A (2:41)

So before we get into 2.0, I did want to dig into that, that first phase because there are still a lot of buyers in the market and, and not that they're going to ignore the signs of a pump and dump, not that they're only going to buy crappy apps or whatever. There's a lot of players in the market who are using Blue Throne's previous strategy of buying a lot of apps that are doing decent revenue and building that kind of portfolio, which now Blue Throne is not interested in, but there's a lot of players in the market who do. So before we get into the new strategy, what kind of apps were you looking for during that time? And like, what, what were the signals of a decent acquisition? What signals? Like, you know, said, hey, don't buy this app. Because, you know, a lot of people listening to this podcast, maybe they spun up a side project and hey, it's doing, you know, 20K in MRR and maybe they want to flip it. Like, what does that look like?

B (3:31)

Yeah. So I would never push someone away from flipping it at the early stage. It's definitely doable. And the app market today in terms of buyers and sellers is in a very liquid position. There are lots of sellers and there are lots of buyers. So if you do want to sell, you'll probably find the right price point. Now, when we were doing the strategy, a lot of things we were looking for were financial based. So we were looking for like strong EBITDA and strong revenue. And we were less concerned with the core app metrics, things like the retention, the churn, conversion to paying, etc. Okay, and you're looking at me and you're smiling because you're like, that sounds kind of stupid. And we realized this the hard way because we saw the apps as purely financial assets back then because we were looking at shallow products, like, for example, a flashlight app.

A (4:09)

Right.

B (4:10)

This is what led us to the next step. But essentially back in the day, we were viewing them more as financial products. And I think a lot of buyers at that, that price point think of apps as financial assets that deliver returns over X period of time.

A (4:22)

Yeah. So in that case, you're probably looking more for organic acquisition. And when you say EBITDA earnings for.

B (4:28)

Interest, tax, depreciation and amortization, I forget.

A (4:31)

All the, all the parts of the long acronym. So essentially, if you're spending 40k a month on user acquisition and you're making 40k a month, you have zero EBITDA. You're not a good financial asset. So what y' all were looking at was apps that were great at aso. They had some kind of organic growth mechanism that we're just spinning off cash. So if that's so if you've built a side project app and you're making 20k a month in MRR and you don't have a bunch of expenses, that is attractive as a financial asset.

B (5:03)

Literally. Yeah, it's exactly what you just described there. We should also kind of identify that the time period we're talking about, which is kind of three to four years ago, the, this whole trend of doing crazy organic on TikTok didn't exist. So when we say TikTok we're really talking about ASO keywords. And if you picture it, it's really those apps that were the title. So the apps that were called Flashlight app or the apps that were called QR Code Scanner, really trying to maximize that aso.

A (5:27)

Right. And these days a lot of people talk about organic TikTok as if it's free, but they're actually paying a ton of creators. So similarly, if you're making 20k a month in MRR and you are spending 20k a month on organ organic Tic Tac or that's your full time job, it's like you're just churning out assets. If you're going to sell that to somebody with this more kind of financial asset approach, the buyer is going to say, oh well, wait, you know, 40 hours a week of a great marketer's time, you know, creating these assets that go viral on TikTok or you know, whatever kind of organic motion that you have. If it's a high either cost because you're paying creators or a high time cost, acquirers are generally going to look at that as a cost basis and not look at that kind of an app as a financial asset. Right?

B (6:20)

Correct. I think us in the industry labeling this TikTok strategy as organic is very misleading. And even though you could pay $5 for a single UGC video that shows off your app with a nice CTA at the end and you may as well get a million 2 million views which may convert into a a 10% conversion rate and you kind of get some downloads from that. That being said, the time invested to get to that point is significant. And I'm talking from experience. We recently built this UGC machine at Blue Throne. It took us like six Months to get like our first viral video. And that's not one person's time, that's like multiple people across multiple disciplines doing the research, doing execution. So there is a cost associated to this organic. But like all great mechanisms within the app business, you get better over time and you optimize, you're able to hit those targets faster with less resources as you get better for sure.

A (7:09)

So then what would your advice be to somebody in that position? Either they're just getting started and they're thinking, hey, I'd love to build this app and exit it in 12 months. I mean, I see this on Twitter all the time. Like I'm going to build this app and I'm going to sell it for 100k in a year. What would your advice be to a founder like that today? To kind of optimize that for a meaningful acquisition.

B (7:32)

So if you're trying to optimize for a meaningful acquisition, let's say within a 12 month time frame, it's completely doable and we see it the whole time. I think what you have to be is an absolutely killer marketer. It's not about your dev skills. And we talked about this over lunch on Friday, right? In a time when anyone can build and the barriers to build are so low because of AI helping us here, the real differentiators are distribution and that's why we're seeing the people like the app mafia guys and also a ton of other kind of people who don't make the spotlight as much. But really amazing marketers and distributors scaling the apps very, very quickly through TikTok, whether it's founder led content, so it's them telling their story, whether it's them interacting really healthily with influencers in their niche. Let's take an example. Let's say you've got a kind of Christian religion based app and you connect with the Christian religious influencers in that niche and you build relationships with them and they spin out content for you that can just shoot you up the charts very quickly as well. And it's actually these guys that we're seeing get those exits within 12 to 18 months. And from the buyer's perspective, like I think if I think about blue throwing perspective here, we will always have concerns that an app that's only been around for 12 to 18 months has less historical data to put a value on top of it.

A (8:45)

Right?

B (8:45)

Because when you're valuing a business, you're looking at past performance. That being said, there are ways to do it because of the beauty of apps which is you can measure retention and you can measure churn and you can measure repeated customers and you can measure conversion of free to paying users. So you, so you can pretty accurately predict how the app's going to do as long as you have maybe six to nine months of data from that app.

A (9:04)

What would be the red flags then that you would advise folks to try and optimize away from that? If you're thinking, okay, I see this app, they sprung up from nothing, they're doing 50k in MRR. But when you're doing due diligence, what are the red flags you're looking for that say, oh, this is, this is either one, a much lower multiple that we're willing to pay or to just like not an acquisition anybody would want to do.

B (9:31)

It's a really good question. Let's think about acquisition multiples on like a spectrum. For those who aren't aware, a multiple is a number you'll apply to your annual revenue which will give you the valuation and you can apply it to your revenue or your EBITDA. But go look that up on YouTube and you'll learn a lot more. Essentially multiples, we can kind of view it on a, on a spectrum. And at the lower end of the spectrum you've got apps that are primarily doing revenue through advertising within the app. Right. It's not very predictable. As a buyer, I cannot predict that into the future. It also depends on your DAO or mao, so it's a little bit hard to put a true value on. It also depends the demographic of your users because your ads are more valuable to tier 1 based users like in the US compared to tier 3 in India, for example.

A (10:12)

Right.

B (10:13)

As you move towards the middle of the spectrum, you've got ads that are monetizing through ads and IAPs, which is in app purchases or one time purchases now in app purchases are great and I'm sure we'll get onto this in a minute, but they are a little bit dangerous when it comes to valuing your app because it's not recurring revenue. It doesn't hit that ARR definition. Now on the far right of the spectrum, to get the biggest valuation possible, you're looking at apps that are pretty much 100% recurring revenue. So subscription based apps. And why is that? It's because as a buyer your revenue is predictable. If, If I have 12 months of data of your app, I know how many users are going to resubscribe when their yearly or monthly subscription is over. So I can predict the amount of money that your app is going to pull in, into the future, which makes it really easy, whether it's me or anyone else really, to basically value the app and how much money it's going to generate.

A (11:03)

And then you do that against the expenses generally. So you're not. And I think that's something a lot of people get mixed up about when they're thinking, oh, my app's worth hundreds of thousands of dollars. And and then, you know, to your point earlier, if you're an AI app and you're spending like 50% of gross revenue on your AI costs, then then you're going to get valued on the remaining 50%. But if you're spending 50% on AI costs and you're spending 25% on marketing and you're spending 20% on like salaries that would need to continue in the business as an attractive acquisition, it's, it's looking less and less attractive as those costs go up higher and higher. And then the other thing I'll say, and I was just tweeting about this yesterday, is that what most people in our industry call MRR and RR are not actually MRR and ARR. So I'll get on my soapbox for one sec and say monthly recurring revenue. Annual recurring revenue. You know, in revenue Cat, we have this great chart now and then I've been lobbying to create some additional charts around this, is that, you know, once somebody's turned off that auto renew very early in the in the cycle, and we have some data at RevenueCat that actually shows the highest month of people turning off auto renew in an annual subscription is actually the first month. And so you can get pretty predictive of what revenue is actually going to recur if you know that first month of people turning it off and then fit the curve. And so when you look at your dashboard and it says 100k in MRR or a million dollars in ARR, it's not ARR, it's ARR. And then to get to ARR, you really need to discount by the known churn stats and whether that's predicting into the future with that first month or whether that's you have a year or two of data where you can look back and see what those cohorts are retaining. Like you need to discount that by the known churn or even the estimated churn to get a true ARR and a true mrr. Because again, I just think it's in consumer where the, you know, median retention of an annual plan is like 35%. It's not air, it's just not.

B (13:27)

That brings me on to like a really interesting point. If we draw this back to the kind of valuation topic which is so often you get a founder come and say, hey, I've got X amount of subscribers on the yearly subscription. And, and it's recurring because it's yearly. But the killer question is like, how many people are going to come back and pay at the end of that time period? And if your app has not been around for 12 months, you cannot tell me your resubscriber rate. You just can't.

A (13:50)

But you can estimate it.

B (13:51)

You can estimate it, but you can't tell me for a fact how many users are actually going to come back and pay that money again.

A (13:57)

Yeah, totally. So a high churn rate would be one of those red flags in.

B (14:01)

Yeah, high churn rate would be one of those red flags. Let's do four more and let's just kind of list them off. So listeners have like a, a five point checklist, right? So top one is churn rate because that's where your subscription revenue is coming. And it, the churn rate kind of dictates how stable that revenue is. It's also a great indicator of like how effective your product solves the problem it set out to solve, which is awesome. Then obviously your whole CAC to LTV ratios are like super, super important. Is the way you're buying traffic profitable? Does it have viral potential or is it capped? So basically knowing where the tip of your curve is going to be and how far you've been able to push that in terms of budget, that's number two. Number three is basically talent, team composition. Who's in the team? You. You know, I'm seeing so many incredible solo founders who want to build stuff and basically hit that kind of million dollar exit within, within a year. Super doable. We've seen it happen time and time again. A lot of deals that we've been a part of. However, there can be some confusion when people say, hey, I'm a solo founder, amazing. But how many consultants are using, how many outsourcers are using completely fine to use them? Everyone does. And it's a really cost effective way of scaling up your business, but just great to be honest about it. Hey, I've got X number of devs in, I don't know, Brazil, Turkey or India. And I've got a marketing guy in California. Just so you know that even though you are a solo founder and it's just your equity, there are other players involved and the buyer will need to account for that. That's number three. Number four is all this research around the kind of category you're playing in. It's a very different app. Whether it's playing in education, fitness, photo and editing, or if it is indeed like a QR code scanner. The competition matters. How well funded is the competition? How aggressive is the competition on ua, for example. So that's super, super important. And the fifth point I will say has to be whether you've raised money or not, if you've raised money from VCs, then your valuation is going to be inflated because you have to keep your VCs happy. If you haven't raised money from VCs and maybe you're bootstrapped or you've done a friends and family round, the power is all yours. You can sell at a lower valuation, but you're keeping a lot more money to take home and start your next project with or retire your parents or buy a house or whatever it might be. But I want to throw this to you, David, because it's something we talk about a lot at Blue Throne, which is, do you think it makes sense for consumer apps to raise VC money in this day and age?

A (16:13)

I think it can. And I was actually thinking about that on the drive here of what kinds of apps are truly investable in 2025. And looking back at my six years at Revenue Cat, I've talked to hundreds of hundreds of founders and app practitioners and, you know, all sorts of folks in my office hours, at conferences, at, you know, random meetings, I end up getting booked. And I'll say I feel like I was a little naive six, five, four years ago around, you know, just how far different apps can be taken. And I think in 2025, we've kind of seen things play out enough to know the different scale opportunities and the true total addressable market of these apps. And so I think if you're playing in a niche where there is not a very being realistic about it, is it a niche where there's a high willingness to pay? Is it a niche that's growing or going down? Pickleball is a great example. I talked to a friend recently who was thinking about building an app in the pickleball space. It's like, oh, so hot right now getting in with pickleball influencers and that's all really hot. Well, pickleball seems to have already been kind of rounding the curve.

B (17:34)

He's better off chasing paddle instead. That's the new one.

A (17:37)

So maybe even two years ago it seemed like, oh, wow, maybe a pickleball app would be investable because it's growing, your TAM is expanding and that kind of stuff. But I'd say, you know, today we've seen that curve rounded and I think looking for those kind of trends as well, of like, realistically, how big is this market going to be? You know, what are your realistic LTVs in that market? And I think that the barrier for consumer apps to be investable in 2025 is just much higher. And I think we've seen some slowdown, especially in early investing in these kind of apps because of that. And so if you think you can build a category winner in a category that has meaningful ltv, meaningful growth, meaningful market, you know, so fitness apps, even, even mental health is tough these days because, like, you know, we saw calm and headspace kind of tap out and now they're going be more B2B. And like, even these big kind of category winners that, you know, three years ago seem like they were just going to keep growing. We've seen them kind of start the growth, start to slow and see them kind of reach saturation in some of those markets. So, yeah, it's tough these days. I don't know that on the spot I could come up with any kind of formula of what I think is investable or not. But taking some of those factors I just shared and thinking carefully about the potential for retention, and there's just so much that would go into me today saying, oh yeah, slam dunk, this is investable.

B (19:08)

It's a good question. I've been thinking about this a lot as well recently because, you know, we have so many founders come through our doors who have raised VC money, then regretted, and some who haven't raised but then want to. And I feel very strongly that I think at Precede and Seed, unless you're building something with uniquely defensible tech, forget about it. You just don't need it. Why? Because unlike most businesses that need VC money, they need the VC money to get going, to build, to create the product. But in consumer apps, the barrier to build is so low, you only need maybe 10, $15,000 to really get going. And that's, you know, if you're also, if you're paying someone to build it, right? So when do you need the extra money, like the cash injection to really shoot for the stars? It's after you've done your very smart marketing and you've got your initial batch of users and you have KPIs that tell you your app is an engine that works, that when it brings users in through the front door, it solves their problem and pushes revenue out the other door. Until you've proved that and you're ready to put millions into your marketing machine, you don't need it. Forget it.

A (20:01)

Or to your point earlier, if you have something you think you can build truly defensible technology, then maybe raising earlier does make sense. If there's a clear signal that if we build this, it will make sense, and we can't build this without a certain amount of money. Those would be the more traditional big swing. Early C players. True.

B (20:22)

How many apps can you think of that needed millions just to get going?

A (20:27)

Calais is a great example, actually. My respect for that team has grown. While I think for a lot of people in this space, their respect for them has diminished as they released the course and they've been doing all these shirtless videos and stuff like that. Clearly they're young and everything, but if you look at what they did, they did start super scrappy. And this is why early on, I really was very dismissive of them because I opened the app and it was a really crappy app, but they took that crappy app that didn't actually work, that didn't do what they said it was doing. I mean, honestly. And this is again, why I was dismissive of them early on, it's like it doesn't do what they say it does, and yet they're marketing it as this amazing solution. But to their credit, they have since actually built out that tech. So to your point, maybe you build a painted door app where you prove out that people are willing to pay for this, and then you go build it and that can work. But I think there aren't a ton of categories that you can do that in where that the app that doesn't work will actually sell. I mean, they were selling a lot of, like, hopes and dreams and promises. Yeah.

B (21:42)

But they kind of. They double down on something we said, you know, 10 minutes ago, which is distribution owns the game right now. And these guys, you know, Alex, Blake, Zach, they're killer distributors. I've got, like, a kind of bone to pick here, because what they've done is insane.

A (21:54)

Yeah.

B (21:54)

But every time they jump on a podcast or an interview, they talk to someone who's from, like, the kind of success sphere or a kind of growth marketer. I would love to get, like, Alex and Zach, like, onto an app podcast like this so we can push them on things like paywalls, A B testing, product depth, mechanics, etc. In fact, let's call them out Right now, I think we should do that. So Zach and Alex, you've both got my phone number. Because we've spoken in the past, I challenge you to come here and jump on the podcast with me and David. We're going to push you on your actual app. Mechanics and performance flights are on me. Between Blue Throw and a revenuecat, we can probably cover it. I'd love to have you here and let's actually put you through your app knowledge and see what's going on there.

A (22:30)

I'd love it. And Blake too. Blake. Blake is also. Yeah, but anyways, what I was getting at with that is that I think there are cases where, where you're not going to be able to do those kind of painted door tests where you really have to actually build the product first. I think that's more rare, but I think there, there are plays where that might still make sense in 2020. I don't think for every possible use case, for every possible, I mean, I mean this is what's so cool about this space though is that like we're building things on these little supercomputers in people's pockets that can do such incredible things. And I feel like just over the last like five years, the broader industry is starting to wake up to just how much opportunity there still is in mobile and then the subscription monetization, unlocking that long term revenue and being able to pay that back. Where I do think starting today, category leading apps that are going to be billion dollar companies in the future can be built today. Some of them may be built like Kalai, where you build an app that doesn't work and hype it up really good and you're incredible at distribution. And then you figure it out. And again, where I was getting at earlier is like, Kalai is a fantastic app now and props to those guys. It's genuinely a great app. I watched Blake on a YouTube video with one of the success guys. He actually drops a lot of knowledge bombs in there in between the discussions of cocaine and all sorts of other stuff about what they're selling. And one of the more, I thought cogent things he described is that for people who are tracking calories, it's not all about being perfect in the calories. Even if you have, even if you log every food perfectly and everything else like that, calories can vary, people's metabolisms vary and all those kind of things. And so one of the things he said is like, by helping people just be more aware of their food intake, by taking pictures, by just the act of tracking whether it's accurate or not. He claims they're at like 90% accuracy with the camera. I still doubt that.

B (24:34)

I don't know about that.

A (24:36)

But he's right in that just the act of tracking your food is going to help a ton of people lose weight, get healthier, you know, be more aware of what they're putting in their body. And so I, I think that's fantastic. And hey, and props to them, they're selling for 30 bucks a year. You know, they're not charging 300 a year, they're not charging 50 bucks a month or something like that. The value that they're delivering compared to what they're charging, I think these days it's actually incredibly favorable. Like 30 bucks a year for the app I think is a great value. And I wouldn't be surprised to see them have better retention than MyFitnessPal or some of these other big apps that are charging way more money because it's like, ah, 30 bucks, 29.99, like it's not that much money to circle this all the way back around. I think there's opportunities to do it that way, but then I also think there's opportunities to build future category leading billion dollar apps that will require much more investment. And I don't think as an industry we should close our mind to that potential. Just because an app like Kali worked out the way it did, that's not going to be the norm and I don't think is the only way to do things. And so I do think that there are apps that will require investment to become the category leader.

B (25:50)

I think as we step strongly into this marketing and distribution first playbook for apps, we're going to see the CEO founder be a marketing guy and then we're going to see them hire or outsource their dev work because it's not that effective. I just want to make.

A (26:02)

But again, I think true for some segment of the market, for some segment of use cases, but I think we're going to see technology forward. Cto, ridiculously talented programmer, amazing technologist, first person who's going to build a category leading company as well. I think we're seeing this rise in that style and the app mafia is a great example of it. But I think it's one part of the market and I think they themselves are maybe a little over indexing on that being the playbook and the only thing that's going to work moving forward or like the way to build, I think that's one way to build. I Think that's one way that things are going to be done. So yes, I think we will see more of the kind of marketing led CEO, non technical led companies that are built that way. And maybe, you know, maybe historically that's only been 20% of the market and now it's going to be 30. But I don't think this is going to take over the whole market. I think it's going to continue to be a spectrum.

B (27:02)

Yeah, definitely a spectrum. And we see a lot of these technical first founders who were great coders, but then can apply the skill set of learning coding to all the different bits and bytes, whether it's optimizing UA or building out the infrastructure, optimizing that team. And what you just said really reminds me of a company we just bought in Brazil. It's like this incredible technical founder who is one of those jack of all trades that kind of learned through necessity how to do a bit of everything, how to do UA, how to build back end, front end, etc. And it just goes to show that if you can kind of garner that skill set and build something that people want. He, you know, he lives in Brazil and he walked away with like over $4 million because he didn't raise any VC money. He just built from the ground up from his bedroom. And within a year and I think six months of launching his app, he walked away with like $4 million. And the deal went through in like three months because there was no VCs to mess around with. It was like straight to his bank account. Crazy. And there are a lot of people like that. We see them, we see them all around.

A (27:54)

So let's circle all the way back around. We chased a bunch of rabbits, but we were talking about red flags for early acquisition. I wanted to throw one more in there. And if you're building that kind of app and you're thinking about an acquisition, a huge red flag is to try and juice numbers leading into an acquisition. So tell me about how, what you've seen and how bad that can be.

B (28:17)

We've seen this a couple of times where, you know, founders are getting prepared to sell. And so what they'll do is they'll try and pump revenue to make their numbers look really good. And what does that actually look like? What does that, what does that mean? Pump revenue or pump growth. So, so to pump revenue would be something like in your paywall, you optimize the UI and UX so that you're really pushing that lifetime subscription, which is, let's say $100 yeah, and your, your monthly is 50 and your weekly is 10. So suddenly you're, you're collecting those $100 much, much faster, which on your piano is going to really bump up your revenue and consequently bump up your profit or EBITDA as well. However, to the person who's about to acquire that app, they suddenly cannot monetize those users that you've just sold a lifetime subscription to. So you're actually kind of shooting yourself in the foot. We've seen it happen a couple of times. I understand why people do it. It just ends up like, you know, knocking down the negotiations further along the line, which is not great. You can also pump growth. Right. You can also really put your foot on the gas on marketing. We see that happen as well. That's not as bad because actually collects a lot of data for the acquirer and the seller as to how effective marketing is when you really try and push the budgets as high as you can go. And in fact, one of the first questions I'll ask when I'm getting to know a founder for the first time is I'll ask, what's your marketing budget? And they'll tell me, I don't know, 50k a month. And then my second follow up question is always, how high have you been able to push that? And if you're not pushing it, why aren't you pushing it? So knowing the answer to that is very important. There's a flip side to this where the founder can also optimize for profit. So let's say they're running at spending $50,000 on marketing month over month. They think about selling, so they're like, hey, I want to sell a profitable app because I'll get a better multiple. They cut marketing from 50 to 10. And once they cut marketing from 50 to 10, they still kind of run off of the cohorts they previously bought. But at some point the downloads are going to follow that drop as well. So it can be a problem as well. So I'd say it's. If I was to categorize for anyone listening, like what's more dangerous, optimizing for profit or revenue? I'd always say it's more dangerous to optimize for profit because you don't want to mess with your download stream. It's better to optimize for revenue.

A (30:20)

Yeah. And to, to that point, you know, if you're spending $1 million a month and on this podcast we've, we've talked a lot about paid acquisition and not getting over dependent on it, and maybe like ideally you're not, you know, spending every penny on marketing, but even if you don't have amazing retention, but you do have a decent product and let's say you're doing you know, 40% annual retention, which would be above median or even if you're doing median, like, or below, slightly below median at like 30% retention on your annual plans. If you're spending a million dollars a month this year, that's 300k a month of free cash flow next year. If you can do that million a month this year profitably or even break even. So if you're breaking even on a million dollars a month of marketing today and expanding and growing faster. And so this is to your point, like if you're optimizing toward revenue and you have decent retention, an acquirer is going to see that and see okay, so what, they're spending a million dollars a month break even as a just, even as just a financial instrument. If you know that that retention is going to be 30% ish. If you can predict that 300,000amonth in free cash flow next year, that's an attractive thing. And to your point also is that you at least see that that's possible to spend at that level and be at least break even if not profitable on that spend.

B (31:43)

I really agree with all your points and I think we should take two steps back and put everything in a box for people. Different acquirers look for different things and we can pretty much split them into three different acquirers. You have your strategics which are people within your niche or within the larger tech sphere that want your product for maybe its features or its user base. Let's give an example. Right? If you're building a dating app, a strategic buyer would be Tinder, Bumble, Match.com et cetera.

A (32:09)

A great example of strategic buyer just recently was Strava Buying run.

B (32:13)

Exactly. That's a great example. Right? They're buying it for the users, for the data, for the cross selling. That's one example. And by the way founders, if you're listening like you can often get a bigger multiple if you sell to strategics.

A (32:24)

And the team runner was incredible team. I know a lot of those folks.

B (32:27)

It can often be a great outcome. The only downside to those outcomes is they'll, they'll look for a pretty big earn out because they spot you as a talent and they want to keep you internally. So that's one second type of buyer is more of a private equity focused buyer who are basically looking for profits or ebitda. They want to see really, really great margins, these guys. The upside is there's a lot around. The downside is they're going to want you to stay on board because they don't have the team to manage your app. They need you to manage your app. And the other downside is they can optimize for like ebitda. So it might get a little bit messy not naming any names, but they generally like to cut the team. Then your third piece of the puzzle is these kind of like app acquirer is similar to Blue Throw and there's a bunch other in the industry. I'm not going to do them any favors and shout them out. Sorry, guys. But essentially people like us, we want to buy the app for its future growth potential and the benefits there is that the founder doesn't need to stay on for a super long period of time. It's often a very, very short handover, a lot of cash up front. So you kind of take the money and walk away. And companies like this will try and take that app to be a category leader and hold it there for as long as possible. The first deal we did was in was in the music entertainment space. It was a solo founder. We paid him basically seven figures, seven figure deal for an app he'd spent two years building and the deal was closed within two months. That was almost four years ago. We bought it at about 200k MAU and since then we added to the team, we hired a killer GM from Spotify actually to manage this music app. We grew the team from 5 to 15 people and we grew the MAU from 200k to almost 6 million today. And it's still pretty much top of the category. When I'm talking to a founder and they ask for a case study, I always give that one. But actually, because we're judged on our track record, we have to be very strict about the deals we do because one bad deal can kind of torpedo the whole company. So actually our track record is great for now, but with M and A and this kind of playbook, you know, one bad deal can really mess things up for good.

A (34:18)

So in that third category that you were just mentioning that you lumped Blue Throne into, there is a very wide spectrum. And so I'd say there is the Blue Throne 1.0 of buying a ton of apps, looking at more of financial instrument. So tell me about Blue Throne 2.0 though.

B (34:33)

So Blue Throne 2.0, it's a great question. Essentially we learned our lesson that buying this kind of Wide diverse portfolio of apps doesn't really work because you're buying financial instruments. And at the end of the day, we were apps guys and we knew apps and our team was made up of guys from mobile gaming, like myself, from ad tech and from consumer tech. So blue throwing 2.0 is really about finding apps that have found product market fit, that have a lot of organic traffic, which is a great signal for us because it means no one is being paid to download your app. They found it out of word of mouth or K factor or just searching for something on the app store themselves. And these product market fit apps have enabled themselves to rise to mid or top of their category by providing a deep product experience. And that solves the issue they set out to solve. That's the first thing. And we realized that if we acquired these and actually invested in them and the team, we could keep them as category leaders for as long as possible and really turn them into like standalone companies. And so all the apps we buy have like a significant brand image, they have really strong organic traffic, they have great retention, great resubscriber rates, and of course, like a killer founding team. Now sometimes the founding team wants to say, and that's great, we love that. We've had people stay with us for like three years. Sometimes they want to take their money, buy a house, buy a car, pay off their parents house and go. That's also fine with us. The whole deal structure is about finding what works for both parties. But that strategy we've been employing for about two and a half years now, and it means our portfolio is much smaller. We now have a portfolio of five apps. I saw your face. Yeah, it's a bit surprised that it's true it's only five apps, but each app is either a product leader in its category or on its way to be. It's a completely different strategy, but luckily it's working well for us.

A (36:07)

Now, I've talked to the founders of Blue Throne a few times over the years. And so I knew Blue Throne as the old strategy where there was like a hundred plus apps in the portfolio. And so when you told me that Friday and then when you told me again today, it is surprising because it's not what I remember and think of Blue Throne as, but it's obviously a whole different ball game. And I mean, personally, you know, if I were in the app acquisition space, this is the approach I would be more taking.

B (36:34)

Which Blue Throne 2 or Blue Throne 1?

A (36:36)

Blue Tone 2. Yeah.

B (36:37)

Can I ask you a question? If you could buy Any app. What would you buy?

A (36:40)

As David oh, that is a really good question. Off the top of my head, I would say my friend Ryan Jones is app flighty because it's just one of those kind of category leaders with so many opportunities. I don't know that 50 million would do it at this point. He's crushing it. But you know, high retention, you know, high willingness to pay. A lot of like ancillary opportunities in the travel space to partner with companies. So like there's obvious like future B2B plays. He's done almost no paid acquisitions. It's a very organic growth.

B (37:17)

I think my dream app is probably Opal, the Screen Time app, for a few reasons.

A (37:21)

One is, well, they raised VC though.

B (37:22)

They did raise vc, so I'll be paying a pretty penny for it. I don't know if I can afford it but. But I love this app because the design is incredible. It looks like it was built by Apple in Cupertino itself. The problem it's solving is super significant. Basically helping people stay off their phones and they've unlocked this crazy LTV. You know what they charge yearly? 12120 bucks per year. And the whole logic, I've listened to a bunch of interviews by Kenneth, the founder is super smart. The whole logic is they target knowledge workers and they say if I can reduce your screen time by 50% a week, you'll be making more money in your, in your probably high paying job. And that more money you're making is well worth more than the 120 bucks a year you're going to be spending on my app. So you're better off spending the money and it works. It's a fantastic business that solves a real problem. So Kenneth, if you're interested, come find me. But I'm also not sure I can afford you. But yeah, shout out.

A (38:13)

Well, I love Opal as well. I've had Kenneth on the podcast, actually he just emailed me this morning about our app growth annual conference. So this is not to take away from Opal, but let's play it out. Some of the red flags, some of the challenges in the category because Opal and other apps have done well, there's now a proliferation of these apps and so there's a ton of competition in the space. How have you been thinking about a space like screen time management? I assume I'm going to put words in your mouth here, but I assume it's that, that even in these spaces there will be the kind of category winner. So that even if there are a Hundred apps doing similar things. If you can buy the category leader, they're going to continue to thrive irregardless of what the competition is. But you wouldn't want, based On Blue Throne 2.0's positioning, you wouldn't want to buy one of the hundred other apps to go compete with Opal. And you've probably looked at some of them because they're so clearly breaking away from the crowd as the category leader. Is that how you think about this?

B (39:20)

So you're a bit unlucky here because I actually did analysis on this the other week, so I'm going to hit you with some data here. Screen time is a really great category because if you go on Sense Tower and you do a cross section of downloads over time and you stack them, there's a great viewing way of doing this. On Sense Tower, you can see that not only is the category growing over time, which is great ever since Apple allowed you to use the API to build these apps, but what you can see is that if you cross section it by downloads, every time a new app enters the market, the whole market grows. And to me, as like an investor or a buyer, this tells me there are users that the market leader has not tapped into yet, that if a new entrance comes in and has a different value proposition or branding or appeal, they can actually capture the capture those users. So that's really interesting. And the same thing happens with revenue. If you cross section this category by revenue, you'll also see that every time a new company pops in and there's been, you know, one from YC and a couple of others, they're able to capture market share without taking it from Opel, even though Opal is clearly the category leader. So in this niche in particular, I would feel okay with buying something that isn't a category leader, because I think there's space for it to grow. You've also got to remember that screen time is like a pretty new category. Yeah, weather apps, QR code, scanners, they've been around for decades. Screen time has only been around for like less than 10 years, probably more like six since Apple got the API. Which brings me on to another topic of like, Sherlocking. You know, some might say, well, hey, Apple is providing the service organically on the phones anyway, so why would you pay $120? And to that I'd say, hey, if you offer a better experience with an improved ui, ux, maybe some social features, you've actually got space to grow. And that's been proven already.

A (40:54)

And I was laughing the camera would probably be focused on you during that answer. But I was sitting across from you laughing because as a parent I can tell you that their screen time functionality sucks. And I actually was just talking on Twitter with Kenneth, the founder of Opal. He said this publicly on Twitter that they're moving that direction and wanted to do a user interview with me of all the problems I have managing my family screen time with Apple's stuff. And that's the thing about Sherlocking is like Apple does create great products generally, but any one of their products is going to have so many holes in it and then specifically some of their products just aren't great and I would love their screen time product into that. There is a challenge there that as they make it better. And this is an interesting one. You know, I have a weather app and historically Apple's weather app has been crap. Well, they actually did invest quite a bit. They bought Dark sky and they invested a lot in the user experience and created a much better default experience Weather app. Now, did that, did that take away from the rest of the weather app market? I actually don't think it did. Like, I probably should sit down and do a much deeper analysis like you've done. But there is always a potential that they will improve the product over time and it could cut into the opportunity for that market to continue to grow the way it has. But historically that just has not been the case. Fitness. They came out with Fitness plus and it's bundled into the Apple One subscription. And yet we see Runna and Ladder and so many fitness apps like Zero to One since Apple launched Fitness plus doing incredibly well. So yeah, I don't think Sherlocking and Apple providing it at the system level or even as an add on like Fitness plus should dissuade you from playing in the category. In fact, maybe that's a sign that it's a good category to play in and you go create that better user experience and serve the different use cases that Apple's never going to serve. Absolutely.

B (42:52)

Apple. For them it's a question of focus and roi. And if they, the behemoth that they are, turn their attention to something that you're looking at, you're probably on the right track.

A (42:59)

Yeah, totally. All right, well, I did want to dive into another topic and we've done so many tangents, we're not even covered probably half the topics we were planning on covering today. But I did want to talk about increasing LTV and kind of breaking through some of the ceilings. It's something I've Been talking a ton about hybrid monetization. We've seen early leaders in the subscription space like Tinder, you know, find ways to better monetize through multi tier subscriptions, through consumables, through one time purchases. How do you think about the opportunities ahead? Because I think we're super early and I love that you come from gaming because I feel like gaming is really perpetually five or ten years ahead of the rest of the software makers. So how do you think about hybrid monetization and ways to increase ltv? Not just by increasing subscription price.

B (43:52)

Consumer apps on a subscription basis typically have maybe four price points, which is your weekly or monthly or yearly and your lifetime. And if you imagine a graph with your x and Y axis and a kind of steps or stairs going up to the middle, you're able to capture users willingness to spend four different points, the price point of your weekly, monthly, annual and lifetime. Now let me put a question to you app founders out there. Let's say you're charging 10 bucks for your monthly and you're charging 100 for your yearly, but you've got a user that's actually willing to spend 75. How do you capture that value? He's not going to pay 100. He might pay 10, but because he was willing to spend 75, you're missing $65 worth of value. Now gaming cracked this a long time ago because gaming works on this curve that shoots up to the right and to the top of the graph. Because gaming uses gacha mechanics. And in app purchases, one time purchases, for example. So if a gacha box costs you 99 cents and you're willing to spend $10, you'll make that purchase 10 times and the app has been able to capture all of the money you were willing to spend. So how can you capture this from consumer subscription apps? Well, the solution we came to on Friday, which is of no surprise to anyone I'm sure is introducing in app purchases, you know, one time purchases into your app. And let's give an example. There's an amazing app called Soundmap for example. Soundmap. I spoke to the founder a while back now, a great guy called Zibo. Soundmap is Pokemon Go for music. So you'll walk around your city using your phone and you'll find tracks in your city and you'll collect that music track, whether it's like a Drake song. And then you'll be able to trade that with someone else, maybe they've got a Metallica song and you can trade that. So there's peer to peer sharing there as well. Now they have, they have a subscription which, which is capturing the majority of the value of the users. But they also have consumables and power ups that for example, let you discover two times more songs in your area. So they're able to capture all the value of the user that they're willing to spend. And I think the issue here for a lot of consumer apps is that they don't all lend themselves to this kind of monetization. But the real unlock we've seen from Blue Throne's level talking to hundreds of app founders a month is the ones that can crack this generally can create deeper LTVs, which gives you way more breathing room on your CPI's and your marketing budget.

A (46:03)

Yeah, I think this is such an underexplored space so far in the non gaming app world. And you know, consumable IAP in some ways is probably the holy grail. And this is what we see with Tinder. And Tinder is a perfect example. One of the things we talked about over lunch was this famous graph from Ravi Mehta. Famous to me.

B (46:25)

I just think not everyone is as.

A (46:28)

Deep into this as you are. But it's looking at that willingness to, the number of users across the horizontal axis and then in the vertical axis that willingness to pay and amount, spend. And what's so beautiful about Tinder's model is that they have subscription tier, a lower subscription tier that can capture way more users at that lower price. And they have a mid tier subscription where it's a higher price but fewer users. And then they have the highest paid subscription tier which is going to be the highest LTV subscription but the lowest number of users. But then layered on top of those boxes is those consumables where you can just perfectly match that demand curve all the way up and down. And so that is optimal. But to your point, like not every app can find that mechanic. I would say look for it, like figure out if there's a way to do that. But if you don't, there's a ton of other hybrid monetization opportunities out there. And one that I think is still underexplored in subscription apps is ads. And even rewarded ads is something I've hardly seen in subscription apps. But it's one of those things where you know, maybe if you're a scanner app and you somebody's got zero willingness to pay, but they just need that one scan, maybe you do a rewarded ad and or you do an in app purchase, you know, three bucks Just for one scan and then they can move on with their life. Now for most apps and scanners are probably a good example of this. You probably are going to be a higher ltv, you know, charging them on a weekly subscription and certain amount of people forget or whatever. But if you can make those kinds of things work, these are the unlocks we're going to see. And then I'll be interviewing Michael Ribeiro from Conde Nast at AppGrowth annual next month. And this is something they're doing is, you know, bundling subscriptions across their products after somebody subscribes offering physical goods. Like there's, there's so many ways to build up those LTVs. Not just with consumables, not just with ads, not just with rewarded ads, not just with like there's, there's just so many ways to, to make that work. And then, you know, you know, to our earlier conversation about Strava and Runa, it seems like what they're doing. When Strava initially acquired Runa, I was like, oh, it makes so much sense. Like they're gonna, they bought a really amazing team, they're gonna like incorporate all these amazing running features into Strava. Oh yeah, brilliant. And then, you know, three, six months later you start seeing them do subscriptions that get access to both products and it's like, wait a minute, they're looking at this as a, as a portfolio play where they have run a standing on its own and bundle in Strava. And maybe I actually hadn't looked specifically whether they're doing that at a higher price point or just using it to acquire more subscribers because you're giving more value by giving them both. But I think there's just so many creative ways that we're going to be that this industry is going to grow over time by layering on different forms of monetization.

B (49:33)

Yeah. And let's try and distill that down into like one action item for like the app founders listening. I always try and do that because otherwise just so much data coming at them. The one action item is what's the easiest, lowest hanging fruit in order to use either rewarded ads or one time purchases in your app. The answer is just to build an economy. To introduce a soft currency, which is gaming slang for a way of building an economy that's not based around dollars. So it could be gems or flowers or whatever, whatever else it might be. Once you have the economy, you can then say, hey, here's a rewarded ad which if you Watch, you'll earn 10 coins. Or here's an option to buy 5 coins, 10 coins, 15 coins at different price points. And if you're not sure how to do this because it's unfamiliar to you, my best piece of advice would be a go and deconstruct the best mobile games. Raid Shadow Legends, the game I used to work with, or Candy Crush or you know, Match Royale or any of the supercell games. Figure out how they're doing it. And if you're still in the dark, there are plenty of great consultants who can help you build like a gaming economy into your app.

A (50:32)

Or look at, look at Tinder and you know, we had a podcast with a former Tinder employer where he went in depth about how they thought about layering on those consumables. So that's another good example. And there's, there's a growing number of apps that would be great examples to look at in this space. And another thing I would challenge folks on is there has been a big move, move to hard paywalls. And that can be a very effective way to monetize and to get that return on ad spend. But if you're trying to grow a category leading company and the TAM is huge, most apps that do that are probably going to need to have some kind of free tier. And Duolingo is a great example of this. They would never have become the company they became. And I mean you can even look at the difference between Duolingo and Babel. You know, Babel has been a hard paywall and Duolingo surpassed them even though Babel was older because they allowed people to come in. And then what do you see Duolingo doing now? They've layered on consumables, working harder at monetizing those users. They have ads now. A lot of their ads currently are for the subscription, but you could see them layering on nice branded ads. So Duolingo is actually another good example for founders to look at of like how they've managed to do that with streak freezes and things like that. Now some of Duolingo's mechanics are probably overplayed and probably not going to work for your app. I've had podcasts where we talk about that as well. It's exciting to me because I think there's just so many opportunities and I think we're going to see so much creativity and then I'm going to have fun on the podcast. I dissecting what all these different companies do over time to, to make things work. And like Ladder is a fun example. They recently started doing physical goods. And I think for them right now it's just kind of like a little side thing. And it's not like a revenue driver, but I could see that kind of thing for a fitness app selling, you know, doing an affiliate deal with Vora or, you know, one of these big fitness brands where they're selling those clothes inside the app. People who are into fitness are going to be buying those things anyway. Can you create an experience in the app where it makes it better and then you do a rev share with the brand or create your own brand of clothing that's as good or better than these other brands and doing that inside your app, I think there's just so many. I was talking to the founder recently about at what point are you going to sell a home gym bundle where you just go into Ladder and you're like, okay, I to want to join this team and the team's great, but like, ah, it's hard to find a bench at the gym and whatever. Like, can you sell them a $3,000 like home gym in a box? Right.

B (53:12)

That's a crazy ltv.

A (53:14)

Yeah, I mean, and that's the thing. It's like, you know, Ladder already has an incredible LTV at $130 a year. But I think there's so many opportunities when you're a category leader, which I think Ladder already is and is going to be even more so recognized as that category leader in the coming months and years. They have a high willingness to pay in a category that, you know, people are willing to spend thousands, even tens of thousands of dollars now as people are looking at longevity and optimizing their health, like it's a whole like, and this is another, like back to our point earlier, like, are you latching on to a trend that's growing or that's like tapping out? And that's one where they're latching onto a trend that already been growing tremendously and I think has room to continue growing a ton. And so then there's just so many opportunities for them and other apps like that to diversify monetization across all different kinds of things. Not just like, can I layer on this, you know, one time purchase like for Ladder, I think that might be a mistake. That might not be a great answer for them to try and like build mechanics around that and maybe alienate some of their hardcore users, whereas they have so many other opportunities. And so I think it's going to be really fun to see, see how the industry progresses in the coming months and years for sure.

B (54:26)

And a couple of things to throw on top of that. The first one is a piece of advice for founders, which is how to avoid quite a significant risk. So if you do implement a hard paywall and Apple finds out about this, there's the risk that they'll move your app from the free category to the paid, which will really mess with your aso if it's a super hard paywall. Yeah, yeah, if they, if they figure it out. So just like a word of warning there on that. One other thing to add is so when I was working at Plarium, the guys who made Raid Shadow Legends, which for those who don't know is a huge RPG kind of hero collection game that was doing about a billion a year in revenue at its peak. And one of my projects back there was to build the physical merchandise line for this game. And so we looked into the different types of customers and what they're willing to spend on and what their likes were. And the way we were analyzing it was not as an additional revenue stream, but how can I increase the LTV of these users using physical products? And it might be a mug for $6, it might be a T shirt for $20 or it might be like a super premium hoodie for $50. And I know that with my whales that are 2% of the user base, give or take, that are spending thousands of dollars on this game, I can then do this easy add on of like a premium product just to show off their fandom for the game and use that to actually influence my marketing spend because I'm actually increasing my LTVs there.

A (55:39)

That's really cool. I like that. There's just so much opportunity in this space to figure out ways to lever up and grow in so many different ways for sure.

B (55:48)

And I wanted to pull the conversation back to something else we were talking about on Friday, which is company strategy. We are seeing so many companies and founders that are building one app and they'll kind of have some luck with this maybe after a few failures. And this question we were kind of riffing on on Friday was like when does it make sense to go from a single app company to a multi app company? And if you do decide to go to a multi app company, should you buy or should you build anything to chuck onto that?

A (56:16)

Well, I mean, yeah, we talked about this a lot on Friday. Hard to summarize in a, in a bite sized podcast. So we're going to have to. I'll have to have you back on in the too distant future to cover the 20 other things we could talk about. But I think from my perspective, and then I definitely want to get you to tag on here, is that I do think a lot of founders don't fully understand why they were successful and maybe overestimate their ability to pull off a second app and run the playbook a second time. I mean, again, we're talking about the Cal AI guys, right? Their plan is to build a whole slew of apps. Now, if you have lots of shots at bat, which they're in a position now where they can take a lot more shots at bat, I think they're the kind of team and people who will have successes, but they're also going to have failure failures, probably very public failures along the way because of how publicly they're doing all of this. But if you expect to win every time, and you need a win to make it worth it, you might be better off doubling down on your existing app and continuing to grow. That versus thinking you can run that same playbook again and make it work again. I think the. The hindsight bias of, like, oh, I ran this playbook and it worked. I can run it again 10 more times. Probably not. Maybe, like, the unicorn folks out there will. But, yeah. What are your thoughts on, like. And, you know, you're. Another layer of this is, you know, if you've had some success, you go buy another app and run your playbook on the app that's already showing some product market fit. And how do y' all think about it at Blue Throne?

B (57:58)

So let's break it down into two questions. The first one is, should you go single app or multi app? And the second question is, if you go multi app, should you buy or should you build? So, starting from the first question, I would always tend to agree with you, which is stick with the thing that works. Because at the end of the day, the top five apps are making 400x more revenue than the bottom 25% of apps. And if you've hit that product market fit, it's a bit like flashing it in the pan. So you want to kind of hold on to it. Now, building again from that and trying to build a second app comes with very similar risks to the first app, and there's no guarantee you'll do it again. So which is why I would encourage a lot of founders out there to actually start exploring buying apps. And, yes, this does add competition to my industry. But that's fine. There's enough to go around. And here it's much easier to measure the ROI of your dollars spent and one of the frameworks we use at Blue Throne is really the ROI of a dollar. So if I have a current app, and I know that If I invest $1 into this app today, I'm going to get back, you know, $50 by month three and then $200 by month 12, whatever it might be. You have this data. When you're looking at buying another app that you want to apply your playbook to, you can say, hey, this app is going to cost me a million and the ROI I expect is going to be X, because I know their revenue is Y and their resubscribe rates are Z, et cetera, et cetera. You're then in a position to directly compare the ROI of that dollar to whether you spent a million more dollars on marketing your current app, because you should know that data. So as founders, you're probably in a much more powerful position than you realize to actually go and analyze other apps in the market, especially if you're looking at apps within your niche, because you can directly compare what's their retention, what's their churn, what's their price points, LTVs, et cetera. And you can do a like for, like, comparison. And there's so much supply in the market because AI is enabling developers to build and execute and publish faster. You'll probably be able to find stuff that's kind of interesting to you.

A (59:44)

Yeah, that's fascinating. I hadn't thought about it from that perspective. And this is one area, I think a lot of folks, especially who were early in the App Store, like, kind of my peers who are building apps in like 2010, 2015, and like today they're, you know, they're doing millions of dollars a year in revenue, whether it's ASO or something else, like having some kind of organic channel that's succeeding oftentimes is what helped propel those apps into the position that they are in today. So you want to really deeply understand that of, like the success of your current app and then looking at potentially buying another app. What you may be buying buying is somebody who also cracked that. And then you can layer on, you know, the paid. I mean, there's so many apps that do get to 10, 20, you know, 30k a month in revenue. You could probably buy them for not that much money. But they haven't even, you know, done a paywall test. They haven't done any paid marketing. And so, yeah, if you're a founder and you really good at paid marketing and viral TikTok or you know, how to work with influencers, and stuff like that. I think that is a really cool opportunity to, like, find some of those apps who have that traction and then double down on them.

B (60:55)

Absolutely. And there's supply, there's opportunity out there to do it. More people should.

A (60:59)

We need to wrap up, but I know you prepared a fun little quiz for me with some data you pulled over the weekend. So let's wrap it up with that because I think it'd be a lot of fun. Sure.

B (61:11)

So at Blue Throwing, we're talking to like over 100 founders a month. Like, it's crazy at this point. We've got quite a big team for it. So I went back into the CRM and I looked at the last 100 founder meetings we've had over the last two months and I calculated some stats. I'm going to throw your question, you tell me what you think. All right. Of the last 100 founder meetings, how many do you think we're building an AI note taking app?

A (61:31)

Yeah, I just saw somebody tweeting about this. I think it was don't go build AI note taking app. So I'm going to guess it's high, maybe 30%.

B (61:42)

Oh, it's not that high. It's nine. So close to 10%. Which, considering the number of categories out there, it's still pretty, pretty competitive.

A (61:50)

That's crazy.

B (61:51)

The next question maybe reveals a bit of a harrowing truth about our industry, but how many do you think were female founders?

A (61:58)

Not many. I do worry apps is turning into the next dropshipping and there's going to be a lot of whatever it is is like dropshipping. Bro, is the caricature for a reason. I'm going to say less than 10%.

B (62:18)

Yeah, it's two. And maybe that's a factor of a success bias thing as well, but it was only two, which I think we need to change, to be honest. All right, of the last 100 founder meetings, how many do you think successfully raised VC funding for their app?

A (62:33)

Well, I know you're going after bigger, more successful apps now. You're not just kind of spraying pray with it much. So probably had higher quality 100 founder meetings, but I'm going to go low on this one and say less than 40%.

B (62:51)

Yeah, it was pretty low. It was close to 20%.

A (62:54)

Yeah.

B (62:54)

But we are seeing more and more pop up these days.

A (62:57)

It's a time in the industry where a lot of apps were able to raise in 2021 when money was free. And so now's about the time they've, you know, Already cut the team, they've run out of cash. They're kind of looking for the kind of exit that Blue Thumb would provide versus like a strategic buyer or an IPO or something like that. So.

B (63:19)

And they're now like raising their head, right? They're now kind of out into the market. So we'll see them.

A (63:23)

Yeah.

B (63:23)

All right, last two for you. Of the last 100 founder meetings, how many were just solo founders with no full time team around them?

A (63:30)

Oh, I'm going to guess a ton. On this one, I'm going to go high over 50%.

B (63:34)

It wasn't that high, but it was, it was high. Compared to the other ones, it was 34%, which is, which is still quite a lot. A third of founders that we're speaking to are solo founders, which is pretty impressive, I think.

A (63:44)

Well, especially impressive given the criteria of who talk to you.

B (63:47)

Yeah, yeah, no, it's definitely the time to build solo. And the last one, I think because we're in the US I thought I'd chuck a US one. But how many were US based founders of the last 100?

A (63:56)

I want to go lower on this one. Like less than 30%.

B (64:00)

No, actually it was a little bit high. It was 45%.

A (64:02)

I did terrible.

B (64:03)

Yeah, I made it hard because out of 100. So if I did out of 10, it would have been easier. But I think the US just has all the tools you need to build these really great products.

A (64:11)

And there's a key reason, there's a.

B (64:13)

Key reason here, which if someone on listening is doing TikTok marketing, they're going to know exactly what I'm about to say, which is to smash it on TikTok, you have to have your TikTok account based in the US so naturally US founders almost have an advantage, really. So these guys are actually doing better compared to people around the world who have to figure out a kind of VPN and buy a SIM card and it gets very complicated.

A (64:34)

That's the most surprising stat of this whole conversation to me, just because I talked to so many founders all across the world and so many great founders coming out of Europe, Eastern Europe, Asia, India. I've been surprised at how global the app industry is, even though the US is the primary app market where users do spend most of their money. I mean, this may be kind of a bias in your travels and stuff, but at revenuecat, we've been looking at the data and Japan and South Korea are two of the largest markets in the world and combined are closing in on some of these Larger markets as well. So you have us, then China, then Japan and South Korea. And I think those markets, language barrier, culture barrier, everything else are a little underrepresented in the broader kind of subscription app ecosystem. US Events. You're not going to run into a lot of them because language barrier. Revenuecat. We recently did a thing in Japan and hired somebody in South Korea. Thriving ecosystems in those countries, but they are fairly isolated. So yeah, surprising to me. But maybe your stats are a little biased if we took the global kind of.

B (65:52)

It's definitely not like a global representation of the population. There's some sort of success bias here as well.

A (65:57)

But that was fun. So thanks for bringing the data and I think tossing it back and forth was insightful and kind of interesting. So thank you. But as we wrap up, you always give guests an opportunity to share anything you want to share. If you're hiring, looking for apps or anything else you kind of wanted to talk about as we wrap up.

B (66:13)

Sure. So Blue Throne, we're full steam ahead on looking for our next basically app to acquire and maintain its like market leader position. Our budgets range from 2 all the way up to 50 million to basically acquire the next big app. And if you're building and have scaled already and want to basically look for your exit and get cash in the bank having built for for many, many years, then feel free to reach out to me on LinkedIn. Josh Palag maybe we'll share my email in the show notes as well. But yeah, dude, thanks for having me.

A (66:39)

What's the, what's the minimum. You would say minimum annual revenue. You would consider probably about 500k. Okay.

B (66:46)

The minimum annual revenue we'd be kind of go for just because there are like costs involved in getting, you know, all those processes started and the acquisition has to be worth it. But the core driver is really that the performance of the app. Right. The KPI's internally and. And the talent of the founder behind it.

A (66:59)

Well, it's been a blast talking to you. Well, we'll have to hang out App growth annual in a few weeks.

B (67:03)

Dude, I can't wait. I'm going to be coming back to New York just for your event.

A (67:06)

Yeah. And I'll have to have you back on the podcast sometime, so thank you so much.

B (67:09)

Thank you so much, man.

A (67:12)

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