Sub Club
Sub Club
Oct 30, 2020
Nico Wittenborn, Adjacent - The Trillion-Dollar Subscription App Opportunity
Play • 52 min
This week, David and Jacob sat down with app investor Nico Wittenborn. Nico is the founder of Adjacent, a new investment fund focused on mobile-first subscription companies. Prior to founding Adjacent, Nico worked at Point Nine Capital in Berlin and Insight Partners in NYC. Nico’s investments include Calm, Revolut, Oura, and Reflectly.
(Full disclosure: Nico is so bullish on the future of subscription apps, he recently invested in RevenueCat!)
In this episode, you’ll hear about:
  • The growing potential for B2C and B2B SaaS on mobile
  • Tips on pricing your product at every stage of your business
  • Challenges for app developers in the Apple ecosystem
  • The future of subscription bundles

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David Barnard: Eiting: Wittenborn:

Here’s the Outline of Our Interview with Nico:

[1:47] How Nico got started with the consumer app ecosystem and SaaS investing.
[4:10] The formula for a breakout SaaS business: engaged users.
[5:00] Stickiness, engagement, and churn: B2B SaaS vs. consumer app businesses.
[6:23] Consumer app stickiness and engagement; Lightricks.
[6:56] Identifying nascent markets before they become mainstream; meditation apps (Headspace & Calm).
[8:25] The growing potential for business SaaS on mobile; mileage log apps (Trip Cubby & MileIQ).
[14:00] The lines between consumer and business use cases are getting blurry.
[16:41] Tiered subscription pricing and freemium game dynamics; Tinder.
[18:40] Build and price your app for your true fans — the dedicated 30% of your users who don’t churn.
[19:51] We’re in the early stages of figuring out subscription app pricing; Salesforce.
[21:30] Freemium apps and subscription upsells; Tinder, XBOX Game Pass, Calm, Blinkist.
[23:08] Users are increasingly willing to pay more for subscriptions that provide real value (Netflix subscription prices have increased 10-15% over the last 5 years).
[24:46] Pricing your subscription app: balancing adoption, data collection, and user price sensitivity.
[27:27] Price anchoring and subscription bundling; Apple Fitness+ vs. Peleton.
[30:53] Prediction: In 3 years, Apple will generate more profits from their services than from their products.
[31:45] Challenges for developers using the Apple developer platform; Apple’s app acquisitions and competition (Dark Sky).
[32:33] Does Apple have a monopoly?
[34:11] Apple Music is closing in on Spotify.
[34:22] Apple’s advantages over 3rd-party app developers and anticompetitive practices; Epic Games Fortnite ban.
[39:13] Is Apple a “benevolent dictator?” (David doesn’t think so!)
[39:55] Increased mobile spending and subscription fatigue.
[40:41] 2 reasons for the rise in consumer subscription app spending: 1) Younger generations are more willing to pay for digital goods, 2) The Covid-19 pandemic has shifted user spending toward digital entertainment and mobile apps.
[43:43] Subscription app market size: high penetration + a business model that works + user willingness to pay = huge opportunity for subscription app developers.
[43:58] Non-gaming, in-app, mobile-first subscription business could become a $1 Trillion opportunity in 10 years.
[45:11] Subscription app services enhance real-life experiences for consumers; Flighty app.
[48:26] Sophistication of today’s apps and technology; Oura ring.
[50:00] For all its faults, the Apple Developer Platform enables entrepreneurs to build million-dollar businesses.
[51:08] Connect with Nico on Twitter @ncsh
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