah, yeah, it’ll be good to get into.


00:01:05 David:


Alright. Well, I wanted to kick off just, having a founder on, we can’t miss the opportunity to hear the founding story. So, you were at Garmin for a while, and then took a break from that and launched Astropad.


Tell us about that.


00:01:22 Matt:


Yeah. To go back even a little earlier, I think it was about 2006, I was a intern at Apple. I was an intern there, two summers actually. I met my co-founder, Giovanni at Apple.


We went different paths for awhile. He went to Apple full-time for five years or so, and I did other things. I worked at a startup, and then eventually I joined Garmin. Garmin was a lot of fun. We worked on aviation apps. 


00:01:55 Jacob:


Oh, really? This is in my wheelhouse.


00:02:00 Matt:


Yeah. I was the first engineer on Garmin.


00:02:03 Jacob:


Oh, nice. You guys had maps right before ForeFlight did. I think you had the vectorized maps very early. Those were awesome. It was like the one, like switching incentives. So anyway, inside pilot baseball.


00:02:16 Matt:


Yeah, and that was tons of fun because I didn’t know anything about aviation going into it. They brought me in to work on the iPad app, and they really wanted to compete with ForeFlight. So, we were kinda neck and neck with ForeFlight for a long time. ForFlight, in general, kicked Garmin’s butt.


It was fun just to learn a ton about aviation. We’d do stuff like get to fly around.


00:02:40 Jacob:


Oh, 


00:02:41 Matt:


Yeah. So, we’d be like, “Alright, we’ve got a new approach feature. Let’s go test it,” and we’d get in a little plane.


00:02:48 Jacob:


In a past life, I made software that connected Garmin Pilot and ForeFlight to Flight Simulator.


00:02:56 Matt:


No way.


00:02:58 Jacob:


Yeah. FSX flight. That was a weird connection. But yeah, that Windows app. I made for six or seven years. I don’t know even when. That was 2012, or something.


But, it was my side gig for a while. Funny. 


00:03:13 Matt:


I probably saw that somewhere along the lines and didn’t know it was you. I would see different things hooked up to ForeFlight.


Yeah. That was really cool. I loved working in the aviation space. Just super interesting. Just all this stuff I didn’t know, and working on the mapping, the mapping was a lot of fun, and pretty hard, actually pretty hard to


00:03:32 Jacob:


No I,


00:03:32 Matt:


get that to work 


00:03:34 Jacob:


Yeah. And it has to be, I mean, talk about constraints on iOS. That report really pushes things. You know, iOS is designed for consumers, right? So, apps jetison randomly, notifications are an issue. There’s lots of stuff that make it a difficult operating system for a hardened environment, like a cockpit.


You have to engineer around all that stuff, and it’s taken a number of years. So, yeah, I can imagine the challenges.


00:03:58 Matt:


Oh, absolutely. And this was, we started on the iPad too. 


00:04:01 Jacob:


Which I, they had like 16 kilobytes of Ram or something like this. 


00:04:07 Matt:


It was, it was terrible. Oh. And actually another, another crossover here. This was my first introduction to in-app purchase subscriptions as well. was the one that built the subscription infrastructure for Garmin


So we’re really crossing over now, but, but yeah, that was, that was tons of fun. Did that for a while, but ultimately kind of got frustrated being in the big, slow company and watching, like, ForeFlight just like, They were just crushing it. They were doing, they were just doing amazing.


And I mean, I’m still really proud of the work we did too. Don’t get me wrong. 


00:04:38 Jacob:


There’s a contingent in the pilot community of Garmin fans. Like it is, it is not a, it is not a zero use app. Like there are people that just prefer it and I still see it in a lot of 


00:04:47 Matt:


Well, and yeah, what we eventually did is we built in a bunch of ‘em. I can’t remember the name of the devices right now. It’s been too long, but the, handheld. GPS units they had for the that had mapping functionality in it. We eventually poured that over. And that was quite tricky because it runs on its own.


Oh, S Garmin has their own OOS. actually use. So it was a whole, like how do we host this thing within an iOS app? It was, it was so we eventually pulled it off. We’re able to add the full mapping, which was super. know, and I’d always been entrepreneurial in nature too.


I mean, I had been involved in the shareware scene early on, on the Mac and like the nineties and early thousands. it was just kinda my, my thing. and I toyed around with lots of different ideas over the years side projects that I would charge for. So I knew I really wanted to go that direction. So I ended up leaving, Garmin and ended up doing consulting. And the consulting I did was actually email apps on iOS. Cause I did a, I did this open-source framework, mail core that made it easy to do IMAP and SMTP. I originally wrote it for the Mac, but it got like no interest cause who wanted to run.


Email client for the Mac bef and objective CA before the iPhone, like nobody, but all of a sudden the iPhone was on the scene and people like, oh, it’d be great to write an email client. And, so I got involved with that and help. Build email apps for awhile. but eventually I ended up getting more work than I could, that I can handle.


And I saw that, Giovanni had left Apple, who I knew from years before. And I, and I really needed somebody that I knew I could bring in and really count on to get this work done. Cause email apps are, are pretty tough to, to do them. And, he was like, yeah, sure. So we ended up working together and we’re like, oh, this is great.


So. We set up a new company, but we knew that we didn’t want to do consulting longterm. Like it just wasn’t, we weren’t great at it. It was paying the bills. It was fine. And so we were looking for a product, I think. And what originally inspired it was, with Astropad for those own know what Astropad we have Astropad studio, which, what it does is it allows you to use the iPad as a drawing tablet, like a high-end Wacom sun teak for your computer.


And it was inspired by the surface, the Microsoft and they, Microsoft had ads with like the surface with full Photoshop on it and a pen. And we’re like, that’s super cool. But we want to use windows. We don’t want to get a surface, like why can’t I do this so that’s what that’s what started.


Astropad so we, we consulted to keep the lights on and then, worked on, Astropad in the remaining time we had, and it, it was, it was pretty tough, almost two years to build it. which was. Way longer. think of us anticipated, but, we launched it. It started to take off, we stopped consulting and fast forward five years and six years now.


And that brings us to today.


00:07:41 David:


What was the original business model? Did you, was it paid up front when you first saw.


00:07:46 Matt:


Yeah, it was paid up front and interestingly early, early on, we, And this can even get into the subscription stuff too. Why we eventually went to subscriptions. we charged on the Mac side actually, cause what’s unique about Astropad and actually our other product lunar display as well is it has an app on both the iPad.


There’s two apps. There’s like in the case of Astropad there’s, there’s one on the iPad, one in the Mac. So we actually made the iPad app free and we charged for the. and that way we thought, oh, we can charge, justify a much bigger to paying more for backups sorta kind of didn’t work.


We actually ended up switching to the app store and made the mock-up free and that worked way better. And we


00:08:24 Jacob:


Interesting. What was the, what was the SIG? Yeah, cause I think that, that the original line of thinking tracks, right? You’re like, oh, people are paying hundreds a year for Photoshop. Like here’s a plugin for Photoshop or, you know, whatever. However they’re thinking about it, right? Here’s the, here’s the value add for this like core thing I do.


And it’s on my Mac and it’s professional. You’re going to get more than the, like 2 99 on the app store. That seems to make sense. What did you see that, didn’t 


00:08:48 Matt:


Well, it was too, so we were charging, I th I believe $50 on the Mac app side, We talked to other, people in like the indie scene, other founders as well. And we had had a really explosive launch like that still today. And that was one of our biggest launches of all time. It just got covered all over the place.


Cause it was a really new, pretty innovative use of the iPad.


00:09:12 Jacob:


What year is like 2016? Something like 


00:09:14 Matt:


2015.


00:09:17 Jacob:


Okay. Yeah. 


00:09:18 Matt:


And we made a big stance about like, too, like let’s use the iPad for professional work cause so much the iPad then was like games and stuff. And we’re like, a super cool 


00:09:28 Jacob:


What it is today, right? 


00:09:29 Matt:


And and we were like, all right, let’s let’s yeah, this is way early on. Before the iPad pro, before Apple really shifted more heavily in a more pro-sumer workflows on it, really started pushing it more. And so that was pretty novel and it, it got tons of traction and we had tons of downloads of our free trial, but we just didn’t have that many, Conversions to pay it.


And we talked to other people, like what’s up with our conversion rate, dah, dah, dah. And it was just like something’s out of whack,


00:09:59 Jacob:


Were you guys taking credit cards? Was it through the MCA?


Credit cards. And then were you like a credit card upfront free trial or was it Mo Okay you had to put the credit card in and then it would convert after X days or 


00:10:11 Matt:


Oh, no, no, you would, it was more like the traditional, like old school, like shareware


00:10:16 Jacob:


Right. Okay. So you get 14 days of use and then it. 


00:10:21 Matt:


And I think it was like 14 days or so that we had, and it just didn’t convert to the dollar amount we expected. so we had insane amounts of traffic, but we weren’t generating the money we expected.


And at this point we had quit consulting. We had fired our clients. We were like, We’re going all in on this. And so we had to make it work. it was partly out of desperation that we tried the app store because we were like, this isn’t sustainable at its current rate. We need to make some changes.


And so let’s try it. What, what the heck? Why not? And so we did an upfront payment, I think it was $30 initially. And the app store and revenue went way up. worked way, but.


00:10:59 Jacob:


Yeah I mean If you think about the case, like, oh, I want a way to use my iPad with my computer. Right. I’m going to start probably on my iPad. That seems like iPad problem, not a Mac problem. and then also just. It’s just easier to buy software on the 


00:11:14 Matt:


It’s easier 


00:11:15 Jacob:


It’s just works better. It’s I’m still a big fan of the app store. Like it’s funny how the Mac app store never feels like it’s quite the same thing. It doesn’t feel as smooth or as cause like the, the still the way of buying software. It, this is the friction is so low. The experience is so ingrained in everybody.


Like you just know how to buy software on the app store, which maybe that’s just enough. That’s might be 90% of what made the difference. It’s just the buying and


00:11:43 Matt:


That’s what I believe. I believe just the frictionless buying experience. and also the other thing too, is like, there was no longer a trial, it was paid up front. So if you had any curiosity at all, like


00:11:52 Jacob:


Yeah. And at that price point, like if it’s something like you might use professionally, you might take a ride, a risk, or you could take $30 or whatever. 


00:12:00 Matt:


We didn’t initially do that. Cause we didn’t think a price like that would be sustainable in that store, but again, and we were kind of like, we got to make something work, so let’s try it.


00:12:07 Jacob:


I mean, there’s, there’s big benefits. I mean, when people think about pricing, it’s a curve, right. They can raise prices. You’re going to have fewer users. Like that’s always, almost unless you’re just really lucky and having an elastic product, but most, most products are elastic in some sense.


And so there’s big benefits to that though, because then you have less support if fewer users less support, unless you’re the hoping for some viral distribution mechanism. Like there can be big benefits to pricing high initially. and then you. You can always work your way down.


Like it’s another reason vice, like you ever got hurt yourself, starting high. Cause you can always like back it down and nobody’s going to be too mad at you. 


00:12:42 Matt:


I totally agree with that. And the other thing too, that factors in with these decisions is we’re a bootstrap company we’ve never taken outside investment. So that cashflow up front is really important for us as grow, the business. So we might prioritize it more than. a company that has a large investment round and just once, you know, pure user numbers early on, right.


A different, we’re optimizing for a different thing.


00:13:07 Jacob:


Yeah, for sure. And it’s changed too on the, even on the venture side, even on the funded side, like every, I mean, every revenues, everything now, like, which is great, you know, five, five to 10 years ago, if you were starting a venture. I mean, I, play. The half starting a venture backed company and like 20 2008.


And like, we were like explicitly said, like, do not worry, do not try to get revenue. which might’ve been the right advice for the, that environment. But, you know, it’s, it’s just different. It’s all about revenue now. It’s the best way for people to show, you know, it’s the best way to tangibly express value in a product.


Right. So, When did the switch to subscriptions happen? I guess like when, when, what was that journey like from, from this point of paid upfront, to a subscription model,


00:13:51 Matt:


Yeah.


So that took about two years, so in 2017 we launched, Astropad studios. So originally at the time it was just Astropad and we introduced the new version that was like the professional edition Astropad studio. and I’m talking about this more too, and just a minute, this was very key to our switch to subscriptions because the other thing about us doing subscriptions at the time, is we were very new on the scene as well.


To doing doing subscriptions there wasn’t a lot of there were services doing it. But if I remember correctly, even before that the app store rule, the app store guidelines didn’t even necessarily allow. Any kind of app. And there was kind of an exception in there for like pro-sumer type apps. And we were hoping to use that.


And so this was really before Apple had the big push on subscriptions and they opened everything up. So it was very, very different time. There was not a lot of information out there. we’re a bootstrap company really concerned about blowing up our existing cashflow. so that’s why we introduced. second edition of Astropad Astropad studio, that was subscription. And. Yeah. So then we still kept the S the, the current one going. So if you wanted, like the light version, you could grab that on the app store as a one-time purchase. But if you want it to all of our advanced features, that was an Astropad studio, and you got to subscribe to that.


And you know, we had the free trial and everything, and really, we made a, we made the push you know, because we knew. It’s still a pretty niche market. And we knew that we had to two things, we had to find a way to have some kind of recurring revenue and like paid upgrades is not an option on the app store. So that was one thing we needed a way to, charge more from our current customers over time.


And we also needed a way to push up the prices. We knew that at about $30 up front, we felt we were at about the ceiling we could push, for a really professional tool, we felt that that was way too cheap.


00:15:42 Jacob:


Just think of it in terms of value capture, right? Like you should be able to capture some of the value you’re generating. And if, if you sell, you just don’t know, you sell 30 bucks a pop there’s some users that probably get no value out of it. Very little. They try they use it, they don’t use it, whatever.


And then you have some users who becomes part of their core workflow. They’re doing, you they’re making six figures in consulting on design or whatever every year, and you’re not you’re you got $30 and that’s it


And so subscriptions, without being able to like charge them per click or something like this, you have a better proxy to value because if somebody is continuing to use it, they’re continuing to pay for it.


And you’re continuing to capture some of that value. And then, you know, going back to the sustainability argument, I, Well, I’ve made it. I’ve continued to make this argument until till the day I die, but like you just see how it makes so much more sense. Like. You are now incentivized to keep working on this.


You don’t have to do weird things where you’re like revving every year. And like all this like effort you can just like focus and really like talk to those users and really serve them and continue to enrich the product. so what was the operational head overhead of having to, I was always worried about that when you’re trying to like maintain two binaries, it’s a nightmare in my experience or not.


I dunno. It can


00:16:52 Matt:


Yeah. And still to this day, we still do maintain too. and it’s a total pain. I mean, I wouldn’t, I wouldn’t recommend it. Like I think you could pull it off. More today. not knowing that, but again, this was very early, so much so that the app store team reached out to us and they’re like, oh, we want to feature you just cause we want to start pushing subscription stuff more.


And like, you’re one of the first in this category to do it. and we did, we get a fee. It didn’t amount to much, so there, there, wasn’t a lot of examples of. so we were very, very, very careful. We were very concerned about, about it. And, you know, the big thing too, was the St.


Sustainability, really those two points sustainability. And the other thing is driving up the price point because with the subscription, You can do a free trial. So people are more apt to, pay. Like we just could never find a good way to do like a more traditional in-app purchase with it. So you could do a free trial and people are willing to pay more for an annual, or you can break it out into monthly amounts or whatever increment you want to make.


It seem much more digestible. So that’s a way you can charge a hundred dollars for an iOS app is through subscriptions. You’re not going to do that through upfront payments. 


00:18:00 Jacob:


Especially with the risk, like you’re asking the consumer to bear and Korea, even at 20 or $30, you’re asking a consumer to bear it. Incredible amount of risk. You know, so many apps I downloaded and try and like they’re all bad. Some of them are bad. Mood by half are bad. I get a lot better.


No, I’m just kidding. I love all of the apps and they’re all but there’s a lot that don’t, that aren’t the best. And then, and then the other half is like, somethings just don’t know if it’s going to fit your use case. It’s happened to me this weekend. I was doing some CAD thing.


I tried to shape ways, which I think is called Shapeways or something 3d. I 


00:18:27 Matt:


Yeah. Yeah. They came out at about the same time as us too with


00:18:32 Jacob:


They were 


Very early. I remember, it’s amazing app. I was blown away by it. but I, I thought I needed, like a pro export feature. And so I plunked, I was like 200 bucks for the, pro thing, to be able to export a certain file format.


And I found out later I didn’t need it. Right. But I was able to back out as it would say, like, oh, I don’t, I didn’t feel bad. I wasn’t like ripping. I would have paid like if I was going to use it, I like, oh, this actually doesn’t fit my use case. So I was able to walk away $200 purchase having known, actually evaluated it.


Right. And that’s an incredible amount of de-risking for our consumer. Yeah, you have this great blog posts that you’ve published about, how not to screw up the neck, like the avoiding the negative case. So what’s your playbook? Or how did, how did you navigate it that you think went well?


00:19:17 Matt:


Yeah. So this is really what I wrote this. This was really after seeing some, some apps, some popular apps. Totally bombing the switch. And I’ve seen this, not even just one particular app, I’ve seen multiple like popular apps do this, where they just totally bombed the switches subscription.


And so this is really just drawing on our experience, making the switch and it went fairly well. for us, I mean, still we had angry customers. You’re always going to have angry customers, but kept it fairly


00:19:47 Jacob:


Even creating a new binary, cause I knew binary was like subscription from the beginning. 


Right?


00:19:52 Matt:


That’s Right. 


00:19:53 Jacob:


Still people that were like, wait, I paid for this other app and you made a new app.


00:19:57 Matt:


Yup. They’re oh, you should add those 


00:19:59 Jacob:


Yeah of That’s just your opinion, man.


00:20:05 Matt:


Yeah, I know. I mean, yeah. And that it was like, yeah, these are a lot of great features, but do you realize it took like two years to develop a lot these? Like, this is some of these are really, quite sophisticated 


00:20:16 Jacob:


So hard to express cost of software development 


00:20:22 Matt:


I know. I know, Well, that’s, that’s interesting cause what’s, there’s a whole nother tangent we can get into, I won’t right now, but we also sell hardware product too. And the difference between purchasing a hardware product and software is Fascinating


You can get people to pay way more for 


00:20:37 Jacob:


Yeah, I mean, so, so much about Percy. Like I still think as humans, we haven’t moved and maybe never will have an appropriate perceived value for software.


00:20:46 Matt:


The thing is, is our hardware. Most of the development costs for our hardware was actually in the software. but anyway, so, when we were switching to a subscription, You know, and the first thing is just being super, super, extra generous with existing customers. And we were, but I wish we were actually even more generous.


So, we gave existing. customers, they, I forgot even how we did it. Exactly. Did we email them? But anyway, they got a, they got like an access code that gave them three months free. Like no credit card required. Like they got the best, like you get three months totally free, no credit card. No, just like try it out and, and see what you think.


I wish we’d done even longer actually with that. 


00:21:31 Jacob:


Probably it’s just deferred If anything 


00:21:34 Matt:


And the reality is most of the revenue too, for our subscription came from new customers, as well though in our, in our case. and so like forcing our existing customers to switch over to 


00:21:50 Jacob:


Timelines wise, how many years after launching the original


00:21:54 Matt:


Was two


00:21:54 Jacob:


Um yes. I mean, that’s not nothing, but if you think about it, you know, now that’s where, how far from that original day five or six years. So like, you’re talking about now at this 0.1 third or whatever of your user life cycles, or of like your accumulated user, assuming you have linear.


User edition, but likely you haven’t. but then also, you know, if you think about it in terms of decades, right? Like there’s really like the, the, the brand cost of you, like trying to ring stuff out those users really Right. And maybe you might have cashflow reasons and stuff, but I think even if you try to ring it out, it often doesn’t work.


00:22:32 Matt:


Yeah. And that’s exactly why is because you’ve built such like brand loyalty and honesty with your existing customers. You’re going to flush that all down the toilet. And about two seconds, once you try to force them over subscription and they’re like your advocates they’re like they’re out there telling people about your product.


We had a lot of people that were really excited about Astropad. We didn’t want to burn that. We really, really didn’t want to burn. And so that’s why I wish we were even more generous. Honestly. I wish we were more and we just, for the subscription, it was forward-looking. It was like, you know what? These existing customers got a really, really sweet deal and that’s fine.


They decided to come on early with us. They’re rewarded for that. Great. We’re we’re forward-looking so the way that we did want to convert customers to be existing customers, those new subscribers. Is by making it so good. The new subscription offering that they couldn’t resist. So not forcing them. It was the carrot, not the stick.


It was like, okay, we’ve got these amazing new features. We spent two years developing. And if you want them, you know, you are going to, you are going to have to subscribe. and that’s really what I, where I think a lot of, Popular apps have made a mistake where they’re just like everybody, you’re all switching over.


If you want continue using, you got to go to. Yeah. And it’s like, well, yeah, don’t take a lot of the stuff they’ve been using. And all of a sudden put it behind subscription. You’re going to really make people that instead, develop something totally new. That’s super exciting that people want.


And that they’re like, oh yeah, heck yeah. I’m going to subscribe. I’ve I’ve had a great relationship with this company. They built a great product. I want this feature. Okay. Then, then they feel like it’s their choice. It is their choice then subscribe. You’re not, you’re not forcing them and there’s a whole different around it at that 


00:24:10 Jacob:


Did you run into D and David that you might know better, but, did Apple give you any guff about the, codes? Cause like sometimes they get weird when you’re unlocking stuff, not through the app store.


00:24:20 Matt:


Yeah. They didn’t 


00:24:23 Jacob:


I kind figured I it was soft ball, but I wanted to make point that there are some times when, if it’s not in your core flow and like, it’s a way to like, be good to users. Like not gonna know and they’re probably not going to care. And if they find out most likely the worst case scenario is you got to take it out.


00:24:38 Matt:


Well, and, and that would have been fine too. Cause it was just a one-time for us. just doing it customers 


00:24:44 Jacob:


Tell people like, don’t. try, don’t mess with Apple. Like it’s just not worth it for you, but there are some cases like this where like, eh, nobody’s going to notice, I’m just going to look the other way. And like, this is a, this is a good chance to bend the rules 


00:24:55 David:


And when it’s good for customers, I think you have a much stronger argument with Apple to lightweight in this kind of case,


00:25:01 Jacob:


Get your case heard. 


00:25:03 David:


The well true, but, the thing they, they clamped down more on is these like referral flows and things where you’re, where you’re offering incentives and offering a different price to new 


00:25:14 Jacob:


Bringing 


00:25:14 David:


And then I think there were especially sensitive around kind of manipulating the app store of like, you can flood a bunch of new users in with, incentivized downloads and stuff like that. So, 


00:25:25 Jacob:


Yeah. 


00:25:25 David:


Kind of use case, I think they’d be the 


00:25:31 Matt:


Yeah 


00:25:32 David:


I did want to ask, so, so you were paid upfront and then you switched to subscriptions.


What are your thoughts on lifetime? lifetime subscriptions.


00:25:41 Matt:


Yeah.


Yeah. So this is interesting. And I actually wanted to talk about this because I think David I’ve seen you tweet before that you’re not a big fan of I believe. 


00:25:50 David:


And forth. So maybe we 


00:25:51 Matt:


So 


00:25:52 David:


The debate here. 


00:25:53 Matt:


I’m curious to hear your take. So one, one caveat upfront, we do not have a lifetime plan. So despite what I’m about to say, we do not have a lifetime plan.


So it takes a take that as it is, but, you know, now being a number of years into this. And seen how high turn can be for kind of like B to C type, subscriptions. It started to make me wonder. and actually what made me think about it as well is our, our Luna hardware we sell. It allows you to use the iPad, another Mac, as a second display.


We now support PC as well. And that’s a hardware product, but we charge a very high upfront price for it. It’s interesting than that. I feel like our two products almost compute out to the same lifetime value, even though one is a subscription. And the other is a one-time hardware purchase. And so that kind of opened my eyes to like, well, maybe cause I was very strongly against lifetime, like early on, like a lot of people brought it up in the initial switch, like, oh, you should add a lifetime or a perpetual or whatever you want to call it.


And I was like, no, I don’t like that. I don’t like that. But then seeing that, you know, and an annual subscription, you can have 50% churn. that is really significant. And if you calculate it out, Yeah, your lifetime value of the subscriber, you know, like 50% sure. And I believe that would be about two, two years, would be so two times your subscription.


So if you’re charging yeah. Double your subscription, that’s your essentially your lifetime value then. So you have a really high upfront price lifetime thing, really that bad that’s of where. 


00:27:30 David:


Here are the two things I don’t have the data to prove it yet. Actually. we have a data scientist coming on soon, and so I actually, well, it’s probably not something we definitively answer with our data. 


00:27:41 Jacob:


Ask the question, David, I can give you my, I can give you my I’ve seen some data, like 


00:27:46 David:


So my theory on this now, as I’ve seen, so much, talk to so many of our customers at revenue cat, you know, thought about it with my own apps and everything else is that the people who are gonna be willing to pay. 60 8,000, $200 lifetime are the ones who are actually going to use your product for years and years and years and years.


So when you take your, when you take average churn rate and say, my average retention is two years. And so I’m going to charge two X, my subscription, which you’re not accounting for is that it’s actually your best users who are gonna be. Paying lifetime.


And so the average retention of that lifetime, user is actually going to be way longer. and then the other thing I’ve been thinking more and more about. we really are so early. So we don’t like you say, the average user turns out at two years. well, you don’t even really know yet is how long are your long-term users going to stick around?


And when you think about how early we are in subscriptions, there may be subscription apps that have users for 20, 25 years, you know, like a column or something like that, where, you know, they subscribe. In 2017 or whenever comm first introduced. So subscription 20, 15, 16, whenever it was. And then like, it’s just a part of their everyday life and they just stay subscribed literally for decades.


00:29:10 Jacob:


Value has a very literal meaning.


00:29:14 David:


And we don’t know. Right. and, you know, our, our glasses getting like change this up, what’s going to happen in the future. And are we going to be able to transition some of our use cases to whatever the next kind of technology is, but at the end of the day, like, we’re just starting to see.


Some of these cohorts that are, that are hitting five, six years of, continuous subscription, like I’ve been subscribed to Amazon prime for, you know, a decade. I think now I’ve been subscribed to Netflix for, six or eight years on the video product. And I had a, DVD subscription for a, for a couple of years and then canceled.


And they eventually got it back on. And so I think we’re just so early and understanding like how long these things are going to go, that if you’re gonna, if you’re going to pick off some of your best, highest intent users and charge them 200 bucks, you’re actually probably significantly shortchanging your, true lifetime value.


00:30:08 Jacob:


I’m gonna, I’m gonna interject a non-educated take, which is basically what I do on this podcast. two points is one I’ve never considered that David, which is interesting, like the lifetime are you funneling away? People that have a higher, actually higher lifetime value and limiting it.


Because, like, I really do believe most consumers are pretty rational, so they wouldn’t be asking for the lifetime value if they didn’t think that they were getting a good deal. you probably are sacrificing some stuff, but that might be okay because the flip side kind of Matt, going back to what you’re talking about is it’s like cashflow can really be important, right.


Booking that money, like right up front can really mean the difference between, okay. I can hire the next step and like we can kind of ramp. what we’re doing as opposed to an annuity, which essentially like an annual subscription where you’re just getting that money like over time.


And yeah, it’s gonna turn out, a little bit, or it’s going to turn out quite a bit in this first couple of years, especially in the like, presuming you’re probably a little bit better off, but still like people just move on and like stop using tools and even, even consumer pro-sumer stuff. 


But it is interesting how you I have seen this in data before multiple times.


When you try to look at LTV that like, it always seems like the lifetime value. Finds a level, like it finds a level like between, like we’ve, we’ve looked at this in like conversion, like full conversion funnel modeling between different products. Like it almost doesn’t matter what path and packaging somebody goes down The LTV often ends up roughly the same. accepting David’s point, which is like this very, very long-term version of people being heavy because we w in LTV modeling, we don’t tend to look past like two years, essentially.


00:31:38 David:


Do with data is look back at some of these apps that have had subscriptions for a very long time and start to understand new revenue versus old revenue, and look at some of those early cohorts and look at the actual LTVs of those early cohorts. As some of them mature into 5, 6, 7 years of subscriptions that’s the analysis we can do.


Jacob, I think would be


00:32:02 Jacob:


Yeah, the tend really small they do decay quite bit. So like you end up with these probably really sturdy stacked cohorts, but they’re very, they tend to be very small. I still, at this stage tend to be very small in comparison to like the a hundred people that signed up last Right. there’s a lot of dynamics going on and because of the. Honestly, just because of, yeah, like the age, we’ve only been doing this for five or six years, like we’re still pretty early in understanding how this is going play out.


00:32:27 Matt:


Yeah. And, and Dave, that’s probably the best argument I’ve ever heard. Like you might’ve, you might’ve convinced me now 


00:32:35 Jacob:


Would get some data first map, because I think one of these arguments. That sounds, it makes sense. But then like, you know, when data look at the 


00:32:43 Matt:


Like what we were talking about early with like, oh, we’re charging on the Mac, Mac, side for, for Astropad. Oh, that make tons of sense. Like logically and then like the data just doesn’t. 


00:32:52 Jacob:


It’s just one of 


00:32:53 Matt:


Yeah. 


00:32:53 Jacob:


Not super good at reasoning about without seeing it like, with an actual 


00:32:57 David:


Yeah. And th th there’s other reasons for, for a lifetime too. I mean, I still have a lot of times in both of my apps. And I think if you, if you have ongoing costs, like my weather app, I am going to pull it from my weather app. but it is a nice like price anchoring, right? Like you have. 60 $80 lifetime.


And then you have, you know, $15 annual subscription or something, or, you know, whatever, whatever those numbers look like, 


00:33:21 Jacob:



00:33:21 David:


Is good. And then it is the off ramp for the people who are just like, yeah, I never going to do a subscription. And so maybe, maybe the, yeah, I’m never going to do a subscription, even helps balance the.


Losing your kind of highest intent users because they’re, they’re not actually paying more because they see the, they perceive more value kinda to Jacob’s point, but they’re actually paying more because they just don’t want a subscription. So, yeah, there’s a lot of


00:33:46 Jacob:


That’s an interesting, it’s mixed that cohort isn’t pure, right? That cohort isn’t necessarily I just love this app and I’m gonna use the rest of my life. Right? Like it’s, it’s, there’s different reasons people would go to that price


00:33:56 Matt:


Well, and for, for us, one reason we seriously thought about it early on. I mean, again, we never did it, but is we had so many people come to us and say, you know, we hate what Adobe did going into the creative cloud subscription. Preferred when we did this, like giant upfront, you know, we bought, the creative.


Every two years for a thousand dollars. Right. They actually preferred that then, because we were dealing with a lot of creative, they were like asking, asking us for that, for that model. So that’s where we, yeah, we hemmed and hawed on, on doing it, ultimately didn’t but now. Yeah. After, after a couple of years and seeing, cause it’s not like, you know what, I would expect more with a lot of B2B subscriptions where their cohorts just kind of like stack and you have much lower churn, a business starts using something and it’s part of their workflow.


And they stick with it for forever where tools, stuff changes faster, the kind of devices and the kind of, you know, Yeah. Like in our case with Ashred studio, what, what does years from now even look like? Right. 15 years, we don’t even know what does the iPad look like in 15 years?


Exactly. So it’s hard. It’s harder to, like, I think I might be biased in that way too. Coming from like the, the. Area we work in where we do see things changing really, really quickly, especially compared to some of these other things. You mentioned David that are more like content businesses to me, like Netflix, I call them in a way I would argue is kind of like Peloton, 


00:35:27 Jacob:


A podcast player with like a very specific kind of content.


00:35:30 Matt:


Absolutely. So that’s a very different than like the 


00:35:33 David:


Yeah. 


00:35:33 Jacob:


A great point, Matt. Like all of this stuff has to be really be conditioned on your product, the kind of value it delivers, where it lives in the value chain. You know, if you think about like, pro users, creating content with something and that, you know, they’re using.


The, the value that they’re creating and delivering to somebody else isn’t getting created. And Astropad, it’s part of the process, right? So thinking about where you sit in that value chain and stuff can, can help educate you. And yeah, you might be right. Like there might be there, you know, with how fast things changing and development of stuff.


Like you might not be able to rely on that. Like, Hey, we’re going to stack forever thing and that’s fine. That’s just business. Right. You just have to understand your your you know, plan around.


00:36:12 David:


And then, speaking of things changing, I did want to get into, a lunar display. So WWDC, what was it? Two years ago? So 2020, Apple gets on stage and says surprise. you know, you can now stream your display from your Mac to your iPad, built into the ALS. And of course that’s exactly what Luna display does as a hardware product.


So what was that like, sitting there watching WWC, I assume you, you were actually watching live, um 


00:36:45 Matt:


Yeah. Oh yeah. Well, it was actually, it was one worse even because, of why we had done Luna display was to diversify because we felt very vulnerable with Astropad alone and it turns out sidecar did with Luna and Astropad Astropad has way more features and it’s, and it’s been actually at this point, both Luna and Astropad, have way more features than Apple sidecar, but, Early on.


That was really, really, really, really tough. yeah, our stomachs just totally dropped. Like we, we felt like we were living in a nightmare. I mean, I remember waking up the next morning and I was like, is this real? this really happening? Like, oh crap. It is, I gotta deal with this. Like this, this is awful.


Cause we people in the company at that point too. 


00:37:28 Jacob:


Founder, like all people, that makes it tough.


00:37:35 Matt:


Yeah, and we weren’t totally oblivious to Apple coming into our space. Like it seemed like a natural. And so at the time we were actually more worried about touch Macs, like supporting pen. cause this was the time like the Microsoft surface studio came out and that kind of stuff just like made so much sense where like, at what point is Apple, just add this natively to the Mac and then Astropad doesn’t make any sense at all anymore.


So our thinking was is that well with Luna display, we’re adding a second display. so even if there is a touch Mac, you need second. So this seems like, we, we never anticipated that they would actually do what we were doing, because they were so anti, like, Putting the Mac UI, they kept talking about the Mac UI doesn’t belong in the iPad. The macula doesn’t belong in the iPad. And we’re just like, yeah, it doesn’t seem like they’re going Interestingly, we never expected them to disable touch put it on the iPad, which is what they do. versus full touch.


You can


00:38:32 Jacob:


I’ve never, used the sidecar thing. but you can’t have to use pencil


00:38:37 Matt:


You can only use pencil. but we support full like


00:38:42 Jacob:


That feels like a by committee decision.


00:38:47 Matt:


So we didn’t really expect that and it was, it was brutal. and not only that, but it was free and integrated with the.


00:38:57 David:


Yeah.


00:38:57 Matt:


It was like, oh wow, this is, you know, it was one thing if it’s paid and then we could compete on, on that, but a feature like this, of course integrated in the last. And so it was just, just absolutely brutal. I mean, our Luna revenue went down 10 X almost 


00:39:13 Jacob:


Wow funny. even know how I would use it in makeovers. follow this stuff as closely as I


00:39:22 Matt:


Going to 


00:39:22 Jacob:


I be one of those like 10 that would still be searching it on the app store.


00:39:27 David:


So, and you’ve told this story publicly, but Apple had actually purchased a bunch of your unit. Did you even like go 


00:39:34 Matt:


Yeah. 


00:39:34 David:


And display and


00:39:36 Matt:


Yes.


Yeah. 


00:39:37 David:


Me that part of the story?


00:39:38 Matt:


Yeah. Well, it was just, we were, we were connected in through, through Apple had had multiple, multiple discussions with us and felt like they were trying to support us As part of their ecosystem. little did we know that behind the scenes, they were actually making


Copy we doing 


00:39:57 David:


Yeah, I had the same thing happened to me with a launch center pro had shortcuts employees like buy our NFC stickers and ask a bunch of questions about how we were doing NFC. And then six months later, boom shortcuts at WWC announces NFC support, but then not only, we were kind of in a worse position than, you know, Like shortcuts has deeper system level access that we can’t get access to suit.


So they completely, obviated our use case, but then actually even did it better because they were able to integrate deeper into the system. I wonder how many other stories are like this. It just don’t get told of Apple kind of cozying up and buying a product and asking a lot of questions and then surprise.


00:40:43 Jacob:


Yeah, you can be, can be kind of starstruck, right? Like you want to, think like, oh, I’m so special. And like, oh, they want to know. And like, oh, maybe they’re going to buy it. I don’t know something good. Right. and, and maybe it’s not all, I don’t think Apples and I don’t think they’re nefarious. I don’t think this is their intent is to like crush indie developers, but they’re a big public company that’s trying to increase revenue for shareholders.


Right. They’re going to do things that are not incentivized in the line. With partners only in so much as they can keep the ecosystem, pushing their share value to be really like, really cynical about it. But, I think it’s always important. Yeah. You got to remember when you go into these things that like, it’s not necessarily for your benefit.


Right. And so in mind.


00:41:23 Matt:


And the other thing too is this is not unique just to Apple


This is a lot of the big companies in general so 


00:41:32 Jacob:


Mean, it’s hard innovate those companies, right? So they’re better at copying. Cause like you can. See something that’s already been innovated, which innovation is hard and it been company just is. And like, then you can, but you’re really good at building.


And you’re really good at like deploying and shipping and launching. Right. So it makes sense that you know, if you ask somebody like, oh, do you want to steal the hard work of some small, like indie developer studio and crush their livelihood? They’d be like, no, gosh, no. But they’ll do it because it’s like how their incentives are aligned.


Right. It’s like they will get a bonus do right. Whether or not that that’s like moral or correct. Doesn’t really matter. It’s just like how the incentives are set up. and that’s not just Apple. It’s going to be any, 


00:42:11 Matt:


All 


00:42:12 Jacob:


Than you


00:42:13 Matt:


Big big big companies Um so you know a lesson to small small developers out with


00:42:23 David:


Yeah 


00:42:24 Jacob:


Guys, you went, hard on windows.


00:42:27 Matt:


We weren’t really hard. We went really hard on windows. That was our. That was what we well, so there was two things. We did. One, we initially started adding more features to a lunar display in particular, cause that one got hit the hardest first. So we started adding more features to that. The first thing we added was, called Mac the Mac mode.


Now it’s actually more than that. It also supports the PC as well, but at the time was called Mac the Mac mode and allow you to use, especially like an iMac as a secondary display for the old school. 


00:43:00 Jacob:


Laptops doing now.


00:43:02 Matt:


Yeah. That’s what we do.


We do that and you can do it with a PC to a PC. You can use a Mac as a display. We’re working on adding support for PC to PC, so you can use multiple PCs so they can, yeah, you can use an old computer. Old iMac display and that’s been surprisingly popular.


00:43:17 Jacob:


That for long time. And they’ve never been very good, especially in a cross-platform months. Like they’re just not well-made. 


00:43:24 Matt:


Yeah Absolutely And they’ve been buggy and they’ll have often like Colonel level drivers that cause weird kind of issues. And that’s where we come in with our hardware support, where we actually plug 


00:43:39 Jacob:


About So the hardware just acts as an HTMI device or whatever, a


00:43:45 Matt:


Yeah, we have HTMI we have mini display port and USBC, USBC, banner, most popular, but you plug that in and our software is able to activate a display that’s how we, and then we can transport it. You can connect over if it’s another Mac and do a Thunderbolt, either net Wi-Fi XY pad, you can do USB, you can do wifi.


So it’s really, really flexible there. And so then we pushed really hard on windows a huge, huge project for us, took us another two years to do. but turned things around for us. And now we’re actually at the level we were before Apple launched sidecar. Cause we were doing great before sidecar then we things took a dive.


And now finally, finally, we’re back up again 


00:44:26 Jacob:


There’s some arbitrage here. Like I’m not a huge expert on the windows ecosystem. I feel like it’s big, there are more windows computers don’t know if it’s an order of magnitude, but it’s a lot, 


00:44:37 Matt:



00:44:38 Jacob:


And, and like, that was, I was talking about this like flight simulator thing.


I made that they made so much money for me and I did almost nothing just cause they’re so even in a niche like that, right. Like my, the one windows made, made six figures over a year, but like, it was like good money. and I barely had to try on it but I think the still the software quality on the app store in the Mac are so much better.


Arbitrage opportunity here. can bring that level of care 


00:45:06 Matt:


And that’s what we’re trying to do, and you can do it. You can do it It’s not like it’s easier to build. I, in my opinion, it’s not easier to build high quality apps on, the Mac than it is on windows. It’s hard on both. It’s really but if you put in the time, we’re finding, you can do it on windows to the API.


00:45:25 David:


So you have that. And that’s such a great story of, you know, not all sherlocking stories and, with, Hey, we differentiated against Apple and are actually doing really well. But I, I think that the companies that are able to do that. the ones who kind of end up coming out of it stronger.


We’re we’re not, Apple is kind of marketing for you. It’s like, Hey, there’s this amazing feature. And then somebody uses it and they’re like, oh, this is kind of cool, but I need this or I need that. And then they go looking for a solution and there you are. You know, I kind of see this in the, in the weather app space.


You know, you would think, you know, WWC 2021 with iOS 15, Apple, you know, made huge strides with their weather app. But at the end of the day, like there’s, there’s so many, niche, things that people care about with weather, and content, you know, weather.com, the weather channel, you know, they have so much content.


They have so many other things that they differentiate on that, you know, Apple’s new weather app still much if any, you know, market share from them. So, so yeah, I mean, how have things gone since, since the pivot, are you that kind of sherlocking success story that the Apples just kind of brought awareness and, and businesses better than ever.


00:46:41 Matt:


Yeah, it was a very difficult two years. We didn’t know if we were going to make it out, to be honest. But now, two years later, I can say, yeah, it is possible to survive, and to do better than you did in the beginning.


It required a lot of hard work. It requires you to be scrappy, or requires you to pivot, and we were able to do that. Others can do it, too. So, if a big company copies you, it’s not the end. Right? You can pivot your way out of that. It’s not easy or fun, but you can do it. 


00:47:17 David:


Yeah. That’s great.


Well, that’s a great place to wrap up, going out on a high note. Great to hear that things are going well.


Anything else you wanted to share? We’re going to drop links to Twitter, to Astropad, and to your blog. There there’s several good blog posts I actually wanted to talk about that we didn’t quite get to today.


Anything else you wanted to share, as we wrap up?


00:47:39 Matt:


Yeah, definitely check out our company, Astropad.com. Check it out. Check out Luna and Astropad, now with PC support. You can also find me on Twitter. That’s probably where I’m most active. I tweet about what’s happening in the business, stuff I learn along the way. So, M R O N G E on Twitter, and check out my website, where I blog occasionally. I’ll try to do it more. M R O N G E.com.


I gotta plug this, too. I also host a podcast, Building Astropad, where I cover the behind the scenes of us bootstrapping our software hardware. 


00:48:13 David:


Yeah, that’s fantastic. I’ve listened to a few episodes. I like that you talk through some of your blog posts, as well. That’s something I think we should experiment with here on Sub Club, the better blog posts that we’re doing.


It’s fun to hear you talk through the behind the scenes a little bit. You get into it a little bit more on the podcast than you do on the blog. That’s a great format, as well.


So yeah, definitely check out Matt’s podcast.


00:48:41 Matt:


All right. Well, thanks for having me on, David. 


00:48:45 David:


Thanks for joining us, Matt.


00:48:46 Matt:


Yeah, it’s been a pleasure.