Transcription
What does it take to build a multi-million dollar app? Most founders think the answer is to raise venture funding, build a perfect product, and spend massively on ads. But Brett and Zach did the exact opposite. They bootstrapped, launched early, spent zero in paid ads, and still hit 6.7 million in ARR before selling to Quizlet. This is their playbook.
The biggest mistake many early stage founders make is waiting to ship. They wait for the perfect feature set. They wait for the perfect design. Brett and Zach launched Coconote with missing features and plenty of rough edges, but they put a price tag on it from day one. And that decision changed everything.
I would say one of the things that we did really, really well in hindsight is get momentum as soon as possible. So we had a free trial from day one, but we were in effect charging from day one. There's a great quote by I think Sam Alman, right, which is momentum is like oxygen for a startup. So, you want to get as much momentum as soon as possible. You just feed off of that momentum and and it lets you put more and more energy and more and more cash if you need to into the company to keep it growing. Revenue is the ultimate validation. It gives you the oxygen to keep building.
But to get that revenue without paid ads, they had to master organic growth. If you want to grow via social media, most people assume the best option is to hire influencers with huge followings. But Zach quickly figured out that was the wrong approach for coconut. If you reach out to a content creator and their email is, you know, it's at sunsetaggency.com or something, any agency sounding, you're too late. Those agencies exist to eliminate the alpha that you are trying to create. Okay? So, they are almost always going to take more than they give in terms of the value that they provide to the company. If they have a Gmail in their bio and they have, you know, five 10K followers, good engagement, that's great. That's a really nice sweet spot. We know whenever social media switched over from a follower graph to an interest graph and with the for you page and algorithmic distribution, the number of followers you have matters less and less, right? The quality of the content you create matters a ton. The algorithm provides distribution. Now, you don't need to buy an audience. You need to buy great content.
But there's a catch. Views don't always correlate with revenue. One of Coconut's videos got 41 million views and 4 and a half million likes. It was a massive viral hit, but it drove almost zero revenue. Why? I think it goes to framing your product as a novel toy and not a solution to a problem. So, we were experimenting with something called PDFtobrain.com. So you can, you know, picture this as, hey, I have this really long PDF and I don't want to read it or there's this really long video or lecture recording, whatever it may be, and I want to consume it in a way that is, you know, more familiar to me. And so we put a voice over with a background kind of Minecraft parkour video. True brain rot. It gets roasted online, but people absolutely loved it. But one of the things that we learned is that that is a toy and it's not something that people are going to pay for. I think at a high level, you want to make sure that your product is seen as a solution to an existing problem. And so you want content that is more identity focused, building brand affinity within a certain audience or market and or shows your product as a solution to a problem. And those broadly speaking are what we see the most the best conversion with. Every piece of content should answer what problem does it solve, not is this cool?
And once you know your product is a solution, the next question is how do you talk about it? A lot of founders agonize over positioning. They hire consultants, run workshops, brainstorm for weeks. Zach's approach was much simpler. He just asked his users one question. One of the best things that we did, we just asked our customers, "How would you describe Cocoonote?" And a great majority of them, it was shocking how consistent this was. They use Coconut to never miss a key detail. And that is exactly what we put in the first App Store preview screen. And so I think one of the cool things that we did with Coconut that I had never done in the past is listen to how your customers describe your product and then say that back to them. I love that. Never miss a key detail pulled straight from user interviews and put right on an App Store screenshot.
And that clarity about value also gave them the confidence to charge a premium price. Coconut targets college students, a demographic famously reluctant to pay for software. So you'd think they price it cheap. Instead, they launched at $99 a year and tested even higher prices. The college student archetype, I would say, didn't really like get to us. Like we didn't want that to limit us from charging a lot of money. like we wanted to be a premium product and be seen as a premium product. I think part of like the price too is we want to be seen as premium so that we also are seen as as reliable. There's a huge amount of trust you have to gain to get someone to like stop writing their notes and instead trust that you will like take care of it because they're going to have to be, you know, take an exam on it either way. And I think that the premium feeling helps with that to to believe that we're not going to lose their recording. One of our early experiments, like we launched at $99.99, but we one of our early tests was raising it to 129 and we saw the the magical like more users and more revenues uh at the same time. And so that's where we've been for most of it. Higher prices don't just mean more revenue, they signal higher quality.
But to get users to experience that quality, you have to get out of their way during onboarding. Coconut was seeing a 10% drop off right at the start of their onboarding. The culprit, a login screen. I think that there's kind of like a like a meta at this point for consumer apps of have a long onboarding and then hit them with a hard payw wall or basically get someone to start a trial within the first session, honestly, if not 24 hours. And we ran a test trying to basically like double the length. I think our onboarding is 15 screens or something. Really works. Like it really works to get people a bit more invested into what they're doing and feel like it's more personalized. Show them some social proof and it increased our trial start by 16%. Which we already felt like it was pretty good. What's funny is like as an engineer whenever you start a new product you kind of like build the login screen first and because you kind of need it right to start playing around with things and then it ends up staying there throughout the rest of the the product but one of the nice things about being like there's not always a lot of nice things about being in Apple and Google's walls but uh one of the nice things is you actually don't really need to create an account to make a purchase because you're already signed into your Apple or Google account. So I think the biggest win that we had was moving login to after the payw wall basically at the end of onboarding. I think we were seeing like 10% drop off by having login being the very first screen. Login can wait. Value comes first.
But once a user gets all the way through onboarding and on your free trial, the work still isn't done. According to Revenue Cat's latest report, the median app sees just 31% of trials turned into subscribers. A small bump in converted trials can make a meaningful difference in revenue. So Brett and Zach set out to improve that metric. We wanted to try some cancellation flows there on our website. And there's like the standard asking questions about why they're cancelling, things like that. And we were able to retain like 25% of people from cancelling, which we felt like was pretty big. And to do that, we tried three things. One of them is like your standard discount offers. you get 30% off if you stay or something like that. Another one is pausing. So, because we have students as our users, they come May or June, they don't want they don't want to keep paying over the summer. And so, we thought we could try pausing for 3 months. And then the last one was trial extensions. And this is one that I haven't seen that much, but basically, if you're on a free trial and you go to cancel, then we basically say, do you need do you just need more time? And offer them seven more days. And that was the most successful one by far. And it really keeps people on that autorenew. When someone tries to cancel a trial, give them more time, not a lower price. Time preserves value. Discounts erode it.
So to recap, launch early and charge from day one. Hire creators, not influencers. Frame your product as a solution. Let your customers write your copy. Price with conviction. kill friction before the payw wall and extend trials instead of discounting them. There's a lot more in the full episode, including how they marketed to moms instead of students. Be sure to check that out. And if you enjoyed this, subscribe so you don't miss the next one.