Our guest today is Ron Schneidermann, CEO at AllTrails, the ultimate guide for outdoor adventures. AllTrails was early to the consumer subscription space, launching a $3/month premium tier way back in 2012. Ron joined as CMO and COO in 2015, and then took over as CEO in 2019, helping to grow AllTrails to over 1 million subscribers and tens of millions of active users worldwide.
On the podcast, we talk with Ron about the magic of consumer subscriptions, experimenting with freemium strategies, and how private equity isn’t always as bad as you’ve been led to believe.
In this episode, you’ll learn:
- How to refine and optimize your freemium strategy
- Two things you need to keep an eye on as a founder
- The pros & cons of outside funding vs. organic growth
- How Ron fast-tracked AllTrails’ profitability
Links & Resources
Ron Schneidermann’s Links
- Ron Schneidermann’s LinkedIn page
- AllTrails Celebrates 1 Million Paid Subscribers! (January press release)
- AllTrails’ website
- AllTrails is hiring
- Follow AllTrails on Twitter
Follow us on Twitter:
Our guest today is Ron Schneidermann, CEO at AllTrails, the ultimate guide for outdoor adventures, AllTrails was early to the consumer subscription space, launching a $3 per month premium tier, way back in 2012. Ron joined as CMO and COO in 2015, and then took over as CEO in 2019, helping to grow AllTrails to over 1 million subscribers and tens of millions of active users world.
On the podcast, we talk with Ron about the magic of consumer subscriptions, experimenting with freemium strategies, and how private equity isn’t always as bad as you’ve been led to believe.
Hey, Ron! Welcome to the podcast.
Thanks for having me.
Yeah. Really looking forward to the chat today. I wanted to kick it off, and most people know what AllTrails is, and it’s a fantastic brand. It kind of tells you what it is right there on the tin. What’s your pitch? We’re in 2021, post pandemic.
Give us the short version of what AllTrails is. What does it mean?
Yeah. So AllTrails is a free app and website that helps you find trails all over the globe, so you can spend more time enjoying the outdoors, and spending time in nature.
That’s a very nice mission. That’s way more beautiful than helping developers make more money. Both are important, but I can smell that. It smells, “piney” and I like it.
Yeah, it smells like the Colorado forest. I haven’t been hiking forever, and doing all the research to chat with you today was like, oh man, I need to go hiking more.
I heard there’s a great app for that.
I heard that.
So, I did want to also ask about your journey to AllTrails. You got there fairly early, and then grew in, and you’re now CEO. Tell me, off the bat, what led you to AllTrails way back in 2015 when it was just six people?
Yeah. To answer that I’m going to go a little bit further back in time. My first job right after college was at Accenture, at a global management consulting firm. It was great. A good jumping off point, and I learned a ton. I didn’t know anything going into that job. You know, you get the rubber stamp and it opens doors.
By the end of my third year there, I kind of had a realization. Epifany is a little too strong a word, but I just kind kinda realized I can’t take a job just for money again. The amount of time and energy that I was putting into it, and the lack of work-life balance, it really made me rethink who I want to be. Who does working Ron want to be?
So, I was able to parlay that Accenture job into a biz dev role over at Hotwire, an online travel company. That was really where it opened my eyes. Like, I am so much happier, and I am honestly so much better when I’m working at something that I’m just personally passionate about.
That guiding principle has really held through throughout my career trajectory. From Hotwire, I want to do my own startup in the ski space. I love to ski. So, I did that for nine years. It was a ton of fun. Then I was over at Yelp, doing growth for a bit. I love finding non-chain restaurants, and supporting mom and pop businesses, and stuff. I live in Yelp, so that was great.
Then, when the opportunity for AllTrails presented itself, it was just kind of a no-brainer. Of course I’m going to take this.
I’ll say this to you, one little addendum, one of the things I learned along the way, too. I am not a zero to one guy. That is not when I am at my best. It just causes me stress and anxiety, and just, figuring out how to keep the lights on for another day.
So, again, knowing kind of that sense of self knowing. Like, alright, I’m best at B to C. I’m at my best when I’m using products I personally want to use and like talking about. I like hypergrowth, and I think that’s probably my sweet spot.
So, it starts to all align when AllTrials showed up.
Yeah. And then how did that go from? You joined the company as COO, right? And then, what was the progression inside the company to eventually taking over as CEO?
Yeah. So if you want to demo and COO, I dunno why I really wanted to have both, like, I didn’t want to just be CMO in a vacuum, but not have any ownership or agency over kind of team composition and strategy and stuff. So I thought that it was really. Really important. And when you’re a six person company, it’s pretty easy to grab titles.
It’s not like how to take it from anyone.
I was going to ask, like, I mean, it’s, it’s not like you see this a lot where it’s like a six person company and they had like five C-levels and you’re like, okay. Yeah, sure. Like, like my title, for example. But like, I’m kind of curious, like, you know, you like your background, you founded a company, like you were like a real CX whatever.
Right? Like it’s not like it was fake. So how did, how did that, how did you go as like an executive, like choosing your next thing? That’d be a hell of a pitch to get you to like join a tiny little like, team like that.
You know, I think I, I spent a lot of time thinking through again. I don’t know, I, to be perfectly honest, I was, I was a little bit bored at the end of my tenure at Yelp. I love Yelp. It’s a great company, but it was just, it was too big for me. And so I spent a lot of time thinking through what’s next again?
That whole question, like zero to one. Do I need, do I need to start something myself or what? So the smallness didn’t bother me. I actually really liked the smallness cause it was almost like, it was almost like a cheat code. Like I got to do a startup, like basically from scratch, but I didn’t have to do it from scratch.
They had, they had a kernel of something at
They did, they did. And you know, it was actually to, to give my predecessor credit. It was, it was actually more than that. Like they had, they had solid product market fit from a monetization perspective. And then what really got me across the line with their product channel. And I feel like that’s often overlooked and that’s something you kind of pick up in time.
Like it’s not just like, is this a product people are willing to pay money for, but just straight up, how are you going to get this out to market? And can you, can you do it in a way that is, you know, viable and scalable and, and ultimately, you know, going to be, be more efficient than, you know, it’s kind of like net out, right?
Like the whole LTV to CAC thing and everything that
Yeah. It’s, it’s something more efficient than paying for every single install. Right.
Exactly. And so. You know, I, it felt like there was good bones, you know, maybe it was like a fixer upper kind of house. but it had good bones, like it had, it had the foundation in place. And I could see, you know, back in 2015, the product sucked, it sucked. and, and what was shocking after I came was how bad the data was.
I didn’t realize that when I was kind of doing my own diligence, but it was
You mean like analytics on the internally, what the company knew about itself or you mean like the, the, the trail
The trail data, like the trail data that we were showing, you know, and that’s that’s subs high consequence. and so that was like a hard pivot, within a couple months, like, all right, this is, you know, all hands on deck thing.
We’re not doing anything else until we figure this out. but again, it just, it felt like there was a diamond in the rough, in this one. You know, I’ve been here six years now and I can say like, unequivocally, this is the highlight of my career. Maybe I just got lucky. I don’t know. But, man, like, yeah, this has been a really, really great run so far.
I was just going to ask about the, that channel and monetization fit. I mean, I guess this was maybe I’m jumping ahead in our agenda here, but, but yeah, they were already charging a subscription before you got there. Right. And in terms of like monetization, maybe like describe that model a little bit and, and how that has changed.
Yeah, I had never done this subscription business before coming here. So this was my first subscription business. And I’ll tell you, you guys already know this. I’m sure your listeners already know this too. subscription businesses are magical. Oh my goodness. Compared to like e-commerce or you’re trying to re when, you know, the transaction every single
I know I was looking at Hotwire just now, when you mentioned it. And I was just thinking about like, how many of those there were at that era, right? Like, and still are like, when you had to book a hotel on Google and they’re like, oh, here’s 15 different sites. You can actually like book it through it’s like Wolf,
Oh, so tough. Same with Liftopia. Liftopia the ski startup. There was the same thing. Right. you know, but, but with a much smaller niche and segment, and then, and then Yelp is, you know, they’re, they’re kind of the media model and then trying to, you know, kind of pivot more towards like B2B and subscriptions for businesses and value added services and stuff.
And coming here doing a consumer subscription business, an annual subscription, the auto renew. It’s like an annuity, like it just builds up every single year. Like obviously, like you can’t take retention for granted and I’m sure we’ll talk about that, but you know, just, if you’re able to kinda, you know, do a, do a pretty good job on the retention side and you see this thing build up And just.
Raise the tide every single year that I’ve been here and have it just, is that much more momentum that just gets like brought into each new fiscal year for us. It’s just, it’s incredible. It is incredible. the leverage that it offers. So that was cool. That was definitely a,
One of those good bones.
Yeah. And that’s what I was going to ask you say the bones were good. Yeah, AllTrails had launched their subscription in 2012. So about three years before you joined, what was the state of that? And that’s really early in the kind of consumer subscription software space. Was there a lot of push back was like, how was traction, chargebacks and things like that was the bones were there, but were there some serious doubts or questions in your mind as to how this subscription app space was going to play out?
Yeah, I mean, so can I share a secret with you guys? I honestly didn’t know that our subscription business loss in 2012, until you guys showed me the research that you did leading up to this, I had always thought that, it launched with our ass. We launched our apps in, I think early 2015, I joined in September, 2018.
And I just lumped everything together just in that, you know,
Yeah. It’s yeah,
Yeah. So I, I, I had always thought that it, that we had launched it when our apps launched, but I guess we were on the cutting edge, the bleeding edge, the subscription space here.
So, so, but that, then I’m, then I’m correct to assume that, you know, if you launched a description 2012 was on the web, if you didn’t have apps until 20, 20, 15. Right. Right. Which, I mean, my, my experience, I guess I’ve been on old trails website, but like my vast majority of experience has been on the web.
Right. Because I’m like, or sorry on the, on the phone because I’m going for a hike and I’m like, I need a map and like, boom, there’s AllTrails. Right. Which I guess is that channel fit. You’re talking about.
Yeah. And that’s been, that’s been one of the cool things when I started. So a couple, a couple, I guess, data points, just to show like, sort of that, that snapshot in time of 2015, we probably had 20,000. subscribers at that point, maybe a million cumulative registered users since 2010, when we first launched and maybe 20,000 active paying subs.
And in January of this year, we put out a press release. We don’t normally do that, but it was two pretty cool milestones. We had cracked 25 million registered users and a million paying subs at the start of this. So, you know, again, like the, the, the unlock has been really cool and very, very powerful. but the other thing, like you said, like this was, you know, a web driven subscription business.
At first, when I, when I first started here. probably 70% of our, of our web traffic was desktop desktop to mobile 70 30. And obviously that’s inverted, since then, and then Mo the, the, the mobile apps, the native apps are by far the best form factor for what we’re trying to do. Like you said, Jake would like take it with you on the go, the navigation, the GPS stuff, everything baked in there.
And so that’s become really the workhorses of, of subscription business and, and of our overall, UDC flat.
Yeah. I mean, it’s so helpful. you guys have good SEO when you search a trail, it comes up on AllTrails. Right. But that’s, I would imagine like this stage probably mostly like demand gen for the app,
That’s exactly it. No, that’s exactly it. Right. So our se our legacy SEO, this is what, again, one of the beauties of being around for 11 years and counting, we have this amazing legacy SEO and that’s, that was that product channel fit that brought me here was the sales pitch was he just showed me Google analytics.
And he just like, look, look at all of this for your
Just like a hyper-local very valuable data, right. Index. And if you’re, if you’re the winner, that’s a great real estate to
I know. And, and so what we’ve been doing obviously as, sort of consumer behavior has changed and gone mobile first is, we’re able to parlay all of that mobile first SEO traffic it’s, incremental organic app installs, and that’s a huge driver. Of our business. We get millions and millions of incremental app installs that we don’t pay a dime for every mom’s.
Yeah. And going back to your point, like yeah. Not having to push. Up the hill completely is a bit, you know, you think about a
Compounding annuity analogy as you made, right? Like the cost of that compounding really, you know, if you net out the whole asset, right? Like that’s going to be a big part of it is like, how much does it cost to push that that, that, that flywheel up a little bit.
It’s a moat for business too, you know, you’re around long enough and you’re doing something good. You’re going to see a ton of competitors start flooding into the space, which is great as validation of what we’re doing, but the product market fit product channel fit conundrum is, is real.
And you know, I see really great products, you know, beautifully designed products that just crank can’t crack the code on either of those. And then they kind of, you know, whether on the line, right? Like see it all the time.
No, that was actually my next question is that in those early days, and you already said when you joined and when y’all launched the apps in 2015, they were crap. So take me, how did you go from this crap up and what experimentation, what pain, what suffering did
There’s some, there’s some old, there’s some like a old guard at, at all trials that are going to listen to this and be like, crap. They were great.
But what did it take and what was the approach to, to find you, you had some level of product market fit, but then to actually build a great product around those early signs.
There, there are a couple of philosophical things that we decided immediately. One was around funding. Do we want to go take funding, and try and do this faster? Do we want to do this kind of organically? And my predecessor had done a small seed round. I think he raised 3 million bucks in 2012.
And we were still kind of drafting off of that. And then there was a little bit of subscription revenue and then a whole bunch of just, you know, classic entrepreneur head on the swivel stuff. Like let’s throw a bunch of shit up on the wall. Like, let’s see what we can do. So there’s, you know, a media play and programmatic ads.
Whatever, right. Just trying to buy time more than anything. Right? Like keep the servers running for a little bit longer. But we decided we very intentionally decided not to take funding. We wanted to control our own destiny. And part of it to be clear, part of it was the handshake agreement with the original founder, was to grow it and sell it.
He wanted us to, to, to sell it. And so, so then if that was kind of the. The Mandy. And I was like, well, why would we even just, you know, deal with the, the opportunity cost and the headache of going out and trying to raise funds, as a pain in the ass. So, you know, it was like, let’s just, let’s put our heads
Especially, especially for our consumer subscription company in 2015, like
Ben kind of been party to that. It’s not, it wasn’t easy. Let’s put it that way.
Tried doing it in 2005, by the way I was with Liftopia was insane anyways. but so we decided to put our heads down and just say super scrappy, super scrappy, super lean. And so, it just came down to like relentless prioritization and essentially what we ended up doing was triaging sort of a different funnel metric each quarter.
Right. So one quarter is. We’ve got to tackle bounce rate. All right. Now we’ve got to tackle signup rate and now we’ve got to tackle pro conversion rate. And now we’ve got to talk over attention and we just kind of spent cycles, through 2016 and through 2017, just each, each quarter, just like laser focus in on that one metric and do what we can and then move.
And it worked because by the end of 2017, we actually achieved profitability. Which was cool, which was really, really great. You know, like we wanted again, when you’ve been around the block long enough, you talked to enough entrepreneurs, you’ve seen, you’ve seen enough. there’s so many examples of people going and getting too much funding too soon, and then they develop bad habits, right?
Yeah. Let’s get a little hot in here. Is it.
I never heard of that.
So, you know, but so you see it right? Like that you, you get the, unsustainable growth channels, again, the product channel fit question, like how are you actually going to bring this to market? And how are you going to do it when that VC money dries up? Like, is this actually
Five X that VC money, right.
Right? Is this sustainable?
Or you’re just connecting yourself to the next round of
You can put yourself in a, in a dead man’s corner, right. Where you’re not your, market’s not big enough, whatever you end up killing and otherwise like really great business,
Totally. And I, you know, I’d seen that, I’d seen that. I really didn’t want to do that here. It felt like because so much of our growth was coming through SEO. It felt like obviously there’s an opportunity, which we later unlocked on the ASO side of things. It felt like even beyond both of those though, it’s just like word of mouth and PR and viral loops and network effects.
Product market fit as a broad thing, right? Like growth kind of have you have a really good product and it serves a niche, like grit just starts to start to go.
And especially organic growth, right? Like, and that was really the big key as like, do we need to be like one of these DTC companies and just raise millions of dollars for Instagram ads? Or can we, can we do something that’s more sustainable for the long haul? And that was, that was one of the bats.
The other big bet that we placed was, from a brand positioning perspective. You know, when I came in the app was definitely geared towards like the through hikers and search and rescue and, and the hardcore, like, you know, back country folks. And the challenge with, with, with that segment is that there’s always these, you know, really esoteric and extreme product requirements that they want because they’re they’re edge cases.
They’re by definition, all edge cases. And in this space in particular, a lot of them. Kind of living the, you know, the van life, life, you know, trying to live as frugally as possible. and so they don’t want to really pay you any money either. It’s like this isn’t a good growth segment. We got, we gotta rethink this one.
And so, I’ve told this story a lot, you know, this strong man to this day still is, is my wife where like she likes going outside with me. You know, she’s always down to go on a high. you know, spend time outside. We have three kids, totally trying to raise them on the trail. we have a dog who loves being on the trail and, but, but if I’m not there, you know, she’s, she’s not going out there.
Right. So it’s like, okay, okay. Maybe here’s the play. Like what, what if we use technology? Kind of tear down the barriers for entry, like instill confidence, whether through like product functionality or content, but really make it so that someone like my wife and the hundreds of millions of people around the globe, like her who, who know that they feel better when they time spend in nature.
They’re just a little scared to do it. Like, can we help augment that? Can we help supplement that? And I think that’s going to be the unlock. And that was the big bet. That was the other big bet that we placed in 2015. And you know,
And just to summarize that, I understand it’s like to kind of not ignore these like extreme users that are on the edge on the edges, you know, serve them, but maybe not in the way that they would want, but like let’s focus on, you know, this larger segment. I mean, I think that’s the thing, even some good founder advice is good for founders.
Sometimes doesn’t always apply. Like B to C stuff sometimes where it’s like, yeah, like, listen to your most vocal users often. There’s something there, but like with an ounce of like moderation, because yeah. They can lead you in really strange places. And think about the network. Think about the like user.
Maybe you’re not talking to her, her the next year saying next a hundred million users that you have to get. and that’s potentially a much bigger surface area. And that doesn’t mean you’re going to abandon those court users. Like they might grumble a little bit and they might not be totally served by your use case.
And like, that’s maybe just life. but, but you know, you’ve now potentially, like if you think about the, you know, the mission of just getting people outdoors, like you’ve achieved that much better by going for this much larger market segment. Right.
Yeah, and they’re not mutually exclusive. It’s just which one are we prioritizing? Which one are we preferencing? And how are we, you know, what kind of language are we? Are we using lingo or not? Right. Are we making this accessible for everybody or not for imagery? Right. Are we doing like, you know, Alex, Honnold like dangling one handed off of a cliff,
Or just, or just a picture of the N the end cap at an REI,
Yeah. Yeah. Or, or just like, you know, a family like smiling and having fun out in nature together, you know, like, all right. It doesn’t cater to the core, but they’re not necessarily going to like walk away because they see that stuff either.
Right. I mean, and that comes to. Channel fit As well, right? Like not your products fit and your products oriented for, and that like B to C you kind of, you can’t divorce the two, like you can’t have totally independent marketing and channel channels for the product itself, which maybe you could get away with a little bit in B2B.
But, but, but they, but they don’t necessarily have to be like completely like linked, you know, you can kind of serve both niches on the, on the product side to your point.
And speaking of getting more folks out in the mission of AllTrails. I’d love to hear about your freemium strategy, because that’s a huge part of it. Like what early on, what was your approach? And then how did that evolve over time? As far as what features you do give away for free to kind of reach the broadest audience possible, and then what things you pay wall to actually get paid?
And, and, and I’d like to highlight how Ron, when we asked you to describe AllTrails, you put free in the name, which I’m sure was very intentional. Right? You said it is a free app, right? It is not a premium app. I mean, it is a premium app, but the highlight the free. So
That framing, what, what, tell us about your free app.
There’s, this is a, this is, an ongoing. Like not debate, but, it’s an open question always. And we’re constantly like asking our employees and our board, like let’s challenge our assumptions here just because we did something a certain way last year. Doesn’t mean we need to do it this way.
Like let’s constantly reevaluate this, for us, there’s sort of three main buckets we have. Free on authenticated users and then we have free registered users. So kind of that registration wall is like the first key funnel, metric. And then there’s, pro subscribers, right? So we have two, two kind of core, success metrics.
One is registration rate and one is pro conversion rate. And then what goes in front and behind the paywall and the red wall, the registration wall. Constantly influx constantly. And plus we actually just did this really fun workshop a couple of weeks ago, internally here. It was like the history of AllTrailss pro and just showing kind of which features started when I, you know, again in 2015, like what was the pro feature set?
How much of those? We actually ended up pulling in front of the red wall and new features that we put back behind the paywall. So I feel like we’re constantly in a state of experimentation here. we’ve been, we’ve been experimenting with that since day one. We’ve been experimenting with pricing also on day one.
And there’s still, I don’t feel like we’ve cracked the code at all at all. When I, when I first started here, I’ll chose pro was 50 bucks a year and I spent the first, like two months just trying to get as, as much like, obviously all the quant data that I could get my hands on, but as much qualitative data as I could get to.
So reading every app store review, every Reddit thread, every blog post. Talking to customers, all of it. And aside from everyone telling us that our data socked and, you know, we can, we got them lost. So we got them tickets from the park ranger for telling them to bring a dog when it’s not that currently, whatever it was.
The other piece of feedback that we got was like 50 bucks, like it’s way too much. And so we immediately started testing pricing and, and, and we tested it at 30 bucks a year and we tested that 15 bucks a year to kinda all right. If we really just take that price down is, the in incremental, purchase rate, gonna offset, you know, the, the change in that revenue per transaction.
They were about to wash it, which was really interesting from a net revenue perspective, 15 bucks a year versus 30 bucks a year was, was basically flat. But we went with 30 because it gave us more maneuverability. We could do more. for the folks who were like price sensitive, do do discounting, intro offers, whatever.
At 15, we really couldn’t go any low, lower. So it’s just like, this is it for everybody all the time. but even that we’re revisiting now and thinking through like, all right, maybe are there other different tiers? We’ve never done monthly before. So what is, what is a world in which there’s a monthly price?
I don’t, I don’t love it. I mean, again, annual is magic. Like why mess with a good thing, but there is a cohort of users, especially outside of the U S where that’s a pretty high
Oh, I mean, I live in the Midwest. Like I would, I only need your app from, from April to November. Right. Like I really don’t need to pay all year.
For the two weeks in
Yeah. I, but I mean, I think there’s the counter argument there of the simplicity. It’s like, yeah, sure. But. Whatever your value is. So your, your, your, this is the price.
I really, I I’ve seen that effect before on the price experimentation, you just end up with the same area under the curve. Like, no matter how you move it, and some apps are like that, some apps are not. but I do think it’s really fascinating, the wisdom of crowds, right. And just how, like, they know like the, the, the, the masses have priced and valued your products.
And then just like showing that like, it’s very efficient, right. No matter where it goes, then you can come down to like, It’s almost a good place to be. Cause then yeah, you have that like opera, you can choose where you want it to price. You can basically, you’re freed from the like fiduciary duty of like maximum extraction.
And you can like, like, just focus on like, okay, what’s gonna what’s right. For us for some of those goals on company growth and stuff like that. If it was right for the mission. And then like also give yourself some like tactical opportunities in terms of discounting and other stuff like this, and then positioning as well.
Like what is it? I think that’s almost as important. It’s like, how do you use. How do you see all trials? Like how do you see it as like, what’s the value of perception? Like a $30 skew and a 50 and a 15, those are very different. Right. And those are, you know, I think about consumer goods on those scales.
That’s like each one of those things has like a different, like, feel to it.
Totally. And, and then on top of it, though, our business is driven by UGC, right? We have this classic UGC flywheel. And so obviously we know our pro users are more engaged, but a ton of engagement comes from our free users as well. And so you can’t kind of, turn the squeeze on them too hard without like really fundamentally damaging the business.
What kind of user generated content? Is it like pictures and updated and stuff or what? What’s
Yeah, ratings, reviews, photos, recordings, you know, and then there’s this also this virtuous cycle that we have, this beautiful relationship we have with our users, where they, they help us create as well as Curie our trail Content. So that’s the thing with trail content, just to go down this rabbit hole for a second, Joe Content, super fluid, like it’s not like streets that are, that are relatively static.
You know, a trail is you get, you get flooding, you get fires, you get maintenance, you get development, down trees, whatever. Like they’re constantly in a state of flux. And it’s really, really hard to stay on top of it. We can’t do it alone. And so we
And there’s no, it’s not like, it’s not like roads where there’s like a national database, right. Of like uniform data
Yeah, no, not at all. Right. so we, we do. We have this like really beautiful symbiotic relationship with our, with our users, you know, and, and it’s kind of like, we both get value from each other and we’re both very transparent about like the relationship, like you guys help us and you help the community.
Right. And we’ll package it. We’ll, we’ll keep improving and investing in the product experience and everything else. and again, like, this is where it seems to be working, but this is when, when we were talking about. Th th the choke points in the funnel and that, that red wall and the broken version Weill, this is the thing that’s top of mind over all of it.
Yeah, that’s great. I did want to move on and talk about in 2018, AllTrails raised, 75 million led by spectrum equity. And so I’m curious about that, about that story. So, I know, you know, the plan was to sell and then you’ve shared on other podcasts that, part of that was the founder taking, taking some money kind of his exit event.
But I’m really curious just from like a company building perspective. I think so many founders and entrepreneurs think, oh, if I can just. More money. If I can just hire more people, everything’s going to be easier. but I imagine that’s not the full story. So I’d love to hear about the raise, but then also kind of how that changed the company and changed the trajectory.
Yeah. So like I said earlier, right. That the handshake agreement was to grow and sell it. So we knew going in exactly what the deal was. and once we hit profitability in 2017, it kind of felt like, all right, it’s probably next year. It’s probably our year. And we got an inbound from one of the big tech companies early, you know, probably end of Q1 of 2018.
And so I was like, all right, game on, right? This is it. We’ll go get a bank. we’ll run a formal process here. And we started going through it. We started going through it. This was actually, it was fun, right? Like I got to put together sort of like, all right, here’s our top 100 strategic partnerships broken out by category, broken out by vertical.
Here’s like the, you know, the accretive value here is, you know, the, the investment credit. It was like a really fun thought exercise. You know, we’re talking to online travel companies and real estate companies, and obviously like the retailers and just so many different types of companies out there. And we ran a process and it was, it was fun.
But, and as we were going through it, well, a couple things happen. One is our business really took off. Like it was a breakout trajectory year for us. So that always helps. Anytime you, you meet with someone, you share your plan and then you come back a month later and it’s like, Hey, actually, Outperforming outpacing.
So your price just went up. so that was, I mean, that was great. Like a great position to be in. I’ve never had leveraged like that. And the other, the other thing was like, we could walk away at any point. If we, if we didn’t like it, I had done a lot of fundraising before and that I’ve never had a position of, of leverage like that.
So that was cool. But as we were going through the process and talking to these different strategic acquires, the other thing that kept jumping out was like, I don’t want to just go be middle management at some big company that I already like have chosen not to work out anyways, because it doesn’t align with what I want to do with my time.
And so, you know, we’re kind of going through, it’s like, is this really, is this it is this the only path? and we’re talking to our bankers about it and like, you know, there’s a, a huge ecosystem of financial investors that are really excited about this consumer subscription space. let’s, let’s do a spike there.
And so we started talking to somebody. Different financial firms out there. And that’s where it got really, really interesting. you know, I think, I think we all probably have preconceptions about like private equity groups, like, you know, I know, right.
Just, it then the light dimmed here. When you said
I know, cause a lot of the classic ones, they’re just there in your shorts about like your bottom line expenses and micromanaging and telling you to cut costs and
That’s, that’s the, that’s the, the stereotype at least.
Totally right. but there’s this whole class of growth equity shops out there and, and we, we sort of plugged into it and I would squarely put spectrum equity and that one, and the first time we talked to them, it was so clear. They’re like, you guys, aren’t thinking big enough. It’s like, what? I love that.
Okay. Let’s talk growth. You know, like you guys need to be thinking global. Right. And it was just like, there was so much alignment around. This, this opportunity in front of us. And instead of like pulling the rip cord and just kind of being absorbed and integrated into something else, it’s like, how about, like, we really make a, make a run at this.
And so the more we talk to them, the more it’s was like, yes, hell yes. And it wasn’t just from like, a funding perspective, you know? Cause if it was just that like again, then you just do an auction and you just see whoever’s the highest. But we really wanted, like I needed a partner. I wanted a value added partner that I wanted someone who could bring in, you know, a sense of community, not have to reinvent the wheel all the time.
That’s always nice when you can plug into our portfolio of similar companies and just pick their brain. All right. Like how did you guys
Yeah. I mean, that’s an under, that’s an underappreciated aspect of raising versus like going at your own. It’s like the network, like it’s, I think feces oversell it, but maybe founders undervalue it. Right? Like
A hundred percent. Couldn’t agree more. It does. It really does. and so yeah, we kinda went, yeah. I, I feel incredibly fortunate that we were able to partner up with spectrum equity. And so David two question, I have, it’s like it for us, it was this huge unlock. It was this huge online. Like we have another partner, we’re going to be more formal, with our board structure and, you know, the, the sort of like metrics, which is great, like we needed to level up, and our corporate diligence and everything.
And they’ve been, they’ve been a partner and we’ve, we’ve grown the board. We’ve added more expertise. And again, like the, the portfolio being, being sister companies with, with like Headspace and the not worldwide and survey monkey, whatever, like these cool companies that I respect and be able to, you know, hit up the CEO and be like, okay, how did you guys deal with this?
Because like you said, like there are a ton of challenges that come when you’re going through that, you know, that the slope of the curve at that point, right? Like the true hyper-growth curves. All right. You know, we can’t fall back on, on money as an excuse, you know, like it’s purely an execution play and how do we do more faster?
And that’s honestly like, that’s my, I think one of the coolest things I can say about my board, that the single biggest piece of feedback I get from them where they’re just like yelling at me all the time and a great way. It’s like, you gotta do more faster. Why aren’t you doing more faster? Right. Like that is the mantra here because everyone sees this opportunity.
It’s ours, it’s ours to go take. Right. But we got to execute and do it as fast as we can.
Yeah. That’s that’s, I mean, I’ll say as somebody recently constructing a board, like that was sort of my cause as a founder and as a CEO, like you’re always, you’re just, you’re you’re at, you should be at the limits if you’re doing your job. Right, right. Like you should be kind of feeling at least like thinking, you know, what your limits are and what the company’s limits are.
And it’s nice. Even if there isn’t anything more you can do. It’s nice to have some people who like, ostensibly are aligned with you to be like, Are you sure there’s not more right? Like, is there anything like, are you doing like, could, could you change this? Like, could you go go faster potentially? And sometimes the answer’s no, but it does always kinda, you leave those board meetings going like, like maybe there is like, maybe there is some way we could do this, like better or faster, right.
Yeah. And then you build a team, right? And that leads back to like the team growth. And this, you know, this is our third year in a row of, of doubling head count. Hopefully next year will be our fourth year in a row. And all of the leverage, I’m a big believer, like two things are the lifeblood for companies like ours.
One is culture and the other is momentum. And you can’t, if you lose either of them, Right. Like, you cannot take your eye off of either of those as a CEO, as a founder, whatever it is. and so like building both, you know, they, they got to go hand in hand, or you can sacrifice culture as you’re doing the internal hypergrowth.
Have an exit strategy, right?
Going to last very long.
Because you’ll never get it back. That’s exactly right. But, but generating momentum through like value added hires and raising the bar or bringing, you know, a bringing in a plus, I love being the dumbest person in the room. That’s my favorite thing at all. Choose walking in there. It was like, all right, I’m going to learn something.
Someone’s going to teach me something cool. and building a team.
So it sounds like the biggest unlock for y’all taking the money was just the ability to hire faster, hire better folks, offer better pay. but was there anything else that you feel like taking funding helped unlock for AllTrails? Did you, were you able to spend Mo did you start spending more on, on user acquisition or ramping anything else out?
Can I ask a clarifying question without like you sharing your term sheet or whatever, but like D w like these, these deals can be very different than like a venture deal, right. Where like, almost always all of it hits the books and it’s dilutive, meaning that the company gets the money, but this was like kind of a buyout for the founder as an alternative to a sale.
It’s like, did you guys structure it? So some hit the books and not, or was it all to the founders or how did it, whatever you’re comfortable
We, we hardly took any primary capital in 2018. I didn’t, I didn’t want it. I don’t want it. Like I liked our organic trajectory. I didn’t want. And obviously I’ve gotten to know spectrum a lot better. They’re not built from the CNA, but you take money from a VC. And the expectation is like the success metric is suspended as hard and aggressive as possible because they’re incentivized to keep you hooked, you know, on the next round.
And I wanted to, you know, accelerate more like on the product development side of things, but I didn’t want to get stuck in a, a growth model that’s dependent on unsustainable paid acquisition. Right. So. almost the entire deal with secondary capital, which was great, which was
And for the financial illiterate IME, like 18 months ago,
The company gets the money. Secondary would be somebody who’s already a shareholder gets the
Exactly the people on the cap table. so it was buying out the founder, buying out the original investors, like really cleaning it out. It was a new chapter, a new book altogether. At that point and, you know, start sort of starting together. I think, you know, to the question earlier, in terms of like the other value as like, I really can’t stress enough, just the strategic value add that I was able to get like, again, because as a founder or as a CEO or as an example, You’re kind of stuck in your own head a lot and you can talk to other founders, but you know, there’s this like culture, especially in Silicon valley, like, oh bro, coaching it.
Yeah. I mean just crushing it, you know? No, one’s, you know.
I didn’t, you didn’t have to put air quotes around culture there, but like, I could hear the
You know, and very few people are like really open and transparent, about the challenges and what have you. And so being able to go in. and have this board that I trust that I feel like we’re all aligned. I’ve had boards, you know, especially VC backed boards, where you get like a different, you know, venture capitalists from every round that you do.
Like you have a lot of misaligned incentives. You have a lot of sharp elbows in a room.
I was gonna say, there’s a lot of, you know, these are all competitors in a lot of cases, right? Hopefully you pick well, and you have people that are professionals, but like you can totally end up in a situation where you have frenemies,
Yeah, you’re watching your back at your own boards. That’s a horrible way to live. Whereas with this one, it was so clean. It was like, we were owned by spectrum. This is great. I work at on their behalf. This is great. We’ve got the two of them there’s me. And then, and then, but to their credit, they’re like, let’s bring on two more operators.
And so, you know, they didn’t care about like, well, we have to have 51% plus of the seats. It was just like, no, let’s just surround ourselves with really awesome. And so we got, you know, we got the former CEO of ancestry, who, you know, they know a thing or two about, subscription businesses. And then we got the COO of Robin hood and obviously like they know a thing or two about hyper-growth and everything else.
And again, like, so it’s almost like it’s this team, you know, it’s like this dream team we’re just collectively, like they’re helping me chart stuff. Like see things. I wouldn’t have been able to see on my own, whatever the pattern
I mean, I think it’s, it’s, it’s a good story in the sense that like, I think, I think we think too terminally sometimes about companies, right? Like it’s like, they’re born, they are grown and then they get sold and then they die usually like nine times out of 10, right? Like it’s, it’s not often that an intern, like I say, all goes well and the integration goes, well, some spectrum of results.
Right. But this is a result where I think you, you guys have a company that’s two important. To let die, right? Like if you had sold, I don’t know what, you know, your fangs or whoever was like, I’m sure I could see any number of massive tech company wanting this to be a part of their data set or part of their like social, like aspect of whatever.
It’s just, I could see a plugging into a lot of things, but you know, to get Google’s exciting acquisition today and not saying you guys. Talking to Google or not, but as an example, like their exciting acquisition today is tomorrow is like, you know, happy trails, blog posts, right. That actually a good name for the, the shutting down AllTrails, acquisition at Google blogposts.
But, but the, you know, and this is a, this is a path where, you know, people who are passionate about the mission, the employees and the users, like can kind of, you know, get that exit that people are looking for. But without like jeopardizing. Thing that’s important. And like, maybe this is very hippie, right?
But like, I think there is some aspect of companies that’s beyond like the capital value and beyond like, even like the culture, but like actually achieving the mission and, and making that change in the world or providing that service. That’s, that’s, that’s more important than, you know, Hypergrowth or whatever.
And look, I mean, we should get into talking about now, like posts around, but it sounds like you guys are in hyper-growth anyway. Right. So it didn’t, it’s not like it’s, it’s this false dichotomy of right. Like either you’re like raising for venture and you’re like going at it really hard or
Like you’re a lifestyle business or, you know, whatever.
And it’s just like, Maybe, whereas maybe us like lampooning, this straw man of a false narrative has like most of the talking about this to like make that is the, the, the totality of the false dichotomy is us talking about it. But I really think this is a great example of like one of those like interesting, you know, outcomes and, and stories.
So it tell us about what’s happening now.
I appreciate you sharing that specifically because even in researching it, I listened to a couple of your other interviews.
I still assume that that the.
A pretty big primary chunk that, that went into the balance sheet of the company and then it accelerated it from there. So it’s an even more interesting story to me that that raise was mostly secondary.
So from the $3 million seed way back in, whatever it was 20 12, 20 13, it really has been an almost bootstrapped company and becoming what it is today on.
Little capital is really incredible and it really kind of speaks to consumer subscription space and, and how you can operate and go big without spending a ton of money.
If you do it right. If you don’t, if you don’t just plug into Instagram and blow $5 million of VC money acquiring the wrong users, if you actually talk to them and build a good product and everything else. but I did
Well, and I was just stay on top of not only that at the first board meeting that we had with. I, I walked in and I said, Hey, you know, this is great high five super-stoked, we’re also, I think we should donate 1% of our revenue to environmental causes. I know you guys just shelled out a whole lot of money, but would that be okay?
And to their credit, they’re like Yeah, let’s do it. Let’s do it. And you know, one of the first things we did post-transaction was signing up for 1% for the planet, you know, like there there’s totally a different path here. I didn’t realize it. And I think it’s cool for people.
I don’t know. I, I wish I heard this earlier in my career. Like there are, like you said, like there’s not a dichotomy, like there’s so many different ways to do this. I think we have. Fetishizing almost, or like putting on a pedestal this whole like massive VC round kind of stuff, you know, and there’s a time and a place for it, for sure.
But like, that’s not the success metric in and of itself, like more often than not, especially for earlier companies, the death knell. And so I think that, I’m always, you know, I get, I get hit up by people, you know, for whatever I’ll all the time talking about this kind of stuff. And so I was like, dude, if you can boot shop, if you can control your own destiny, like do it, you know, find right partners that are gonna unlock growth and everything else.
Don’t fall, don’t fall victim to that. Like, just that story that you think is like the classic Silicon valley startup story, which is you go out, you raise a big round and you have an IPO. It never works. It never works that way
Who would do that?
To too many man.
We’re running out of time. I do want to know. So you’re talking about like doubling and so I’m guessing like the pandemic, like we’ve seen across the ecosystem has been really, especially, I can imagine there’s two aspects to it, right? Like one your digital service.
And then secondly, like you’re very good compatible with like, social distancing. So did you like think you would be having this conversation for whatever four years after the spectrum, deal like doubling every head count every year? Cause that’s typically not what private equity companies growth rates look like.
I know. No, it was, I mean, so I’ll preface this by saying we were incredibly fortunate during COVID and sometimes you just get lucky. Sometimes you get like, there’s a ton of great companies out there that just like how to pull sales reps out of the field, or we’re an equip for like the supply chain issues or whatever it was.
Right. Like, Well, like you said, we’re digital first company. we, we already, we had a somewhat distributed workforce, so we already like using zoom and slack and going fully remote. Like we, we saw no, no drop in productivity. Now granted like when, when the world shut down mid-March that was a little bit scary.
But we knew it would be temporary. I, you know how long no one really knew. Bye bye. Mid April, we were going to our board and saying like, look like, I know things look a little bleak right now. Like the, the machine has fully ground to a hall, but we think actually like this is going to be an insane accelerant.
Once things open back up, there’s nothing to do. Like you said, it lends itself perfectly to social distancing. You know, people who can’t travel anymore. Like, all right, we’re going to explore our local state parks now, you know, like we’ll scratch that. It’s that way I got three kids and you know, school is canceled and obviously, you know, summer camps forget.
What are we going to do? What are we going to do with these kids? And it’s like, we’re going to run them ragged on the trail, you know, every weekend we’re just going on the trail and we’re running them ragged and
There’s a good ad campaign in there. Just
Totally right. And so,
Sleeping kids in the back of a Subaru Forester and it’s like,
Yes, exactly. So, I mean, you know, we made, we did make a big strategic decision, to get in front of it and, and start hiring like crazy, and just make, you know, make a play, make a play. And, and again, Sometimes you get lucky. you know, that works, that works all these companies around us, that we were never able to like really poach from or whatever.
Something like we’re able to go grab their talent. Like not just from people who are like, oh, but people were actively working there who were just like, I don’t want to do this with my life anymore. I like spending time outside. I had the number of people, the number of inbound applicants that like write in their cover letter.
I was looking at which apps I use the most. And I just started applying to those jobs. You know, I think that there really is. It’s like really. Great. And I applaud it and I love it. And I hope it never stops people like taking more agency and control over their career and not just like reactively, you know, just doing whatever leftovers
Yeah. I mean, the geographic unlock of remote, I think is a big part of that. Right. Cause suddenly like you’re, you can just literally go on your phone and pretty probably today, nine times out of 10, you’re going to be able to work for that company depending on your like, you know, locale or like time
It wasn’t that way two years ago,
Not at all, not at all. Exactly. So, a lot changed. A lot has changed in this time. With all of that, with the big accelerant they were seeing on the usability side through 2020, there is, I think David, you had asked this like pre pre-show, you know: there’s two big questions hanging over our business as we went into 2021.
One is, are the registered users who we got last year during COVID are they going to convert to pro like our conversion to pro happens over time? We look at a lot of stuff through a cohorted basis, and it goes up and to the right. It will take years for some users across the line to go pro, but it’s great.
It just keeps going up. So, are the folks who signed up when there was nothing else to do, are they ever going to convert to pro or not? The other big question is: all the folks who converted to pro in the height of the pandemic in 2020, once the world opens up, are they going to retain? Or, are we going to have the bottom drop out from under us?
These were two questions hanging over our heads. We have a seasonal business, it follows the sun pretty much. So, as we headed into May, June, July of this year, thankfully that the answer for both was a resounding “yes.” The folks who signed up last year are converting at a higher rate than normal.
The folks who subscribed are retaining at higher rates than normal, too. And I think it’s kind of more of a testament to how the zeitgeists has changed a little bit post pandemic. Being outside just makes people feel good. I guess it’s that simple. It’s not very complicated.
You feel better when you spend time outside, and people are just incorporating it into their regular routines.
Yeah. It’s interesting. For positives and negatives, I think you came up three cherries, right? It just really lined up, and then it’s continued. You’re talking about the hiring thing, too. Like a lot of habits changed during COVID, and I don’t think anything will necessarily go back. Especially if people have found a new, happier, maximum for their lives. You guys are part of that. That’s great. and that seems like, I dunno, we don’t have total good analytic quantitative data on this, but it doesn’t seem like the whole boosts from last year totally collapsed.
It seems like it just was like an accelerate, and I think other industries would sort of back that up.
Yep. Well, we’re coming up on time. Is there anything else I should’ve asked you?
No, this was fun.
You guys are probably hiring, right?
We’re hiring like crazy right now. Yeah, absolutely.
There you go.
Any particular roles you want to shout out?
We’re always starving for great engineering talent. Android, iOS, front end, back end dev ops, security, all of it. PMs, product designers, mapping designers, customer support, the full gamut. The entire company, every department is hiring right now.
Well, it sounds like a really fun company to work for. We’ll put links to your job page and to your personal LinkedIn, and a few other places in the show notes, but this was really fun chatting with you today, Ron. Thank you so much for taking the time.
My pleasure guys. Thanks for having me. This was fun.