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

0:00So, this might be a contrarian opinion, but most like consumer apps that are sort of one or two person founded startups shouldn't raise VC. They don't need to. I know it's a popular topic of conversation, but I tend to think that institutional capital is really not designed very well for that stage. Hello, I'm your host David Bernard. My guest today is Greg Conn, co-founder and CEO of Ad Hoc Labs, makers of Burner and Dialed. On the podcast, I talk with Greg about knowing when to pivot, why most consumer apps shouldn't raise VC, and why making free trials optional

0:40outperformed making them the default. Hey, Greg, thanks so much for joining me on the podcast today. Hey, David, great to be here. I'm excited for this. Yeah, I've been really looking forward to this chat. you and I got a chance to catch up in LA a few weeks ago and talked about the business, talked about things you're working on and as as I often do have a conversation like that

1:01like I got to have Greg on the podcast. So here it is a few weeks later you're in Austin and we get to do this in person which is fun. It works out great. If although if we could have recorded that conversation that would have been good too. May maybe a little too deep for the podcast but yeah it was fun. Uh I did want to kick off talking through the story of Ad Hoc Labs, especially I love the early pivot and I think it's a

1:23lesson a lot of people can learn from. So yeah, tell tell me about the early days of Ad Hoc Labs. So my co-founder and I kind of started with this idea that the phone app was the crappiest app on the iPhone. Um and it was right and we also had this sense that you know the phone has all this capability. It has sensors and it has, you know, software affordances, you know, and things like location, all all kinds of cool things. It knows who your friends are. It knows where you are and where they are. But the phone itself

1:56didn't do anything smart at all, right? So, that was really the core insight. And the first product we built was called Wrangle. Like, it's a pun on Rang, you know, without the W. And the idea was you could find other folks who were available for a phone call. I I live in Los Angeles and and spend too much time in the car and a little bit born out of that sort of long commute itis, right? Where you would the idea was you would go on and see who was available for a chat, hit a button, you

2:23know, one tap and the phone would ring. And when we built that, it was it was kind of a hack on top of Twilio. So Twilio at the time was new. We're kind of in the 2011 time frame now, 2012. And uh Twilio really built kind of an API interface to a lot of telecom

2:40complexity. And so we were able to hit a REST API, generate a phone number or or generate a phone call from your phone to a phone number and do all this sort of stuff. We found that that particular thing was really cool when we had a bunch of our friends artificially using it at exactly the same time. For an app like that to work, you need a network, right? It's

3:02sort of an empty restaurant problem. Classic for social. We basically trying to do a web 2.0 idea on top of the phone. So that was that. um it didn't really work well. And one of the things that you experience when you when you kind of have a prototype first mentality is people are nice. So a lot of the feedback we got was, "Oh, this is really cool. You know who would really like this? My sister would like this. My

3:28girlfriend would like this. She talks on the phone all the time." And you go, "Okay, well give it to your sister. You know, see what she thinks." You know, and and you kind of, you know, you're you're working uphill on these things. And then we also had this idea that VCs would use it as like a public office hours,

3:44right? And that didn't really get any traction either. So we came up with this hack really on that that was designed to kickstart that, which we called uh the burner feature. And so in addition to going on and seeing if you had any friends there uh on the app, if you didn't have any that had joined or you had friends on the app but didn't have any that were available, we would let you post a phone number on Twitter or on

4:08Facebook. Oh yeah. So he hit the Twilio API, throw the phone number on Twitter cuz you wouldn't want your personal cell phone number on Twitter obviously. Definitely not. Yeah. Well, people did it and it was it was a kind of a big deal like Charlie Sheen's number got posted at one point and there was kind of this discussion around people's you know emails being on Twitter and things like that. The way we set it up was if you called that number, if anyone saw that number and called it, it would ring through to the person who had posted it and then we would dissolve it after 30 minutes or 60 minutes or

4:39whatever. And that feature when we started showing to people, they thought it was really cool and and so they instead of saying, you know, my sister would use this, they would say, oh, I want this, right? And so, um, that that became the feature we built into burner, right? which is to this day primarily an app that's known as, you know, the best and sort of most reliable place to get a

5:03second phone number, right? And that's how that evolved. Well, I love that story for a few reasons. You know, one, a lot of people start working on things and just don't find that pull. And so with wrangle, you you started butdding your head up against those like real like market issues like, oh, somebody else will use

5:21it and and not seeing that ground swell. And the network effects, like you said, it's like you pretty much need everybody, you know, to be on there in order for that matching to happen where you happen to be free when somebody, you know, happens to be free and then you both happen to want to have a phone call. Um, but there was like an inkling of something. And then the second thing I love is that you were leveraging this new technology. So Twilio was new, phone number as an API. And I think we're in an age right now with AI and so many new opportunities. You know, I mean, this is

5:52something I do every time iOS releases a new feature like interactive widgets. Like my weather app uh is one of the more um useful interactions that you can have on the home screen. And so this idea of like looking for opportunities in these new spaces where this new opportunity comes. Uh I forgot that part of the story that that the whole genesis of the company was like leveraging this new technology. Um but what would you say were the lessons and like if you were advising somebody today they're

6:22they're struggling to get that traction. What are the lessons you took from that that you would share with with folks? Yeah. So one of the specific memories I have uh of that stage we were actually pitching Wrangler kind of in prototype form to VCs right and and you know at the time I uh had previously worked at Yahoo for a bunch of years and had mentored a lot of startups in the tech stars program and 500 startups and things like that and so we knew a lot of people. We went and met with a lot of great you know VCs with a reputation for supporting kind of early

6:55stage pre-revenue type companies. We thought, "Isn't this great? They're going to want to fund us." And we got so much feedback that was very, well, there's something here, but it's not quite, you know, very neutral. And and and the learning for me on that was first of all, consumer is hard. Yeah. Right. And consumer is hard in a way that, you know, you can take a new technology and it absolutely creates new opportunities to build new products. AI is a great example of that. at the time, you know, Twilio, before Twilio, we had,

7:30you know, Dropbox being built on AWS. And there's sort of many examples of these these things that sort of build off of a foundational technology shift. Um, but, you know, the the sort of market only recognizes you when you actually have traction. Yeah. And you know, that's kind of it's a little bit of trying to catch a falling knife, I think, to try to get into the seed round or the A round or whatever of a of a consumer startup after the growth potential has been sort

8:02of validated. Right. Right. And so we were pre that validation and we were chasing it. And knowing what I know today, I would look at that strictly as a distribution problem. Right. And I think, well, was it just a distribution problem or was it a product problem? Because I mean those are the two main things,

8:20right? Is the product not pulling? Yeah. Or like would wrangle have worked if you could have figured out distribution or was wrangle just not the product. So I think we did not really know how to build at that time like a viral loop where where it was self-perpetuating. That was really early, right? That was

8:382012. That was 20 late 2011 I think. Yeah, maybe early 2012. It's interesting because there there are apps, there are founders out there, there are founding teams out there that are very adept at kind of generating attention and an early audience. And and today, of course, you know, we have, you know, Tik Tok and kind of all these other sort of new new influencer vectors relative to what might have been available even been five years ago. And with Wrangle, you know, if we had a large audience trying it out from some kind of media validation like that, that would have been fine. Or if we had, you know, every

9:16user invites three friends, a factor driven growth, right? Um, that might have worked. That wasn't really necessarily our strength. And, um, in the end, you know, Burner, which is what it became, is pretty much a single player app. Right. Right. We've never really had a network effect model on that versus a lot of other messaging apps that are fundamentally, you know, WhatsApp is is the ultimate example of of kind of a network effect messaging app. Right. I do think it would have worked well if we

9:46had a lot of users to start out. Right. Right. And ultimately, in fact, there are other apps that had very similar ideas and and and were successful. Okay. But um WhatsApp was actually started on on the idea of what that that's called presence but who's available thing and Slack has you know kind of a being online peer-to-p peer messaging you know availability is is the feature right so so for a team that's struggling how how would you think about whether it is a product problem you need to pivot to a new product because for you I mean maybe that was a blessing in disguise because maybe wrangle could have seen a certain

10:26amount of success but then would have hit a wall but instead it kind of forced a pivot because you didn't have the distribution and you landed on what was actually a better product that then had kind of pull in the market. So how would you advise people to think about when is it a distribution problem where you just can't find the eyeballs and when is it a product problem that you're you don't have a level of product market fit

10:45that's worth investing in. Yeah. Um, I would back into that, you know, by thinking a little bit about retention. And I think there's a fundamental thing there, which is to say, well, what problem does it solve? And I think the learning with wrangle ultimately was it didn't solve a real problem, right? People weren't necessarily looking for kind of another way to get

11:08get more phone calls. Yeah. You know what I mean? It was a problem for me, right? I was stuck in a car commuting from Santa Monica or whatever, you know? Well, and maybe you're the extrovert who actually wanted to call [laughter] I enjoy my podcast when I have a long drive. For sure. You know, it's fun, but you know, and and also in the in the era of mobile phones, you know, if you're in the car and you've got an hour to kill, you're driving to the airport or something, you start calling people, they're all you're just getting their voicemail, they're all screening you, you don't know whether to leave a

11:37message, you know, they they start calling you back. It's it's a messy problem, but it really wasn't a problem that people were going to look for an app to solve or looking for kind of an extraneous tool for. And when we sort of pivoted into the burner standalone app where you know we had built that feature and that feature was generating positive results and then we were doing stuff like testing it by selling tickets on Craigslist and we were posting fake ads for giving away flat screen TVs and things like that. We just get you know a ton of traffic and it was what that did

12:14was it quickly validated the problem. Right. Right. And so started to feel pull from the market instead of having to push yourself into the market. That's exactly right. And and it was like a 10x to 100x level of response from even just friends we were showing this to. So in that actual stage, we went down to South by Southwest here in

12:33Austin 2012, right? And we it wasn't sort of hardened and ready. It wasn't in the app store or anything like that, but we were showing it to friends on test flight and people, you know, we ended up like with the New York Times interview and we ran back to our room and we kind of set up a warm room and set up a like a launch page, you know, we were capt capturing uh waiting lists, names, and you know, we were on a panel, you know, it was just like it happened really fast and it for us it was a real sign that there was something here that

13:05was actually meaningful sort of an authentic problem they were solving for people and and you know as much as has happened since then there's you know a lot of evolution we can we can get into around our product and around how we've thought about growth and things like that fundamental piece has has really only deepened right having only one phone number associated with your mobile phone is even more of a problem today you know for even more reasons right and more use cases than it was when we

13:39started burner. Yeah, that's cool though that I mean and that this is what you want to see in a product is getting that pull. Now you're you know very few people are going to get to have that experience of being at South by Southwest and New York Times interviews and stuff like that. But I think you know for a product to succeed if you're pushing pushing pushing and you're not getting any kind of a flywheel people aren't excited about it you know maybe that's a good sign that it is time to pivot and it is the product you know if you've if you haven't if you're not good at

14:12distribution but you're at least trying and you're not getting any pull then maybe it is time to look at at pivot. I I think there's, you know, too many people work for too long on products that just don't solve a real problem that don't don't fill a need that or fill a need that such a small number of people have. And I mean today, you know, if you're an indie developer and you're you're you that extrovert and you want to have phone calls and maybe there is a small market of people, but you're not

14:39going to build a venture scale business. You're not going to build a big business solving those little tiny problems that not many people have. Uh but it's fascinating to hear that that and and once you start building though you start seeing things you start seeing like oh this there's an inkling of something here there's and and then again with the like Twilio API opportunity you were experimenting in a place that led you somewhere and you were able to pivot into something bigger. So I I think it's just a fun story for people to listen to to learn from. But I did want to go back and talk about at what point did you

15:10decide to raise money and why in that journey? Did did you raise it before that that that blow up at South by Southwest or did you raise after on the kind of heels of that? So we were raising during that. It was actually like I got my first commitment um on the bus to the Salt Lake that uh that uh First Round Capital would run these buses out to to the Salt Lake. But actually it was Dave Mccclure from 500 Startups and I and I pinned him into a

15:38seat and made him listen to my pitch. Um, and then uh David Cohen from from Tech Stars, the founder of Tech Stars on the same day at a different at a different event, you know, he committed, but uh you know, neither of those guys is a fool and wanted to be the only money in. And so I had to I had a target. I think I was trying to raise a half a million and I didn't quite get there. And so we actually never closed um before launching. We we launched the app, you know, kind of on my credit card um in terms of the Twilio account,

16:07right? And um and in fact that informed the pricing model because the phone numbers cost money. So we believe it or not, Burner was a paid download when it first launched. $1.99 to download it. Wow. And then it it included a free phone number for 7 days or something and then you could re-up it kind of like credits,

16:28right? It had this credit system. It was kind of elaborate thing. you could buy, you know, 3, eight, you know, 15 or 25 credits for different price points and and then different configurations of phone numbers to extend them. Um, but when that's what it was when we launched it and we priced it out so that we would basically if a user used every bit of what they were allocated in terms of texts and call minutes that we would and after Apple got their cut, we would we would break exactly even on the Toyota cost. And then anything that a user didn't use was profit basically. So any breakage was

17:03profit. Um and when we launched, we had like $50,000 in revenue on the first day, right? So we just got picked up. It was it was uh I think Gigahome that covered us and we were on Hacker News as a top story. It was generating debate and it kind of you know you can't recreate that today. like you said, it's not South by Southwest in 2012, but but analoges of that exist today on on Tik Tok and Instagram and anyone can go viral for a feature, right? And so we kind of had a little moment where we had initial traction and at that point a couple of

17:42months had gone by since those early commitments and everything closed within a couple weeks of that moment and it was like, okay, did you raise the price? Yeah. Well, things changed a little bit and you know, the product had changed completely. We were raising on initially kind of a concept version of Wrangle with this burner thing as a kind of a little by catch on it,

18:00right? And then and then it became burner became, you know, we had to redo the deck and all that stuff. But it was I do think, you know, it was maybe more driven by signals that there was a consumer app here that had resonance, right? Um, and you know, we didn't invent the category of of the second phone number. you know, Google Voice predated us by a

18:22number of years. It's a free product. Skype had sort of a variation of this and and what we did do was we reinvented it for mobile and we made it, you know, much more oriented to the privacy control oriented consumer and the UX was just I think 10x better. Not that I'm biased, you know, it would it was better enough to generate a lot of interest and and and people willing to pay us kind of a classic painkiller, not a

18:50vitamin. Right. Right. So, um, at that point, I think, yeah, you know, we we raised an angel round. The thing we wanted to do was take the paid download off, right? Became a free download. We figured out the conversion math and then we also launched an Android in that sort of next six or eight months. And then we actually subsequently raised a VC round which is its own sort of set of set of things and dynamics. But um again I think that was very driven by those early signals and and and coming back to your comment about pivoting or understanding when you have that you know one of the signals you can start to

19:28see once you have a little bit of traction of course is is retention right? And so not just sort of revenue retention, but there's any number of ways you can look at how many, you know, what's your DAU to MAU ratio and how often are people coming back and using an app or what what hooks can you kind of um evolve to to re-engage people. And yeah, one of the things I call it is a pre premium feature user retention. Is the thing you're going to sell something

19:59that people keep using? Right. Right. And so if your subscription if your if your payw wall has locked a feature, well a hard payw wall would lock all features. So any feature would be premium user retention, premium feature user retention. But yeah, are people coming back to that thing that you think is the hook that is the valuable thing

20:17in the app. I actually think this is a really hard problem. So we're we're you know 10 years later, right? We have a lot of features. Some of those are are locked behind. We have multiple tiers of subscriptions including a standard and a premium today. And the discussion of whether something should be included in the premium bundle or you know used to drive engagement at the free tier or the standard tier I

20:43think it's it's not always obvious. No, it's not. But but having that signal of people coming back to it is is key. You can make a lot of money with a gimmick like the $9.99 download. I mean, the Ibeer app, you know, this is a famous example of that. 99 cents, you pretend you're

21:00drinking a beer. I love that the era of the app store, by the way, the flashlights. It was great. But you're not building a real business. You're making I mean, whatever that guy made like, you know, hundreds of thousands or a million dollars, but it's a flash in the pan because it's not something that people come back to and they're not pretending to drink a beer on a weekly or monthly or even annual basis. You do it a few times. It's a funny party gag. And and that's where the paid up front actually made a lot of sense for those kind of apps where today I think you do see a

21:29lot of people with that kind of app charging via subscription but they don't have any retention because you're not going to keep doing that thing and so it's kind of more flash in the pan and you're you're and so I mean you know more power to you if you can capitalize on those kind of moments and that kind of attention. Um but that's very different than trying to build a real business. So I wanted to get back to the the raising BC. What was your thought process in raising at that time and then kind of how do you think about advising folks especially today in the

22:01mobile space when whether or not to raise and how to think about raising? Yeah, sure. So, this might be a contrarian opinion but I I would posit that most apps and especially most like consumer apps that are sort of one or two person founded startups shouldn't raise VC. They don't need to. Um I know it's a popular topic of conversation but um I tend to think that institutional capital is really not designed very well for that stage uh for particularly I mean we were talking about some of the flashlight apps and some of the more I don't want to I don't want to say gimmicky in the sense that sometimes these things

22:45can start with a small insight and and get traction that may be ultimately a meaningful insight not just a gimmick, but I don't think that necessarily follows that it's a good idea to raise, you know, real VC, which, you know, is driven by VC math, right? Which is driven by the idea that that any one investment could potentially repay sort

23:10of an entire fund, right? Right. in terms of returns. Um, it's actually pretty hard to do that when and when you start doing the math, you know, you have to have these hundreds of millions or billions of dollars of outcomes at the end in order to make that work. And that's actually even more true today than it was then. And then I think you cross that with consumer, right? And and you're kind of really working on early signals. At the time we we were a little bit innocent and it was a different time in terms of you know you could still get press you know that was there's an app for

23:43that essentially and you know we thought we could potentially build a very big consumer scale business here. We have built a very scaled business. I was going to say um but but it's not a a billion dollar valuation scale business today. I mean we're we're on track you know for for a large scale business but it's taken a long time so speed of return matters and um you know we've built a very authentic durable business but we've kind of done that in some ways despite having raised VC right and we've had very supportive investors but I think we got very lucky with that for most founders I would say my advice

24:25generally is don't raise VC because you and raise VC because you feel like you have to, right? Or you really want to and kind of you understand what's behind that. Yeah. And then maybe adding on to that, make sure you raise from the right folks that if it doesn't turn out to be a venture scale business, they're not going to sell it for parts, put too much pressure on you, run the business into the ground, or any other number of things that some VCs will do in that

24:51situation. Choosing your partners carefully absolutely goes without saying. I mean, and and there's there's lots of advice out there on this. It is ultimately a fairly rare situation where the founder has like so many different offers of funding that they get to pick. And so, so a lot of times, you know, a founder is faced with a choice or founding team is faced with a choice of here's somebody who wants to invest in me. They want to put, you know, $500,000 or, you know, $1.5 million into my company and and they're kind of setting the terms

25:22and you have to say yes or no, right? And so I just think it's really important to understand what's behind that. You just said earlier that you know when you were launching Burner the Twilio account was on your personal credit card. So how do how do you recommend folks navigate those early stages where a little bit of money would help? I mean

25:42this is something I hear all the time. It's like gosh if I just had you know 20 50k to kickstart UA or to at least try or I need money for this or that. I think that's that's why people I think idealize raising VC is that oh if I just had more money would solve the problem. So how do you get through those early

26:02stages without any help? Yeah. Well the classic 3Fs friends, family and fools is probably the right source of capital right for you know that sort of early I want to throw a few ads on on Facebook or something and test it with some users. You know 20K can go a long way. you can't really sort of quit your day job and and pay multiple salaries and, you know, kind of have enough money in the bank to just go design apps if you never never done this before, you know, at least not reliably, right? That that's a big sort of bet. But if you are scrappy and you're, you know, able

26:38to be personally sort of low burn, whatever your personal circumstances are, you know, and you just need a little bit of money, you should not be even thinking about institutional capital. If you start to have some early validation, you start to get maybe a wider set of options and you can start to think about things like the Y cominator program or other programs like Techars that do put some cash in but do

27:02so on fairly open-ended governance. Right? So there's this whole stage or um kind of model around safes and convertible notes and things like that that they sort of set you on a path toward venture capital, but they don't absolutely lock you in if something goes sideways. And we were in that stage for a while and that and that, you know, kind of ultimately it worked out really well for us. The way we did it, we have um a VC who's just very aligned to early stage uh founderled companies, founder collective, and they've been very supportive as things have evolved kind of off the classic alphabet series of rounds one after

27:43another. Um and it's nice not to have to go raise more money in order to survive as a company, right? But if you're trying to compete in a large category or in a SAS business or something like that, you kind of have to do that. And that's when VC is maybe the right choice, right? This will be a much smaller audience, but I think even those who aren't in this situation would be curious and will learn something. What was that transition like? And what was the time span from we're raising VC, we're going to be a billion dollar outcome to okay, maybe we're not and let's not raise more and let's, you

28:19know, shift to a slower growth profitable mindset. Yeah. So, we closed our angel round right after that sort of first launch and we raised about a $2 million VC round within a year or so of that. That's the one I'm referring to. And it was with that that you know the job of a round right from a sort of classic point of view is to prove something or validate something. And so we were trying to go out and use that really you're buying time and you're buying time to validate a market and we were trying to figure out

28:49you know how big this market might be. After a period of time, you know, we were starting to run low on that cash and we had tried a lot of experiments including trying to make a premium business out of burner very much has a similar formula today as it did back then. It's it's it's evolved in a lot of meaningful ways, but at its core, it does one thing really well, right, which is download app, get phone number,

29:15right? Okay. And those phone numbers cost money. Yeah. So you can't just give it away to a million people and hope you know 1% of them convert after some number of months, right? You have to figure out a way to make that a or well you can do that with a lot of capital. So we tested some things like that to see would it make sense to raise more capital and do more of that. There were some other ad supported competitors kind of in the market emerging around the same time we did and we were looking at those and trying to do the analytics on what they were doing and we saw

29:47potential to have kind of a business that was a mile wide and an inch deep but we weren't sure how it would get to be really valuable down that path and what we were seeing in our business we were from the beginning revenue driven kind of a premium app like a good experience we're investing a thought in the craft of what we were building and trying to use technology creatively to give people a good experience and then charge for it,

30:13right? And people were paying add a new subscription tier or add a new higher price point and people would some people would buy it, right? And renew. And so it it became clear somewhere in there that this was going to be a nice, you know, healthy business and grow at a certain rate, but it wasn't going to be, you know, kind of 200% growth year-over-year and and and scale in that way, at least not in any way that we had unlocked. And so, you know, there was a period of time where we considered going out for more money that it was on the timeline. It was time to go raise a

30:48series A. it was clear we didn't have the metrics for it, right? And so that's the ultimate test of whether you should raise VC today is at the end of that cycle will you have the numbers to go raise a subsequent round and we didn't get there. So we had some insider support to kind of convert the business into a break even at the time business and we've been really profitable ever since. So, for six or eight years, we've been, you know, either break even or or meaningfully profitable and and while still also growing the top line, which is great. It's it's a and it's a

31:26I mean, that's ultimately what you're trying to build toward. And so, you just got there quicker, but then grew slower, but you started with profit, which is great. Yeah. Well, I mean, just to give you some numbers, right? So, I think we had our first million annual year at about two and a half years in and then, you know, we had a $5 million year by about five years in and, you know, it took another couple years to get to 10 million and now we're we're multiples of

31:53that today. But it, you know, this is when when I see the dialogue out there about founders flipping apps for 100K or something like that, I think, well, if you have something Yeah. you know, build it, right? And uh if you don't have anything, who wants to buy it, right? And so there's sort of a my advice would be if you, you know, can can find the authenticity or the real problem within the thing you're getting traction on, then that's an interesting

32:21thing to keep exploring further. Yeah. And at some point capital becomes an issue, right? If you kind of saying you're in a situation where it's growing, you're retaining and you need you know help whether that's to do user acquisition and you you are in a position to increase your your budgets or you know product evolution then you have an interesting problem right and I do see a lot of apps out there sort of in the let's say sub 5 million in revenue who you know they're maybe not going to raise VC they're not growing at a rocket ship sort of explosive type of rate but it's a real business and they

32:55need capital and so what do they do? The capital markets aren't well set up for that. I don't think today we look more like a growth stage business or maybe a PE business, right? Not a venture business, but those kinds of investors aren't interested in really small to them. Really small is very large to lots of lots of founders. But um it's an interesting tweeter kind

33:18of problem I think. Yeah. And there and there are options now surfacing in the market. you know, Bravo, Pollen VC, there's others who are kind of filling this gap for that level of company. And then, you know, revenue cap, we're launching a product soon for that factoring where you can get the revenue ahead from when Apple pays, so

33:36you can accelerate a little faster. There there's little bits and pieces of options for apps today to to get some of that, but it's just it's not like a big, you know, $2 million series A influx of cash. you you know I I think somebody anybody who's innovating in the sort of financial space serving founders like that that's fantastic right so that just creates more options for founders sometimes you know they're not the right price for founders or whatever but at least they they have those options and and they exist but you know as a as a founder of a of an app you don't also

34:11want to be kind of trying to innovate on the finance side you just want to you know take something off the shelf and and you may not be familiar with some of these things. Yeah. Well, I wanted to go back in the story again and talk about the credit system and kind of the transition from credits to subscription and where all

34:31that landed because it's kind of funny. I I've talked a lot on the podcast about how, you know, if you are a subscription app and it was actually just the most recent podcast was Revy Ravi Meta who worked at Tinder and looking at the demand curve and fitting those consumable credit kind of economy on top of the subscriptions, but you went the opposite way. Yeah. So early on in Burner, you had a credit system and then layered on subscriptions and the subscriptions were the unlock for you, not the credit system. So I I kind of swed your thunder a little, but like

35:02tell me how all that went. In a funny way, by the way, we ended up in the same place, right? So today we have a business that's more than 90% subscription revenue and the the 10% or you know 8% or whatever that's that's credits is mostly existing subscribers topping up, not people who are avoiding the the subscription system. Right? So we we kind of evolved to that, but we started off um as you know credits were something you could purchase in an inapp purchase, right? And they were ultimately kind of a consumable. You would use them to get uh extend a phone number or get an additional phone

35:37number. And one of the differentiators of burner is you could have multiple phone numbers, right? So you could have three, four phone numbers. I actually think the right number of phone numbers for most people is not is not two. It's not like your main line and your burner line. having a couple of burners, right? So you can keep one for, you know, your long-term sort of podcasts and and use one for spam or special circumstances like shopping for a car and so on, right? And so we had this model that people could kind of mix and match and some of them didn't even have, you know,

36:11the capability to send pictures, MMS, right? And so we thought, okay, and and in the back of our mind, we were looking at games and apps like Zingga, you know, that were kind of gifying inapp purchases a little bit, like a poker chip mentality. Yeah. So you buy the credits and then, you know, we had this vision where in addition to phone numbers, we'd have, you know, maybe vanity area codes or special features, ringtones or something. You know, we never really did any of that, but it it worked out pretty well. And when the AP subscription capability rolled out, we got pretty excited about that and looked for the

36:51right product fit to that, right? So, it was very important to us that it wasn't just, well, here's a way we could make money. And and a lot of our thinking about growth, by the way, and features is driven by trying to fit an offering to an authentic need or an unmet need among our users. And in this case, people wanted to keep their burners, right? They wanted to not accidentally

37:15lose them. Yeah. There's some set of users to this day that come through, they need a phone number for a specific purpose. A lot of our users have very high intent, but sometimes that intent is is shortlived, right? So, you're you're selling a bunch of stuff on Craigslist. You can have a great experience with a one month uh kind of tenure as a paying

37:35customer. Yeah. And many of those users kind of come back later, but there's a lot of users who want them for a long long or indefinite period of time. Funny enough, I I am that user. Um, I don't use burner because I got mine pre-burner. I got a freaking Skype number in 2008 for my business because I wanted a business number and I didn't want my business number to be my personal cell phone number. And so I've paid Skype I don't know how many hundreds of dollars over the last 18 years I've been running my business. And it was I was exactly that use case. And

38:08so it makes sense that shift to subscription for people like me who have this long-term need to maintain a phone number. And it's very sticky especially if you don't use that number all the time. You probably have it on some filings and forms and your post office box and you know if you delete it you you miss the renewal notice and so on. those. In fact, my I have a lot of burners, as you might guess. I have a lot of phone numbers. In fact, maybe I'll put one in the show notes for people to reach out um if they want to. But the one that is

38:37the the one I the last one I will give up, right, is the one I almost never use, right? It's the one that's on, you know, kind of long-term things like that. And so when we went out with the first subscription offering, it was really driven around meeting, you know, a segment of our users needs who wanted to keep their number for longer. Um, and we wanted to make that a fully featured thing. So there was a lot of backstage work to get MMS, which at that time wasn't something that was supported by the carriers through aggregators like Twilio. Google Voice didn't have it,

39:14right? And so, you know, nobody had it. We were I think the first to get it out there commercially and we rolled it into our first subscription offering. So it was a pretty big moment and it was a huge success for us. So that was one of the biggest singlestep functions in our revenue growth in our history was the

39:32day we launched subscriptions. Um and it was also our first unlimited all you can eat. You know, you can have an unlimited number of texts and and voice minutes and and photo messages. So it wasn't it wasn't kind of counted. Yeah. And that involved contractual negotiation and other things with our suppliers, right? It got a little bit complex to build as a product, but then was really successful as a as a um skew bundle. And then immediately we started to say, okay, well, what percentage of people are taking the monthly and the annual? What's the retention of monthly? And you know, completely change the the game in terms

40:09of cohort math, right? I would say today, you know, we know as much or more about cohort subscription cohort math as anybody. And it's like a really important dimension of our business and growth. But at that time, that was just like the beginning of learning about all of that. That was I think our first subscription offering we had monthly and annual. That was it. And now we today we have monthly oneline, monthly threeline, annual of both of those. And then we have that standard and premium. So that's that's eight cues right there. And then we have the

40:45credits for buying up on top of that. But we did sort of slowly deprecate credits on the back of launching subscriptions. Um because our our mindset at least originally was well we should move all of our users through a subscription model and the ones who have longerterm intent will retain and the ones who who don't will will leave early. Um and so as a consequence of that we have reasonably high churn. And I look back at that decision and I go, well, we might have been able to fit to the curve even more efficiently if we had maintained a more front and center credits model for those lower those

41:20users with lower long-term intent but high short-term intent. So, you know, we're constantly reooking at that and testing things and you never know that may resurface at some point. Yeah. No, it's fascinating and uh it's fascinating too that and I I didn't know this about Tinder, but talking to Robbie uh in the last episode, he said, you know, as with you, most of the inapp purchase revenue is from subscribers because it's a force multiplier of the subscription. It's not as much a standalone, but I think it can be all things. And so for you right now it is mostly subscribers but maybe there is an opportunity for non-subscriber and to

41:56add more on top of the subscription to continue like you said to fit the fit that demand curve. I think um products change over time in the context of their marketplace as well and so one of the contexts that is very important to us is in general the telecom landscape. This is maybe not super relevant to a large subset of your users, but it's if you if you sort of abstract that, right, the the the things that we're trying to accomplish are not necessarily well served by having tons and tons of users with really short-term phone numbers that are that are kind of effectively hard to distinguish from

42:34from spammy behavior if telecom ecosystem. and and we think of that as kind of a a buildup of an an increase in the kind of quality of our users over time as well. Implicit in what you just said and something you seem to have been very focused on over time is that kind of ethical perspective and we we've kind of like hinted at it a few times here of the you know pump and dump and gimmicks and things like that. But I I read a story and I wanted to hear a little bit more about this opportunity you had where you saw that users were using

43:07Burner to game the Uber uh referral program to get a bunch of money, but you chose not to leverage that in marketing. What what's like your ethical framework for how you run the business and and why do you think that's important? Yeah, and I think that that's a good example, but there are there are lots of examples, right? I mean the phone number industry is full of sort of I don't want to call them scammy opportunities but but it's it's kind of attracts a lot of hustle culture type of people and you

43:37know that was a great example of that. So there was this moment in time where Uber in its early days had a referral program that could earn you free rides and credits on Uber if you would introduce friends and and we actually got a call from Uber. I don't that's how we knew about it. I don't know if I put that in the article. Somebody at Uber's growth team called us and we had, you know, shared VCs and stuff and and I thought, "Oh man, we're, you know, they're going to hammer us in this." And they were actually really excited. They were like, "This is great." You know,

44:06people are, you know, it's there's some obviously, you know, kind of inauthentic aspect of it. But there were also a lot of people that were signing up for Uber accounts that didn't want to put their real phone number in Uber because they were afraid drivers would call them, right? And today Uber has this you know sort of well architected system that anonymizes phone numbers but they didn't have that sort of as fully baked in the early days. I think it worked very lightly in certain situations but a thing would happen where a user would leave something in a car and and you know the the driver could no longer call

44:46the user and vice versa. And so people were using burners for all kinds of things in the Uber ecosystem. Um, and the growth team was like, we're happy to have this. We just want to understand how it's working. But in our end, we didn't want to promote, you know, hey, get burners and you can get, you know, extra Uber accounts and go get extra referral credits and promote the idea that, you know, a phone number is a way to sort of hack the system, right? the authentic thing that that burner solves and and this is this is kind of almost a like a guiding story for us is I I this

45:21is something I say internally all the time which is like to to team members if you're stuck in an elevator with the CEO of a wireless company. you know, Verizon Wireless's CEO is in the elevator with you. What is your sort of 30 secondond pitch on on why Burner exists in a world that has, you know, cell phones everywhere? And, you know, the very short version of that is people really want to use phone numbers for many things. And those things have a lot of value to them. And even if it's your texting to make a dentist appointment or you're getting alerts about your flight being delayed, that that is really

45:57important. You just don't want all of that on your main private personal cell phone number. And so it's a kind of on the one hand a service to users to have mobile phones everywhere, but a tremendous disservice to users to make them do it all on one phone number. Yeah. And so that that's a problem we authentically solve for people. Like we help with that and that's the message we want people to understand about our product. By the way, we do a lot of other things too. We have a VPN and we have spam blocking and we have AI voicemail handling. We have all these features that we we've evolved over the

46:31years into helping people control how their data kind of is used on the internet and how people reach them. But um you know in terms of those individual use cases that might generate a few press hits. Yeah. You know that's sort of less an important part of of our value proposition than helping people understand okay this is my phone number is my identity. this is what I'm signing in with and I'm registering at the bank with. How can I, you know, just get a little more control over that in a more

47:01authentic way? Yeah. I mean, just just again, the thread through this conversation is that in trying to build a long-term profitable real business, not associating yourself with hacks and scams. It's like, yeah, you may have seen a revenue bump from promoting that people could gain the Uber credit system to make, you know, you would have you would have seen a bump and you would have made some money, but you chose not to see that bump and make that money with that long-term vision. And so I know you advise a lot of founders like how do you advise that kind of hustle culture startup person who would

47:41otherwise want to take advantage of something like that but maybe it is a very short-term thing that handicaps them in the long run. I met a founder not too long ago and he showed me a feature that had kind of gotten some vir I'm not going to name it but he' kind of gotten some virality from this feature. It wasn't in any way

48:00a scam. It was a very legitimate thing. It it had sort of escaped the event horizon on on Tik Tok and and Instagram. And he showed it to me and I thought, "Oh, that's brilliant." You know, and and how's that feature doing? And he said, "I designed it to go viral. I don't really necessarily care if people use it, and I don't think a lot of people really do, you know, I thought, okay, so in no way is that a scam,

48:25right?" Right. But it sort of it was a good attention getter. You know what I mean? And then I think in this particular case, the app is fairly sticky once you get in there. And so I think there was more sort of meat on the bone there than just the the throwaway feature. But it was a really interesting version of that, right? Where I think you can do a lot of things to get attention. And you have to do some of that. You can't just sit around and

48:48and product your way to glory, right? You have to find a way to break out, get attention, do things. And so I just think, you know, from early on we've had many opportunities to take a high road or a low road, you know, and there's there's a lot of low road tactics out there or just kind of lowest common denominator tactics that a good example of that is clones, right? There's we've been cloned a bunch of times, a bunch of crappy,

49:14you know, fake burner apps out there. Um, we've had opportunities to clone features or or emulate, you know, other apps that have that have been successful and we we choose to do things kind of the way we develop them independently. And that's I think that's speaks to who we are, not just like Yeah. kind of something that's written above

49:34the door. Yeah. And it speaks to building toward a billion dollar outcome versus flash in the pan or or being associated Yeah. being associated with the with stuff you don't want to be associated with as a as a brand, as a business, and everything else. Well, and a billion dollar outcome is that feels like a huge sort of large and unapproachable target for all but a few apps out there, right? But to say, you know, $100 million in revenue if you're already at tens of millions is it's linear, right? It's very achievable. Yeah. And 10 million is very achievable if you're at 1 million and and you know fractally all the way down,

50:15right? Like you can really build a real business. It just takes a long time and there's a lot of um in in in our case we think of it as a lot of operational discipline and and a lot of you know sort of thoughtful process around what we're good at all the way through the funnel, right? And so like I think the conversations about raising money, you know, those are premature if you don't

50:41have the fundamentals of the business. Yeah. Just as a side note, I used to be in book publishing. I was an editor uh at a a trade publishing house called St. Martins's Press before I moved into tech. And at cocktail parties, people would always approach me about how to get their their book read or their book published, you know, or how to get an agent or how to get an editor. And the answer was always, well, do you have a book,

51:07right? Most of the time the answer was no, right? So, it's like, well, write a good book, start there, you know, and build on that. Build a good product and go from there. It doesn't have to be, you know, deep and fully featured, but, you know, something that that works. You know, you can really have a single serving product and then and then build on it

51:24substantially. Yeah. Well, I wanted to dive into some more tactical things. I know as a company over time, you've done a ton of experiments. Uh so any in the progress that you've made from going from that million to the five to now tens of millions of dollars of revenue, what were some of the key learnings along the way and the process for obtaining those

51:48learnings? Yeah. Um I you know one thing that I think uh is really important is to focus on analytics as early as you can. um we set out from day one to be a datadriven company and by the way to be a very engineering and productdriven company not just a product driven company right and I think there's a lot of overlap there in in analytics as you start to stitch together data that's coming from the product itself you know in the client things that are coming from the server analytics things that are coming from the marketing analytics and and how you munchge those together and all that

52:26really starting to understand cohort math um and understanding you know you can run an experiment and the experiment throws data but how do you pick the winner right unless you kind of know what you're trying to actually optimize for I would say you know where we have done I think an exceptional job is fairly high in the funnel we have you know done over the years I mentioned some of our SKUs you know within that there's what's in and what's out of each bundle. There's pricing. There's, you know, kind of what's the default, right? There's a lot of sort of opportunity to experiment and and explore, you know, also, of

53:10course, the design and the positioning, right? And that's also true in our UA, right? We we have a pretty robust user acquisition program and a lot of a lot of creative variance and a lot, you know, there's sort of a lot there, right? And so, um, what's what's been interestingly true for us consistently, I'll come back to experiments in a minute, but you know, what we don't do as a company is a whole lot of brand marketing,

53:37right? We have a great brand, by the way. I I like to say, I love burner. Thank you. I I like to say it passes the F1 sort of car test. Like, you could you can imagine it, right? But but if we ran, you know, if somebody gave us $10 million and we ran a Super Bowl ad, you know, that's not necessarily a very targeted audience

53:56for us. Yeah. Um and when we have had some like breakout mainstream press, you know, every now and again we've been covered in like Vogue or something, you know, and and people come download the app, but those people don't convert and they don't retain, right? So, so the thing that's been true is we've we've been pretty focused on there's a lot of natural intent that already exists for our app, right? For for burner. People go into the app store, people go on to search engines and search for second phone number, temporary phone number, private phone number, burner app, you know, by brand. And um we're very good at finding

54:33that and harvesting that in terms of getting people to download the app. And then so we're working with a pretty high um intent audience and then so that gives us a lot of like surface area to test different pay walls um and different you know things at that onboarding funnel right so that's I think incredibly important um and the for a long time has been the biggest single factor in our retention right which is like well what did we what did we sell them into right is kind of the biggest determinant of

55:06what their trajectory is as a customer. Um, and what we've been building on is our ability then to retain them, right? Um, and you know, give customers more value, kind of stickier features, things that address maybe things they had less intent about as they came in. Right? So, I mean, there any number of features we've launched, but I'll mention one that was a surprise to me. Um, we have in our premium tier, we have the ability if someone calls you on your burner and you don't recognize the phone number to do kind of a lookup through the telefan system of of, you know, and make a

55:47pretty good guess of who that that is, who that caller is. And that feature has been very popular. Um, it's funny because when people get burners, they think they're being they think we're selling their numbers. Sometimes we get these comments like, "Oh, I started getting all these telemarketing calls." like not we're not the ones selling 100% I can definitively state we are not but but that's the whole point of getting a burner is as soon as you give your phone number out once it's it's out and then people realize when they would they use this lookup feature oh actually this is somebody you know calling me um so that's been really

56:20popular and kind of a driver of of upsell and that was that was really an experiment right it was in a bucket of features that we tested out I think we had done some surveys and that one surveyed But I didn't really necessarily intuitively believe that it was going to be a winner feature for us. And so you don't always

56:37know. Yeah. So how do you think about in these in these experimentation from pricing to pay walls to onboarding? What are your kind of northstar metrics and how do those shift either even experiment by experiment or year by year? Uh I you know you mentioned earlier you do have a lot of churn from the people who just like uh Facebook marketplace I just need it for this weekend. and I'm going to sell five things on Facebook Marketplace and then they turn out. So, so how do you how do you balance? I mean, it must be a really tricky thing to try and run an experiment that can generate more

57:10revenue on the payw wall but then lead to lower retention and getting the wrong people through the door with the wrong incentives with the wrong price. So, it I mean it's such a balancing act. How do you think about that? I think, you know, if you look at it from the framework of the LTV of a cohort, that's probably the

57:28right framework as as a starting point. And and and it's it's interesting because that's a hard thing to optimize for in a single experiment, right? You know, you have to ultimately kind of think about how you segment customers coming through. And so you might, you know, we have a lot of tools to do that now, right? So for example, our highest value customers, we ultimately want to be both in the premium tier and to be longer retaining, right? So if we have a shorter retaining customer at too high a price, you know, maybe we haven't done that right. So we're we're kind of maybe optimizing the premium

58:07subscription differently than we than we want to optimize a user who's coming in with lower intent or just wants to get a quick hit. But but a key thing that that is really interesting about our product and this has been true since early on and the thing you don't want to do I guess is like try to solve a problem that's sort of good enough for everyone

58:26but great for no one. Right. Right. And so um there is a set of users who just kind of wants to get in and out and there's a different set of users that you know needs a number for a long period of time and you know is going to be price sensitive in a different way. you know, how much they're going to be thinking about how much it costs them per year,

58:44right? Whereas you were talking about, you know, paid downloads, people are thinking about that as a one-time, right, expense, right? So, balancing those things really cohort LTV is probably the true north, but within that, you know, you can you can't wait for those uh metrics to mature. Um, so you have to kind of project based on things that are happening at day eight or day 30. You know, we have a a three-day trial. We have a 7-day trial treatment. And so there are different different things that you will get bucketed into depending on on which uh

59:19cohort you're in. So with the cohorting, I imagine you're not just cohorting by time. Are you cohorting by answers to onboarding questions? Because it sounds like you're not just cohorting um broadly, but you're trying to find and you and I have talked about this before, Eric Crowley, the tourist versus locals. Yeah. Uh for those of you on listening to the podcast, if you haven't heard that episode, go back and find it because it's really great. But the idea of like the tourists would be your Facebook people who are just going to be there for a week when they, you know, need to sell a bunch of stuff on

59:52Facebook Marketplace. But what you're really trying to find is those locals who are going to be around for a long time and live there and stay in your product. But so it sounds like you're you're actually cohorting by those kind of intents where you have like a a tourist cohort and a local cohort and you're and then you're you're presenting different pay walls and different options and different pricing based on

1:00:12that. Is that is that what I'm hearing? Well, I would say to date we've mostly done that by presenting different SKUs and different bundles and letting people self- select. Um I do think the the more sophisticated approach is to understand to try to anticipate who they are in advance, right? But um there's a phenomenon first of all you know the intelligence is getting better and the tools are getting better to identify them. Um and then we also have a lot of users that do that tourist experience and then come back later. So, we have, I think, an unusually high percentage of, you know, people who are, let's call

1:00:52them quote unquote, new subscribers, you know, who incept a subscription, but they're not firsttime subscribers. So, you've got the smile curve going. Yeah, it's north of 20%. It's, you know, somewhere between 20 and 30%. And it's a very large number, right? And so, you know, one way of looking at that is like that's a user we failed to retain on their first tourist visit, right? But also it maybe it's a user that kind of like in a Google search they had a great experience they left and they came back again when they needed it again. And so um we are you know trying to give those

1:01:26people good experiences and maybe do an increasingly good job educating them on why you know a good example of this is so at the end of the life cycle of a burner phone number the user can burn the number. Right. Right. And so we've increasingly explored what to do at that moment. It's really a fun moment in the app, right? Like, you know, in the early days, you know, you'd hit the button and it would do this match sound and and this kind of flame visualization and then like people liked doing it so much that they kept accidentally burning their numbers, you know, and was a lot of support volume,

1:01:59but you know, using that as a way to say, well, you may be done with this transaction, but maybe you want a new number. And so we we do retain a certain number of people into kind of a second shot there. Um and you know ultimately it's about understanding those users, right? But but what's been crazy um and you know we're well over 10 years into this company and there's still like the expression is you know there's the

1:02:28juice is worth the squeeze, right? There's still these optimizations that have meaningful. It's not, we're not talking about like tiny bits of basis point types of, you know, uh little optimizations on whether we underline or what color blue we're using, right? This is like a meaningful shift of users when we introduce kind of a new a new plan. Um we recently tested um the uh the making the free trial optional instead of default and um that was a very positive test for us interestingly um kind of this is a good example of something that was like a little bit trendy. there was somebody out there talking about, you know, radio

1:03:08buttons at the free trial payw wall and this that it came in the door to our company through that kind of dialogue in the app space and the sort of app growth community. Yeah. We've talked about it on the podcast. Yeah. Yeah. But internally we said, well, one of the reasons there's an authentic reason for it isn't just a hack, right? It's like people come in, they want a phone number, they want our product, and some people like want to make sure they lock it in, right? They don't want to lose it, right? They really want to come. No, no, no. I don't need a trial. I want to buy

1:03:38it. And then other people, you know, I'm not sure. I'm not sure I want to pay for this, etc. Give them the free trial, you know, and so let them self- select. And and that's a lot of the uh the nuance of that. But it gets more complicated when we get to, I think, more um robust features for those users. So you can separate locals and tourists not just at the payw wall in the skew but in in terms of the actual features. So an example of something that's in our premium bundle I gave one earlier around the phone number lookup but we also have like an AI voicemail classifier not in

1:04:15itself a hugely profound feature. Um, we have some other improvements like um custom icons and higher quality, you know, uh, video messaging, things like this that a tourist wouldn't care about, right? But somebody who's using kind of burner as their secondary or tertiary phone number side by side, like with their home number, they're going to want those kind of, you know, higher quality experiences. And so those are bigger investments from a product point of view and we don't always know if they'll drive you know kind of payw wall conversion immediately. You don't you don't know on day eight right if that's a winner experiment and it's it may take

1:04:58you know real time to build those features but you'll see it in retention eventually. Yeah. And then you know one of the things you and I had talked about on the retention front is becoming more multi-product and potentially even acquiring apps to drive that retention through bundle and even the I mean there there's so many layers to becoming a multi-product company of solving new needs of bringing user acquisition in with a different hook but then has a secondary need. So

1:05:30how are you thinking about that today? Yeah, it's it's um absolutely something we're excited about. So, we've been thinking about, you know, what our customer needs are, you know, a lot. And from a product point of view, we try to really come from a place of identifying a problem, validating that problem, and and solving that problem. Um, but sometimes those problems are are are big. We're we're still a relatively small team. We're about 30 people, and that's that's healthy, but it's a complex app. It's mature. there's a lot to do across you know core and product and growth and you know um operational stuff and so um the biggest single

1:06:09feature we launched that was like a kind of an expansion of the product portfolio is in the first quarter of 2025 we launched a VPN right and VPN is its own category on the app store you know um you've you've probably studied that in detail here and um there's you know kind of PE stage companies in in the VP PN space and there's a lot of small ones and you know um we didn't necessarily set out to kind of take over that category so much as to broaden the offering of burner by by building that in there's a like-minded customer right who's concerned about their their

1:06:47privacy to some degree or you know looking to hire tools that give them more control really ultimately over kind of you know how they're seen how their identity is understood on the internet so you can kind of be who you want to be and be where you want to be with a VPN, right? Um, so that particular product we did with a partnership and it's a white

1:07:09label partnership. There's a provider. Um, and when when we were able to integrate that, it was still a pretty significant investment for us. Yeah. Um, and we had to make that investment without it wasn't easy to validate that need. So, it kind of ended up being an expensive investment. Yeah. It's driven a lot of value and growth of our premium um tier of our premium skew but it it is a for us it represents like an example of a buy build partner type of portfolio approach right so we decided to partner in that particular case and and it was the build aspects of even in a partner

1:07:50strategy were still expensive right but if we had um decided to go become a VPN company um and build that from scratch and you know build all the expertise necessary for that and and by the way that that product exists in the burner app and there's a desktop version of it on on uh Mac and Windows right so it's kind of a 360 product um you know it's an expensive investment yeah what what was the decision though to build it into the product versus making a second product and and bundling it

1:08:25as a second app Yeah. Yeah. Okay. So, we've tried that. That's a tactic that has not worked as well for us is having multiple apps. So, we have Ad Hoc Labs is is the the parent company, you know, we have Burner. It's it's kind of our flagship app, but we also launched an app called Firewall um and an app called Dialed to respectively um do robocall blocking and um business phone numbers. Um and ne neither one of those has worked at scale for us. And I'll just be honest, you know, it's um these are things that were, you know, very thoughtful, very, you know, kind of

1:09:02intentional builds. We did all the launch things and all the hardening and and and quite expensive to build apps from scratch. Um and neither of them got real traction in the app store. Maybe coming back to that distribution comment earlier. Um but also in you know over a period of time we realized you know that the the acquisition funnel of burner itself in part because of our strong organic that's built in and the brand name and in part because of our mature UA program we have you know several million people per year downloading uh burner right and plenty of those people could use a VPN right

1:09:44and those people are a lot easier to sort get an offer in front of than to go construct a new audience through whatever combination of organic and attention and paid that we would have to do even if we cross-promoted. Here's this other app. Yeah, I know. It's a really good point. Yeah. Yeah. because and you know I would think well and that I mean the app store is a hard place to get distribution period and so you you would think in one hand oh launching a VPN app people are going to searchVPN people are going to find VPN it's a VPN app so they find that it's a solution to their problem

1:10:20for VPN but like that's a whole that's a whole another company right yeah well when we launched firewall we learned that lesson really fast and that was before we got Sherlock when when Apple launched uh you know kind you know, screen unknown callers basically killed that app. Um, and we didn't even get to Android on that, which you know, you know, all of our products are roughly a parody on on iOS and Android, you know, by by philosophy when so we can serve our customers and

1:10:48increasingly on the web, by the way. Um, but that one never made it past that stage. But, you know, it is it's like you said really hard to launch apps today. Yeah. Um, I mean, anyone could do it. It's cheap. It's just very difficult to get visibility and traction and certainly um to ASO your way to glory. Yeah. Is a

1:11:08very difficult thing today. Yeah. Um except maybe if there's a brand new category. I mean there have been right you know not just the the top LLM sort of open AI type brands but any number of AI apps is an example of a category that's that's done very well as a sort of new native category. Yeah. Um, but I think in a in a highly contested category, we're we're used to being the incumbents burner and and you know, there's some things that are great about that, right? And there are some things that are bummers about that, right? Like everyone else can target our keyword and cannibalize the organic

1:11:42searches for burner that we think are rightfully ours, right? But we were on the other end of that when we were trying to compete with Robociller and whoever else on on Robocall Block. And um it what is working so well for us by comparison to that is saying well we have this robust funnel we have this user coming in with high intent that user might be a tourist that user might be somebody who's like

1:12:08here for whatever you got. Yeah. um but where we can say great come for the number maybe add the text blocking while you're here or maybe you know maybe you like this AI voicemail feature and have you ever tried a VPN you know and you can really broaden the offering there and so we you know our vision is much broader than being you know private phone numbers right it's really to help users take control of their mobile identity and and communications and so these are tools with which they can do that So then how you you mentioned build partner buy. So we've talked about the build and that's a

1:12:46struggle launching a a brand new app in a new category and a huge investment and everything. The build and partner sounds like it's it's it's been a nice value ad to the existing app. U but I know you're you're starting to consider buying as well. What does that look like and what are how are you thinking about that? So first of all, you know, the underlying goal there is is speed, right? So it's it's you know how quickly can you build things or validate and then build things or partner in things and and you know how how much can you drive growth as you get bigger and

1:13:15bigger right as well as deliver complex features to users more quickly right it's like if you have the idea to do something you know our customers would love it yesterday right um so yeah we've been in a certain number of conversations to acquire apps there's sort of a I think I mentioned it earlier you know a little bit of a um kind of I don't want to call it a death zone, but it's it's a it's a tough sledding range where you know you've got some traction and you've got some revenue and maybe you even have you know cash flow

1:13:48to fund a certain amount of growth. Um but it, you know, where do you go from there other than grind, right? Right. We survived it. We got through you know any number of years that you know we had a very small team. and we had to figure it out and kind of no UA specialist on the team, but we had to do UA or or what have you. Um or you know the stage where you have kind of one iOS developer and that person, you know, takes a vacation and the whole thing shuts down. And so um uh we are very keen to grow, you know, in a very tight way, right? like

1:14:24we're not we're not interested in kind of just randomly acquiring other apps, but um we are having a certain number of conversations right now about things that would be I think you know very organic to the burner brand, right? And and if you think about it, it is a you know the the need that people have for greater control of their communications and privacy extends way beyond phone numbers, right? there's kind of any number of things that I think are are good fits for that. So, yeah, we're excited to be looking at that. Um, and we're we're I think good at a bunch of things, right? So, you

1:15:02know, we've we've had to develop kind of real subject matter expertise in a bunch of stages of, you know, funnel optimization, analytics, and and cohort math and pricing and and can really leverage, you know, I it's not massive consumer scale, but we have a lot of users with a kind of fairly consistent set of needs that we think we could uh

1:15:26add some more um meaningful products to. And so, yeah, we'd love to do that if we can. Cool. Yeah, I'm excited to see where where this goes. And I mean, I guess you're you're thinking in those contexts both where it would be a standalone app if that app already had some level of traction, but then also potentially buy an app where it would then become a feature in burner. It would just depend on the the fit and how it would fit into

1:15:51the product and stuff. Yeah, I think that's right. I mean, not not all apps that are kind of adjacent to Burner would lend themselves to being features inside of the Burner app. I think some would. I think some would would benefit from being a standalone, but the ideal, and we've definitely given thought to this, would be both, right? So something that has kind of found some traction, we could absolutely accelerate the reach and the development of that app and it could still continue to be a standalone app that's complimentary to burner as well. So you know I you know it's hard to generalize that because you know every category

1:16:28we've looked at has been a little bit different. Yeah. Um but there's some there's some pretty exciting categories out there. Um and I think some emerging ones that are that are just emerging needs. Um I mean an example just by the way and this is not not to sort of telegraph anything right but like you know in the world of AI you know what does it mean to have control over your data right that that means something different than the preai days when you were focused on maybe Google right and so you know kind of what's the uh facial recognition mask right [laughter] for for something, you know, when you

1:17:12want to put your your medical labs numbers into an LLM and and get some feedback on something like that without giving Sam Alman your, you know, personal biometrics, right? This is a a very interesting contrast to a lot of the buyers in the market today are the rollups or just buying a bunch of apps or, you know, I had Blue Throne on the podcast. They're not just buying a bunch of apps anymore. They're buying individual apps, but the whole idea there is like individual apps that kind of scale as their own businesses and a portfolio of like businesses, but this is like a really different opportunity. So, I'll I'll do the pitch

1:17:50for you that if you're in the space and you think um your app would be meaningful to the burner audience and to the burner burner brand, his number will be in the show notes. text Greg [laughter] an idea and and pitch him on why he should buy your app. Awesome. I mean, yeah, I couldn't have said it better. Thank you. Yeah. Um, but yeah, I mean, I'm not bullish on, you know, app farms, right? And I think that by and large has not been validated by the market. It makes sense why people thought it was a good idea and so, you know, some very smart people were were

1:18:24operating in that in that strategy. But I think I wouldn't want to own, you know, 10 $1 million apps. Yeah. Right. I just don't think there's that much leverage in trying to scale things that don't Yeah. connect to one another, right? Um whereas having multiple multi-million dollar apps that are complimentary to one another, there there are it's it's much easier for us to add 5 million in revenue to our app than it would be to take 500k app and turn into a $5 million

1:18:57app. Yeah. Yeah. If you're uh if you're trying to pump and dump, Greg is a very sophisticated buyer, [laughter] that's not going to work out. But it makes sense. You're kind of looking for the sleep stories to the calm. Like you're looking for secondary product market fit to build out this and and so almost and

1:19:15that's right as you did with the VPN. It's not even multi-product necessarily, but it's multi-solution for the audience that you already have. Well, that's the starting point. So that's actually a really interesting dimension of it, right? So, if you take, you know, several million burner users coming in a year and then you crossell them, let's say VPN, that's terrific. But what about when you can then with that combined product, let's say there's another component of it, reach an even bigger audience, combined offering, right? And to the degree that the retention math really drives that, right? where you know a user that comes in uh you know I I I use this example of of

1:19:59GoDaddy a lot like it's kind of an antiquated brand and whatever but they you know they kind of you know you come for the domain and you end up with a website and email and you know e-commerce and you know suddenly you're like a 84x LTV customer for them and and that that magic of bundling is not it's not new right people have been doing it a long time in cable and telecom subscriptions Um but it is um you know tricky sometimes to apply and it's a real opportunity area within within I think

1:20:32consumer mobile subscription generally. I think if you're not thinking about bundling, you should be, right? And I think that's where a lot of opportunity unlock for us is both like you said within the current sort of scale of the funnel and then in expanding the reach, you know, maybe with a higher CAC target, right, and a broader bigger budget, right, to a to a broader audience. So we are working on some internal build stuff and some partner stuff that I think expands the strike

1:21:03zone of what burner is as well. Yeah. And I think that's a great way folks should be thinking about it too about that secondary and tertiary product market fit and how to how to build it out into this broader offering when you have found product market fit in that single thing and you're growing and you're doing well. But then that does provide more opportunity, an opportunity to grow faster, opportunity

1:21:28to increase that LTV across that cohort. So yeah, uh fascinating new direction for for burner and an opportunity I think a lot of people should be considering over the years. I think it's a great place to wrap up the conversation. I've started doing this lightning round and funny enough, I beta tested this lightning round with you and a few other founders uh on a rooftop in

1:21:49LA. It was an incredible evening. There's there's pictures on the internet, but we purposely didn't record it. This one will be recorded. So, uh I don't know if you're going to select different answers. Um but it was it was so much fun. We did this live. Um there were about 20 25 people in attendance. There were I think four founders sitting there and and and I hosted a panel and it was so much fun. Uh and so I started doing this uh in the podcast now to ask these three questions. The first one is what is the biggest we'll start with the fail. What's the biggest fail of the

1:22:21past year? Experiments, product launch, um, hiring. I mean, just what's the biggest fail of the year? Yeah, it just by the way that that panel was great and it's a testament to the community being, you know, really coming together here. Um, which which I really enjoyed. Um so the biggest fail in the past year is the same one that we really have every year which is one way or another is you know building things too expensively and that take too long that aren't always the right thing and kind of ultimately the tax on on velocity that that incurs because of the opportunity costs. So in the in the past

1:22:57year I mentioned we shipped VPN um and that is an example of something that you know while it's working well as a product we built it in a very expensive way um even with a partner in the mix right and so if we could run that again we might have done it in a in a more nimble way um and I mean I feel like we learned that same lesson with audio messaging and learn that lesson with you know kind of infinite numbers of features going back it's a tough balance to strike because you you you want to put your best foot forward and like build the best possible

1:23:30product and so it's just so easy to overinvest when when you're passionate about something and you're confident it you're somewhat confident it's going to work and it's working but yeah well I think that's especially true in a in aoriented team my co-founder is this product he's a design you know we have you know passionate members of the teams throughout engineers and and they want to build things the right way right So that's an important differentiation. I know this is supposed to be the lightning round, but I know I was going to [laughter] say that that's an important differentiation between just like let's, you know,

1:24:04analyze our way to a growth hack, right? It's like it's a meaningful feature. Yeah. Well, we've already blown up the lightning round. So, how would you coach yourself and how are you coaching the team to think about in 2026 um being able to take those swings but not spend so much at every at bat? I think the right way to think about it is probably there are no sort of medium-siz at bats, right? You you either do something that's kind of a painted door test, which is something I know you've talked about a lot, or maybe using, you know, kind of an inapp modal or something in the onboarding funnel or

1:24:41you rebuild the whole onboarding funnel and it's going to take however many sprints it takes. Um, but it's very hard to do kind of this one surgical thing that involves a complex system and not have it turn into complexity that that sort of spirals. And so that's a big learning and it's one in our um sort of product road mapping and engineering kind of road mapping process we're trying to get, you know, ever tighter

1:25:06about. Yeah. All right. What was your biggest win of the past year? biggest win of the past year, I mean, aside from launching premium full stop, was definitely adding technology to increase our uh payw wall testing speed. Yeah. Um we um were always a very test-driven company. Um but we were, you know, shipping one or two payw wall tests a month and we're we're able to do, you know, a multiple of that today. And it's it's very interesting because it pulled all the you know kind of the velocity is now you know on the product team not not gated by the engineering right team and probably the speed to results

1:25:51is mostly gated by analytics now and maturing of data as opposed to how fast can we ship features. Yeah, it's or excuse me, tests, but it's still true that we don't always know the ones that are going to win. Like, you know, there's kind of one winner for every four or five that we do. Yeah. Yeah. Payroll velocity. That's uh it's been a big topic over the last couple years. And I I there's legs there. I mean, we've see a lot of apps do really well that that you just wouldn't think that moment would have as

1:26:19big of impact as it does, but it does. That first hour of the user journey is just incredibly important. I just feel like I've heard that again and again. and not just the pay wall. We want to expand that into onboarding and and even sort of win back, you know, kind of cancellation flows, things like

1:26:35that. All right, last question. Growth would be easier if if my users would stick around longer, especially those tourists. Yeah, it's a hard balancing act. Attention versus, you know, kind of optimization at the payw wall and uh one we'll probably talk about the next time we get together, David. So, why why specifically though? Uh, I mean, you know, the math works out as far as like anybody who sticks around a little longer. You can spend more money on them, the money you spent this year becomes free cash flow next year that

1:27:04you can invest in more user acquisition. But are there specific things you think when you say growth would be easier if retention were better? Let me put it this way. If if I were advising someone on how to build a large-scale subscription business, I would probably advise them not to start with a product that's inherently

1:27:21temporary. Right. Right. So burner is very churn biased by its nature as a by it throwaway phone number and people love to burn the numbers you know um so you know all jokes aside I think we've done a good job of evolving it toward a a um kind of a subscription retention business but that's almost by kind of the survivor bias and of the relatively smaller percentage of customers who stay

1:27:46a really long time. Yeah, that's fascinating. All right, well this is so much fun. Thank you so much for joining me. really appreciate it. Um, we've already kind of pitched, but anything else? Are you hiring or anything other than um, people uh, pitching you an app that you wanted to share as we wrap up? Yeah, thank you for saying that and thanks for a great conversation. We have a couple of very interesting roles open um, in both product and analytics and engineering at the moment and so I would love to hear from anyone who might be interested and I and I also really welcome hearing from founders in the

1:28:18space. I'm kind of in touch with lots of people. Well, my door is always open and love to be helpful. If if I can save you some some some hard years in there in the middle, I' I'd love to be of help. That's awesome. And and as we said earlier, Greg's phone number, his burner, but his phone number [laughter] will be in. So, uh text him. I I would imagine you'd prefer a text first. Uh a text would be good. Uh but it will be

1:28:41really me at the other end of it. Yeah. Awesome. All right. Thanks so much. Thanks, David. Thanks [music] so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community. [music]