And that means at 20% monthly churn, it gets very hard to retain what you have, much less fill the top-of-funnel with enough new customers to grow the business. With most subscription products, the more you improve your product, the lower your churn.
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I’ve been listening to the excellent Season 2 of the podcast Startup, which gives an inside look at YCombinator startup The Dating Ring (NYT coverage here). They talk about many important topics, but I had some specific comments on fundraising for dating products.
Here’s a couple scenarios for products that buy their customers: Here’s a visualization of this: When you start to fill in this chart, you can see a couple things: First, you’ll observe that of course the “ideal” case might look like a super low churn business that also generates a ton of revenue from each customer.
However, the market size might be much smaller than the others.
Both factors open up the market to a wider audience, reduce churn, and create opportunities for viral growth.