with Tom Medema, CEO at Bubbles
While most start-ups put a significant amount of resources into their sales teams, technologies and strategies, Tom Medema is a firm believer in instead allocating resources toward building a product people love so much that they do the selling for you. Tom talks about focusing on the user journey when thinking about monetization, where to focus when you have multiple funnels, removing friction to increase user value, and using direct and indirect loops to build virality.
Tom Medema is the Founder and CEO of Bubbles, a rapidly growing asynchronous communication platform. He’s passionate about the future of work, productivity, and collaboration.
How does monetization fit with your PLG traction and the experience you provide users right now?
You need to have a lot of focus as an early stage startup. Generally, there's kind of a natural path towards being able to get the kind of revenue that you need. For example, if you feel like you're not even a product market fit, it doesn't even really make sense to have a self-service paid plan. You first need to be a product market fit before you can even expect to get people to pay for it. If you're trying to have sales reps reach out to people who are using your product, it doesn't really make sense if no one is actually trying to pay for the product in the first place. That’s more of an extra lever to try and convince the users who are not necessarily the early adopters.
If you are a PLG company, so you’re not starting out as a top down sales driven company, then you need to start more on the product side. You need to start with some really foundational metrics around engagement and retention. And then you introduce the concept of paid. Then you need to look at conversion across that user journey. I like metrics that resonate with me and are easy to imagine. I like metrics that are along the user journey from first discovering the product to finally being a happy, repeat, and paying customer, and really optimizing conversion rates across that funnel. Ultimately you have a leads to sales conversion and you can optimize it.
In Bubble’s case, we've been very focused on that first time experience. That had a lot of pros. It helped us improve our product loop and get a lot of early trials, but it also has some challenges around being hyper focused on that individual. We are ultimately a collaboration tool. You need a team to be able to collaborate. This also is related to monetization because it makes more sense to monetize teams and businesses than to monetize individuals as a B2B business. Businesses and teams tend to churn less often. They tend to also have higher customer lifetime values.
By focusing on that first time user experience, our focus has been on that very narrow individual experience. You do need to be able to make the next step and look at how many of those individuals actually invite their team? How many of those invitees on those teams convert and become active users? We’re currently changing some of our metrics from things like MAUs to things like number of active teams, retention of teams, and so on.
How are you thinking about the different funnels?
I totally agree that there are many funnels. There's so much to optimize and there's so much complexity. Can you really execute on optimizing all of these different funnels at the same time? I believe more in a more focused approach. In my case, we started with self-service. That makes sense for us because we had such a focus on freemium and focus on getting that first time user experience. The natural next step is once that user has experienced the “aha” moment, is it strong enough for them to voluntarily start paying? There you’ll see if a group of users is willing to do that, but there is also a group of users that may need that extra push, they may need more onboarding or education. Once you have a self-service funnel in place and there’s no low hanging fruit that is going to take most of your time, then it makes sense to move forward towards sales assist.
Ultimately you will be at a more enterprise funnel as well where they may not even have ever experienced a product. It may be a more traditional top down, which will compound your PLG sales.
What have you learned from user onboarding experiments?
Early on, we had a fear that if we lowered friction, it might also equate a lower commitment from the user. Our fear was that if we make it really easy to start Bubbles, maybe no one will retain.
That actually hasn't proven to be the case. We found that by making the experience very frictionless, we have a really healthy percentage of users that come back voluntarily, even without us having to email them and so on. In fact, We don’t email you if you sign up. We have a high percentage of Users come back because we create a lot of value for them.
It sounds simple, but isn't always that easy. I think where we have gone a bit too far in the past is that we were hyper focused on removing every little click, so less tangible friction. However, that may actually result in some more intangible friction. What I mean by intangible friction are things like concerns around how the business operates if everything is so easy and free. A user might think,“What’s the catch?” An example of how by not asking for credit card details and not requiring a user to start an account, you might increase that emotional friction.
That’s where we are and we’ve learned a lot. We’re introducing a little bit of onboarding, but in a way that we think is very non-obtrusive. It's not going to distract you from experiencing the actual product.
Technically, we create an account for you. having an account doesn't mean much more than having some kind of identifier and being able to associate your data to that identifier. We create that for you because we don't really need your name or email to give you a great experience. Now, if you decide that you want to drop a comment somewhere, then you might benefit from leaving your name because you would want your colleagues to know that this is you dropping in that comment.
We think more about when a user benefits from these actions rather than when we can start emailing people. We prioritize when the user actually wants to do something. When in their user journey does it make sense for them to be asked for their name and email? That's how we've been able to make that first time experience really low friction and delight users by avoiding app fatigue of having to try yet another tool and having to sign up with yet another tool.
What’s top of mind for us, even though we are a team collaboration tool, is making the first time individual experience really strong. So we are working on finding that middle ground. What we are doing right now is we are introducing some steps where the individual is encouraged to invite their team so they are not operating in a silo. If you are using Bubbles just as an individual, then you aren’t really getting value as a user.
The truth is in the middle and there is always a balance to be reached. That’s something you will experience, especially if you are in a collaboration space and you have multiple stakeholders who need to work together.
Another thing that we are doing is giving the user the team experience without requiring them to immediately invite their entire team because that could take some convincing. So we are sending semi personalized Bubbles, videos from our team, to people who just signed up. It’s a way of onboarding and showing the user what the product is like but actually using the product.
How do you build virality into your product as a PLG company?
A recurring theme for Bubbles and other PLG founders I’ve talked to is touch points. It turns out that if someone has only experienced a product once, that may not be enough for them to give it a good try. They might respond to a Bubble that was sent to them, but they might not yet start their own bubble. To really get them to try it, even though they don’t need to install anything, even though they don’t need to sign up, they’re still going to have more exposure to the platform.
One thing that worked very well for us has been to encourage a feedback loop between the creator of the video and the person who's looking to respond. We encourage them to ask questions and make prompts, you encourage the other side to respond. Then naturally get into this feedback loop where there are more touch points because of notifications. The other person will be notified that there's a message waiting for them. This is a very natural way to increase the number of touch points without sending yet another marketing email that probably isn't very interesting to them.
We have a concept of what we call a direct loop user and an indirect loop user to measure how many users an individual brings to the platform by collaborating. A direct loop user is very measurable and is someone who signed up after first having experienced the platform because someone else sent them a link. You can directly tie them in terms of marketing attribution because of that referral link.. We see that for every new Bubbles user, we see about three or four people invited to the platform.
In addition, you also have these much harder to measure indirect users. Most of the indirect users happen through word of mouth. It’s things like people mentioning you on Slack to give Bubbles a try. We cannot attribute that easily, but we do see that all these folks are signing up. So, we can try to approximate what percentage of signups come from that indirect loop. To approximate that, we take into account our marketing effort and we can guess how many trials we get from that. We take the difference as a result of word of mouth.
The hard part is activating these invited users.For direct users, you have to find ways to let them experience the product. Keep in mind that most of these folks will be busy. They'll be doing other things when they receive that link. They're not necessarily going to have the head space to try out yet another tool. I say yet another tool, because what we learned from users in general, not related to Bubbles, is that they are somewhat fatigued by all these apps that are available to them.
Your challenge as a PLG company is to make sure that even though there's so much app fatigue, you're still going to have multiple touchpoints with these potential new users before they become active. Bubbles is fortunate to be in a collaboration space. That naturally encourages users to go back and forth across multiple touch points and lets us convince them to become active users.We are fortunate to be in the collaboration space because that naturally encourages these users to go back and forth. That’s how we can convince users to become active users.
Another thing we do to make it easier on our users is rather than having to remember that they can create a Bubble by going to UseBubbles.com, we actually prompt installing the free Chrome extension for free screen recording. These are functional value adds. We don’t talk about the benefits of asynchronous work and the behavioral change that's involved with that. We talk about the very functional value of a free screen recorder.
That's important because if someone is really busy and they have a lot of things on their mind, They may not be in the right mindset to think about changing their workflow, like going from a more synchronous way of working to a more asynchronous way of working.
At the same time, they might see the benefit of quickly recording something that's on their screen. As you get them to try that, you can steer them in the direction of having more asynchronous collaboration and having less live meetings.
