Founder Playbook · Sub Club by RevenueCat
9 tactics from Eric Crowley
The Subscription App Industry Rebound
Watch the full episode“In 2024 things have probably never been better. A lot of companies took their medicine. A lot of really great founders and builders kept their head down and they kept doing exactly what their mission was, which is serving their customers. We are seeing better opportunities and better companies now than we even have in 2021.”
2024 is the industry's best year ever — founders who kept their heads down and served customers won
After a brutal 2022–23 correction — over-hiring, wasted marketing spend, and pivots to B2B — the CSS (consumer subscription software) market entered 2024 in stronger shape than the 2021 boom. Companies that survived by staying focused on product and customers emerged with better retention, profitable growth, and higher valuations than the hype cycle ever produced. Crowley's M&A pipeline is fuller than ever as a direct result.
“Consumers flock to best of breed and they learn and decide what best of breed is because other consumers tell them. Word of mouth is such a dominating channel. Flo is really special — they get over 50% of their users are organic. Moms now are telling their daughters, friends, girls in school tell each other about it.”
Category killers win on organic word-of-mouth — over 50% of Flo's users are organic
In consumer, word-of-mouth is the dominant channel — not paid UA. The apps that become category leaders reach a self-reinforcing flywheel where organic referral dwarfs all paid channels. Crowley's framing: 'category killers' emerge in every vertical (female health, youth sports, family management) and they compound on the organic advantage until paid acquisition becomes almost irrelevant. Building for that scale is the highest-value strategic goal.
“You start with 100 users, you churn 50 in the first year. In the second year you keep 45 of those 50. Then the third year 43, the fourth year 42. All of a sudden that parabola has just flatlined. Now if you have a flat cohort number of users you're just adding price increases which can overcome double-digit compounded inflation.”
Churn stabilizes into a flat 'locals' cohort — price increases on that base unlock NRR
CSS businesses experience heavy early churn from 'tourists' but retain a stable base of 'locals' whose annual renewal curve flattens. Once that flat cohort forms, periodic price increases (à la Netflix, Hulu, Amazon Prime) can push dollar retention above 100% — positive NRR — without acquiring a single new subscriber. The key pre-condition: wait until a meaningful base of multi-year subscribers exists before testing price increases.
“Apple may clip off a couple percentage of their free users, but what they don't do is take the people that would pay for AllTrails and Flo. Those people do not just stay on Apple — they're trying to look for a premium experience. If you're an app that hasn't innovated, that's kind of just a me-too app sitting at the bottom of the rankings, that's the hardest spot to be.”
Build deep and verticalized — broad shallow platform features don't take paying users
Platform sherlocking is frequently overhyped. When Apple adds hiking maps or period tracking it attracts free users but almost never converts the high-intent paying audience — those users seek depth, community, and features no OS-level app will build. The defense is simple: verticalize and go deep. AllTrails adding social features, Flo moving into perimenopause, OnX adding layered maps — these are moats Apple will never bother to match.
“If I say I'm a Strava user — well what do you think? They're probably an athlete, they probably care about fitness. It's an identity. If you're a Surfline user, you're a surfer — that's just who you are. Tying your CSS business to passion is a great way to enhance retention, and passion ties to identity.”
Maslow's hierarchy of subscription: apps tied to identity and passion retain longest
Crowley maps CSS apps onto Maslow's hierarchy: safety (Life360, Citizen), love/belonging (communities), esteem (leaderboards), and self-actualization (Calm, Audible). Apps anchored to identity — 'I am a hunter, so I use OnX' — retain at a fundamentally higher rate because cancelling the app feels like a personal renunciation. The tactical implications: build community features for belonging apps, leaderboards for esteem apps, fresh content for self-actualization apps.
“There's a bunch of CSS aggregators in our report. They're buying these companies up for multiples. They're giving founders liquidity. If you're generating EBITDA and you're saying I'm done, I want to go off and do something else — I think I can get 20–30 million in my pocket — that's a pretty good option instead of raising a VC round and then having to sell for 100 million.”
CSS aggregators are now a real exit path — profitable apps can sell at EBITDA multiples today
A new class of 'Berkshire Hathaways of the App Store' — European-led aggregators like Bending Spoons — are systematically acquiring profitable $5–15M revenue CSS businesses at EBITDA multiples. For indie founders who built profitable apps and want liquidity without a VC treadmill, this is now a fully viable exit path. Crowley expects this trend to accelerate as institutional capital flows into the aggregator model.
“Every one of my clients is looking at some sort of web subscription offering. Those are getting better and better. There's a bunch of names thinking about how do we offer a web subscription tool that provides the same features that the App Store does — at a 5–7% commission rate versus 30%.”
Web subscriptions at 5–7% commission vs. 30% App Store — every client is now testing this
The commission delta between App Store (30%) and modern merchant-of-record web payment stacks (5–7%) is now large enough that every serious CSS company is running web subscription experiments. Crowley sees the shift accelerating: consumers are already being trained to take a small discount, click a web link, and return to the app. The tools are maturing rapidly as Stripe and others build out merchant-of-record products.
“Spotify and Duolingo launched family plans. They acquired the mom and then the mom brought in the dad and the family. You can upsell new features — Quicken, OnX launched global maps versus just your state maps. There are really cool ways that CSS businesses are generating net revenue retention.”
NRR in consumer comes from family plans, upsells, and add-ons — not just price increases
Consumer apps can achieve positive NRR through three mechanisms beyond price increases: (1) family/group plans that expand seats within a single account, (2) feature upsells to premium tiers with new capabilities, and (3) consumable add-ons layered on top of the subscription. Each mechanism requires deep customer data to time correctly — Crowley notes 'you really have to dig deep to understand how these businesses work.'
“Consumer spend accounts for 70% of the US GDP. You know, OnX — people are spending tens of thousands of dollars a year as a hunter on these passions, these self-actualization, the love and belonging, the community. There's a lot of money going toward these. Consumer subscription businesses have an opportunity to enter those markets and capture so much more of that spend.”
Consumer spend is 70% of US GDP — the app market has barely scratched the surface
The total addressable market for consumer subscriptions is essentially the entire discretionary spend of the US consumer economy. Crowley argues most categories remain grossly under-penetrated: the analog value (in-person coaching, physical maps, print media) is still being captured digitally, and most passion-driven spending has no software subscription attached yet. The opportunity is not competition within apps — it is converting offline spend.