Sub Club Podcast: Turning Gamification Into a Retention Powerhouse for App Growth— Anton Derlyatka

0:00hello I'm your host David Bernard and with me today Revenue cat CEO Jacob biding Our Guest today is Anton derka co-founder and CEO of sweatcoin one of the largest health and fitness apps in the world the past 3 years with more than 180 million registered users on the podcast we talk with Anton about building sustainable viral growth Loops at scale how to effectively gamify user incentives and why emotional connections Thrive more value than purely economic ones hey Anton thanks so much for joining us on the podcast today yeah thank you very much for having me pleasure and Jacob nice to have you on as well excited to be here so Anon I

0:42want to kick things off with a little bit about sweatcoin I don't think our audience will be as familiar with sweatcoin as they are with some other apps especially because you're just now starting to layer subscriptions on so it's not kind of well known in the kind of subscription app industry but I think you have a lot of interesting things we're going to be will talk about today but why don't you just kick it off tell us a little bit about sweatcoin how it was founded and what the app is yeah thank you so so sweatcoin has a very simple concept um at a score we are

1:10great Believers that physical activity is valuable and we wanted to create something that would help people develop a very healthy habit of continuously moving we all know that it's very very hard to be active you know we all have been on the receiving end of that you know early January Blue Monday type of depression you buy a gym membership you give up you install a new app and you promise yourself that it's going to work out like three times a week and then you before you know it you forgotten about it so I mean we all know this right you know building a a habit is difficult why

1:43is it so and you know the funny thing and that's one of the things that we kind of discovered very early on is uh actually we are not born to be active we are born to be lazy n Mother Nature did not ever think that we will have excess calories at some point in time so actually did not buil in any kind of Behavioral mechanisms that would encourage you to be active you know which is very different to some other behaviors like take Pro procreation you know we have orgasm so we procreate right so I mean easy but well as it turns out we don't have orgasm for

2:15exercise and we almost kind of you know obviously the whole thing I'm just making a bit of a joke but we I was really kind of fascinated you know I've been in the sports fitness space for many years and one of the things that I was constantly fascinated by is that you know why you know motivations are not there for some people and they are for some others so obviously that the biggest and the best thing about this is intrinsic motivation and many of us actually don't have a problem with that and we are really lucky truth is that the about 70% of the world population do

2:44not have that ability and they need to be approached because you know all of the fitness industry is based on that pretty much that very healthy concept of yeah you get you need to get more responsible you need to get moving and everything and that's why you know there's so much success you look around yourself everybody is doing something everybody's going for a walk to the gym and stuff but the reality is 70% of the roal population do not buy into this so we wanted to come up with something different we wanted to come up with something less intrusive not like guild-based or whatever guilt Tri trip

3:16based type of things you know lazy bum stand up do a 5K and all kind of jazz and you know obviously loyalty programs had been around for ages they're popular and the initial idea was can we actually come up with some sort of program Air Miles full steps and this is where it all started but that's kind of fty programs are not cool you know you look at the air miles they're pay and then you know so obviously we started I started iterating trying to come up with a a different level of user engagement that could actually make people adopt a new habit and then as I said you know my

3:51initial claim is that physical activity is valuable and the idea was that very simply that you know physical activity is valuable literally because people are more physically active they are more productive they are healthier they destroy less value for the economy generally because they get ill less frequently and if we were able to capture that value One Way or Another and somehow tokenize it and share it back with the user would create a an ongoing flywheel and that's exactly what we did so yes that's a long story you know it's story kind of materialized initially in a form of a loyalty program then I started chatting to a few friends

4:27I think that I ended up with speaking to my now co-founder who was like oh man let's just take it all the way let's call it a coin and we of course we were inspired by Bitcoin then it was back in 2015 Bitcoin was still in its infancy relative infancy so we came up with this concept of creating like a uh a virtual kind of point system or token system next thing we knew is that it just exploded that whole idea is super fascinating you know a lot of people these days are trying to recreate dualingo the dualingo for this they the dualingo for that and you know streaks is kind of an

5:02interesting way to do that but this whole idea of like this loyalty program of a coin is an interesting kind of spin in the other direction of incentivizing those things so how does sweatcoin actually work and funny enough I was telling my wife last night that I was interviewing the CEO of sweatcoin she's like sweatcoin that sounds kind of gross then I was like yes but it's also really cool it's like you earn coins I didn't think that for a second for sweating which is I think a really cool idea so so how does that actually work and maybe it' be interesting even to talk through

5:36some early iterations on like what did work and what didn't work the question I was going to ask is like how did you bootstrap that fly you know you talk about like exercise or sweat being inherently valuable right but actually create there needs to be some Arbitrage there that to actually like capture and and sort of tokenize that so like how did you go about bootstrapping the value for the customer and then also for the partners yeah brilliant question like a set of questions so let me ask them one by one so I think firstly on the name our original working title was fitcoin and then we thought it wasn't like it

6:06was too cozy almost like meaningless we needed something a bit more polarizing and lots of people especially in the early days right now it's become a little bit of a like you know lots of people have heard about it and they don't have an issue like here in the UK we have this brand called Sweaty Betty and you know it's become such a such a kind of High Street phenomenon that nobody thinks about sweaty betties everybody swey that's it that's fine it's similar with sweatcoin now I I love the name just to be clear like what was cool last night in the conversation with my wife was that it was polarizing and

6:39it like it led to a conversation like I said sweat coin she said oo that's gross or weird and then we had a whole conversation about like sweating and like earning for sweat and stuff like that so I think it was ultimately like a a really successful name in that way we love it too yeah so but you know the the original kind of the starting that you know the the app is very simple you walk we make sure that those steps are real so we run a piece of software that we call a valid dator actually ensures that you know you cannot put it on a dog as

7:09some people suggest on top of a washing machine or create a farm in Vietnam and you know like uh fake the system and then you know every Thousand Steps give you a sweat coin and then you can turn those sweat coins into you know product Services experiences donate to charity and you know send to your friends so that's a very simplistic type of activity now now coming back to your original question about gamification now look gamification has been around for ages I think the first time I kind of consciously heard about it I think was back in I would to say maybe 2005 when I had a course from corsera called

7:47gamification and all that kind of jazz the streaks the badges leaderboards it was all there so you know the human you know the humankind has known about gamification for ages you know but it's just easier said than done so I think Jo lingo did really really well what they do is a different toolkit you know they do gamification really really well and we went slightly down down a slightly different route which is incentives the use of incentives because you know one thing that Fitness kind of lacks a little bit is that all the fitness apps they're kind of similar you are being requested to kind of do something that's

8:21generally unnatural you don't you don't want to especially for those people who are not Fitness junkies but you know yeah just do something and and that's it you know we wanted to take a slightly different angle and kind of make it fun essentially the promise there is that look you know you walk anyway why don't you try and earn something useful so it's a very different concept very different message when we just launched we intentionally the product concept was that we didn't want to look like a fitness app so the look and feel was much more of a financial app where you had the kind of the bullet and you'd had

8:53a Marketplace and the techy very techy look you know we had a very cool kind of generator Graphics there it was cold and was a bit we definitely pay some tributes to the kind of the emerging crypto scene there because we wanted to kind of you know to to congratulate the new movement and stuff like that so all of that essentially we became the only financially looking up in in health and fitness so I think that created a lot of Buzz that was really really interesting again don't forget that we launch the app in 2016 it was very early days of crypto and some people would just you

9:28know have no idea idea and then I think our first stage of growth obviously timing lucky as many products are we launched in the Ico boom of 2017 but I think what was really really important there as well you know you know we launched and then you know the press the media picked up on the story because it was fun lots of people wrote about us we got our first initial whatever 30 40,000 users which was great amazing but then obviously we hit a bit of a wool in terms of how do you continue to grow and you know funny I remember we apped to Y

9:59combinat we made it to the very final round and then we got rejected and they said guys you need to grow faster because we were so happy and we were so proud that our retention was Skyrocket you know rocketing in terms of other Health and Fitness Products because health and fitness is really difficult to retain users and we were doing so well on our first kind of 50,000 user base so we thought that was good enough but they said no that's not good enough you guys need to figure out growth so we came back to the grow the drawing board that was November I want to say November

10:2816 and we said look you know we need to get to like 300 users every day and then we came up with this idea to actually turn things around we just realized that unlike other apps or products that actually if you want to build a referral program you all of a sudden you need to have quite a lot of cash to be able to fund it now we didn't have to do it because we had our own currency we were our own Central Bank so to speak so we created a usage Jour a very simplistic one so if you B into this idea you install the app you know you see a a

11:00very simplistic today's screen there's two things you can do to earn sweat coins you can either start walking or you invite a friend for five sweat coins and that created quite a lot of that intrinsic virality where we made the earning sweat coins essentially earning sweat coins is the user experience of course as in any kind of gaming e economics you need to provide ways for people to do something with El coin once they've been earned but you know that that happens usually later and this is how we solve the call start problem so uh we created that inherent Loop that's ingrained into the core user experience

11:34I think this is what's so special about our gross engine and that kind of helped us to get over the line and we got to 300 users a day and then a th and then 5,000 and then as I said you know gradually that you know the train gathered speed and we ended up just uh raising around in about N9 months later from Goodwood capsu finally enough one of my interns about 9 months later in the summer of 2017 he said do you guys mind if I reapply to Y combinator I said I don't think it's needed but hey why don't you go ahead do it so he did and

12:08we ended up being accepted by that time we already kind of signed a term sheet I really wanted to get into by combinat but on our on our terms that wasn't acceptable for them so we kind of passed on them so it's a funny one things changed in 12 months a lot so uh no but I think that you know credit to them I think the conversation was really useful just a point of clarification so from the beginning this like sweat coin it's a is it a literal crypto coin like is it on a chain no it's like a virtual currency essentially that the moment will launched there was only two

12:38blockchains out there the first one is Bitcoin right ethereum was like just starting ethereum was just a startup with metalic and went for a walk down down the river THS the South Bank he walks very very fast by the way but we concluded there that you know we were not not in a position to build our own blockchain no need yeah I mean I think it would have been then obviously the user experience challenges were crazy they still are it was slow it was expensive it was like everything like so it was only in 22 when the technology was of age and we were ready to

13:13essentially partnering with sweat Foundation to launch a crypto proposition which is a separate thing to sweat coins there's no connection but we are partnering the organization and some of our users who actually decide to op in they can convert their steps into a sweat token but that's a separate story sweatcoin continues to be a health and fitness app it's disconnected from sweat Foundation but it's essentially the fiat currency right with the app of sweatcoin right you control well technically speaking it's a it's an inapp currency you know and then our job is just to make sure that it's useful for our users to make that sweatcoin you know to earn

13:47that sweatcoin because they find it useful I wanted to dig into that idea of the sweatcoin being valuable to users it just dawned on me while you were talking that I created a form of sweatcoin for my son he's like 16 super into Ai and computers and he'd rather just spend all day on his computer and so just this weekend I made his allowance contingent upon getting certain physical extra shot I created my own sweatcoin I should just you know get them on the sweatcoin App instead but for him now there is direct like monetary value to him doing exercise and that's a that's highly incentivized for him how did you early

14:25on and then how has it evolved in making the sweatcoin actually valuable and something that people actually want and are incentivized to get so look you know let me rephrase the question again so lots of people basically question okay how is that possible where does the value come from and when we just started so obviously we researched the graveyard of other companies that Tred to do something similar and what they failed you know the most obvious answer there is that okay I need to find a backer you know I need to find somebody who provides the value because in your in your example you are the backer of the

14:59whatever that kind of the value that you that your son is creating by by being active and the most obvious answers are one of the three it's either a health care provider it's a healthare insurer it's a health insurer or it's an employer all those stakeholders are potentially interested in you being active the approach with that you know it wasn't and we were not excited about you know any of the three as you know I mean when you start up trying to penetrate the Healthcare System unless you've got some incredible competitive Advantage near impossible same applies to health insurance and with employer you know Corporal Wellness

15:36is a is a red ocean it's a very busy area lot of competition you know the check size is small Revenue retention is low it's hard to compete so we kind of went back to the drawing board we said we need to find something different and we kind of concluded that our best shot really is to create such a sticky user experience that users would love the experience and as a result the brands the partners that we would were hoping to partner with they'll be able to provide lots of value in kind to make it worth their while so I mean the way we designed the user experience we didn't

16:09want to create an Amazon kind of way you can exchange your your sweat coins for like thousands of different products not because we didn't want to because we knew we couldn't get all those products in who would give them to us so we created a small curated list where there would be like four products only every day and there would be a new product every day so essentially 12 products weekly and you know we had a good enough Network to find 12 different brands that would give us some value in kind because they love the idea and this is how we reserve the cold start problem and we

16:42started getting those users and the number of users gradually started to increase and then at some point in time we just realized that some of those vends as used we used to call them actually were queuing outside the door saying oh guys when can you feature us we are du to be featured next November can we actually move it forward a couple of months and this is when we realized that the number of users and the kind of the attention span we were generating the level of Engagement was big enough for us starting you know to start monetizing those us and then the other kind of thing that we did at that stage

17:13we just realized that we were very anti- ads and I'm still anti- ads because whenever you think about ads you think about the bloody banner and that's something completely irrelevant and then we discovered that some of our users and this this practice of rewarded video some of our users their retention and engagement improve considerably when we let them watch a video where they are at Liberty to decide whether they want to do it or not so essentially we introduce a product where you could get one s coin if you watch the video till the end but you don't have to do it A and B we would

17:47restrict the number of times that you'd be able to do it initially it was just once a day and so then we experimented to some users actually the the threshold was three times a day and then if you try to allow them to watch it more frequently then the retention drops but actually one to three times actually retention and engagement improved it's completely counterintuitive but you know the people in the gaming world and then I obviously I started researching much more into this people in the mobile gaming World know this so sometimes there's a group of users so about 20% of our users they engage with us they love

18:20it the rest of them hate it and it's fine these were the early kind of the things and then so again you know we we solved the kind of the call start problem and then we were really lucky to post through that value of death where you have too many users to you know have negligible costs and uh we went on the other side of the kind of tunnel and then already kind of we had scale and we were able to monetize somewhat so you mentioned in an abstract like partnering and creating value and kind those partners are they giving full products like what is the actual value is it a

18:54discount on gym equipment or the original idea that I had is that look you know nobody's going to be excited to get access to a coupon because you could go to Groupon and get get a discount voucher so early version was like yeah it could be just you know 100% paid in sweat coin just real product I remember like we secured a deal with our friends at VI be food the uh the flat Soul running shoes very very cool and they said okay we'll give you 100 pairs of our last year's collection and we put them on the on the marketplace and like you know the users were static but then

19:26obviously as you continue to scale as you go Global it becomes a bit less kind of manageable from a complexity perspective so we do have discount vouchers but we also make sure that whatever you can find on sweatcoin is pretty unique of course it depends very much on the geography as well so there's a there's a wide range of different things and some of the things you can get only for swep coins like 100% of it and then you can get some discount vouchers there's a plenty of different stuff and so then the value for the brand like Vivo Barefoot they gave you the shoes but then essentially it

19:56becomes kind of like an ad for them and then the hundred people who tens of thousands of people see Viva Barefoot and then they go look for oh maybe I actually just want to purchase this and then those that get it for free then then maybe over the next decade they buy 10 more pairs of via barefoot shoes after getting it for free or will that happens even more immediately because you know you have a way of just going straight into we be food's website and just you know buy whatever use use whatever you got because this is how you do we do fulfillment we don't do

20:25fulfillment ourselves it's done by our partners and you know from that perspective you went there bought a pair of shoes and maybe also bought something else oh right so there's always that you know kind of the revenue kind of generation opportunity any other fun examples of of partners that you've worked with this is just so fascinating to me again like thinking through this this idea of coins and retention and gamification that you're like giving real products to people for exercising yeah any other like fun examples oh look I mean obviously in Co everybody was so excited about digital experiences it was just like amazing for us because we

21:02didn't like you know one of the potential kind of difficulties is always that Redemption process on the Fulfillment because you know we are in the game of instant gratification and if you can only get your product after a few days that's not instant is it but when you get a subscription like you know we worked with whatever Spotify of Apple music and these guys like you know the basically the propositions that you can get the first three months for swe coins and then the rest of it is paid through you know Fiat cash and uh that was just amazing so we really absolutely loved it but there was like in lots of

21:34lots of people who would like you know at some point in time in some markets our positioning was that we are a product Discovery platform and there were lots of you know without traffic lots of new startups doing some really cool things in the health and wellness space like you know Innovative kind of the wearable sensors apparel and stuff like that and they would just you know they would always struggle with distribution because you know you do when you start from scratch and we would be that kind of a really really welcome partner for them because we would be just showcasing that product to our user

22:07base and the user base was very attuned and receptive to this and it was just great yeah that's so fascinating so it's really interesting to me that the next layer that you layered on there so you talked about this referral program where you give five sweat coins for somebody who invites a friend but now you have a whole influencer Hub what does that look like and how did you layer that on look I mean one thing leads to another as it usually happens and you know we kind of early early stage we just noticed that there was some users that would bring in like massive numbers and I'm not talking

22:39about like 10 20 30 invites we're talking like hundreds sometimes thousands so obviously we started digging and we realized that some of our early users would have a considerable following on on social media there were early adopters they loved it and then they just you know because we provided that functionality we kind of they were able to share the link on their profiles and then lots of users would come in because everybody loved the idea it was so fresh and everybody kind of loved it and people love to share and when we realized that were people like this we also realized one really interesting thing at that stage it was just the

23:15beginning of the influencer movement and there were like big influences and there were everybody else and there were some people that maybe had like 10,000 followers which is not insignificant but there was no way for them to monetize I'm not sure how familiar with the influencer business but if you're an influencer there's two major things that really that are really annoying firstly when you work with a brand usually do that through an agency unless you're a a massive influencer and that's a hassle because the a agency works as a uh kind of you know as a bridge and they tell you what to do what not to do so it

23:49takes lots of iterations and speaking way and then the second thing even if your contents got you know okayed by the brand then you know it's very very hard to see what kind of efficiency you know whether you drove any results in stalls and if you did how much and when are you going to get the money so the money this the cycle is very very long so what we realize is that there was a gap that wasn't essentially covered by anyone of that midcap so to speak influen and those guys and you know when we discovered that we created a special market place or a special level that

24:27would only open up to user they invited 30 people successful so you just install the app you start working and then once that number which we counted inly all of a sudden you kind of reach more than 30 influencers uh 30 invites then a secret section of the marketplace opens up and you can convert your installs into a bigger better range of prices and we would have like you know a thousand invites would buy you a PlayStation and 5,000 invites would buy you a flat screen TV or something like that just I'm making up those numbers up but was the idea and when we did that that b

25:01basically started spreading like wildfire because lots of people with anywhere between five and 50,000 followers which is again not massive but it's not insignificant either they kind of had a way of essentially turning their following following into something very tangible very quickly and that's something that essentially prompted the idea of an influencer Hub which is in in effect this is a like a a separate version of the app that's available for the for people who are very rich on invoice which is a very similar app but there's an extended functionality there's extended range of prizes and as extended service so to speak like think of it as a VIP version of the app it's

25:42so fascinating have you since then also layered on any kind of native ad content or viral content on top of that that you directly work with influencers or has it all been through that influencer Hub so look I mean we start obviously we started with influencer Hub and you know we got ourselves in a position where we we did not do any paid acquisition at all which is just so incredible I mean people are going to be listening to this and just I well I mean I'll challenge giving away a slat screen TV as a form of paid acquisition right with more steps I agree with you yes but then

26:16again I think that that was like that was probably ENC counted for like 5% of all our users and it fits into the model right it's part of the part of the core Loop anyway it's really interesting it's really interesting because then at that stage and that's right now it's been written about very widely I think there's like lots of people talk about it because there's lots of viral products out there the issue with viral products is that you can create an explosion but when it dies down like you are not in control of things because virality is uncontrollable it's like nuclear synthesis it's basically a

26:47nuclear reaction you can have an explosion but how do you create a nuclear power station where you can control the nuclear reaction and that was the biggest challenge for us because we could have the that massive Spike like 30,000 users daily and then it would just go back to like two or three I remember then I was talking to one kind of very very smart data scientist and you know I said can you build us a model that would help us understand how we create a virality and he was a specialist in stochastic processes whatever that means and he said look you know he did it he did some studying and

27:21then he said well one thing I can do the only thing I can do I can tell you that the virality or the viral spike is is inevitable one thing I cannot do I cannot tell you when and that wasn't particularly kind of useful because fair enough you just sit there just waiting maybe it's going to happen tomorrow maybe it's going to happen three months but you don't know so anyway we kind of started building that sort of approach now what we did then is we just realized that there are certain stages in creating that controlled nuclear reaction and the first stage is you need to kickart the process you need to

27:57create what we call a ground swell the ground swell where you create a little bit of that noise around the brand so that people who have some following they start listening they kind of they know about the product they've heard about it because that's important and that is best done when you do it through the influencers that you're friendly with but those influencers need to develop a Content that's very native to the channel they use because at the very early days of Instagram it was very different you know lots of people would post content that would be not necessarily kind of seen as genuine lots of professionally developed content

28:37early days again we now know that for example Tik Tok is like famous like you cannot full users that they will you know they will spot a fake a mile out so we started experimenting we started working with those influencers that we were friendly with and then when you kind of you start developing that content you become really ATT tuned to what the users need in those channels and then slowly but surely we've developed that expertise where we kind of we were able to work with influencers then take the content they there was a winning content they would produce and we a would share it with other

29:11influencers you help them develop their own just give them some ideas and some of them we started using our in our pet advertising like our pay Debs constitute right now around about 10% of the total still only but that's a very important kind of starting point this is how we create the ground SWR from the ground swell with then accelerated and what's really important probably the key the truly unique part of the growth engine is that when you create the virality then the velocity of invites drops sharply what that means what's velocity is the time that is between one user installing inviting another one the next user installing

29:48because guess what when the velocity of invites shrinks you could have six or seven people or sometimes more in you know the chain happen happening within 24 hours and when that happens the algorithm start to pick you up and you get lots of organic kind of Organics through app stores and uh and Google and everything so essentially just creating that you know this sequence of steps where you start creating your ground well where you get the influencers working with you they develop native content then it's being picked up because again I'll use it to use the virality is very strong the moment you create that Spike then it's being picked

30:27up the main thing by the user to user virality and then the Organics kick in and you become the number one health and fitness app and sometimes occasionally the globally you know we were number one app globally in the US Brazil 65 other countries have not mistaken so like you know of course you cannot sustain it but you can sustain the number one place in the category for example I mean you can't sustain any one Spike but like this is sort of goes back to just App Store Marketing in general which is like a you know getting featured or whatever if you can create a somewhat repeatable

31:00process of knowing oh we we'll generate so many viral spikes a year that starts to become like a somewhat of a reliable Channel that's not easy and you know we kind of we've fine tuned this girl engine over the years and right now we are like literally we we don't we don't have that many spikes almost at all like we're very stable yeah but it takes time it takes experimentation we haven't seen it there was a period there during 2020 21 where we would see a lot more viral spikes and apps I don't think we see that as much David I mean our famous widget kit is our friend uh a very

31:30famous example went like Mega viral was that in 2021 2020 something like and just like nothing I'd ever seen before in terms of like how fast it went and yeah it's been a little bit I feel like more metered since then I don't know maybe it's more people have rushed into influencer marketing and stuff like that it's become a little more competitive but it's an interesting observation yeah it's so fascinating building that growth engine on I love the analogy too of like controlling a nuclear reaction and then figuring out how to get that spark and then how to like keep getting that spark to like maintain that growth but I think

32:05that you know the next question then is like okay this is an incredible growth engine and being able to acquire so many users at such a relatively cheap cost compared to a lot of other folks in the industry is just an incredible leg up but then how does sweatcoin actually make money like how do you then monetize those free users that you've brought in so Luke I mean as I said the two main uh monetization channels is the commercial Partnerships with Brands and then the kind of the the ads that I described which we've kind of you know F tune over the years however it was very very clear

32:40that the advertising model will only take us that far even the much bigger user base type of products they kind of struggle with it a little bit like you know look at Twitter you know they decided to Pivot and I think that you know for us it was essential to be independent from the health healthare Partnerships the insurance partnership the corporate Wellness we know we'll go there one day but I think there's a far kind of much lower hanging fruit and that is subscription because you know with subscription I think the name of the game is how cheaply you can acquire uses at scale because everybody at one

33:15point or another they face the music they kind of they end up in a situation where you kind of you know you continue to grow your C and very very hard we Pro it probably took us a bit longer because I think that we probably got a little a bit too excited about the fact that we got the profitability at the time when everybody else was just essentially crashing a burning like you know we got the profitability at the very beginning of covid and I think that I probably just you know got a little bit over excited as I said so I think that we probably took that decision to go a

33:46subscription maybe a year 18 months too late in retrospect but I think right now what's totally amazing is that we launched a very basic subscription we did a a very kind of very very kind of low grad type of development and we already have considerable month Revy so from that perspective that's a really important and exciting opportunity there and then beyond that subscription so of course you've got that like you know we worked with the NHS which is the National Health Service in the UK you know these guys essentially the number one spend line for them is diabetes type two 11% of the total budget of the NHS

34:24goes into diabetes 2 and the NHS developed what they call the the national diabetes prevention program ndpp and that's administered to users through the kind of private providers and that ndpp actually works it's administered to people with pre-diabetic State and that aims to essentially drive them away from the edge of the cliff the problem with the existing program is that its completion rate is very low it's about 20 to 25% which means that the other 75 to 80% of patients they end up with you know diabetes 2 with probability close to one now when sweat coin participates and plays a role of an engagement platform for the NHS that completion rate goes

35:07from 25% to 89% this is how we work you know when with a partner that essentially provides the extra liquidity so to speak they provide an extra range of products that makes the whole experience for the user even more exciting because on average a sweatcoin use it becomes 20% more active using a free version of the app but let's say in case of the NHS when they come in and fund an additional range of prizes and other incentives that number goes up to 45% and users lose about 6% of their body weight in 10 weeks and all this kind of just so the model is there but

35:43the B2B is a very different Beast is the NHS doing anything to promote actual like installation I don't want to go into discussing the how good NHS are in terms of digital well I don't know are they handing out QR codes at at doctor's offices and stuff for you guys or is it it's but it's purely their funding their funding no it's it's a little bit more complex than this it's you know requires a deeper integration but why I'm saying in this is that there's unlimited opportunities in the B2B space but I think that just generally speaking we still want to continue to be true to our

36:12roots of the b2c and from that perspective you know the Spates of cryption is such a a no-brainer and you know look you know at this stage we are running about you know two-thirds of all our user base is actually free and we on board anywhere between like 60 and 80,000 users every day it's a massive scale as is for any health and fitness product retention is the name of the game you kind of move retention by 1% and that's a massive uplift but just coming back to that pay subscription conversation look you know there's a there's lots of opportunity in there and we've just started with scratching the

36:44surface there's plenty of stuff I think that the good thing there is that lots of people as you already kind of mentioned you know lots of people in the subscription base space they start with subs and then they hit a ceiling and then they try to diversify into other r streams I think with us with us you know subscriptions in a funnier way it's a much more well understood path and lots of people have done amazing things so it's relatively easier for us just you know to take a couple of pages from their book and uh and continue to build yeah I'm just looking at the the premium

37:15offering and much more matches like what you would see like like a Pokemon go or like some other games that layer on subscription which is like you get premium access to stuff that people don't get it's not necessarily like a content and feature unlock it's like a boost to your ability to play the game which I think fits really well you know and it kind of becomes a no-brainer if there somebody who's very serious about this like to put in a little bit of money and you'll get a lot of Leverage out of your usage you think of things like a family subscription like you know

37:43one of the things that very early days Michael founder he actually packed his at the pocket money to his kids to the number of sweat Co that were genu rating yeah I gotta do this but so much we can do because you know at the end of the day walking is the type of activity that's available to almost everyone you know that's that's almost like breathing and it's such a an endless area of opportunity and physical activity and again because of many of my friends who are in technology sector we are moving less and less because we're slay to convenience you know it all started with

38:18the remote control but right now you don't have to step outside to buy food anymore you don't have to almost do anything so before you know it we're all in w e kind of uh you know we'll move in those capsules I got to go to Sam's Club and ride one of the scooters the other day unrelated but related so I got to experience it that's scary man I know I was like oh your point earlier about there being no natural incentive to you know I was like if everybody had a scooter you just would you know uh Superior for those who have zero contacts on Twitter Jacob broke his foot

38:50like a month ago and had a massive surgery and so even more sedentary than usual you would have to give me a dang sweat coin I'll go I would love to go walk 10 miles right now that'd be amazing but now now I have double reason so Jacob kind of alluded to it but I wanted to dig a little deeper into how you thought about layering value into the subscription and as you mentioned even you know you kind of are doing the reverse of what so many people in the industry do of like spending a ton on paid ads putting people right into subscription a lot of apps are even

39:23doing hard pay walls now you know apps are switching to hard pay walls then you hit a ceiling and then then you have to figure out oh gosh how do we get our customer acquisition cost down you know how do we layer on aium products so you you've kind of done this in the opposite but I think it'd be really interesting to hear how you thought about creating value for users in that subscription like what's that kind of like primary motivation for somebody to actually pay when the premium product is so good look first of all we've built a product with inherent limitations like there's only

39:56that type of products that the free version can afford so to speak there's you know we would always set a ceiling on the number of sweat coins you can earn on a day on a given day so because of that you know we needed to create a kind of e economy that would be sustainable so we introduced a bunch of restrictions early on that we actually can lift or remove one of those restrictions so to speak because you know we talked a lot about ads and I was kind of very excited about it but then let's face it some of the users even those users that do not engage with

40:31those apps the ads they kind of see the ad and it's not necessarily the ideal experience so I think we moving ads to some users that's a massive value proposition I'm not saying that's the only thing we're going to do but essentially just removing the restrictions that are inherent to the free experience I think that's a massive one but then there's a bunch of other features that are so to speak more expensive and cannot be justified for the free user a case Point like we are working on a walking coach you know is someone who essentially helps you with you know provides the nudges provides those not necessarily inside no no a

41:08robot of course not a human like you cannot justify a human really of users so there's a bunch of different things that can only be available to a pay subscription and that arises very naturally from the user experience because you know I we always think about sweatcoin as a platforming experience on top of which you can build so much more and like that's like literally we've built that very platforming use case where it's very simple you walk your steps are being converted sweat coin has been issued and there there's a bunch of basic things you can do with them that's all and then you can stop building okay

41:42there's other ways alternative ways to earn there's alternative ways to spend there's alternative ways to kind of do something with that s coin and that all very nicely feeds into the pay subscription idea now the way I like like to think about you know this and I know it sounds a bit controversial because most of the market would say yeah you can start at top and then you kind of like you you launch a a more expensive car and then you can create a mass market car but sometimes you can like launch a Southwest and then you can create like a premium experience and the premium experience will be the same

42:18plane just wider seats better quality food better service and people would would be prepared to pay because at the end of the day like all our users we divide them broadly into two groups the ones that come for rewards and the ones that come for health the ones that come for rewards they're less sticky but some Chun a considerable chunk of them they actually they qualify into what we call come for rewards state for health they come for the free stuff and then before you know it they go like oh man I'm working 40% more wow that's cool I'm no long kind of interested yeah I'm pass

42:51rewards but you know what I'm hook up on working how do you distinguish like what are the signals you see that tells you like what category somebody's in based on behaviors or well I mean we do lots of user research we observe lots of kind of user Behavior patterns like those users who engage with with ads more they tend to be more rewards focused there are some users actually it's incredible how the balance itself serves as a progression system because you know essentially what we've done and you know it's it's it's really amazing we just reframe steps because you know we used to have Fitbit and the Fitbit is

43:25wonderful but then you kind of 10,000 steps next morning zero 2,000 steps afterwards this man it's come on it's like a it's the same thing again the moment you reframe and you say these are not steps these are coins and here's your balance and your balance keeps on growing and you're actually quite rich and I know it's for myself even now I'm looking at my balance my balance is like whatever 10 15,000 sweat coins makes me feel good and bought in like there's like literal lock in there yeah man I got make what's a fat I really want to get to 20,000 I'm rich so I think that

44:00that refraining that's a major that's a that's a massive that's a very powerful thing and I think that that's you know coming back to what we started with it you know understanding behavioral economics Behavioral Science generally I think it's useful yeah I mean I think there's lessons there for anybody building an app it doesn't necessarily have to be direct a coin or an analogy like that but the more that a users experience can vary with relation to the amount of time and effort they've invested into your app like you'll create those hooks right and that that has Downstream effects on retention and it doesn't even have to be all like

44:32there's no logic there there's really no there's no literal value but like I guess literal value is not a thing right it's all in the eye of the beholder so if that if if you value having a high balance it now has value right correct lots of that because lots of people get a little bit too literal talking about the value of sweatcoin and you know we always like to think and differentiate the kind of the rational value element and then the emotional value what's really interesting is that we we around this test when we ask users so how much do you value your sweat coins at oh like

45:02what's the exchange rate how much would you buy for somebody else's sweat coin and people then would say anywhere between one and 5 cents and then we ask them how much would you sell your sweat coins from and guess what the answer was I'm going to guess higher 50 cents to a dollar which means that basically your own steps or actually I bet David you know the steps of your of your son are going to be far more important to you then let's say my steps or somebody else's that you don't even know it's really interesting considering it's fully fungible like oh man that's that's just like a it's Endless Possibilities

45:37there and we're just scratching the surface there yeah yeah I mean it tells you you haven't really created a currency because it has no currency right it has no bidirectional trade value the it's got an asymmetry in bidirectional trade a really interesting conversation we had a long time ago when we just started with a dino one of the top Business Schools and he said like I'm not sure that you necessarily want to go crypto because then the magic will disappear I think actually it's a fair point because there's this discrepancy in that the market value versus the perceived value the yeah yeah you don't want to you don't want to shatter

46:09anybody's perception right so I think there there's lots of really interesting stuff and you know I appreciate that we kind of we just scratching the surface here and we're probably not digging deeper into it just yet I just valued all my Pokemon cards for when I was a kid and it and it's destroyed me I wish i' had never done it in my head it was worth thousands of dollars and now now turns out not really held on them for 25 years for nothing in talking through that it actually reminded me of a conversation we had with somebody who is really early at Tinder and how like this

46:38idea of the economics inside of an app can help fuel the monetization so like with Tinder and you're talking about how like certain things are limited within the app and then you buy the subscription to kind of like uncap that and it's similar like with Tinder when they really exploded with monetization was when they layered on like you get one boost a month for the subscription but then you can buy additional boosts to get attention and this whole idea of like creating an economy inside of an app where and Jacob said it it's like you you pay to be more effective playing the game is just such a a fascinating

47:16concept for an app to build this economy inside the app well I think the gaming companies are very good at it and they've been have it for like 10 you know decades and they are very good building the experiences where which which create that scarcity naturally so I think that you know and uh a good friend of mine who is uh like a like a a very successful serial founder in the gaming space his thesis is that you know the gaming the mobile gaming hyper casual casual they know so much about the user that all that information all that knowledge should be transferred into the app world and there so much to

47:51learn for the for us in the in the app space and that that's happening as we speak L and you know actually everybody mentions dingo they doing exactly that they just using some and let's face it that's a very basic gameification mechanics that's been known to the human current for decades and they just implementing and just killing it and doing it really Tastefully too right they've done very little at the right amount at the right time and they've maintained a brand alongside of it which I think is is rare yeah I think probably some amount of nose turning in the app world to some of the techniques that are

48:23used in hyper casual because yeah because some of it's not all not all that great but at the core of it like there's a lot of stuff there that if you if you bring over appropriately you can really supercharge so one thing I want to say about gamification some people want to stick it pretty much into every hole the reality is that in order for gamification to work well there's got to be an underlying experience that's actually good for the people and they know it if the gamification is used for you to watch more ads you may be successful shortterm but long term it's not going to work I think why dingo is

48:54so successful they layer that gamification on top of the fundamentally good thing which is learning a language you know for us it's being more active and that's why people kind of they agree to be slightly manipulated because people are not stupid I mean they understand that this streak is yeah it's but they they play the game they play the ball so I think that's that's my view on gamification I think gamification can be super successful if applied properly to the right underlying experience yeah I love it you know you guys are are pushing being more active do lingo is pushing learning I think that's a great place to wrap up but as

49:27we wrap up anything else you want to share I'm going to link to I know y are actually hiring for a lot of roles right now but anything else you want to share as we're wrapping up no I think that you know it's exciting times for us in the space of uh Behavior change I think it's really really exciting that there are some successful products there I'm really excited about the right mix of incentives and gamification and building a long-term sticky product and then of course you know uh subscriptions is an area that we are doubling down on right now and uh would be great to catch up

49:56with you guys again in another six to n months maybe and see how we're progressing absolutely thank you so much for joining us this is such a fun conversation thank you very much guys David Jacob everyone Thanks a all for having me thanks so much for listening if you have a minute please leave a review in your favorite podcast player you can also stop by chat. sub club.com to join our private community