Pivots, Funding, and Building Apps That Last – Greg Cohn, Burner

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 Bernard. My guest today is Greg Cohn, co-founder and CEO of Ad Hoc Labs, makers of Burner and Dialed.

On the podcast, I talk with Greg about knowing when to pivot, why most consumer apps shouldn't raise VC, and why making free trials optional outperformed, making them the default. Hey, Greg, thanks so much for joining me on the podcast today.

Greg Cohn:

Hey, David. Great to be here. I'm excited for this.

David Barnard:

Yeah, I've been really looking forward to this chat. You and I got a chance to catch up in LA a few weeks ago and talked about the business, talked about things you're working on. And as I often do have a conversation like that, I got to have Greg on the podcast. So, here it is a few weeks later, you're in Austin and we get to do this in person, which is fun.

Greg Cohn:

It works out great. Although if we could have recorded that conversation, that would've been good too.

David Barnard:

Maybe we were a little too deep for the podcast, but yeah, it was fun. I did want to kick off talking through the story of Ad Hoc Labs, especially I love the early pivot and I think it's a lesson a lot of people can learn from. So, yeah, tell me about the early days of Ad Hoc Labs.

Greg Cohn:

So, my co-founder and I started with this idea that the phone app was the crappiest app on the iPhone. And it was, right? And we also had the sense that the phone has all this capability. It has sensors and it has software affordances and things like location, all kinds of cool things. It knows who your friends are. It knows where you are and where they are, but the phone itself didn't do anything smart at all. So, that was really the core insight. And the first product we built was called Rangle, like It's a Pun on Wang without the W. And the idea was you could find other folks who were available for a phone call.

I live in Los Angeles and spend too much time in the car and a little bit born out of that long commute idis, where the idea was you would go on and see who was available for a chat, hit a button, one tap and the phone would ring. And when we built that, it was a hack on top of Twilio. So, Twilio at the time was new. We're in the 2011 timeframe now, 2012. And Twilio really built an API interface to a lot of telecom complexity. And so, we were able to hit a rest API, generate a phone number or generate a phone call from your phone to a phone number and do all this sort of stuff.

We found that that particular thing was really cool when we had a bunch of our friends artificially using it at exactly the same time. For an app like that to work, you need a network, right? It's an empty restaurant problem, classic for social. We were basically trying to do a web 2.0 idea On top of the phone. So, that was that. It didn't really work well. And one of the things that you experience when you have a prototype first mentality is people are nice. So, a lot of the feedback we got was, "Oh, this is really cool. You know who would really like this? My sister would like this. My girlfriend would like this." She talks on the phone all the time.

And you go, "Okay, well, give it to your sister, see what she thinks." And you're working uphill on these things. And then we also had this idea that VCs would use it as a public office hours, and that didn't really get any traction either. So, we came up with this hack really on that that was designed to kickstart that, which we called the Burner feature. And so, in addition to going on and seeing if you had any friends there on the app, if you didn't have any that had joined or you had friends on the app, but didn't have any that were available, we would let you post a phone number on Twitter or on Facebook. So, you get the Twilio API, throw the phone number on Twitter.

David Barnard:

Because you wouldn't want your personal cellphone number on Twitter, obviously.

Greg Cohn:

Definitely not.

David Barnard:

Yeah.

Greg Cohn:

Well, people did it and it was a big deal. Charlie Sheen's number got posted at one point and there was this discussion around people's emails being on Twitter and things like that. The way we set it up was if you called that number, if anyone saw that number and called it would ring through to the person who had posted it and then we would dissolve it after 30 minutes or 60 minutes or whatever. And that feature, when we started showing it to people, they thought it was really cool. And so, instead of saying, my sister would use us, they would say, "Oh, I want this," right?

And so, that became the feature we built into Burner, which is to this day, primarily an app that's known as the best and most reliable place to get a second phone number. And that's how that evolved.

David Barnard:

Well, I love that story for a few reasons. One, a lot of people start working on things and just don't find that pull. And so, with Rangle, you started butting your head up against those real market issues like, "Oh, somebody else will use it." And not seeing that groundswell. And the network effects, like you said, it's like you pretty much need everybody you know to be on there in order for that matching to happen, where you happen to be free when somebody you know happens to be free and then you both happen to want to have a phone call. But there was like an inkling of something. And then the second thing I love is that you were leveraging this new technology.

So, Twilio was new, phone number is an API. And I think we're in an age right now with AI and so many new opportunities. I mean, this is something I do. Every time iOS releases a new feature like interactive widgets, like my weather app is one of the more useful interactions that you can have on the home screen. And so, this idea of like looking for opportunities in these new spaces where this new opportunity comes, I forgot that part of the story, that the whole genesis of the company was like leveraging this new technology. But what would you say were the lessons? And like if you were advising somebody today, they're struggling to get that traction, what are the lessons you took from that that you would share with folks?

Greg Cohn:

Yeah. So, one of the specific memories I have of that stage, we were actually pitching Rangle in prototype form to VCs. And at the time I had previously worked at Yahoo for a bunch of years and had mentored a lot of startups in the Techstars program and 500 startups and things like that. And so, we knew a lot of people and we went and met with a lot of great VCs with a reputation for supporting early stage pre-revenue type companies. We thought, isn't this great? They're going to want to fund us. And we got so much feedback that was very, well, there's something here, but it's not quite very neutral. And the learning for me on that was, first of all, consumer is hard, right?

And consumer is hard in a way that you can take a new technology and it absolutely creates new opportunities to build new products. AI is a great example of that. At the time, Twilio, before Twilio, we had Dropbox being built on AWS. And there's many examples of these things that build off of a foundational technology shift, but the market only recognizes you when you actually have traction. And it's a little bit of trying to catch a falling knife, I think, to try to get into the seed round or the A round or whatever of a consumer startup after the growth potential has been validated, right? And so, we were pre that validation and we were chasing it.

And knowing what I know today, I would look at that strictly as a distribution problem. And I think...

David Barnard:

Well, was it just a distribution problem or was it a product problem? Because I mean, those are the two main things, right? Is the product not pulling, or would Rangle have worked if you could have figured out distribution or was Rangle just not the product?

Greg Cohn:

So, I think we did not really know how to build at that time a viral loop, where it was self-perpetuate thing.

David Barnard:

That was really early, right? That was about 2012?

Greg Cohn:

That was late 2011 I think. Yeah, maybe early 2012. It's interesting because there are apps, there are founders out there, there are founding teams out there that are very adept at generating attention and an early audience. And today, of course, we have TikTok and all these other new influencer vectors relative to what might've been available five years ago. And with Rangle, if we had a large audience trying it out from some kind of media validation like that, that would've been fine. Or if we had every user invites three friends, a factor driven growth, that might've worked. That wasn't really necessarily our strength.

And in the end, Burner, which is what it became, is pretty much a single player app, right? We've never really had a network effect model on that versus a lot of other messaging apps that are fundamentally... WhatsApp is the ultimate example of a network effect messaging app, right? I do think it would've worked well if we had a lot of users to start out, right? And ultimately, in fact, there are other apps that had very similar ideas and were successful, but WhatsApp was actually started on the idea of what that, that's called presence, But Who's available thing and Slack has a-

David Barnard:

Being online.

Greg Cohn:

... peer, peer messaging, availability is the feature, right?

David Barnard:

So, for a team that's struggling, how would you think about whether it is a product problem you need to pivot to a new product? Because for you, I mean, maybe that was a blessing in disguise because maybe Rangle could have seen a certain amount of success, but then would've hit a wall, but instead it forced to pivot because you didn't have the distribution and you landed on what was actually a better product that then had pull in the market. So, how would you advise people to think about when is it a distribution problem where you just can't find the eyeballs and when is it a product problem that you don't have a level of product market fit that's worth investing in?

Greg Cohn:

Yeah. I would back into that by thinking a little bit about retention. And I think there's a fundamental thing there, which is to say, well, what problem does it solve? And I think the learning with Rangle ultimately was it didn't solve a real problem, right? People weren't necessarily looking for another way to get more phone calls. You know what I mean? It was a problem for me. I was stuck in a car commuting from Santa Monica or whatever.

David Barnard:

Well, maybe you're the extrovert who actually wanted to callus.

Greg Cohn:

That's right.

David Barnard:

I enjoy my podcast when I have a long drive.

Greg Cohn:

For sure, it's fun. And also in the era of mobile phones, if you're in the car and you've got an hour to kill, you're driving to the airport or something, you start calling people, you're just getting their voicemail, they're all screening you. You don't know whether to leave a message. They start calling you back. It's a messy problem, but it really wasn't a problem that people were going to look for an app to solve or looking for an extraneous tool for. And when we pivoted into the Burner standalone app where we had built that feature and that feature was generating positive results. And then we were doing stuff like testing it by selling tickets on Craigslist.

And we were posting fake ads for giving away flat screen TVs and things like that. We just get a ton of traffic. And what that did was it quickly validated the problem, right? And so...

David Barnard:

Started to feel pull from the market instead of having to push yourself into the market.

Greg Cohn:

That's exactly right. And it was like a 10X to 100X level of response from even just friends we were showing this to. So, in that actual stage, we went down to South by Southwest here in Austin, 2012, and it wasn't hardened and ready. It wasn't in the app store or anything like that, but we were showing it to friends on test flight and people... We ended up with the New York Times interview and we ran back to our room, and we set up a war room and set up a launch page. We were capturing waiting lists, names, and we were on a panel. It was just like, it happened really fast.

And for us, it was a real sign that there was something here that was actually meaningful, an authentic problem that we're solving for people. And as much as has happened since then, there's a lot of evolution we can get into around our product and around how we've thought about growth and things like that, that fundamental piece has really only deepened, right? Having only one phone number associated with your mobile phone is even more of a problem today for even more reasons and more use cases than it was when we started Burner.

David Barnard:

Yeah. That's cool though. I mean, and this is what you want to see in a product is getting that pull. Now, very few people are going to get to have that experience of being at South by Southwest and New York Times interviews and stuff like that. But I think for a product to succeed, if you're pushing, pushing, pushing, and you're not getting any kind of a flywheel, people aren't excited about it, maybe that's a good sign that it is time to pivot and it is the product. If you're not good at distribution, but you're at least trying and you're not getting any pull, then maybe it is time to look at it at Pivot.

I think there's too many people work for too long on products that just don't solve a real problem, that don't fill a need or fill a need that such a small number of people have. And I mean, today, if you're an indie developer and you're that extrovert and you want to have phone calls, and maybe there is a small market of people, but you're not going to build a venture scale business. You're not going to build a big business solving those little tiny problems that not many people have. And once you start building though, you start seeing things. You start seeing like, oh, there's an inkling of something here.

And then again, with the Twilio API opportunity, you were experimenting in a place that led you somewhere and you were able to pivot into something bigger. So, I think it's just a fun story for people to learn from, but I did want to go back and talk about at what point did you decide to raise money and why in that journey? Did you raise that before that blow up at South by Southwest, or did you raise after on the heels of that?

Greg Cohn:

So, we were raising during that. It was actually, I got my first commitment on the bus to the Salt Lick that first round capital would run these buses out to the Salt Lick. But actually it was Dave McClure from 500 Startups and I pinned him into a seat and made him listen to my pitch. And then David Cohen from Techstars, the founder of Techstars, on the same day at a different event, he committed. But neither of those guys is a fool and wanted to be the only money in. And so, I had a target, I think I was trying to raise a half a million. I didn't quite get there. And so, we actually never closed before launching. We launched the app on my credit card in terms of the Twilio account.

And in fact, that informed the pricing model because the phone numbers cost money. So, believe it or not, Burner was a paid download when it first launched, $1.99 to download it.

David Barnard:

Wow.

Greg Cohn:

And then it included a free phone number for seven days or something. And then you could re-up it like credits. It had its credit system. It was elaborate thing. You could buy three, eight, 15 or 25 credits for different price points and then different configurations of phone numbers to extend them. But that's what it was when we launched it. And we priced it out so that we would basically, if a user used every bit of what they were allocated in terms of texts and call minutes that we would... And after Apple got their cut, we would break exactly even on the Twilio costs. And then anything that a user didn't use was profit, basically. So, any breakage was profit.

And when we launched, we had like $50,000 in revenue on the first day, right? So, we just got picked up. It was I think GigaOm that covered us and we were on Hacker News as a top story. It was generating debate. You can't recreate that today. Like you said, it's not South by Southwest in 2012, but analogs of that exist today on TikTok and Instagram and anyone can go viral for a feature. And so, we had a little moment where we had initial traction. And at that point, a couple of months had gone by since those early commitments and everything closed within a couple weeks at that moment. And it was like, okay.

David Barnard:

Did you raise the price?

Greg Cohn:

Yes. Well, things changed a little bit and the product had changed completely. We were raising on initially a concept version of Rangle with this Burner thing as a little by catch on it. We had to redo the deck and all that stuff. But I do think it was maybe more driven by signals that there was a consumer app here that had resonance. And we didn't invent the category of the second phone number. Google Voice predated us by a number of years. It's a free product. Skype had a variation of this. And what we did do was we reinvented it for mobile and we made it much more oriented to the privacy control oriented consumer. And the UX was just, I think, 10X better, not that I'm biased.

It was better enough to generate a lot of interest and people willing to pay us a classic painkiller, not a vitamin, right? So, at that point, yeah, I think we raised an angel round. The thing we wanted to do was take the paid download off, right? Became a free download. We figured out the conversion math, and then we also launched an Android in that next six or eight months. And then we actually subsequently raised a VC round, which is its own set of things and dynamics. But again, I think that was very driven by those early signals.

And coming back to your comment about pivoting or understanding when you have that, one of the signals you can start to see once you have a little bit of traction, of course, is retention. And so, not just revenue retention, but there's any number of ways you can look at what's your DAU to MAU ratio and how often are people coming back and using an app, or what hooks can you evolve to reengage people and all that?

David Barnard:

One of the things I call it is a premium feature user retention. Is the thing you're going to sell something that people keep using. And so, if your subscription, if your paywall has locked a feature, a hard paywall would lock all features. So, any feature would be premium feature user retention. But yeah, are people coming back to that thing that you think is the hook that is the valuable thing in the app?

Greg Cohn:

I actually think this is a really hard problem. So, we're 10 years later, we have a lot of features. Some of those are locked behind. We have multiple tiers of subscriptions, including a standard and a premium today. And the discussion of whether something should be included in the premium bundle or used to drive engagement at the free tier or the standard tier, I think it's not always obvious.

David Barnard:

No, it's not. But having that signal of people coming back to it is key. You can make a lot of money with a gimmick, like the $1.99 download. I mean, the iBeer app, this is a famous example of that. 99 cents, you pretend you're drinking a beer.

Greg Cohn:

I love that. The era of the app store, by the way, the flashlights.

David Barnard:

It was great. But you're not building a real business. You're making, I mean, whatever that guy made, like hundreds of thousands or a million dollars, but it's a flash in the pan because it's not something that people come back to and they're not pretending to drink a beer on a weekly or monthly or even annual basis. You do it a few times. It's a funny party gag. And that's where the paid up front actually made a lot of sense for those kind of apps. Where today, I think you do see a lot of people with that kind of app charging via subscription, but they don't have any retention because you're not going to keep doing that thing. And so, it's more flash in the pan.

And so, I mean, more power too if you can capitalize on those moments and that kind of attention, but that's very different than trying to build a real business. So, I wanted to get back to the raising VC. What was your thought process in raising at that time? And then how do you think about advising folks, especially today in the mobile space, when, whether or not to raise and how to think about raising?

Greg Cohn:

Yeah, sure. So, this might be a contrarian opinion, but I would posit that most apps and especially most consumer apps that are one or two person founded startups shouldn't raise VC. I know it's a popular topic of conversation, but I tend to think that institutional capital is really not designed very well for that stage.

Particularly, I mean, we were talking about some of the flashlight apps and some of the more, I don't want to say gimmicky in the sense that sometimes these things can start with a small insight and get traction that may be ultimately a meaningful insight, not just a gimmick, but I don't think that necessarily follows that it's a good idea to raise real VC, which is driven by VC math, which is driven by the idea that any one investment could potentially repay an entire fund in terms of returns. It's actually pretty hard to do that. And when you start doing the math, you have to have these hundreds of millions or billions of dollars of outcomes at the end in order to make that work.

And that's actually even more true today than it was then. And then I think you cross that with consumer and you're really working on early signals. At the time, we were a little bit innocent and it was a different time in terms of you could still get press, there's an app for that essentially. And we thought we could potentially build a very big consumer scale business here. We have built a very scaled business.

David Barnard:

I was going to say.

Greg Cohn:

But it's not a billion dollar valuation scale business today. I mean, we're on track for a large scale business, but it's taken a long time. So, speed of return matters. And we've built a very authentic, durable business, but we've done that in some ways despite having raised VC. And we've had very supportive investors, but I think we got very lucky with that. For most founders, I would say my advice generally is don't raise VC because you can raise VC because you feel like you have to or you really want to, and you understand what's behind that.

David Barnard:

Yeah. And then maybe adding onto that, make sure you raise from the right folks that if it doesn't turn out to be a venture scale business, they're not going to sell it for parts, put too much pressure on you, run the business into the ground or any other number of things that some VCs will do in that situation.

Greg Cohn:

Choosing your partners carefully absolutely goes without saying. I mean, and there's lots of advice out there on this. It is ultimately a fairly rare situation, where the founder has so many different offers of funding that they get to pick. And so, a lot of times, a founder is faced with a choice or founding team is faced with a choice of, here's somebody who wants to invest in me. They want to put $500,000 or $1.5 million into my company, and they're setting the terms and you have to say yes or no. And so, I just think it's really important to understand what's behind that.

David Barnard:

You just said earlier that when you were launching Burner, the Twilio account was on your personal credit card. So, how do you recommend folks navigate those early stages where a little bit of money would help? I mean, this is something I hear all the time. It's like, "Gosh, if I just had 20K, 50K to kickstart UA or to at least try, or I need money for this or that," I think that's why people I think idealize raising VC is that, "Oh, if I just had more money, money would solve the problem." So, how do you get through those early stages without any help?

Greg Cohn:

Yeah. Well, the classic 3Fs, friends, family, and fools is probably the right source of capital for that early, I want to throw a few ads on Facebook or something and test it with some users. 20K can go a long way. You can't really quit your day job and pay multiple salaries and have enough money in the bank to just go design apps if you've never done this before, at least not reliably, right? That's a big bet. But if you are scrappy and you're able to be personally low burn, whatever your personal circumstances are, and you just need a little bit of money, you should not be even thinking about institutional capital.

If you start to have some early validation, you start to get maybe a wider set of options and you can start to think about things like the Y Combinator program or other programs like Techstars that do put some cash in, but do so unfairly open-ended governance, right? So, there's this whole stage or model around safes and convertible notes and things like that, that they set you on a path toward venture capital, but they don't absolutely lock you in if something goes sideways. And we were in that stage for a while and that ultimately it worked out really well for us the way we did it. We have a VC who's just very aligned to early stage founder-led companies, founder collective.

And they've been very supportive as things have evolved off the classic alphabet series of rounds one after another. And it's nice not to have to go raise more money in order to survive as a company, right? But if you're trying to compete in a large category or in a SaaS business or something like that, you have to do that. And that's when VC is maybe the right choice.

David Barnard:

Right. This will be a much smaller audience, but I think even those who aren't in this situation would be curious and will learn something. What was that transition like and what was the time span from we're raising VC, we're going to be a billion dollar outcome to, okay, maybe we're not and let's not raise more and let's shift to a slower growth, profitable mindset?

Greg Cohn:

Yeah. So, we closed our angel round right after that first launch and we raised about a $2 million VC round within a year or so of that. That's the one I'm referring to. And it was with that that the job of a round from a classic point of view is to prove something or validate something. And so, we were trying to go out and use that really, you're buying time and you're buying time to validate a market and we were trying to figure out how big this market might be. After a period of time, we were starting to run low on that cash and we had tried a lot of experiments, including trying to make a freemium business out of Burner. Very much has a similar formula today as it did back then.

It's evolved in a lot of meaningful ways, but at its core, it does one thing really well, which is download app, get phone number, and those phone numbers cost money. So, you can't just give it away to a million people and hope 1% of them convert after some number of months. You have to figure out a way to make that a... Well, you can do that with a lot of capital. So, we tested some things like that to see would it make sense to raise more capital and do more of that. There were some other ad supported competitors in the market emerging around the same time we did. And we were looking at those and trying to do the analytics on what they were doing.

And we saw potential to have a business that was a mile wide and an inch deep, but we weren't sure how it would get to be really valuable down that path. And what we were seeing in our business, we were from the beginning revenue driven, a premium app, like a good experience. We're investing a lot in the craft of what we were building and trying to use technology creatively to give people a good experience and then charge for it. And people were paying at a new subscription tier, or at a new higher price point and some people would buy it and renew.

And so, it became clear somewhere in there that this was going to be a nice healthy business and grow at a certain rate, but it wasn't going to be 200% growth year over year and scale in that way, at least not in any way that we had unlocked. And so, there was a period of time where we considered going out for more money that on the timeline, it was time to go raise a series A. It was clear we didn't have the metrics for it, right? And so, that's the ultimate test of whether you should raise VC today is at the end of that cycle, where you have the numbers to go raise a subsequent round and we didn't get there. So, we had some insider support to convert the business into a breakeven at the time business.

And we've been really profitable ever since. So, for six or eight years, we've been either breakeven or meaningfully profitable and while still also growing the top line, Which is great. And it's a...

David Barnard:

I mean that's ultimately what you're trying to build toward. And so, you just got there quicker, but then grew slower, but you started with profit, which is great. Yeah.

Greg Cohn:

Well, I mean, just to give you some numbers, right? So, I think we had our first million dollar annual year at about two and a half years in. And then we had a $5 million a year by about five years in. And it took another couple years to get to 10 million and now we're multiples of that today. But when I see the dialogue out there about founders flipping apps for 100K or something like that, I think, well, if you have something, build it, right? And if you don't have anything, who wants to buy it, right? My advice would be if you can find the authenticity or the real problem within the thing you're getting traction on, then that's an interesting thing to keep exploring further. And at some point, capital becomes an issue.

If you saying you're in a situation where it's growing, you're retaining and you need help, whether that's to do user acquisition and you are in a position to increase your budgets or product evolution, then you have an interesting problem. And I do see a lot of apps out there in the, let's say, sub five million in revenue who they're maybe not going to raise VC. They're not growing at a rocket ship explosive type of rate, but it's a real business and they need capital. And so, what do they do? The capital markets aren't well set up for that, I don't think.

Today, we look more like a growth stage business or maybe a PE business, not a venture business, but those kinds of investors aren't interested in really small to them. Really small is very large to lots of founders, but it's an interesting tweeter kind of problem, I think.

David Barnard:

Yeah. And there are options now surfacing in the market, Bravo, Paul and VC. There's others who are filling this gap for that level of company. And then RevenueCat, we're launching a product soon for that factoring where you can get the revenue ahead from when Apple pays, so you can accelerate a little faster. There's little bits and pieces of options for apps today to get some of that, but it's not like a big $2 million series A influx of cash.

Greg Cohn:

I think anybody who's innovating in the financial space serving founders like that, that's fantastic, right? So, that just creates more options for founders. Sometimes, they're not the right price for founders or whatever, but at least they have those options and they exist. But as a founder of an app, you don't also want to be trying to innovate on the finance side. You just want to take something off the shelf and you may not be familiar with some of these things.

David Barnard:

Yeah. Well, I wanted to go back in the story again and talk about the credit system and the transition from credits to subscription and where all that landed. Because it's funny, I've talked a lot on the podcast about how if you are a subscription app, and it was actually just the most recent podcast was Ravi Meta, who worked at Tinder and looking at the demand curve and fitting those consumable credit kind of economy on top of the subscriptions, but you went the opposite way. So, early on in Burner, you had a credit system and then layered on subscriptions and the subscriptions were the unlock for you, not the credit system. So, I slowed your thunder a little, but tell me how all that went.

Greg Cohn:

In a funny way, by the way, we ended up in the same place, right? So, today we have a business that's more than 90% subscription revenue, and the 10% or 8% or whatever that's credits is mostly existing subscribers topping up, not people who are avoiding the subscription system, right? So, we evolved to that, but we started off as credits were something you could purchase in an in app purchase, and they were ultimately a consumable. You would use them to extend a phone number or get an additional phone number. And one of the differentiators of Burners, you could have multiple phone numbers. So, you could have three, four phone numbers.

I actually think the right number of phone numbers for most people is not two. It's not like your main line and your Burner line. It's having a couple of Burners so you can keep one for your long-term podcasts and use one for spam or special circumstances like shopping for a car and so on, right? And so, we had this model that people could mix and match and some of them didn't even have the capability to send pictures on MMS. And so, we thought, okay. And in the back of our mind, we were looking at games and apps like Zynga that were gamifying in app purchases a little bit, like a poker chip mentality. So, you buy the credits.

And then we had this vision where in addition to phone numbers, we'd have maybe vanity area codes or special features, ringtones or something. We never really did any of that, but it worked out pretty well. And when the IAP subscription capability rolled out, we got pretty excited about that and looked for the right product fit to that, right? So, it was very important to us that it wasn't just, well, here's a way we could make money. And a lot of our thinking about growth, by the way, and features is driven by trying to fit an offering to an authentic need or an unmet need among our users. And in this case, people wanted to keep their Burners, right? They wanted to not accidentally lose them.

There's some set of users to this day that come through, they need a phone number for a specific purpose. A lot of our users have very high intent, but sometimes that intent is short-lived, right? So, you're selling a bunch of stuff on Craigslist. You can have a great experience with a one-month tenure as a paying customer, and many of those users come back later, but there's a lot of users who want them for a long or indefinite period of time.

David Barnard:

Funny enough, I am that user. I don't use Burner because I got my pre-burner. I got a freaking Skype number in 2008 for my business, because I wanted a business number and I didn't want my business number to be my personal cellphone number. And so, I've paid Skype, I don't know how many hundreds of dollars over the last 18 years I've been running my business. And I was exactly that use case. And so, it makes sense that shift to subscription for people like me who have this long-term need to maintain a phone number.

Greg Cohn:

And it's very sticky, especially if you don't use that number all the time. You probably have it on some filings and forms and your post office box. And if you delete it, you miss the renewal notice and so on. So, in fact, I have a lot of Burners, as you might guess, I have a lot of phone numbers. In fact, maybe I'll put one in the show notes-

David Barnard:

Oh, that'd be fun.

Greg Cohn:

... for people to reach out if they want to. But the last one I'll give up is the one I almost never use, right? It's the one that's on long-term things like that. And so, when we went out with the first subscription offering, it was really driven around meeting a segment of our user's needs who wanted to keep their number for longer, and we wanted to make that a fully featured thing. So, there was a lot of backstage work to get MMS, which at that time wasn't something that was supported by the carriers through aggregators like Twilio. Google Voice didn't have it, and so nobody had it. We were, I think, the first to get it out there commercially, and we rolled it into our first subscription offering.

So, it was a pretty big moment, and it was a huge success for us. So, that was one of the biggest single step functions in our revenue growth in our history was the day we launched subscriptions, and it was also our first unlimited all you can eat. You can have an unlimited number of texts and voice minutes and photo messages, so it wasn't counted. And that involved contractual negotiation and other things with our suppliers, right? It got a little bit complex to build as a product, but then was really successful as a SKU bundle. And then immediately, we started to say, "Okay, well, what percentage of people are taking the monthly and the annual? What's the retention of monthly?"

And completely changed the game in terms of cohort math. I would say today we know as much or more about subscription cohort math as anybody. And that's a really important dimension of our business and growth. But at that time, that was just the beginning of learning about all of that. That was, I think our first subscription offering, we had monthly and annual, that's it. And now today we have monthly one line, monthly three line, annual of both of those. And then we have that standard end premium. So, that's eight SKUs right there. And then we have the credits that are buying up on top of that.

But we did slowly deprecate credits on the back of launching subscriptions because our mindset at least originally was, well, we should move all of our users through a subscription model and the ones who have longer term intent will retain and the ones who don't will leave early. And so, as a consequence of that, we have reasonably high churn. And I look back at that decision and I go, "Well, we might've been able to fit to the curve even more efficiently if we had maintained a more front and center credits model for those users with lower long-term intent, but high short-term intent. So, we're constantly re-looking at that and testing things and you never know that may resurface at some point.

David Barnard:

Yeah. No, it's fascinating. And it's fascinating too that, and I didn't know this about Tinder, but talking to Ravi in the last episode, he said, as with you, most of the in-app purchase revenue is from subscribers because it's a force multiplier of the subscription. It's not as much a standalone, but I think it can be all things. And so, for you right now, it is mostly subscribers, but maybe there is an opportunity for non-subscriber and to add more on top of the subscription to continue, like you said, to fit that demand curve.

Greg Cohn:

I think products change over time in the context of their marketplace as well. And so, one of the contexts that is very important to us is in general, the telecom landscape. This is maybe not super relevant to a large subset of your users, but if you abstract that, the things that we're trying to accomplish are not necessarily well served by having tons and tons of users with really short-term phone numbers that are effectively hard to distinguish from spammy behavior in the telecom ecosystem. And we think of that as a buildup of an increase in the quality of our users over time as well.

David Barnard:

Implicit in what you just said and something you seem to have been very focused on over time is that ethical perspective. And we've hinted at it a few times here of the pump and dump and gimmicks and things like that. But I read a story and I wanted to hear a little bit more about this opportunity you had where you saw that users were using Burner to game the Uber referral program to get a bunch of money, but you chose not to leverage that in marketing. What's your ethical framework for how you run the business and why do you think that's important?

Greg Cohn:

Yeah, and I think that that's a good example, but there are lots of examples, right? I mean, the phone number industry is full of sort of, I don't want to call them scammy opportunities, but it attracts a lot of hustle culture type of people. And that was a great example of that. So, there was this moment in time where Uber in its early days had a referral program that could earn you free rides and credits on Uber if you would introduce friends. And we actually got a call from Uber. I don't know if that's how we knew about it. I don't know if I put that in the article. Somebody at Uber's growth team called us and we had shared VCs and stuff. And I thought, "Oh man, they're going to hammer us in this."

And they were actually really excited. They were like, "This is great." There's some obviously inauthentic aspect of it, but there were also a lot of people that were signing up for Uber accounts that didn't want to put their real phone number in Uber because they were afraid drivers would call them, right? And today, Uber has this well architected system that anonymizes phone numbers, but they didn't have that as fully baked in the early days. I think it worked very lightly in certain situations, but a thing would happen where a user would leave something in a car and the driver could no longer call the user and vice versa. And so, people were using Burners for all kinds of things in the Uber ecosystem.

And the growth team was like, "We're happy to have this. We just want to understand how it's working." But on our end, we didn't want to promote, "Hey, get Burners and you can get extra Uber accounts and go get extra referral credits and promote the idea that a phone number is a way to hack the system," right? The authentic thing that Burner solves, and this is almost like a guiding story for us. This is something I say internally all the time, which is to team members, if you're stuck in an elevator with the CEO of a wireless company, Verizon Wireless' CEO is in the elevator with you, what is your 30-second pitch on why Burner exists in a world that has cellphones everywhere?

And the very short version of that is people really want to use phone numbers for many things and those things have a lot of value to them. And even if it's you're texting to make a dentist appointment or you're getting alerts about your flight being delayed, that is really important. You just don't want all of that on your main private personal cellphone number. And so, it's kind of, on the one hand, a service to users to have mobile phones everywhere, but a tremendous disservice to users to make them do it all on one phone number. And so, that's a problem we authentically solve for people. We help with that. And that's the message we want people to understand about our product.

By the way, we do a lot of other things too. We have a VPN and we have spam blocking and we have AI voicemail handling. We have all these features that we've evolved over the years into helping people control how their data is used on the internet and how people reach them. But in terms of those individual use cases that might generate a few press hits. That's less an important part of our value proposition than helping people understand, okay, my phone number is my identity. This is what I'm signing in with and I'm registering at the bank with. How can I just get a little more control over that in a more authentic way?

David Barnard:

Yeah. I mean, just again, the thread through this conversation is that in trying to build a long-term profitable, real business, not associating yourself with hacks and scams, it's like, yeah, you may have seen a revenue bump from promoting that people could game the Uber credit system to make... You'd have seen a bump and you would've made some money, but you chose not to see that bump and make that money with that long-term vision. And so, I know you advise a lot of founders, how do you advise that hustle, culture, startup person who would otherwise want to take advantage of something like that, but maybe it is a very short-term thing that handicaps them in the long run.

Greg Cohn:

I met a founder not too long ago and he showed me a feature that had gotten some... I'm not going to name it, but he'd gotten some virality from this feature. It wasn't in any way a scam. It was a very legitimate thing. It had escaped the event horizon on TikTok and Instagram, and he showed it to me and I thought, "Oh, that's brilliant, and how's that feature doing?" And he said, "I designed it to go viral. I don't really necessarily care if people use it, and I don't think a lot of people really do." I thought, okay, so in no way is that a scam, right? But it was a good attention getter, you know what I mean? And then I think in this particular case, the app is fairly sticky once you get in there.

And so, I think there was more neat on the bone there than just the throwaway feature. But it was a really interesting version of that, where I think you can do a lot of things to get attention. And you have to do some of that. You can't just sit around and product your way to glory, right? You have to find a way to break out, get attention, do things. And so, I just think from early on, we've had many opportunities to take a high road or a low road, and there's a lot of low road tactics out there or just lowest common denominator tactics that... A good example of that is clones, right? We've been cloned a bunch of times, a bunch of crappy fake Burner apps out there.

We've had opportunities to clone features or emulate other apps that have been successful. And we choose to do things the way we develop them independently. And I think that speaks to who we are, not just Something that's written above the door.

David Barnard:

Yeah. And it speaks to building toward a billion dollar outcome versus flashing the pan or being associated with the stuff you don't want to be associated with as a brand, as a business and everything else.

Greg Cohn:

Well, and a billion dollar outcome, that feels like a huge large and unapproachable target for all, but a few apps out there. But to say a hundred million dollars in revenue, if you're already at tens of millions, it's linear. It's very achievable. And 10 million is very achievable if you're at one million, and fractally all the way down. You can really build a real business. It just takes a long time. In our case, we think of it as a lot of operational discipline and a lot of thoughtful process around what we're good at all the way through the funnel.

And so, I think the conversations about raising money, those are premature if you don't have the fundamentals of the business. Just as a side note, I used to be in book publishing. I was an editor at a trade publishing house called St. Martin's Press before I moved into tech. And at cocktail parties, people would always approach me about how to get their book read or their book published, or how to get an agent or how to get an editor. And the answer was always, "Well, do you have a book," right? Most of the time the answer was no. So, it's like, well, write a good book, start there, and build on that.

David Barnard:

Build a good product and go from there.

Greg Cohn:

It doesn't have to be deep and fully featured, but something that works. You can really have a single serving product and then build on it substantially.

David Barnard:

Yeah. Well, I wanted to dive into some more tactical things. I know as a company over time, you've done a ton of experiments. So, in the progress that you've made from going from that million to the five to now tens of millions of dollars of revenue, what were some of the key learnings along the way and the process for obtaining those learnings?

Greg Cohn:

Yeah. One thing that I think is really important is to focus on analytics as early as you can. We set out from day one to be a data-driven company, and by the way, to be a very engineering and product-driven company, not just a product-driven company, right? And I think there's a lot of overlap there in analytics as you start to stitch together data that's coming from the product itself in the client, things that are coming from the server analytics, things that are coming from the marketing analytics and how you munge those together and all that. Really starting to understand cohort math and understanding.

You could run an experiment and the experiment throws data, but how do you pick the winner unless you know what you are trying to actually optimize for? I would say where we have done, I think, an exceptional job is fairly high in the funnel. We have done over the years, I mentioned some of our SKUs within that there's what's in and what's out of each bundle. There's pricing, there's what's the default. There's a lot of opportunity to experiment and explore also, of course, the design and the positioning, right? And that's also true in our UA, right? We have a pretty robust user acquisition program and a lot of creative variants and there's a lot there, right?

And so, what's been interestingly true for us consistently, I'll come back to experiments in a minute, but what we don't do as a company is a whole lot of brand marketing. We have a great brand, by the way. I like to say...

David Barnard:

I love Burner.

Greg Cohn:

Thank you. I like to say it passes the F1 car. You can imagine it, but if somebody gave us $10 million and we ran a Superbowl ad, that's not necessarily a very targeted audience for us. And when we have had some breakout mainstream press, every now and again, we've been covered in Vogue or something and people come download the app, but those people don't convert and they don't retain. So, the thing that's been true is we've been pretty focused on... There's a lot of natural intent that already exists for our app for Burner. People go into the app store, people go on to search engines and search for second phone number, temporary phone number, private phone number, Burner app by brand.

And we're very good at finding that and harvesting that in terms of getting people to download the app. And then so we're working with a pretty high intent audience, and that gives us a lot of surface area to test different paywalls and different things at that onboarding funnel, right? So, that's, I think, incredibly important. And for a long time has been the biggest single factor in our retention, which is like, well, what did we sell them into is the biggest determinant of what their trajectory is as a customer. And what we've been building on is our ability then to retain them and give customers more value, stickier features, things that address maybe things they had less intent about as they came in, right?

So, I mean, there are any number of features we've launched, but I'll mention one that was a surprise to me. In our premium tier, we have the ability if someone calls you on your Burner and you don't recognize the phone number to do a lookup through the telephony system and make a pretty good guess of who that is, who that caller is. And that feature has been very popular. It's funny because when people get Burners, they think we're selling their numbers sometimes. We get these comments like, "Oh, I started getting all these telemarketing calls."

David Barnard:

We're not the one selling.

Greg Cohn:

One hundred percent, I can definitively state we are not, but...

David Barnard:

But that's the whole point of getting a Burner, as soon as you give your phone number out once, it's...

Greg Cohn:

It's out. And then people realize when they use this lookup feature, "Oh, actually this is somebody calling me." So, that's been really popular and a driver of upsell. And that was really an experiment, right? It was in a bucket of features that we tested out. I think we had done some surveys and that one surveyed, but I didn't really necessarily intuitively believe that that was going to be a winner feature for us. And so, you don't always know.

David Barnard:

Yeah. So, how do you think about in these experimentation from pricing to paywalls to onboarding, what are your north star metrics and how do those shift either even experiment by experiment or year by year? You mentioned earlier, you do have a lot of churn from the people who are just like, "Oh, Facebook Marketplace, I just need it for this weekend. I'm going to sell five things on Facebook Marketplace," and then they turn out. So, how do you balance? I mean, it must be a really tricky thing to try and run an experiment that can generate more revenue on the paywall, but then lead to lower retention and getting the wrong people through the door with the wrong incentives, with the wrong price.

So, I mean, it's such a balancing act. How do you think about that?

Greg Cohn:

Yeah. I think if you look at it from the framework of the LTV of a cohort, that's probably the right framework as a starting point. And it's interesting because that's a hard thing to optimize for in a single experiment, right? You have to ultimately think about how you segment customers coming through. We have a lot of tools to do that now, right? So, for example, our highest value customers, we ultimately want to be both in the premium tier and to be longer retaining, right? So, if we have a shorter retaining customer at too high a price, maybe we haven't done that right.

So, we're maybe optimizing the premium subscription differently than we want to optimize a user who's coming in with lower intent, or just wants to get a quick hit. But a key thing that is really interesting about our product, and this has been true since early on. And the thing you don't want to do, I guess, is try to solve a problem that's good enough for everyone, but great for no one, right? And so, there is a set of users who just wants to get in and out, and there's a different set of users that needs a number for a long period of time and is going to be price sensitive in a different way. They're going to be thinking about how much it costs them per year.

Whereas you were talking about paid downloads, people are thinking about that as a one-time expense, right? So, balancing those things, really cohort LTV is probably the true north, but within that, you can't wait for those metrics to mature. So, you have to project based on things that are happening at day eight or day 30. We have a three-day trial, we have a 7-day trial treatment, and so there are different things that you will get bucketed into depending on which cohort you're in.

David Barnard:

So, with the cohorting, I imagine you're not just cohorting by time. Are you cohorting by answers to onboarding questions? Because it sounds like you're not just cohorting broadly, but you're trying to find... And you and I have talked about this before, Eric Crowley, the tourist versus locals. For those of you listening to the podcast, if you haven't heard that episode, go back and find it because it's really great.

But the idea of the tourists would be your Facebook people who are just going to be there for a week when they need to sell a bunch of stuff on Facebook Marketplace, but what you're really trying to find is those locals who are going to be around for a long time and live there and stay in your product. So, it sounds like you're actually cohorting by those kind of intents, where you have a tourist cohort and a local cohort and then you're presenting different paywalls and different options and different pricing based on that. Is that what I'm hearing?

Greg Cohn:

Well, I would say to date, we've mostly done that by presenting different SKUs and different bundles and letting people self-select.

David Barnard:

Got it.

Greg Cohn:

I do think the more sophisticated approach is to understand, to try to anticipate who they are in advance, right? But there's a phenomenon. First of all, the intelligence is getting better and the tools are getting better to identify them. And then we also have a lot of users that do that tourist experience and then come back later. So, we have, I think, an unusually high percentage of people who are, let's call them "new subscribers" who incept a subscription, but they're not first time subscribers.

David Barnard:

You've got the smile curve going.

Greg Cohn:

Yeah. It's north of 20%. It's somewhere between 20% and 30%, and it's a very large number, right? And so, one way of looking at that is like, that's a user we failed to retain on their first tourist visit, but also maybe it's a user that like in a Google search, they had a great experience. They left and they came back again when they used it again. And so, we are trying to give those people good experiences and maybe do an increasingly good job educating them on why... A good example of this is, so at the end of the lifecycle of a Burner phone number, the user can burn the number, right? And so, we've increasingly explored what to do at that moment. It's really a fun moment in the app, right?

In the early days, you'd hit the button and it would do this match sound and this flame visualization. And then people liked doing it so much that they kept accidentally burning their numbers and there was a lot of support volume. But using that as a way to say, "Well, you may be done with this transaction, but maybe you want a new number." And so, we do retain a certain number of people into a second shot there. And ultimately, it's about understanding those users, right? But what's been crazy, and we're well over 10 years into this company and there's still, the expression is the juice is worth the squeeze, right?

There's still these optimizations that have meaningful... We're not talking about tiny bits of basis point types of little optimizations on whether we underline or what color blue we're using, right? This is a meaningful shift of users when we introduce a new plan. We recently tested making the free trial optional instead of default, and that was a very positive test for us, interestingly. This is a good example of something that was a little bit trendy. There was somebody out there talking about radio buttons at the free trial paywall. And it came in the door to our company through that dialogue in the app space and the app growth community.

David Barnard:

Yeah, we've talked about it on the podcast.

Greg Cohn:

Yeah. But internally we said, There's an authentic reason for it, isn't just a hack," right? It's like people come in, they want a phone number, they want our product, and some people want to make sure they lock it in, right? They don't want to lose it. They really want to custom, "No, no, no, I don't need a trial. I want to buy it." And then other people, "I'm not sure. I'm not sure I want to pay for this, et cetera, who give them the free trial." And so, let them self select. And that's a lot of the nuance of that. But it gets more complicated when we get to, I think, more robust features for those users.

So, you can separate locals and tourists, not just at the paywall and the skew, but in terms of the actual features. So, an example of something that's in our premium bundle, I gave one earlier around the phone number lookup, but we also have an AI voicemail classifier, not in itself a hugely profound feature. We have some other improvements like custom icons and higher quality video messaging, things like this that a tourist wouldn't care about, but somebody who's using Burner as their secondary or tertiary phone number side by side with their home number, they're going to want those higher quality experiences. And so, those are bigger investments from a product point of view.

And we don't always know if they'll drive paywall conversion immediately. You don't know on day eight that that's a winner experiment and it may take real time to build those features, but you'll see it in retention eventually.

David Barnard:

Yeah. And then one of the things you and I had talked about on the retention front is becoming more multi-product and potentially even acquiring apps to drive that retention through bundle. I mean, there's so many layers to becoming a multi-product company of solving new needs, of bringing user acquisition in with a different hook, but then has a secondary need. So, how are you thinking about that today?

Greg Cohn:

Yeah, it's absolutely something we're excited about. So, we've been thinking about what our customer needs are a lot. And from a product point of view, we try to really come from a place of identifying a problem, validating that problem and solving that problem. But sometimes those problems are big. We're still a relatively small team. We're about 30 people, and that's healthy, but it's a complex app. It's mature. There's a lot to do across core and product and growth and operational stuff. And so, the biggest single feature we launched that was an expansion of the product portfolio is in the first quarter of 2025, we launched a VPN. And VPN is its own category on the app store.

You've probably studied that in detail here and there's PE stage companies in the VPN space and there's a lot of small ones. And we didn't necessarily set out to take over that category so much as to broaden the offering of Burner by building that in. There's a like-minded customer who's concerned about their privacy to some degree or looking to hire tools that give them more control really ultimately over how they're seen and how their identity is understood on the internet. So, you can be who you want to be and be where you want to be with a VPN. So, that particular product we did with a partnership and it's a white label partnership as a provider.

And when we were able to integrate that, it was still a pretty significant investment for us. And we had to make that investment without... It wasn't easy to validate that need. So, it ended up being an expensive investment. It's driven a lot of value and growth of our premium tier, of our premium skew. But for us, it represents an example of a buy, build, partner type of portfolio approach, right? So, we decided to partner in that particular case, and it was the build aspects of even in a partner strategy were still expensive, right? But if we had decided to go become a VPN company and build that from scratch and build all the expertise necessary for that.

And by the way, that product exists in the Burner app and there's a desktop version of it on Mac and Windows, right? So, it's a 360 product. It's an expensive investment.

David Barnard:

Yeah. What was the decision though to build it into the product versus making it a second product and bundling it?

Greg Cohn:

As a second app?

David Barnard:

Yeah.

Greg Cohn:

Yeah. Okay. So, we've tried that. That's a tactic that has not worked as well for us is having multiple apps. So, we have Ad Hoc Labs is the parent company. We have Burner, it's our flagship app, but we also launched an app called Firewall and an app called Dialed to respectively do robocall blocking and business phone numbers. And neither one of those has worked at scale for us. And I'll just be honest, these are things that were very thoughtful, very intentional builds.

We did all the launch things and all the hardening and quite expensive to build apps from scratch and neither of them got real traction in the app store, maybe coming back to that distribution comment earlier. But also over a period of time, we realized that the acquisition funnel of Burner itself, in part because of our strong organic that's built in and the brand name, and in part because of our mature UA program, we have several million people per year downloading at Burner, right?

And plenty of those people could use a VPN, and those people are a lot easier to get an offer in front of than to go construct a new audience through whatever combination of organic and attention and paid that we would have to do even if we cross promoted, here's this other app.

David Barnard:

Yeah, no, it's a really good point. Yeah, yeah. Well, I mean, the app store is a hard place to get distribution, period. And so, you would think in one hand, oh, launching a VPN app, people are going to search VPN, people are going to find VPN, it's a VPN app. So, they find that it's a solution to their problem for VPN, but that's a whole nother company, right?

Greg Cohn:

Yeah. Well, when we launched Firewall, we learned that lesson really fast. And that was before we got Sherlocked. When Apple launched screen unknown callers, it basically killed that app and we didn't even get to Android on that, which all of our products are roughly a parody on iOS and Android by philosophy, so we can serve our customers and increasingly on the web, by the way, but that one never made it past that stage. But it's, like you said, really hard to launch apps today. I mean, anyone could do it. It's cheap. It's just very difficult to get visibility and traction. And certainly to ASO your way to glory is a very difficult thing today, except maybe if there's a brand new category.

I mean, there have been not just the top LLM open AI type brands, but any number of AI apps is an example of a category that's done very well as a new native category. But I think in a highly contested category, we're used to being the incumbents Burner, and there's some things that are great about that, and there's some things that are bummers about that, right? Everyone else can target our keyword and cannibalize the organic searches for Burner that we think are rightfully ours. But we were on the other end of that when we were trying to compete with RoboKiller and whoever else on RoboCall block.

And what is working so well for us by comparison to that is saying, "Well, we have this robust funnel, we have this user coming in with high intent. That user might be a tourist. That user might be somebody who's here for whatever you got, but where we can say, great, come for the number, maybe add the text blocking while you're here, or maybe you like this AI voicemail feature, and have you ever tried a VPN? And you can really broaden the offering there. And so, our vision is much broader than being private phone numbers. It's really to help users take control of their mobile identity and communications. And so, these are tools with which they can do that.

David Barnard:

So, then you mentioned build, partner, buy. So, we've talked about the build and that's a struggle launching a brand new app and a new category and a huge investment and everything. The build and partner sounds like it's been a nice value add to the existing app, but I know you're starting to consider buying as well. What does that look like and how are you thinking about that?

Greg Cohn:

So, first of all, the underlying goal there is speed, right? So, it's how quickly can you build things or validate and then build things or partner in things and how much can you drive growth as you get bigger and bigger, as well as deliver complex features to users more quickly, right? It's like if you have the idea to do something, our customers would love it yesterday, right? So, yeah, we've been in a certain number of conversations to acquire apps.

There's a, I think I mentioned it earlier, a little bit of a, I don't want to call it a death zone, but it's a tough sledding range where you've got some traction and you've got some revenue and maybe you even have cashflow to fund a certain amount of growth, but where do you go from there other than grind, right? We survived it. We got through any number of years that we had a very small team, we had to figure it out and know UA specialists on the team, but we had to do UA or what have you, or the stage where you have one iOS developer and that person takes a vacation and the whole thing shuts down. And so, we are very keen to grow in a very tight way, right?

We're not interested in just randomly acquiring other apps, but we are having a certain number of conversations right now about things that would be, I think, very organic to the Burner brand. And if you think about it, the need that people have for greater control of their communications and privacy extends way beyond phone numbers, right? There's any number of things that I think are good fits for that. So, yeah, we're excited to be looking at that and we're, I think, good at a bunch of things, right? So, we've had to develop real subject matter expertise in a bunch of stages of funnel optimization and analytics and cohort math and pricing and can really leverage...

It's not massive consumer scale, but we have a lot of users with a fairly consistent set of needs that we think we could add some more meaningful products to. And so, yeah, we'd love to do that if we can.

David Barnard:

Cool. Yeah, I'm excited to see where this goes. And I mean, I guess you're thinking in those contexts, both where it would be a standalone app if that app already had some level of traction, but then also potentially buy an app where it would then become a feature and Burner and it would just depend on the fit and how it would fit into the product and stuff.

Greg Cohn:

Yeah, I think that's right. I mean, not all apps that are adjacent to Burner would lend themselves to being features inside of the Burner app. I think some would. I think some would benefit from being a standalone. But the ideal, and we've definitely given thought to this, would be both. So, something that has found some traction, we could absolutely accelerate the reach and the development of that app, and it could still continue to be a standalone app that's complimentary to Burner as well.

So, it's hard to generalize that because every category we've looked at has been a little bit different, but there's some pretty exciting categories out there and I think some emerging ones that are just emerging needs. I mean, an example, just by the way, and this is not to telegraph anything, but in the world of AI, what does it mean to have control over your data? That means something different than the pre-AI days when you were focused on maybe Google, right? And so, what's the facial recognition mask for something when you want to put your medical labs numbers into an LLM and get some feedback on something like that without giving Sam Altman your personal biometrics, right?

David Barnard:

This is a very interesting contrast to a lot of the buyers in the market today are the roll-ups or just buying a bunch of apps. Or I had Blue Throne on the podcast, they're not just buying a bunch of apps anymore. They're buying individual apps, but the whole idea of there is individual apps that scale us their own businesses and a portfolio of businesses. But this is a really different opportunity. I'll do the pitch for you. If you're in this space and you think your app would be meaningful to the Burner audience and to the Burner brand, his number will be in the show notes, text Greg an idea and pitch him on why he should buy your app.

Greg Cohn:

Awesome. I mean, yeah, I couldn't have said it better. Thank you. But yeah, I mean, I'm not bullish on app farms, right? And I think that by and large has not been validated by the market. It makes sense why people thought it was a good idea. And so, some very smart people were operating in that strategy. But I think I wouldn't want to own 10 $1 million apps, right? I just don't think there's that much leverage in trying to scale things that don't connect to one another, right? Whereas having multiple multimillion-dollar apps that are complimentary to one another, it's much easier for us to add five million in revenue to our app than it would be to take 500K app and turn into a $5 million app.

David Barnard:

Yeah. Yeah. If you're trying to pump and dump, Greg is a very sophisticated buyer. That's not going to work out, but it makes sense. You're looking for the sleep stories to the calm. You're looking for secondary product market fit to build out this... And so, almost...

Greg Cohn:

And that's right.

David Barnard:

As you did with the VPN, it's not even multi-product necessarily, but it's multi-solution for the audience that you already have.

Greg Cohn:

Well, that's the starting point. So, that's actually a really interesting dimension of it. So, if you take several million Burner users coming in a year and then you cross-sell them, let's say, VPN, that's terrific. But what about when you can then, with that combined product, let's say, there's another component of it, reach an even bigger audience combined offering, right? And to the degree that the retention math really drives that, where a user that comes in... I use this example of GoDaddy a lot.

It's an antiquated brand and whatever, but you come for the domain and you end up with a website and email and ecommerce and suddenly, you're like a 84X LTV customer for them. And that magic of bundling is not new, right? People have been doing it a long time in cable and telecom subscriptions, but it is tricky sometimes to apply and it's a real opportunity area within, I think, consumer mobile subscription generally. I think if you're not thinking about bundling, you should be, right?

And I think that's where a lot of opportunity unlock for us is both, like you said, within the current scale of the funnel and then in expanding the reach maybe with a higher CAC target and a broader, bigger budget to a broader audience. So, we are working on some internal build stuff and some partner stuff that I think expands the strike zone of what Burner is as well.

David Barnard:

Yeah. And I think that's a great way folks should be thinking about it too, about that secondary and tertiary product market fit and how to build it out into this broader offering when you have found product market fit in that single thing and you're growing and you're doing well, but then that does provide more opportunity and opportunity to grow faster, opportunity to increase that LTV across that cohort. So, yeah, fascinating new direction for Burner and an opportunity I think a lot of people should be considering over the years. I think that's a great place to wrap up the conversation. I started doing this lightning round.

And funny enough, I beta tested this lightning round with you and a few other founders on a rooftop in LA. It was an incredible evening. There's pictures on the internet, but we purposely didn't record it. This one will be recorded. So, I don't know if you're going to select different answers, but it was so much fun. We did this live, there were about 20, 25 people in attendance. There were, I think, four founders sitting there and I hosted a panel and it was so much fun. And so, I started doing this in the podcast now to ask these three questions. The first one is, we'll start with the fail.

What's the biggest fail of the past year? Experiments, product launch, hiring. I mean, just what's the biggest fail of the year?

Greg Cohn:

Yeah, just by the way, that panel was great and it's a testament to the community being really coming together here, which I really enjoyed. So, the biggest fail in the past year is the same one that we really have every year, which is one way or another is building things too expensively in the days that take too long that aren't always the right thing and ultimately the tax on velocity that incurs, because of the opportunity costs. So, in the past year, I mentioned we shipped VPN and that is an example of something that while it's working well as a product, we built it in a very expensive way, even with a partner in the mix, right? And so, if we could run that again, we might've done it in a more nimble way.

And I mean, I feel like we learned that same lesson with audio messaging and that lesson with infinite numbers of features going back.

David Barnard:

It's a tough balance to strike because you want to put your best foot forward and build the best possible product. And so, it's just so easy to overinvest when you're passionate about something and you're somewhat confident it's going to work and it's working, but yeah.

Greg Cohn:

Well, I think that's especially true in a product oriented team. My co-founder is this product, he's a design. We have passionate members of the teams throughout engineers and they want to build things the right way, right? So, that's an important differentiation, and this is supposed to be the lightning round, but...

David Barnard:

I know. I was going to say that.

Greg Cohn:

That's an important differentiation between just like, let's analyze our way to a growth hack, right? It's a meaningful feature.

David Barnard:

Yeah. Well, we've already blown up the lightning round. So, how would you coach yourself and how are you coaching the team to think about in 2026 being able to take those swings, but not spend so much at every at bat?

Greg Cohn:

I think the right way to think about it is probably there are no medium size at bats, right? You either do something that's a painted door test, which is something I know you've talked about a lot, or maybe using an in app modal or something in the onboarding funnel, or you rebuild the whole onboarding funnel and it's going to take however many sprints it takes, but it's very hard to do this one surgical thing that involves a complex system and not have it turn into complexity that spirals. So, that's a big learning. And it's one in our product roadmapping and engineering roadmapping process where we're trying to get ever tighter about.

David Barnard:

Yeah. All right. What was your biggest win of the past year?

Greg Cohn:

Biggest win in the past year, I mean, aside from launching premium full stop was definitely adding technology to increase our paywall testing speed. We're always a very test-driven company, but we were shipping one or two paywall tests a month and we're able to do a multiple of that today. And it's very interesting because the velocity is now on the product team, not gated by the engineering team. And probably the speed to results is mostly gated by analytics now and maturing of data, as opposed to how fast can we ship features or excuse me, tests. But it's still true that we don't always know the ones that are going to win. There's one winner for every four or five that we do.

David Barnard:

Yeah, yeah. Paywall velocity. It's been a big topic over the last couple of years. And I just like Sarah. I mean, we've seen a lot of apps do really well. You just wouldn't think that moment would have as big of impact as it does, but it does forever...

Greg Cohn:

That first power of the user journey is just incredibly important. I just feel like I've heard that again and again. And not just the paywall. And so, we want to expand that into onboarding and even win back cancellation flows, things like that.

David Barnard:

All right. Last question. Growth would be easier if...

Greg Cohn:

If my users would stick around longer, especially those tourists. Yeah. It's a hard balancing act, attention versus optimization at the paywall. And one we'll probably talk about the next time we get together, David.

David Barnard:

Why specifically though? I mean, the math works out as far as anybody who sticks around a little longer, you can spend more money on them. The money you spent this year becomes free cash flow next year that you can invest in more user acquisition. But are there specific things you think when you say growth would be easier if retention were better?

Greg Cohn:

Let me put it this way. If I were advising someone on how to build a large scale subscription business, I would probably advise them not to start with a product that's inherently temporary, right? So, Burner is very churn biased by its nature as a-

David Barnard:

By its name.

Greg Cohn:

... throwaway phone number and people love to burn the numbers. So, all jokes aside, I think we've done a good job of evolving it toward a a subscription retention business, but that's almost by the survivor bias and of the relatively smaller percentage of customers who stay a really long time.

David Barnard:

Yeah, that's fascinating. All right. Well, this is so much fun. Thank you so much for joining me. I really appreciate it. We've already pitched, but anything else? Are you hiring or anything other than people pitching you an app that you wanted to share as we wrap up?

Greg Cohn:

Yeah, thank you for saying that and thanks for a great conversation. We have a couple of very interesting roles open in both product and analytics and engineering at the moment. And so, I would love to hear from anyone who might be interested. And I also really welcome hearing from founders in this space. I'm in touch with lots of people. My door's always open and love to be helpful. If I can save you some hard years in there in the middle, I'd love to be a full.

David Barnard:

That's awesome. And as we said earlier, Greg's phone number, his Burner, but his phone number will be in. So, text him. I would imagine you'd prefer a text first.

Greg Cohn:

A text would be good, but it will be really me at the other end of it.

David Barnard:

Yeah. Awesome. All right. Thanks so much.

Greg Cohn:

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.sunclub.com to join our private community.