How V1 Sports Doubled Revenue with Bold Bets

David Barnard:

Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat. Thousands of the world's best apps, trust RevenueCat to power in-app purchases, manage customers, and grow revenue across iOS, Android, and the web. You can learn more at RevenueCat.com. Let's get into the show.

Hello. I'm your host, David Barnard, and my guest today is Alex Prasad, CEO of V1 Sports, the leader in video golf swing analysis software, and seamless video lessons. On the podcast, I talk with Alex about the power of user segmentation, executing bold strategic shifts and why imaginary customer conversations are sometimes better than real ones. Hey Alex, thanks so much for joining me on the podcast today. Really looking forward to chatting.

Alex Prasad:

Thanks for having me, David. Super excited to share our story and hopefully, there's a learning or two that's applicable to your listeners.

David Barnard:

I think there will be, and that's why I wanted to have you on the podcast. The interesting thing about V1 sports and what I wanted to focus on was how... And I think so many apps are going to relate to this. It's like V1 Sports had amazing early product market fit and built a great business around that and then went through the wilderness. So let's kick it off with what that early product market fit was, and then we'll go through how you came in and the things you did to really get it back into a growth state.

Alex Prasad:

Yeah. So this company is over 20 years old, maybe closer to 30, which is crazy to think about, from a technology company perspective. Not a lot last that long basically. And the first innovation was being able to send video over the internet before really anyone else could in applying it to this golf context. So I know today, everyone's streaming 4K, four NFL games and quad screens on YouTube TV, like hiking through the woods, but that was not the case 20 plus years ago.

And then the second was telestrating on that video so that instructors could do a video analysis, whether in person or purely remotely and send it right over the internet. So that innovation won roughly 30% market share in North America amongst golf instructors. That's our B2B side of the business revenue cast, working on the consumer side. We'll be talking mostly about that. But that became less innovative over time, like every innovation, and so it won that market share. Then there was a plateau for a while in terms of growth. So, especially on the consumer side, learned a lot of things to then start to kickstart whatever, maybe phase two, whatever you want to call it, of growth, and not in a straight line, not because we're so smart, but through a lot of trial and error and a lot of learnings.

David Barnard:

Let's talk through that. So what was the state of things when you joined the company? And then let's start talking through that early, what it took to take this great business, but great business had plateaued, and get it back to growth.

Alex Prasad:

Yeah. Well, if you think about a 30-year arc in technology, I like to step through phases. So late '90s, who's the best company? Ford and then maybe Microsoft. So you go from let's sell a lot of stuff, Ford, like big expensive machines, to Microsoft, let's license software and deploy that. So here's your CD and install it on X number of computers, whatever. And then you start to move... I'm skipping lots of shades of gray here, into a subscription model. But so, when there's a business that's of that age, you have remnants of each of those models. And I would say now we're in a platform model with two sides of a marketplace and so on and so forth, is the "best" in quotes, the most interesting thing. And maybe we've actually aged out of that and now it's AI something, right? So yeah, it was a puzzle because you had vestiges of each of these business models, which were the best practices at the time, lying about, basically.

And so we needed to put a stake in the ground and say which of these are we really? Which is antiquated by age or maybe not still pertinent? If you think about these users, we have high 80s percent retention on the B2B side of the business. So these guys are happy where they are, they like the thing and they don't really want fundamental [inaudible 00:04:20] that behavior regardless of what we're doing to them, if you will, means I don't really want to move, right? I'm happy where I am, thank you. Just keep delivering this thing to me without disruption. So we had to look at those various business models and choose one and then try to harmonize around it. And so, especially on the consumer side, because the business started purely B2B, I would say the strategy was, I don't want to say immature, that sounds negative, not the point, but it hadn't been focused on as to how do these pieces of the puzzle go together. So not surprising that opportunistic line of business plateaued because it wasn't really the focus as a starting point. It wasn't the genesis of the company.

David Barnard:

It sounds like this is why you joined. Is you saw that there was a ton of potential, but what did the business look like at that point? Like size and users? And you already mentioned 80% retention, which is insane.

Alex Prasad:

Yeah. So 30% market share on the B2B business has not changed a ton over the last, I've been with the company a little bit over four years now. The annual contract value is increasing. That's the exciting story there. Again, not really our focus. On the consumer side, again, it's not being critical, it's just the order of events was that the consumer thing was opportunistic, but it had never in my opinion, been thought about, rethought, once it reached a certain size. So because of that B2B dynamic, the focus was really, don't disrupt the instructor consumer relationship. So some instructors would have issues with the fact that we could sell directly to their customers that were on the platform. So we thought that we made some bold decisions, which did create some friction on that B2B side, but we basically switched from a freemium model to a free trial model to simplify things because freemium, in my opinion, in a direct to consumer business is probably the most complicated monetization strategy you can have.

And we got to be really clear thesis statement, really clear metrics, really know where to draw these lines. Otherwise, no pun intended for a video telestration company, draw the lines, father dad joke, right? But that freemium strategy had been really, I think, deployed more offensively to keep the pros happy, if you will. And still, today, the pros, students, athletes can join the platform are never going to disrupt with a paywall, the interaction between the two. It just like a touchstone, third rail, you're never going to change that. It's a fundamental tenant of our business, if you will. But we did rethink that freemium business model because the thesis statement, I think, was fairly weak, to be blunt because it again, it was like an add-on line of business. It was not the main event. So it didn't get that level of thinking. When something's opportunistic, you attack it and you take the money that's there, but that's very different than being methodical and thinking about it from scratch.

David Barnard:

I want to interject because I think a lot of apps can relate, and maybe I need to help point this out, but so many apps, if they're four or five, six years old, they don't have as much business strategy debt as V1 Sports did, but they probably have more than they realize. There's features that they give away for free in their freemium strategy that maybe are higher value that they should be putting behind a paywall. There's ways they do things that haven't been rethought in years. And to your point earlier, things have changed so much. Consumer willingness to pay via subscription has changed, onboarding patterns have changed, even willingness to pay higher prices are surprisingly doing better and better if you can deliver the value. Consumers are more willing to pay higher prices for software these days than I ever thought consumers would be willing to pay for.

So I think this is how, if you're listening in and you're like, what does this golf app have to do with my business? I think this is the meat of it, is that if you've been around and your business has plateaued at all, or even if you've just been around a bit and are still growing but want to grow faster, taking a minute to reevaluate some of these core aspects of the business can produce incredible fruit. So then what was your process? How did you gather data, talk to users? What did it look like to figure out where those opportunities were to shift the business strategy?

Alex Prasad:

Well, how much time do we have? So I'm a corporate lawyer by training, in that perverted or rewired or whatever adjectives you want to use, my brain. Not a litigator, no one makes TV shows about corporate attorneys, but the first was just to challenge our assumptions. One of our, it's not a core value, but it's just lurking outside of our core values is nobody knows anything. Nobody, right? I believe in experience shares. I'm not giving advice, telling you our experience. Here's what worked for us, here's what didn't. Apply it to your situation. I don't know enough about your situation to tell you that my approach is right or wrong. Our approach is right or wrong. And then another corporate lawyer thing, it's a logical syllogism. Everything that we're doing, what are these implicit assumptions that we're making to make decisions?

And the more time that passes, the more dated those bedrock assumptions are. I think one of the things that our team is most proud of is, it feels like we've been, in the last four years, like 15 different companies, completely disorients our board, which is a whole different masterclass that someone needs to give me. But I view that as a sign of progress and success. So there's lots of times we actually come back to something that we may have done previously and someone says, "Well, we already tried that." And I go, "Whoa, but that was 18 months ago." And think about all the things we've learned, let's go back to. So I'm a big fan of why are you where you are? Can you go back and critically evaluate that and are those still true? Sometimes they might just be truisms and you might just say, "Check, check, check."

For instance, for us, we're never going to make the student pay to interact with their instructor. We're just not going to do it. We go back every once in a while and say, "Well, we could." And we go, "No, but that violates our core value and these people have a long relationship with us. We're not on the pro side, right? We're not going to disrupt that." Okay, great. That one hasn't moved. But what about these other things? So first for us, was just go back to the beginning. And so free trial is just simpler. We couldn't reconstruct the thesis statement behind the freemium strategy. So he said, "We need to make things simpler and get back to the basics." And by the way, if you switch from free trial or from freemium to free trial, you're just going to make more money doing it. You might burn users, different story. We can talk about that and bad reviews, whatever. So there are costs.

So that was, I don't want to say... I use the word easy a lot when I think I mean simple. That was simple. It was A or B, you got to choose a door, pick one, right? But we decided basically, to retreat to move forward, meaning, there's a lot of assumptions that are stacked here and we don't really know how many of these are true. Where's a simple place to start to explain the universe that we're living in and then proceed from there and try to meticulously, brick by brick, lay these down so we have a solid foundation. And again, because we had such high turnover, a feature and a bug in some ways, and so institutional knowledge got eroded to some extent. It was easier to do that because there weren't a lot of sacred cows to us, but also, harder because there was fear around, well, what are we disrupting? Because we didn't have that full knowledge. So that was a start, at least, simplifying things so we could list the four or five assumptions that we thought we were operating based on and then building off of those.

David Barnard:

Yeah, let's talk about that one assumption then. So it sounds like people would open the app, go through onboarding and then be able to use the app and certain features for free. But was there a premium tier at that point and what did that look like? And then when you say switch to free trial, is there no longer any free usage of the app? You have to pay to use the app? What data, what hypothesis did you have? How did you test it? This is a transition maybe a lot of... I did this in my weather app, so I've already talked about this on the podcast. It was always intended to be short-term, but it worked really well in the short-term. And so now, I'm going to revisit freemium once we get the product to a certain point where the costs align and things like that. And we're in a different market. So like you said, experience is something you need to learn from, but not always directly apply.

But anyway, so yeah, what did you mean by freemium? What did it look like in the past and then what were the user research and data that helped inform the hypothesis and then how did you validate that?

Alex Prasad:

Yeah, so there's a limited number of ways to improve your golf swing. Just fundamentally. So, you could work with someone that's working with a coach, you can look at your own swing with video. We view that as foundational elemental. If you want to improve any athletic thing, if you're not going to watch yourself do it, your level of seriousness about improving is, in our view... Because we're thinking about our ICP, right? Reduced significantly. So you're not really the droids we're looking for, probably. And so video telestration goes along with that and being able to look repeatably, the swing, what's the same, what's different and what's a flaw based on what I know or what we're teaching you. And then looking at content. So there's only three or four things. So we were allowing you to do basic telestration in this freemium but not advanced. We thought that was way too thin of a hair to slice, to split. There's no way. You're either in or out.

And so when we still have way more free users, like 3X, 4X, like monthly active users, and we do paid. Basically, we just split up the constituent parts. So the interacting with the pro, because the pros are generating about a third of our new registered users on a daily basis, are coming from this relationship. So yeah, we don't want to disrupt this. So what does that mean today? Send videos to your coach, go back and forth with them, interact with them. So the pros experience and your experience, hey, there's this free app, this is what you use to interact with me, right? Let's go. Great. But then there are three quarters of the people that are not coming through that channel. So we tease segmentation, we can talk more about that. But the three quarters is where there's all this volume here, 3X of volume.

So that's some of the decision making progress or process just at the starting point, who are you and how did you come here? You came through a pro or you didn't, let's just start there. By the way, when you're trying to remodel the airplane while it's flying, doing some basic things like that is hard, don't get me wrong. And we're at a place now where we actually think we do that well. But that was the problem two years ago. So that was a starting point. And then it was, is it reasonable to have to pay for that? How much convincing are we doing with the freemium tools and we can talk about data and when do you know to go or not? That's a good thing that we've talked about previously, David, but that was just instinct, I think, largely. When we don't know and we don't have data to point it out, we try to retreat, make things simpler so that we are on more solid footing.

Obviously, not burn a bunch of money or stop charging people or whatever, but retreat, it's too complicated. It's a golf app. This isn't that complicated. But if we don't understand what's going on, adding in more and more factors is not going to make it easier. It's going to make it harder. So let's simplify this thing. Here's the thing, do you want it? If you do, you'll pay us. If you don't, yeah, should you have a free trial? Sure. Try it out before you buy. But we'd really just try to simplify, as a starting point. And that was more instinct and really, not instinct about what the best reaction would be in the market. Instinct that we didn't know.

So what are we supposed to do if we're driving this vehicle, we're not in control of it. What's the first thing that you do? Slow it down. Try to understand what's going on. Because if we just keep going faster, we're going to hit something eventually. So that's the way we thought about that. And then as we got more fine-tuned, certainly data and instinct or whatever started to come into play, but at the start, it was simplified and respect the existing relationships. And I think we did that, at least.

David Barnard:

What did the gathering data look like? What did it look like? Talking to users, having conversations, figuring out how you could make this transition from freemium to the free trial?

Alex Prasad:

That transition versus, I think it's about maturity of a company, like in where you are. That was more of a naked bet, to be blunt. We just knew what we didn't know and so we had to make a leap. But I taught us a lot. So we got all these reviews of people who were in the freemium and all of a sudden, now some of their things, it had to be paid. And you get these reviews, lots of one star reviews. If you go back, look at the V1 golf app in the iOS store and you go back two years, there's a massacre. And the responses were, "I've gotten this for free for nine years and now I have to pay for it. I hate these guys." I like to say the more time I spend in other people's shoes, the more effective I have been for the day.

Because it really, at the end of the day, it doesn't matter what we want, it matters what our customers want because we are trying to get our customers to open our wallet. So I like to, and a lot of calls that we have are thinking things through and I'm not saying anything, be like, "What are you doing?" I'm like, "I'm playing out. I'm having a fake conversation with a real person." So I'm having a conversation with this guy who's leaving a one star review saying, "I got this free for nine years and now I have to pay." I don't think I had that conversation in real life. I think the guy pays me. You don't come to the bar and get a free drink and come again next week because the bartender likes you or whatever, and go, "Well, yesterday or last week you gave me a free drink, so I'm entitled to another one. Hey, thanks for the favor. I'm going to pay for this one, for sure." Right?

In real life, that's what would happen. So these decisions were, we understood there was going to be friction to be blunt, right, with users, but that we were comfortable with having that conversation. When we war-gamed it out, people are going to say that, and I said, not lacking empathy, but, "So what?" If you're a user who's looking to download this app and four one star reviews and it's four people who are upset that they had a thing for free for almost a decade and now they got to pay 60 bucks. And I understand the star rating, that's important, but we have to make this shift here because I think for every four that complain, 10 are going to subscribe. And that's basically what happened.

So there's a little bit of blunt force there, and that was, I guess, the data in that case, we're more mature now. We don't have to make bigger bets like that or a little bit bigger leaps that we just hope. But there, the data was war-gaming out those conversations and trying to draw a line between reasonable and unreasonable, which is completely subjective, and which conversations are we comfortable with and which ones are we not? And that was one that we were comfortable with.

David Barnard:

So you're really burn the bridges because I had this exact same debate and I landed on the other side of it for my app that if I recall correctly, part of this decision was that as a business you needed to make money, you needed to move the dial financially. And had you only made it free trial for new users and grandfathered in this really passionate long-term cohort of users, you knew you were going to leave too much money on the table that you needed to propel the business forward. So it was also like a business strategy decision that we need the money and we're willing to take it on the chin to get the cashflow we need to keep moving the business forward.

Alex Prasad:

Yeah. A lot of people called us greedy and if I showed you the financial history of this company, that's a hilarious statement. So yeah, we just made that leap, David. It's almost not a lot of thinking required to explain the background behind it. We needed to do it for the financial stability, viability of the company. If it's a nonprofit, it's a different story. We're still in a process of moving users over to new pieces of software and sometimes, my team asks and I jump in to a conversation and I say, "Look, we're running a business and these people are working hard and they deserve to be paid."

So we offer a service. If this service isn't for you, then find a different service or don't choose not to consume this service. It's really that simple. It may be a different way of saying, you can't please everybody. Much harder when those people are already in the tent and some may perceive it as you kicking them out because you're changing the rules of the game. No one liked doing this, to be super clear. I was like, "Ha-ha, we got them. Let's squeeze these guys." Not at all. But to run a viable business, you're going to have to make some decisions like that. And I would just say, for as hard as it is, in your case in mind, with your weather app, it's no different, I think. But it's a little bit of encouragement if someone's looking down the barrel of that to having set the right stuff in the first place, right?

David Barnard:

Yeah.

Alex Prasad:

If you say you can only come into the theater if you buy a movie ticket and then there's people in the theater that didn't pay, they got in a back door or whatever, you going and seeking them out and saying, "Hey, you have to pay to be here." That is a conflict. I get it. You're much less likely to do it in that scenario than the person at the front door, but fundamentally, you should. You owe it to your shareholders, you owe it to your business and the people that work there, you can give them better raises. You can invest more in the product for the users that are paying. You can go down that. It's just a matter of fairness, and that's not a word that's really in my vocabulary, but if you're going to use our thing, you got to pay for it. And if we change the permissions, if you will, it also helps. My wife's a doctor, I work for a golf company. It's a golf app. This is not kicking you out of the hospital and you need life-saving procedure or something, right?

David Barnard:

Wow. But then I guess it speaks to the core product market fit that you had these users using those free features for like you said, nine years. If somebody's using something for nine years, it's because it's delivering a ton of value. So you already talked about, you took it in the chin review wise, but then how did it go? Was it an incredible success?

Alex Prasad:

Yeah. It grew 80, 90% in 12 months or something in terms of revenue. So yeah, you could just do the math and you go, wow, there's a lot of people that are using the heck out of this. That transition was about future use. It was not about holding people's data hostage and so on and so forth. And one lesson I do think that we've learned is that when we try to communicate nuanced message with three points, the first point is heard and the other two aren't. That's because people are busy. It's not like people are stupid. That's not what I'm saying. But really, repeatedly, we've spent a lot of time when we do these disruptive things because this has been a turnaround, whatever the right word is, but a rethink, whatever the right phrase is, there's been a lot of disruption and we're still disrupting in other ways, in other lines of business, et cetera, to try to get everything in the same strategy on the right path.

And it's as funny, maybe funny is the wrong word, but how repeatedly there will be a nuanced thing that we're trying to say to folks and really, to take away one point and they move on. There's a recent example, I'll spare you the details. So I guess my point is, if you're looking at one of these decisions and you believe that the aggressive decision is the right one, just know that the five weeks you're going to spend massaging, well, no, there should be a fifth email that communicates this. It is a little bit binary. If you're going to move someone's cheese, you're moving it, that's the way they're going to perceive it.

The fact that you did it to the 95th percentile versus the 55th percentile is likely lost because they're upset that the cheese has moved. I don't know if that points to don't do that extra work. I'm just saying, it's unlikely that it will be recognized if you change the game on someone. So just [inaudible 00:23:15] beware or fair warning or you won't be praised. Well, I know you had to do this, but you did it in the best possible way. You're not going to get the first part, so you won't get the second part.

David Barnard:

So how did you communicate it? Because that's a big deal. Again, why I wanted to have you on and why I wanted to talk to this is because I think there's a lot of apps out there making decent money, not growing, struggling, that should not necessarily go from freemium to, you really burn the boats and bridges there. It would be hard for me to, in good faith recommend a lot of apps go quite so dramatic. But hey, if you're struggling as a business, you need to make bigger bets and this was a big bet. So then if people are going to make a big bet and make a big change, especially to existing users, how did you communicate it? And it sounds like you've already shared one lesson, but any other lessons in that communication that people could take away from?

Alex Prasad:

Well, I think the 80/20 rule applies, and I think fewer, better customers are better in general. It's a general rule. If we could pile in a million users, but they were all on the knife's edge at every renewal and we knew they didn't really get value, and we call them zombies. We got a lot of zombie users out there that maybe they forgot. That's a dirty secret of the subscription business is that everyone has some percentage of users. This is why consumers revolt against subscriptions and why businesses like subscriptions. They forget that they even have the subscription, right? No one wants to talk about that if you're in our shoes. But that's a part of the business model. And one thing that gave us confidence I think, was this, which is that if you have fewer, better customers, you're going to spend less time trying to manage churn and spend less time just worrying, about how tenuous your grasp is on these folks.

What if the people that are really getting value out of it have to pay for the value? Again, that's a theme of simplification. So that was what I think, gave us a lot of solace. Since that comes down to segmentation and trying to understand your customers, and if you believe you have lots of customers that actually love the product, you should charge a fair price for it. And if you're worried, so, so worried that... And this applies to price increases too, so, so worried that a 10% price increase, maybe not today's, but your last couple years inflationary environment is going to run off all your customers, I would just encourage you to think through why. And is it because you don't have conviction that your product is really solving one of these people's problems or your user's problems?

And if that's the case, the problem isn't the price increase. The problem is understanding those customers and delivering the value. I think this comes down to trying to treat people like they are people and not users, because we have all this data and thousands of users and so on and so forth. Everything becomes a spreadsheet, but we forget that fundamentally, it's people. And so I'd spend, like I said, a lot of time in other people's shoes, but then also a lot of time pretending like these interactions are happening in real life.

Does that make sense? Would you do that in real life? Look, everyone knows it's software, it's programmed to give you this answer, that's fine, but if it doesn't feel right or doesn't mimic the human behavior, the chances of success are lower in my opinion. So again, to the person who has that issue with the nine years free whatever, let's play this out in real life. Are we okay with that? Are we okay with other people overhearing that? The answer was, yeah. Whatever percent of people are not going to like it, and that will create the snowball effect that you're so worried about. Sure. But most people, we think that's reasonable. These guys are working, they're delivering a service and they're not getting paid for it. They should get paid for it, probably. Segmenting your customers, understanding where they're coming from and what they're doing, and then are we scratching the itch that they have can give you a lot of confidence.

Although that being said, I don't feel like every day I wake up and go, "I don't think we understand this well enough." It's not like you reach a point, oh, we got it. We figured them all out. Mission accomplished. So, we've landed on the moon, whatever. No, if you're not paranoid about that all the time, but that's the root cause issue of everything. Are you delivering the value to these people that they feel like they can't live without? And if you are, you got a lot of freedom and flexibility to do a lot of things.

So our average user spends 21 minutes a month in the app, our monthly active users. That's a ton, which is not a license to abuse them, but it is, okay. These people get it and they're going to be retained at a high level. It's something to build off of. And the ones that are in and out real fast or not using at that level, we want to understand why. But we also know that a lot of those people are not savable, not the ideal customer because there are ideal customers over here. What's working for these people? Let's really drill in here and understand and apply it to more with an understanding that these people might only be 20%, right? Everyone is not your ideal customer.

David Barnard:

You teed up segmentation, which I do want to dig into, but just one more time restating the question. What did you tell them though? This is the practical takeaway for folks of, if you're going to make a big change to the way you operate, to asking people to pay, did you just say, "This business will fail, then you will not have an app. You need to start paying." And then did you do that through on the paywall brass tacks? How did you actually implement this change and communicate with users about the change?

Alex Prasad:

Yeah, that's a funny, that's what you wanted to say, for sure. This is a for-profit business and we can't subsidize you and all those things. We said it nicer, but there wasn't a ton there. It was, "Hey, look, yeah, by you investing in this subscription. We can deliver a better product, period." And that goes back to my lesson of everything that comes after that, they're not listening to. I have to say total personal opinion, take or leave. I disagree with the no explanation change, which I've seen more and more of lately. Where people are like, "Your price is going up," or here's a link to your new billing statement, and then you click in there and realize that the price increased.

Again, you and me, David, right? I say that to you or we have an interaction, you buy a service or product from me in real life, and I just don't tell you that the price changed. Aren't you going to walk out when you look at the receipt later or whatever and be like, "Hey, what the heck? This used to be," right? "And now it's..." That's not cool. And if I had just said, "Hey, David, I'm your dry cleaner. The shirt's five bucks now, not three bucks, because of all these reasons," you'd have been like, "Yeah, okay, but I've been going to you for forever and I like you and whatever. So it is what it is," right?

David Barnard:

Yeah. I had this exact experience recently, so I had a HVAC contractor come, did some work. The bid was $2,100. Yeah, he finishes up, I pay, he leaves, and then I looked at my credit card statement and it was $3,900 more than the bid, and they never explained to me, and I've been calling them and about ready to do a chargeback on my credit card just to get their attention. To your point, it's treat people like humans. And having just had that experience, I very much relate to not just increasing the price just to increase the price and actually communicating about it. And then it sounds like you had some more to go on that.

Alex Prasad:

Yeah. Well, I think it comes back to the fear. So let's put ourselves in the shoes of the contractor or the HVAC company. They set an expectation. It says a lot more about them and what's going on in their head. And I get it. I have sympathy for being in that position. It's happened to me many times. I set one expectation and I can't deliver on it. That's crap. It's one of my least favorite things in life, but trying to skate through is never going to be... It's just delaying the pain, basically.

David Barnard:

They delay the pain until my chargeback.

Alex Prasad:

Right. But it would've felt so much better just for them to say, "Hey, look, it was a bigger job than we thought. It took me longer. Here's why." Maybe it took me longer because I'm not very good at... You don't have to say that part, but this is why. And that's the point until the third, fourth or fifth thing, no one's listening anyway, you're going to hear, "Oh man, it's 900 more bucks. But at least he told me." Now that expectation has been reset in a negative way to me to be sure, but it's just the right way of doing things. My wife likes to say, I'm too honest a lot of the time, weird comment, but I get it. But because I'm not smart enough to keep track of the lies basically, right? I'm not smart enough. I need a really big notepad.

David Barnard:

Nobody is.

Alex Prasad:

Yeah. So it's just easier and simpler and more genuine and people will appreciate it. That would be another thing about segmentation is you'll listen to the squeakiest wheels but don't over listen to them. Right? It's important to be tracking that, for sure, and asking a lot of whys and see if you can even get them. So maybe the inverse of the, if you give four reasons, only going to hear, I moved your cheese and maybe the start of the first explanation, but a lot of time, we're building towards a call or the actual conversation with the squeaky wheel. And then again, we just play act it out. Are we comfortable in that scenario? Do we feel, proud is the wrong word, but do we feel okay and comfortable in it? Right?

Well, I can't believe that you're making me pay for something that I've used for forever and I've never paid for. I'm like, "Yeah, I can." Right? Where's the other place that's giving you a free house or a free car or a free whatever? You say it nicely, but you try to get to the why. And if you get to a why that's bizarre, you go, "Okay, that's on you, not on me. Moving on."

David Barnard:

Right.

Alex Prasad:

Sometimes, you get to a real why. They go, "Oh, someone else set this expectation that we didn't even know," right? And you go, "Oh wow, okay, thanks for sharing that with me." Yeah, our advice was always, and you can't do it on the consumer side, but as we've moved stuff on the pro side, I always tell my team that you have complete and total autonomy to make it right, but there are some guardrails and we'll set them ahead of time. You can't use a thing for free for forever. You got to pay something, right?

But if you can reach a reasonable deal, we don't want people to leave angry, if you can avoid it, but you have to at least move the person towards the goal. So I'd love to have a playbook, hard and fast, black and white rules for everything and there's a policy, there's a policy, but more, we just have a really great team. We trust them to make decisions and defuse situations, but not defuse them at our expense. You can treat someone like an adult and compromise and reach somewhere that's at least a step in the direction, but you have to have the tough conversation. You can't just not have it.

David Barnard:

It's been so fun diving into this. I didn't expect to get quite so deep on product psychology. And I love the way you keep bringing it back to, these are other human beings on the other side of it. And I think that's where a lot of folks in the subscription app industry are maybe heading the wrong direction currently. Over-optimizing their paywall on data and not putting themselves in the user's shoes of what does that actually feel like? And then how do you, to your point, defuse that situation through communicating effectively? And if your goal is just to make as much money as you can as quickly as you can, sure, go for it. But if you're trying to build a truly great business that's going to stand the test of time... And to your point earlier, which I loved, have users who care enough to pay, have the users that matter, not just a bunch of zombie users who forgot. That's a good subscription business.

I think a lot of people these days are building toward not having a great subscription business. They're over optimizing on price and other conversion metrics that do bring in a lot of those very poor quality users that aren't going to renew. And the magic of subscription app businesses is those users who are going to stick with you for a decade and be willing to pay for the value that you're creating, not just tricking people via dark patterns and other stuff. Because then you're just going to bleed out those users on the back end, and then you're pissing off the people who would otherwise become your really amazing tenure users. So anyways, it's been really great diving into the psychology aspect of building a great business by carrying about the people on the other end.

Alex Prasad:

Yeah. Look, the promise of SaaS and subscription businesses is a scalability in the margin. That's why most people get into it, as opposed to a professional service or something else, restaurant has like 0.5% or 1.5% really, really hard businesses. And the faster you run, not necessarily the faster you get ahead. So get that. But there's something, and we fall into it all the time, myself included, that breaks your brain in terms of running such a business, is you're so hyper to get to the scalability that we forget that the way to learn is inherently, unscalable activities. We call it the hamster wheel. Someone called it to me the gerbil [inaudible 00:35:56]. Whatever metaphor you want to use, build the gross manual, maybe bespoke process first and learn from it and do it. So get a little bit of data, have a hypothesis, get a little bit of data, paywalls, whatever to prove the point, okay, this paywall is doing better than that paywall, why?Opinions, enter now and then I test those opinions and choose the best one.

And we get so obsessed with, well, that's not scalable. Well, how do we know? Because we don't even know where we're going yet. The idea isn't inherently scalable or not. The execution of it is. So test the idea purposefully in an experimental way, and then what a great problem... I like to talk about great problems. Let's create good problems. What a great problem. We have a thesis that we're doing some manual gross, lots of hamsters running on wheels or whatever thing, and it's working, and now, we just have to make it scalable. How do we take this manual thing and write it into the software? I would take this manual thing and not make it a survey that zaps somewhere, but make it a core part of our backend. Right?

Great. That's great. If those are problems we were working on every day, I'd be on vacation 24 hours a day, right? That'd be great. That's fantastic, right? This works. Now we have to scale it up. Again, in this industry, we get so obsessed with the scalability part that we miss. We just skipped because we reject any idea that we can't immediately see the through line to scalability and look, gee whiz, there's a lot of good ideas and talking to people is not scalable. We should talked to a lot of people and that will create a hive mind that will be useful. So yeah, this is a pattern that we... The same with planning. There's all these pain in planning at the outset, if you've ever seen squiggly lines and then pain and how much planning's involved, no pain at the beginning if you don't plan, but lots of pain later.

Similar dynamic. But again, everyone falls into the trap. But I think particularly, people that are attracted to SaaS because they see that opportunity. Rome wasn't built in a day to use a cliche, but all these overnight success stories, when you start to learn about them, it's like it took them eight years to figure this stuff out. It explodes onto the scene and it wasn't because they built a super scalable thing eight years ago because if it was super scalable eight years ago, they wouldn't have just come onto your radar today, right? So yeah, that's not a flaw in logic, but just a pattern that I find ourselves getting sucked into all the time that just pump the brakes for a second. Can we learn as much as we possibly can now? First, don't worry about how we scale it. We'll figure that part out. Well because it'll be worth it because we'll be the courage of our convictions, if you will.

David Barnard:

What I see over and over again in the data is apps do come out of nowhere, but they come out of nowhere with dark patterns, with not actually delivering on value, but they're really good at paywall optimization, onboarding optimization, but not really good at building a great product.

Alex Prasad:

The execution is there, but not the product market fit. Yeah, it's crazy. Yeah.

David Barnard:

Yeah. And then they grow and then they just hit a cliff and then die, die, die, die, die. Because like you're saying, it's like that's SaaS. It's people actually have to use the product for you to get value over time. And if all you're doing is converting folks and not retaining them, then you're not building good business. But part of understanding those users, and I did want to transition to segmentation, is it part of being able to think through who these users are, what they like, how to communicate to them, how to most effectively sell them, is understanding who they are. So talk about how you think about user segmentation and understanding who those users are.

Alex Prasad:

Again, not the expert, just an experience share what we've learned. And I don't know if this stuff works that we're doing but we'll find out, I guess. I really mean that. This is my first rodeo in this role and in this industry. So maybe I'll be better. My family say you'll do better next time. Doesn't matter if it's a good thing or a bad thing, you'll do better next time. You'll know more. You do something really good, you'll do better. Next time you do something bad, you'll do better next time. So this goes back to what we were talking about earlier and just war gaming out real life conversations. But we reached a point where, yeah, we had plateaued again, if you will, and I think we're still actually there, to be completely honest. We got that growth of changing the business model. Great. And okay, now, what's the next thing? Oh man, right?

And really, we again, re-challenged our assumptions and came back to what do we know about these people? The answer was not a lot. We're looking at their user. Where are they clicking and why? And how much time are they spending on the screen? I'm like, man, but the data can tell us where to look, but it can't tell us the story of the people. So we started treating the app like you are walking into a golf shop or like you were walking into a retail shop and started asking. They were really worried about the trade-off between straight line onboarding and get the person in and scalability and whatever, and creating more friction. The more I talked to other people in the space and people that I respect, talked a lot about positive friction and that you're going to filter out bad users sooner. And the ones that do make it through, you're going to be a lot more confident with, that you have product market fit, et cetera.

So that's basically what we've done. We started asking people like, why are you here? By the way, we're going to get way better at asking that question because I think we're only scratching the surface. But what we found was that hundreds of people a week, maybe 10, 15% of all the new registered users wanted to find a coach. And believe it or not, even though we talked about coaches and the golfers, we didn't really facilitate that well. We were facilitating existing relationships, not building new ones. And so just as a starting point there, when we started asking the question, why are you here? There's only four or five ways to improve, as we were talking about earlier, one of them is to meet a coach. Is that interesting to you?

And we've battled a lot about are we collecting information? Are we pushing them towards the result? And again, I don't have answers there, but we found out there's a significant number of people that are actually, even though we're not putting it into the universe, that this is a place to find a coach. That's what they're here for. So what if we gave it to them? And it turns out those people, even though that's not what this plus, golf plus premium, if you will, subscription, gives you, are a much higher likelihood to subscribe as well.

So I think on the next rodeo, wherever that is, that's fundamental and first, is some sort of onboarding sequence where you just ask, what are you doing here? What do you think... Just like on a B2B business, you would ask, what's your measure of success? Right? Super important customer success question. Same thing here on the consumer side. And it sounds so basic, simple, but it took us years to get to the conclusion, we should just ask. We're looking at all this data and it's like a lightning bolt one day like, why don't we just ask? Are people going to leave because they got one minute or less survey of just these fundamental basic things? Maybe, actually, probably yes, at the fringes, but these are people that were not your ideal customers anyway.

So when we look at the whole least common denominator, not just in math, but is a thing, and limboing to it is not going to get... The rewards that are going to come from that, those ICPs or that 80/20 rule, it's not going to come from optimizing everybody because then you're going to dilute the product for the people that are your ICPs and you're going to be playing to the crowd that's unlikely to subscribe anyway. And that goes back to a confidence that is this a tool that actually has value and people really want? And if the answer is yes, the total addressable market could be too small, et cetera, but think about that phrase, total addressable market. You can't address a non-addressable market. So don't try to attack the people that fundamentally aren't really that into you to begin with.

So that was a breakthrough for us. Just ask. And then we say, "Well, how do we make this more straight line?" You go back and forth. It's not black and white. But again, a fear of asking came up implicitly in our conversations because you thought you'd run people off. Who were you going to run off by asking them why are they here? Not people that are really into it and want to be here. Right?

David Barnard:

I love the framing of what is your measure of success. I think in consumer, we don't think about that as directly. So I do think about jobs to be done. That's a famous framework that I've used as a mental model to understand user behavior. And then speaking of my weather app, I think all the time about there's a job to be done of when is it going to rain? Do I need a raincoat? Do I need to take my umbrella? Do I need a jacket today? That's one job to be done. But there's actually so many other jobs to be done in even something as seemingly simple as a weather app and that's why some people gravitate towards some weather apps that just tell you in the morning, do you need an umbrella?

I think there was an app called Poncho that its whole thing was just like, do you need a raincoat today or not? And then it sends you a push notification in the morning. And that's finding a really clear measure of success. The measure of success is that I don't get caught out in the rain without my raincoat or umbrella. And then understanding that measure of success then helps you build the better product to meet that measure of success. And so even something as seemingly simple as a weather app has all these different jobs to be done, has all these different measures of success and understanding from your users what that measure of success is.

Then focuses you, one, like you were saying, on the more valuable users who are going to pay for it, and then potentially, even segmenting those to show them the higher premium tier if you have two different tiers or there's different ways to optimize that into a better experience for them getting the premium tier versus the lower tier, because that's what's going to actually deliver for them. And they're not the user that's going to be happy with the non-premium tier. Even if that, on an A-B test, the non-premium tier converts better, but you're missing the forest for the trees because there's some users who aren't going to find success in that non-premium tier or whatever.

And so just by understanding these measures of success as you framed it and asking what that measure of success is, could help tremendously. And doing that on-boarding, like you said, it can be tricky and create friction, but where's the payoff? And the payoff can be tremendous.

Alex Prasad:

Yeah. Easier the higher the ACV is, right, to create more friction because you understand that the payoff's there and $70 a year now is our golf plus subscriptions. That's not high ACV by anyone's definition. But yeah, that's maybe a good summary of this conversation, is these aren't black and white things and you're going to keep moving the dials. More of this, less of this. We want to decrease the flow because we need higher value. Oh, wait, no, that's too much because look at all the breakage. So open it up a little bit and then measure of success is obviously the way we're thinking about it. And then the question is, how can you ask that question in the right way to elicit the right response? That's the really hard part.

You can't just say, "What's your measure of success?" What do you mean what's a measure of success? I don't understand. So the, why are you here? And again, that goes back to can you do it in real life first in your head? Fake, right? Come into the golf shop. What are you looking for? Do you want this? Do you want that? And so for us coming to the golf improvement store, how do you want to improve? Well, I don't know. Okay, well, there's these couple of menu choices, and then again, shades of gray, art not science. We had this conversation because we, I think been successful in thinking about that metaphor. You walked into the golf improvement store. What would you do next if you're the clerk, if you will, greeting the person coming in? The person says, "I want to improve this way," but maybe we want them to improve a different way. We can make more money doing that.

Or as a higher value, do you just go with the flow of the customer? Do you say, "Well, there's also this other option just so you're aware." And is that friction towards the goal that they stated, right? These are all... You don't know. And that's where the data comes in, right? Because you can measure those things. Those are little incremental improvements, changes. But our position, total opinion land, as I like to say, statement was, make them understand that the other options are there, right? That's why you put a menu in front of someone. Even if they say they know exactly what they want to order, well, here's the menu, you just in case if you want to peruse it.

But again, it's not black and white. I can't write a book, and ChatGPT can't give you the syllogism of how to get that done. It's instinct. But using the data to fuel the instinct. If three people stick their tongue out at you and run out of the store because you say, "I don't care that you said you wanted this, I'm going to give you that." You're like, "Well, don't do that." You have to modulate based on reality. So yeah, all hard problems to solve.

David Barnard:

You alluded to it earlier that in golf there is a higher ACV, but then also, probably a higher willingness to pay higher comparable. Like we've talked about this on the podcast a lot, weightlifting apps. Going to the gym is 60 bucks a month, hiring a personal trainer is 60 bucks a session or 120 a session if you're at a fancy gym. And so, how do you think about pricing? And to me that almost sounds low. You can hardly get on a course these days for 80 bucks and you're only charging them $80 a year when they're in a hobby that's probably 5,000 a year, 10,000 a year. If they're really going for it and buying new clubs all the time and have a pro teaching them and they're traveling the world to golf and you're only charging 80 bucks a year, how do you think about that?

Alex Prasad:

You're right, it is just math. At the end of the day, how many people a willingness to pay is super high for the most avid and then you move into less avid? And then how much are you willing to pay? Fierce competition because the underlying tool, the video analysis is largely commoditized. So there's a downward pressure at this stage. Downward pressure on pricing. There's not a lot of other ways to get that job done. On both sides of the business, it's been about how do we make this... Position it as the first step, the fundamental step, the step that needs or a place for you to grow and start. Again, the horsepower here is largely commoditized. The engine is largely commoditized. So what are the things around us? This is the only place where you can A, but B, C and D as well, right?

So if you're going to compare A against anybody else, apples to apples, but we can do B, C and D. So if you really want to grow and improve, you want more options to do that and a place to grow over time, that applies to both sides of our business. So that's why you should start here because it's not a dead end, right? It's not a short dead end alley. You can continue to grow into different ways when you're ready for that. And A is the same as everyone else's A. That's the way we've thought about it. Yeah, hard to split. It's funny, most golf companies are selling, I don't know if most is the right word, but a lot of golf companies are selling things that are a lot higher ticket price. And so, I found that many of, in any industry, the most exciting businesses is a lot of people model off of those businesses. They're often high ticket price items. But if your ticket price is a fraction of that, you can't mimic their behavior because [inaudible 00:50:36] economics just aren't there.

So if you're selling golf clubs, you got two or three extra zeros a year, if you will, versus what we're selling. You can't take that business model and then apply it to something that's 100th of the cost. You just can't do it, right? So you have to approach it in a fundamentally different way. So you can talk about expansion revenue opportunities of which for us on the consumer side, are fairly limited. But yeah, that initial get in the door price, that's opinion statement, I don't know, advice-ish stuff. But I don't think the optimal price is the maximal to get the most revenue out of just that first bite at the apple, if you will. If that word salad made sense, right?

Because I think most would aspire to put a software product out where they can go on a journey that the more you use it, the more value you get out of it, and then therefore, the more value you would pay for it. So the revenue maximizing over the lifetime of the customer price may be artificially low versus if you were only selling one tier and one set of options, you'd put that at the highest price possible, basically. You just do the math at that stage. And then for all of us, thinking about ACV and renewal rates, et cetera, right? It's a multi-variable equation obviously. But really, we learned this on the B2B side where we didn't really have expansion revenue opportunities for a long time. Once you have them, it radically changes the way you think about that first step, the first opening of the wallet, because I just want to get you in and start to interact and learn more about you.

And yeah, you're paying something for the service, but there's this growth pattern that could be really interesting for you and for us, and that's another courage, lowercase c, but courage of convictions, decision. Because I think most people, Dan Martell, SaaS Academy calls it commission breath. If you were selling cars or boats or houses, sure, because it's likely one transaction you're going to do with these people, it's not repeat players that you're trying to maximize the value of that one transaction. But for us, which I think is a largely socially beneficial dynamic, if you will, it's a repeat game. So take the guy for as much as you can right off the bat, is probably unlikely to be long-term, the most effective strategy.

David Barnard:

Man. See, that goes counter to what so many people are thinking. Things we've discussed on the podcast and other things is when the data says a higher price works, you go for the higher price and you scale up. But again, it's like what business are you building? Are you building an advertising arbitrage where you're just going to find as many users who are willing to pay as possible and charge them the maximum revenue possible today to keep that flywheel going? Or are you looking for those better users that you're going to build a relationship with and have more opportunity to monetize them over time? And I think I already talked about this on a past episode, but there's this incredible chart that Dmitry the founder of Flo shared on LinkedIn that shows, and I think it was actually also shared in Eric Crowley's GP Bullhound consumer subscription report.

And it shows that over time, Flo has actually had net revenue retention increase where the initial cohort retention in year one is like 60% revenue retention, and then it actually goes up year after year after year because they are selling more into those users, users upgrading to a more premium tier, users buying other features that they didn't get with that initial payment. And that's a fantastic business. That's why Flo raised at a over billion dollar valuation and had competition to get into the round. Whereas if you're over maximizing that initial and you have really bad churn and you don't have any industry above benchmark revenue retention, you're in a much worse place as a business moving forward. So I love that framing.

You mentioned in there, commoditization of the primary technology of V1 sports, and this is something I think we all are seeing in the consumer subscription space, which means a lot of folks the last few years, have jumped in and there's a lot of commoditization going on in our space, and I thought it was interesting that rather than pointing to the willingness to pay and all the price comparisons in the golf industry, you went right to our primary technology is commoditized and just the blunt reality that you live in that you would recognize that and then so directly stated, but then you must be thinking, okay, that primary technology is now commoditized, what about our product is differentiated that we can charge for? And then what new products can we build that are highly differentiated, that we can increase that revenue over time by adding these add-ons and new features and new things that people will be willing to pay for that aren't commoditized?

Maybe a great point for folks is if you have a commoditized product, you probably do want to aim for that more industry standard pricing, but then figure out where you can really differentiate and that's where you charge. And maybe the differentiation is the whole product, and then you can fight back against that commoditization and charge a higher price, but you got to actually be differentiated to charge that higher price. So how are you thinking about that differentiation?

Alex Prasad:

I really believe that execution wins nine times out of 10, for sure. So even if your internal, don't say it out loud assessment is that your product is very similar or commoditized versus others, I do think you can have confidence that out executing the competition is a path to some level of success, just probably not a 1000X growth success. There's [inaudible 00:56:06] hard limit there. But if you're okay with whatever percent growth a year, so it just depends what your goals are, probably. You could start with that and everything falls after that. What's the point? What are your goals? But yeah, we've tried really hard and just like the entire journey, has been about what's unique to us. So this answer, again, the execution of this, really hard, really complicated, but the answer was fairly obvious, which is this unique position that we're in almost 100,000 monthly active users at high tide every summer, spending that 21 minutes a month and all these instructors, I wonder if they want to... And the answer was yes. Right? So that's what we're really working on.

And again, the starting point was why are you here? And then when they started telling us, that was a big thing. Hey, I want to find an instructor. I would take help from an instructor. Oh, guess what? The more people that want help from an instructor, the more instructors want to be here. Unlock, right? And are we optimize that? Not even close. We're trying very hard to execute on that. So for us, it was fairly obvious. Again, it was us again looking around the room of the resources that we have saying, "Well, what are unique resources that we have?" But yeah, I would guess, to put myself in a different scenario, because ours is unique, if you had just the B2C business. So these spare parts are lying around, just make sure you're getting the most out of what you're doing would be, again, try not to give advice.

But from that execution piece, even if the product is commoditized, can you out execute the competition with focus and diligence? The answer I think, is yes, 99% of the time, if you're built like you are, David or me, can you focus on something for longer than two hours? No way. Longer than two minutes maybe, right? Most organizations, you multiply that difficulty by many people, really can't. So [inaudible 00:57:40] talk out of both sides of our mouths and don't focus too much on conversion or whatever at the outset, but also really focus on it. If you're convinced of two things, I think you're in trouble. One, you have a commoditized product and there's lots of competitors who do something similar. And two, you've rung the rock for every ounce of efficiency everywhere around you. I don't think most people are in that boat. It certainly make marketing et cetera more challenging.

And so you do need to at least come up with a genuine, this is why we're different statement. Even if it's on soft things like we actually answer the phone for support or we've been in the business for a long time, so you should trust our brand. If you can find those differentiating factors, even if the core is maybe very similar. But I would challenge the assumption that if you're commoditized or you think your thing is commoditized, that that's the end of the road because I guarantee that there are ways you can execute better. There's lots of room to run there.

Again, if your goal is to be a trillion dollar market cap company, yeah, your thing has to be the latest NVIDIA chip. Don't get me wrong. And that just is what it is. But there's lots of space between no growth and bonkers growth to move. And you might just have to be realistic that it's not going to be a 1000X every year. But if it's 10% every year or 20% every year reliably because you keep getting better at what you're doing, that might be a happy spot. But yeah, obviously, highest invest is find a new thing and make it better. But that's a shiny object syndrome that lots of us are prone to fall into.

David Barnard:

Yeah. But I think this whole podcast has been a great lesson on how to actually find that differentiation, is think about users. Have those conversations in your head with actual users. I've never done that. That's one key takeaway I'm going to do. It's like I have done user testing, I have had those user conversations, but I don't regularly look at a feature, look at a dialogue box that I'm creating, look at marketing copy, and then picture somebody standing in front of me and make it into a conversation. I think it's a really great way to operate as you're building a consumer product, is to put that consumer right in front of you and think about it. So I think this whole conversation has been a great way to focus you on not chasing that shiny object syndrome, but actually finding the things that users care about. So thanks for sharing all your lessons in getting there and growing and burning the ships and everything you've done along the way because I think this is going to be super helpful to folks. So yeah, thanks so much for sharing.

Alex Prasad:

Thanks for having me, David. Love to reflect and it's a work in progress and there's no destination that's been arrived at, just to be super clear.

David Barnard:

Anything you wanted to share as we wrap up? You have any job openings that might be a good fit for folks or any way the audience can interact with you or help you?

Alex Prasad:

If anything, any of this was stimulating, you want to have a conversation, experience, share, whatever, alex@V1sports, pretty easy. Yeah, just reach out. Happy to chat. Happy to learn more from more people in this space.

David Barnard:

Well, thanks so much for joining me, Alex. This was so much fun.

Alex Prasad:

Thanks, David.

David Barnard:

Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.