Speaker A
In my opinion, you have a really great product with good cycles. Why sell it?
Co-founder of Noji discusses selling a successful mobile flashcard app, covering growth, marketing, and deal insights.
Key Takeaways
- Strong organic growth combined with targeted paid ads can build a valuable mobile app business.
- Specialized apps require motivated users, making paid acquisition more difficult but organic growth more powerful.
- Selling a mobile app involves careful consideration of buyers' intentions and alignment with long-term product growth.
- Brokers can facilitate the sale by attracting multiple offers and negotiating better deals.
- Understanding unit economics and market fit is crucial for attracting serious buyers and achieving a good sale.
What the video covers
- The Noji co-founder explains why they decided to sell their mobile flashcard app despite strong organic growth and over $4M ARR.
- The app's growth was driven by a mix of organic traffic and targeted paid ads like Apple Search Ads and Google UAC.
- Performance marketing on platforms like Meta and TikTok was challenging due to the app's specialized nature and user motivation requirements.
- The product targets users already familiar with flashcards, making user acquisition both a challenge and a strength.
- They explored B2B opportunities with schools and universities, including student subscription programs.
- The sale process involved working with a broker to receive multiple offers and find a buyer aligned with growth goals.
- Key factors for a successful sale included strong unit economics, product-market fit, and a proven customer base.
- The founders prioritized selling to a company that would actively grow the product rather than shelve it.
- Tax implications and deal structuring were important considerations for the founders during the sale.
- The discussion highlights the evolving mobile app market, with apps surpassing gaming revenue in some areas.
Chapters
- 00:00Introduction and Reasons for Selling
- 01:53App Economics and Traffic Sources
- 04:13Challenges with Paid Campaigns
- 06:11Product Specificity and User Motivation
- 08:29Sale Process and Broker Involvement
- 10:53Buyer Selection and Deal Considerations
- 13:36Tax and Legal Aspects of Selling
- 15:29Market Trends and Final Thoughts
Full Transcript — Download SRT & Markdown
Speaker A
Everywhere a user searches for something like Digital Flash Cards, we tried to be in the top positions, and we tried to buy ads.
Speaker A
Let's say I go and make an app now, and it takes off, and in six months I'm making a couple hundred thousand dollars. That doesn't look like a sexy app that I can sell.
Speaker A
And they view the purchase as an additional asset that brings in money. They can scale it.
Speaker A
I think that's definitely not the case for everyone. They will quickly repeat the exact same thing. So, there is no advantage here.
Speaker A
How do you even make money right now? It's the same deal, the same amount, but as a founder, you end up with significantly less.
Speaker A
The reason I was interested in inviting you and talking about this is because you had a great deal. And honestly, any deal in the mobile market is of direct interest to us as a company. And in principle, it's a really great event.
Speaker A
It happens quite rarely, and in my opinion, you have a really great product with good figures. You were making over 4 million ARR, with over 100,000 active subscribers. It was a healthy, great, organically growing business. Why sell it?
Speaker A
Well, when we started the product, no one ever thought about selling. Three founders got together with energy, believing we could make a great product. We gradually set ourselves some goals. Every year we needed to grow by 2x.
Speaker A
Double the revenue. And at some point, we realized among ourselves that it would be hard to do the next 2x, hard to hit the next goal. We started looking at different options for what we could do. There were options to
Speaker A
raise investment, options to find a partner who could come in and help with the expertise we lacked. And there was also the option of selling, and we understood among ourselves that it suited us quite well, so we started
Speaker A
looking in that direction. Tell us about the app's economics. How was it set up, exactly? Did the majority come from organic traffic, or were you a performance-driven business? How was it structured?
Speaker A
We had a fairly large amount of organic traffic, but there was also a lot of advertising. But our advertising was specific; it was from search. Apple Search Ads, Google Ads, UAC, wherever it was in the Google Play search. So,
Speaker A
our product was built on what our product actually is—flashcards for memorization. And we compared the users who were looking for a digital version where they could create their own cards and study them. And we built a product for that. Meaning everywhere users look
Speaker A
for digital flash cards, Flash Cards, we tried to be in the top positions, and we tried to buy ads.
Speaker A
What contributed more to the economy? Was it still organic and some word of mouth, or paid, or... Well, look, why is it interesting to buy? Because usually an app—our target client, say, in edtech—is a hard performance-driven client. Yes, these are clients who live
Speaker A
on relatively low margins: 10%, or in a good case 20%, but they have huge turnover, and they know how to pump that pipe. Yes, as far as I understand, your turnover is smaller, but you have much higher margins. It’s interesting
Speaker A
how that works. So what was the mix between search, organic, and why was it like that, and why, for instance, did you not actively push performance? At different times, different channels drove growth for the products. At the beginning, we entered via organic, and
Speaker A
organic was our main source of traffic, but then we immediately started moving to paid, Apple Search Ads, then Google UAC, then Google started driving the funnel to web, it changed. It wasn't stable, it wasn't always organic. And at some point, about half our traffic,
Speaker A
or even more, came from there. That was what drove it. And did you try to drive regular traffic on Meta or TikTok? You know, like, standard performance?
Speaker A
Yes, of course, but we probably didn't push hard enough. That is one of the reasons where we want to go, where we need to invest more effort and where we saw an area for development. And we realized that we weren't managing to
Speaker A
pull it off and launch it ourselves. When we started thinking about selling, that was okay. But where is the company that will help us take the product to new heights, help us launch paid campaigns?
Speaker A
You say you tried several times to launch paid campaigns, say on Meta, but it didn't really work out. What is the difficulty? Why is it hard? Honestly, I'm a B2B person, I really don't understand it well. I consider
Speaker A
performance marketing a blind spot, I don't understand it at all or understand it poorly, unlike our clients. What is difficult about it?
Speaker A
Well, it's the nature of our product. Some products launch better, others worse. Ours fit well with organic and virality. It was hard for us to launch paid acquisition on Facebook, but on the other hand, our organic and virality worked very well. When a user
Speaker A
arrives, they create their own deck of flashcards, share it with friends, and people come to us when teachers mention us or classmates simply talk among themselves. This part of our business was growing well, and it was one of our
Speaker A
main sources of growth. After two years, we needed a good, full-fledged product; one of the things that brought us growth was that we were a great product when you were looking to learn something using flashcards. If you
Speaker A
aren't interested in the flashcard methodology, we don't just have to sell you our product, we have to sell you the idea itself that you should be learning with flashcards.
Speaker A
And that is a fairly difficult task. This is a bit of a next-level sales challenge. And, perhaps, this is the part we weren't able to master because our product isn't entirely casual. Our flashcards were exactly how we entered
Speaker A
the market and why we succeeded. We got very involved in the product and tried to make it great; it became quite powerful and one of the best in the niche, but it also became specialized, so if you need flashcards, we are a
Speaker A
perfect fit. We are one of the best solutions. For example, if you just need to learn English or prepare for exams. That idea was a little bit difficult to sell there. The idea of flashcards. I think when we made
Speaker A
EASYTEN, it was a concrete implementation of your approach. Actually, it was a very similar idea.
Speaker A
Well, with EASYTEN, you were selling the act of learning words. That was a casual kind of story. It didn't matter to the user if it was flashcards or something else.
Speaker A
Our product is specific because you can make flashcards with so much functionality that you won't find it anywhere else. Great. You get freedom, but the barrier to entry was quite high. Not that it was high, but the user
Speaker A
needed motivation. They had to know what a flashcard is. They had to have a foundation. Like, "I want to learn using flashcards." That's it, that's our user. We will get along great, and they will really enjoy using us. If
Speaker A
they don't have that understanding, it will be much harder for us. You know, this sort of reminds me of a B2B case, where you're making an app, essentially for professional users. Users who understand what they want, right, as in
Speaker A
our case. We are selling to people who already understand what they need to do. It is both difficult and good at the same time. I guess it depends on how you look at it. Uh, have you thought
Speaker A
about a B2B direction, for instance, fully selling this tool to schools, universities, or perhaps companies for some kind of corporate employee training? Have you thought about that, and what are your thoughts?
Speaker A
We’ve had schools that studied with us, and teachers who brought their groups of students to learn specifically on Noji. And we held separate calls with universities that reached out to us because their students asked to include Noji in the
Speaker A
subscription provided by the university. In America, it’s a popular thing where as a student, you can ask for a subscription to an educational product, and the university pays for it. And we had students just come and ask for a
Speaker A
Noji subscription, and
Speaker A
And we were always growing through other channels. That was clearer to us. It was easier for us to record podcasts .
Speaker A
And we did that; we had a podcast. We had an incredible marketing team and we have a separate Noji podcast. We released a couple of episodes. We even have a playlist on Spotify.
Speaker A
I'll have to check it out. Let's move directly to the sale. At that moment, you realized that without all the possible options for raising, growing on your own, or somehow optimizing, selling seemed like the most reasonable option. Walk me through
Speaker A
the steps of how that actually happens. Is there some kind of investment bank or advisor for the sale? What actually happens? What did the process look like ?
Speaker A
In our case, we worked with a broker. We decided right away that we wanted to bring in an outsider who could help us find potential buyers, handle part of the top-of-funnel, and then we would handle the deeper conversations. So, in
Speaker A
our case, we called a few brokers, understood who was the best fit for us, and started the process. It probably took a couple of months of preparation, gathering information from our side, creating a project presentation, and thinking about how to package it nicely
Speaker A
and tell the story. And then everything moved very quickly. We immediately reached out to all the companies we were interested in. We sat down and made a list of who we considered to be our potential buyers. And since the
Speaker A
broker had quite a lot of contacts, we went through them all almost immediately. Initial contacts, conversations, back and forth, as always happens, and then receiving offers. And somewhere in that process, the first big milestone is when you receive an LOI, a Letter of Intent,
Speaker A
where you get an offer, and along with the offer, a Letter of Intent always comes. This means that if you sign it, you commit on your part not to consider any other buyers. You could treat it as an LOI; they are essentially the same
Speaker A
thing. I think they complement each other. You receive a message: "Andrey, it's such a great product, we want to buy you for this much, under these terms." And immediately attached to that same email is a letter of intent that you are
Speaker A
required to sign. And until you sign it , you don't move forward. After the letter of intent is signed, due diligence follows, and the contract signing immediately follows that. And then, as I found out later, there is something called PMI—Post-Merger
Speaker A
Integration—or maybe it's called slightly differently. It's the process after the sale, once you've signed the deal, where you sit down and help the team onboard, set up all the processes, and essentially integrate the new team into the product.
Speaker A
Let's dive into a few specific things, because in fact, I get asked this question about how to sell a mobile app quite often, even though I don't think I'm an expert at it, honestly. What did they actually look at, right? I mean,
Speaker A
it's clear: there's revenue, there's the team. How was it in your case? I mean, what were the top three metrics or indicators? What did they look at?
Speaker A
Why? By default, I think they look at what you already have. It's just that some companies are interested in buying products of a certain size. Some aren't ready to go beyond a certain scale; they don't have the resources for it.
Speaker A
Others, on the contrary, aren't interested in buying products for a couple hundred thousand. The first thing that filtered the most was what you already have. With some, we didn't even have a conversation. So, also post-factum, you realize they were
Speaker A
looking at things like that. During talks, everyone, of course, asks for retention metrics and subscriptions, but I think it's all asked to determine potential. Everyone is interested: okay , what is the growth potential of the business? Can we do 2x or 3x over the
Speaker A
next year or two? And all the questions are basically aimed at that, to understand if there's upside, if they can increase it, and if it's really a business for them to make money from.
Speaker A
As for the third point, I think there were a series of questions where they tried to understand how stable what we have is. I mean, no one wants to buy a business where you buy it and it goes
Speaker A
downhill. It happens, and you need to prove stability. Well, in our case, our product has been around for over 4 years. So everything here was clear. We have a good track record. I suppose if your product has only existed for six
Speaker A
months, you had a flat start for the first few months, then a sudden spike, and you come to sell at that peak, then there will be many more questions.
Speaker A
And if you break this down into specific metrics, you should highlight the three key business metrics that matter most.
Speaker A
Our situation was a bit different. We didn't discuss specific numbers; we provided a huge spreadsheet with our financials. Basically, guys, here is what we have. We provided everything possible, right upfront, to make it as easy as possible for them. We
Speaker A
aggregated information from all sources , and the next step was usually them requesting access to App Store Connect, Google Play, and Stripe for verification. And since we were talking to companies that specialize in buying mobile apps, this wasn't anything new for them; they
Speaker A
already knew what they wanted and mostly just asked for access and figured it all out themselves. So our setup was more like that; we didn't discuss abstract metrics as much. So you created a data room, right? A data
Speaker A
room, as I understand, containing every financial metric you could think of: cohorts, revenue, retention, and so on.
Speaker A
And then the guys just got it themselves, looked it over, and verified it in the store connectors.
Speaker A
Yes, that's a fact. So, if they were missing something, they would go to the store connect, check it, and look it up . Mobile apps are very simple. There is a data source that is very easy to provide access to.
Speaker A
It’s quite secure, I think. One radio stream. Yes, that’s true. How did you calculate the model, the financial model, or the unit economics model? Did they do it, or did you do it for them?
Speaker A
Everyone calculated it; we did our own calculations, we looked at it, we evaluated it from our side, we understood that below a certain price, there was no point in even discussing anything. And at a certain threshold, well, it's possible, but not
Speaker A
particularly interesting. And from another threshold, real communication begins. And we did that on our end. We calculated, analyzed, and forecasted.
Speaker A
Because selling isn't mandatory. You can just keep your product; it sits there. You provide support, you can even continue developing it. There. So, apparently, everyone made their own financial model. And what is the story?
Speaker A
Your goal is to sell as high as possible, the buyer's goal is to buy the best product for the lowest possible amount. And you try to reach a point where the deal makes sense for both parties.
Speaker A
So, what function did the broker perform, or, you know? Was their task to create a competitive process, or what exactly did you want from them? We had a broker, we had them, well, let's see. I’ve been a broker myself. And
Speaker A
in our case, we got exactly what we wanted. We specifically wanted to go through all potential buyers on the market as quickly as possible, talk to everyone and understand, because, okay, you can consider the stage of selling a
Speaker A
company, but you don't have offers, you're initially looking at it as a hypothesis. Well, let's see what's out there. And nobody wants to drag it out, nobody wants to lead this for six months. You could go on your own. It
Speaker A
would take some time. We decided to turn to a broker. It helped us. Actually, one of the points where the broker helped the most is something I don't think about right away. They helped us receive several offers simultaneously. I mean, when you go on
Speaker A
your own, if you go through them one by one, dedicating a couple of hours a day , you get one offer—great, you're happy, you make a decision, you go to the second one. It’s not a fact that you can collect several offers at once
Speaker A
to compare them with each other and use them as your strong position. During the discussion. And with the broker, we managed to do just that. So we immediately went to a large number of companies, immediately received several offers, and we could already
Speaker A
compare them. This gave us a lot of confidence internally. And we also showed: "Hey guys, look, we have other offers, and we are ready to discuss, but we want better conditions here and there." What do potential buyers even look at?
Speaker A
What attracts them, right? So, for instance, if I go and make an app now, I don't know, in a week or two, and let's say it takes off, and in six months I'm making a couple hundred thousand dollars a month, well, that
Speaker A
doesn't look like a sexy app that I can sell for a reasonable multiplier, right ? What really attracts them, what were the buyers looking at, why did the offers come so fast, and you say there were several, what made them? The first
Speaker A
thing that surprised me was that when we got on a call, everyone knew us. I mean plus or minus, they had already heard about us, they knew about us, they were following us. I was surprised by that.
Speaker A
Perhaps it helped somewhere. I was often surprised that we even hit their radars. But in general, those who make mobile apps usually don't know. Their email, uh, their email client is just filled with messages saying "I'm from such-and-such company, we want to buy
Speaker A
your product." I think that's definitely not the case for everyone. I want to tell you that from the people I talk to, it's not like their email client is packed with purchase offers.
Speaker A
Exactly, not for everyone. Okay. But we, as founders, had quite a lot of those emails. Look at it as a business. How do I see it? You have an app stream that is predictable, you can buy it, maintain it, and you know that
Speaker A
with this kind of payback, the deal will pay off after some time. And that was the first main stage. What they looked at was predicted revenue and the clarity of the deal's payback. The second is the potential for growth.
Speaker A
Well, we also applied a filter here. We wanted the product to grow, and we always looked toward companies where we felt during the conversation that they aren't just guys who will put it on a shelf, raise the price, and wait, but
Speaker A
rather guys who will invest in development, and we will reach new numbers with them. Probably, from a certain size, the product's age also makes for an interesting deal. That is, our product had been an established business for over 4 years. It was clear
Speaker A
, and I think we did a great job—we did very good work. We had a clear product-market fit, a clear brand, organic reach—that's what they buy.
Speaker A
Nowadays, no one is going to buy just anything. If you just wrote some app code and you're doing Facebook ads yourself, and your unit economics are working out at like plus 20 percent.
Speaker A
They will quickly replicate the exact same thing. So there is no advantage there. That's why they look at things that are hard to replicate or take time to replicate. Like some good product, a brand, brand awareness. A client base.
Speaker A
That is significantly harder to replicate. We had all of that. You know, these are things like...it's easy to evaluate the quality of unit economics, right? You just divide one by the other , take a number from Facebook, take a
Speaker A
number from Appmetrica, divide them, and you've understood the economics. Well, it's understandable, you put in X , you got Y. You talk a lot about how you had a quality product and so on.
Speaker A
What was your ratio between investments in the product versus investments in marketing? Well, assess it, like, sell it. How would you rate that?
Speaker A
Look, I'll talk about this, but I think the reason they wanted to talk to us and look at us, why we got a quick response and everything went fast, was —Well, in reality, everyone looks at it as a business. That is, the main
Speaker A
metric was the revenue our app generates, the new revenue, and the renewals we have.
Speaker A
Uh-huh. That was the main thing; the company's valuation came from that. So, yes, the product is cool, that's good, the design is great, but the valuation always stems from financial metrics.
Speaker A
So, in short, a high-quality, cool product essentially opens the door, it's good, and so on. But if the unit economics inside are bad, then, well, there won't be a decent deal, right? Or you really have to sell yourself very, very well and paint a
Speaker A
magical future. Yes. How do you estimate the multiplier based on this? How do you even...which one? Look, I'm making Nodgy 2. Let's say I made not Nodgy, but some other app. It's decent. It earns, say, a couple of
Speaker A
million a year, and it's white hat, more or less organic. Let's say 90% organic, and I want to sell it. How do I estimate the multipliers in the current market? Yes, we are recording this in June 2026. So, how do you
Speaker A
estimate the multiplier now? What range is it in, and what should it be calculated from?
Speaker A
We mainly talked with companies that have a portfolio of apps, and they view a purchase as an additional asset that brings in money. They can scale it. And in this case, the market more or less already has rules for those buying.
Speaker A
From what I've noticed, it's about two to three times annual EBITDA. And EBITDA is after marketing and after commissions, right? Is that correct?
Speaker A
Yes, I've seen offers made at five times annual EBITDA, and I've seen them make less, like one and a half. And here it depends on the product and the buyer's confidence in how much they believe this product will still exist
Speaker A
after some time. And, probably, on how you present yourself and how well you can show that we have a great product and together we'll reach new figures.
Speaker A
And a broker, by the way, helps with that. In our case, the broker helped us more with making the first contacts. He was always around and we could always talk to him, but we founders made the main decisions among ourselves.
Speaker A
Tell me, how is the sale of a company technically structured? Yes, you can essentially sell a company as a legal entity, as an entity, or you can sell the company's assets. Is there a difference, and how did you do it? Why?
Speaker A
I think there's a huge difference buried here. This is something that, well, I personally didn't think about from day one. I only realized this in the process. How big can the difference be for you as a founder as a result of
Speaker A
a deal? For context, I live in London and pay European taxes. And when you sell a company, that is, the company is a legal entity, you sell a share of this company, your shares, and you pay capital gains. That’s one tax. When
Speaker A
you sell, say, a mobile app that exists within this company, the money doesn't come to you for your share in the company; the money comes to the company . You have to pay the entire range of taxes. And the difference in tax is
Speaker A
colossal. That is, in my case, it’s double. It’s the same deal, the same amount, but you as a founder receive much less. There. And, well, in short, in the first case, roughly speaking, it’s capital gains, right? In the second case, it’s
Speaker A
standard income, right? Yes. It’s corporate tax and dividend tax. Capital gains is 25%, while corporate tax and dividend tax come out to over 50%. And this what conclusion can be drawn here is that, in fact, almost everywhere capital gains are lower than dividends.
Speaker A
I think it’s like that everywhere in the world. I think you should probably move to Dubai. That’s the ideal case. Uh or Switzerland, Europe.
Speaker A
Yeah, Europe is expensive regardless. Overall, buyers consider both. I mean, we didn't have a situation where they said, "We’re absolutely not ready." There were those who were only ready to consider an asset sale. And there were companies that were ready specifically
Speaker A
to consider buying the legal entity. There were others, conversely, who said we only buy legal entities. That was profitable for us. So, it’s also the same amount that you are paid for selling a product, but on your account,
Speaker A
it looks completely different after taxes. Yes, well, different types of contracts , sort of, because you’re selling different assets, but yes, essentially it’s the same thing. Well, it’s interesting, what is the buyer's incentive to buy either the company or
Speaker A
the asset, what difference does it make ? Just brainstorming, really. It’s interesting, like, what are the downsides, if I'm based in some jurisdiction, I don't know, say, I buy a company registered in the States or the UK, well, maybe it’s just extra
Speaker A
liability and that’s it, right? Meaning they bought 10 products, they have 10 companies in different countries where they still need to do bookkeeping and pay taxes.
Speaker A
So, you buy a company, bring it in-house—or rather, you buy a company's product, bring it in-house, and just manage everything in one place .
Speaker A
Yeah, for buyers, that can truly be simpler, right? But at the same time, some of the companies we spoke with—we brought this up for discussion almost from the very beginning, saying we have two options and want to go with selling
Speaker A
the company—some companies adapt, saying, "Okay, we're ready to consider it," others don't, and some said, "Yes, we always buy companies." As I understand it, the companies were bought outright; accordingly, the founders exited, left the business.
Speaker A
Like, the company was bought, it came under new management—it's a deal, right. But, as I understand it, well, earn-outs, the deal—they aren't always like that; there are often other stories too. Did you have that? And tell us about how the deal structure is
Speaker A
generally set up, what kinds exist, and what one should look out for if I want to sell. I think earn-outs are everywhere. At least from a certain scale, earn-outs start everywhere.
Speaker A
Perhaps if you're selling a small mobile app, no one will think about an earn-out. But if a deal is worth at least a couple of million, it's probably everywhere. Like, we’re talking now, Cursor was bought for $ 60
Speaker A
billion. I’m really curious what the earn-out percentage is there. I mean, it's clear they paid in shares with cash, but I’m sure there’s an earn-out portion, and it’s not guaranteed the guys will ever get it. I think the earn-out is around 90%,
Speaker A
honestly. See, that sounds great on the screen. I mean, it sounds like it was bought well , but then it turns out that's a huge part of the deal, and then the sale doesn't look as sexy.
Speaker A
Well, yeah, I think we had them everywhere. What were yours tied to? Different for each one. That’s where you have to stand your ground. As a founder, your task is to structure the earn-out so that, no matter what
Speaker A
happens, you get it. Buyers, on the other hand, try to build all their risks into the earn-out. And the larger it is, and the higher the KPIs, the better for them, because they take on less risk. If something doesn't work
Speaker A
out for them, it effectively becomes your responsibility. They were all different. And that is exactly one of the reasons why, when you have several offers in front of you, you choose which one to go with. One of the first
Speaker A
points is not just the total amount. You look at it, it's cool, you go straight to the terms and look at the earnout. And the main thing is not just what it is, but what goals you need to
Speaker A
meet to get it. Was it important for you what happens to the product after the sale?
Speaker A
Yes. Why? I mean, let's put it this way. First, everyone has an earnout. You are tied to the product metrics and Yes, after the sale you Yes. And you are still motivated for the product to do well, for it to
Speaker A
grow. So that's the first thing, even a basic financial reason why it's important to you.
Speaker A
The second point, well, that's how I relate to business, I made the product, I spent a lot of energy on it. For me, I'm a power user of our product, I have 700+ days and 3k. And I want it to be
Speaker A
okay. And when we were choosing, it was important for us to see that the teams buying the product have the expertise, resources, and desire to grow the product. This is that very thing.
Speaker A
Actually, if it's not there, you see it and the deal goes poorly. You clearly understand that something is wrong, they are offering you not the offer you want. You just notice in the process that they look at the business, at
Speaker A
buying the company/product, differently than you do. What is your role after the deal? I mean, do you even have a role? I mean, if there's an earnout, it seems like there should be some kind of role. So what are you supposed to do?
Speaker A
This is one of the points, another point in the offer that you look at: what are the expectations from the founders. Sometimes you have to stay for a year. Yes, I think that was the maximum. And keep working on the
Speaker A
product. In our case, we advise the company, but it's not full-time, not even part-time. We advise, we help, we talk to them. We have periodic calls , where we join in, think together, and take a look. But that's it. So it's
Speaker A
more of a consulting role. Again, probably because the buyer is a company that already has other products in its portfolio. They know perfectly well what they are doing. They have their own technical team that onboards and takes over the entire product. They
Speaker A
have their own marketing team, their own product team. They put their own people on the product. In our case, the guys who bought us, they are all in one office, they have an incredible culture in their team.
Speaker A
They make decisions quickly and move very fast. And even if we had actively participated in production, we would have slowed them down. Looking back now , with time passed, I understand why they took that path and didn't even
Speaker A
involve us in the ongoing product work. I was incredibly surprised by the guys from Korea. I hadn't interacted much with people from Asia before. An incredible culture, just so you understand. We closed the deal and signed it on December 31st at 2:00 AM
Speaker A
London time. That means it was already past 10:00 PM for the guys, plus eight hours. The level of engagement and how fast everything moved was amazing. The way they respond—it’s 11:00 PM for them, they are online, they reply, we
Speaker A
send over edits, and by the next morning, they’ve already finished everything. I mean, I always thought that I move fast, that we move fast because we have a small team and we founders do everything quickly. It turns out these guys do the same thing
Speaker A
in a much larger company. They have a very strong work culture; everyone works a lot. Perhaps that’s a downside, too. I mean, these guys really work a lot.
Speaker A
And this isn't even counting the Chinese, you know? I have never interacted with anyone from China. I don’t know what that’s like, but I was in Seoul and had an incredible week—incredible people. After talking to the team, I
Speaker A
believe they have a great future. I think, you know, building is a strong motivator. The fact that they just filed for an IPO—we're recording this during an interesting week. I think many founders around the world are watching them. Everyone liked how they
Speaker A
are acquiring. We all got motivated. Before the sale started, I didn’t really understand or look at what was happening in the market.
Speaker A
In the process, I learned about it, met a lot of people, and found out that even "one-man companies" are buying products. There are guys in London, some just one person with eight products, and they are ready to buy
Speaker A
products for half a million or even more. So it’s not like they only buy the tiny ones. I might be wrong, but four or five years ago, far fewer companies looked in this direction; everyone was more focused on "we'll
Speaker A
build it ourselves, it will be our product, we will win with it." Now, a huge number of studios, while looking at how to build, are equally looking at acquisitions.
Speaker A
It’s interesting. I’ve actually seen, you know, that the gaming market isn't exactly doing great, and budgets are shifting heavily from games to apps . App revenue has even surpassed gaming revenue, which I never thought would happen.
Speaker A
And it seems like more such holdings will actually start appearing. The most interesting thing right now is AI; basically, any product can be built very quickly, but the trend toward buying is strengthening. I mean, it's not like, "Why should we buy it? We can
Speaker A
develop it ourselves." No, on the contrary, more and more companies are looking toward buying rather than building it themselves.
Speaker A
Because, in a way, you can find a product, but you can't find a brand yet .
Speaker A
Yes. Another thing we discussed when we were in Korea is the simple product-market fit that you need to find, and the amount of torture you have to go through to find it.
Speaker A
But when you buy, you already— the problem is essentially solved. You are buying a product that already has product-market fit. You have a user base, and you continue to grow it; you are already dealing with the business from one to infinity, having already
Speaker A
passed the zero-to-one stage. And for many companies, when you're not the founder sitting there working yourself, the zero-to-one process might be the most difficult one. One experiment worked super well for us—the annual subscription—where we probably added 10%to our revenue overnight just by
Speaker A
inserting an annual plan. We had a monthly and an annual one, and we added a lifetime option. And this lifetime option just brought us an extra 10%in revenue in a single evening. Cool.
Speaker A
Is it even from Brazil? Look at what we had. I really wanted our product to always be accessible to everyone.
Speaker A
And we ran a series of experiments with price optimization. We lowered it. In some countries, we raised it significantly, in others, we lowered it, but we didn't see the results of our goals growing. Sometimes conversion increased, but not enough to
Speaker A
cover the gap created by the price change. For instance, ad-based monetization didn't work for us either.
Speaker A
At some point, I really believed in it; we also have a competitor, Quiz, and they have a huge amount of ads. I think they even have their own ad network so you can buy ads within the app. I had
Speaker A
high hopes, but it didn't catch on at all. It just didn't work out for us. It turned out that, mathematically, it suited us better. If we set a limit for the user and ask them to buy a subscription, it was financially more
Speaker A
profitable for us than letting them skip the limit by just watching an ad. Plus, people hate ads. As soon as you see an ad, your impression of the product immediately worsens. So here— That's true, yeah.
Speaker A
And they hate it. Well, you could provide an alternative: either ads or a subscription.
Speaker A
Yes. That’s exactly how it was for us . And I wouldn't say it worked great at that moment.
Speaker A
Perhaps we aren't advertising experts yet. Maybe it could have been implemented better. But what was the story if you look at it globally? We have a session where users are studying , learning flashcards. Right at the moment they’re studying, we could
Speaker A
show ads. But if you start showing them often to really earn money, people don't see the product. And you could show them once every 30-40 cards, which is generally comfortable, but then you don't earn enough. There you go. And we just started to notice
Speaker A
that it made no sense for us to show ads; it’s easier to set a limit. And here you go, a subscription that helps you remove the limit, and that was just more effective for us.
Speaker A
Did you try web funnels or any kind of web monetization? Of course, our web version is the core of our product. Oh.
Speaker A
The web is the product core, right? That, by the way, turns out to be interesting. Tell me.
Speaker A
We started developing the product on React from day one. I mean, from the very first line of code, we knew our product would be cross-platform and the web would be a huge part of everything.
Speaker A
The logic is super simple; you’ll understand it yourself right now. Our product is about learning flashcards.
Speaker A
You create the content for the card yourself. You go in and write down words, or when preparing for an exam, you write down things you need to memorize. And doing that on a phone is, well, super inconvenient. So, if you
Speaker A
don't have a desktop version where you can do it quickly at a computer, we lose users. And that’s why the web is our core product. Meaning, for all users who create thousands of cards and study those thousands of cards, the web
Speaker A
is the main platform for them. They then move to mobile and study, because it's more convenient: you're on a bus, you study; you're on a break, you study . You can study in any situation, but you mostly create the content at a
Speaker A
computer. That’s why we had a full-fledged web version. And of course , for this web version, we had a full-fledged web funnel. And we didn't just do "web to app," we did a full " web to web" approach, where you
Speaker A
would acquire users on the web, the user would go through onboarding and immediately start using the product right there in the desktop app. Yeah.
Speaker A
Yes, all of that on the desktop. Cool. And what kind of distribution was there between the web product and the mobile product in terms of revenue? At different times, it varied. I saw that we had it written down as 20%. It seems
Speaker A
to me there was a time when it was even more than 20%. Right? I think there was even a time it was 30%. There are no figures to look at differently now, but the idea was that a user could come to the web and
Speaker A
then buy a subscription on their phone, because on the phone with the App Store , you have a bit more trust than on the web. I think there were a number of users who did the opposite, I feel like
Speaker A
I always do that, if I see there's a web version, and as a developer myself, I'll buy on the web to support the developer. We didn't even have a trial on the web yet. We Uh-huh. It's just that when we were
Speaker A
making the web version, well, as always , you do it quickly, try to iterate fast, and you think, trials are a bit complex, let's start without one. And as often happens, something temporary becomes permanent. Yeah, yeah, yeah.
Speaker A
You know, I have this trick. If you have an App Store account for a developing country and a valid payment method there, you can find some service , for example, if it's American, and 99 %of the time, the price in that country
Speaker A
will be much lower. It's the same, I think, if you use a VPN and set it to Turkey.
Speaker A
Well, that's not always the case. No, because they all personalize prices on the web, but in the App Store, it's personalized automatically. I mean, when you localize the price.
Speaker A
We had that happen with Turkey when they had hyperinflation, and I just saw that our Turkish subscription was costing literally like a dollar and a half or two.
Speaker A
Yeah. Even if you do that. Yeah, yeah. I've had my Google Drive subscription like that for, I think, 3 years now, for like 10 dollars a year.
Speaker A
Perfect. Let's go through a few final questions. Look, we touched a bit on the topic that it's very easy to make an app now.
Speaker A
What kind of competitive advantage can those who create apps even have? How can you even start to stand out? Yes, for example, we track some no-code app building services, and the total revenue of apps developed on those services is quite low. I mean, it's
Speaker A
just a few million dollars a year with tens of thousands of apps published. How can you actually make money now?
Speaker A
How do you make money with an app? Listen, I think in general, nothing has changed. We were making a product before. I'm starting to make new products now, but some basic things remain the same. You must have a great
Speaker A
product with good retention, and you need to figure out how to get that retention so that you can implement it quickly. You must have distribution.
Speaker A
Uh-huh. Overall, everything has accelerated significantly. If before you were copied in 3 months, now you are copied in 2 weeks, but the basics remain the basics.
Speaker A
We were talking earlier about what they look at when buying, and why companies are even bought at all. We discussed that it’s the brand, product-market fit, and a proven customer base. I think it’s the same thing here. These
Speaker A
are the things that you cannot copy. And from what I see, belonging to a certain brand—that you use this specific product because it is that brand, and your friends use it, and you have some kind of community.
Speaker A
That cannot be copied, and that will be valued more and more. Also, I think a lot of people nowadays, because everything is done so quickly, start fast and leave just as fast. You made an app in 3 weeks, tried to promote it
Speaker A
for 2 weeks, it didn't work, so you moved on. And visually it looks like there are a lot of competitors. It creates a kind of FOMO. But in reality, those who fully commit to a product and try to make something out of it, that
Speaker A
percentage isn't that high. Perhaps the percentage has remained the same as it was before AI. And competition hasn't actually grown that much. It seems to me, yes, the advantage might simply be that you don't look at all this FOMO, where
Speaker A
you could run off and make 10 products (because it's very easy to start 10 products simultaneously), but you dive in, you commit, you make a bet on your part as an entrepreneur that I believe in this idea, and you always end up a
Speaker A
step ahead.
Topics:mobile app saleNojiflashcards appapp monetizationorganic growthperformance marketingapp acquisitionedtechstartup exitapp economics
