There's a great quote by I think Sam Alman, right, which is momentum is like oxygen for a startup. You just feed off of that momentum and it lets you put more and more energy and more and more cash if you need to into the company to keep it growing. Within 45 days we had crossed 100,000 ARR. Within 4 months we crossed a million and then within 5 months we had crossed 2 million. And so we just had more and more capital, more and more confidence to reinvest into the company to keep growing and keep working with creators. Hello, I'm your host David Bernard and with me today, Revenue Cat CEO Jacob Eiding. Our guests today are Brett Bowman and Zach Harut, co-founders of Cocoonote, an AI powered note-taking app that was recently acquired by Quizlet. On the podcast, we talk with Zach and Brett about hitting a million dollars in ARR in four months with no pay ads, why trial extensions beat discounts for saving cancellations, and why you should be hiring content creators, not influencers. Zach, thanks so much for joining us on the podcast today. >> You got it, David. Thanks for having me. >> And Brett, nice to have you as well. >> Happy to be here. Jacob back on the pod >> with a with a fourperson pod. My my commentation budget is cut in half. So you may not hear that much from me, but who wants to hear from me anyway? These guys got the story to tell. So >> they have a great story. Uh always fun to have you on the for the color commentary and uh feel free to interrupt and interject to get get the color commentary going. I'm going to kind of spoil the ending, but I think this is going to be in the title anyway. Brett and Zach, you founded Cocoonote not too long ago. uh what about two years ago and got it to 6.7 million in ARR and then just sold to Quizlet. So quite a story for a bootstrapped app to go so quickly to that much ARR and then to sell to such a big storied company in the subscription app space. So I wanted to kick it off just with the story of you know when exactly was it and how did uh Coconut come together? I think we take it back to 2022. Uh I had just shut down my last startup which raised venture capital. We were a uh consumer product studio. We were building for uh high school students and college students. So I really thought most often of my little sister Emma uh my steps sister Emma who was in high school and then going into college right around then. So it was 2022. I was tinkering around with a Chrome extension which summarized blog posts and YouTube videos because frankly I didn't want to watch you know an hourong YouTube video. I really just wanted like the two three sentence summary. And same thing with blog posts, right? I came across a lot of blog posts that I wanted to read, but I didn't want to, you know, spend 30 minutes reading it. I just wanted the summary to see if I wanted to dig deeper. And then Brett and I started tinkering on a way to replace Siri with back then GPT4 in 2023. >> That's what I was going to ask. So those summarizations, those were like the first like using LLMs to do summaries which was like very very novel in 22, right? >> Exactly. 23. Yeah. >> Yeah. Yeah. And back then I believe it was still GPT3 or some version of GPD 3 something >> which worked but it's nothing like what we have today. Right. >> Exactly. >> Yes, for sure. And uh yeah and Brett and I started tinkering and I think we realized the power of voice. we, you know, were thinking about summarization from the Chrome extension that I was kind of hacking on. And then we saw the the success of some notetakers that were more business focused, but we didn't think people were really taking it seriously. And so something that comes to my mind is a a great Charlie Mer quote, which is simple ideas taken seriously. We kind of came to this simple idea that this could be great for college students and we committed about two years ago. >> So, how did the two of you meet? I know you you were both at Loom, but you didn't overlap. So, h how did y'all meet and how did how did you decide to build that together? >> Yeah, so Zach uh was there before I was and we basically just worked with the same people. Um and I was on the mobile team. Zach did all kinds of things at Loom uh being there earlier than me and helped get the mobile team started. But Zach, I feel like it was at like the offsite one time in LA. Zach was uh still coming to offsites even though he didn't work there anymore for some reason. And um some of our like mutual friends were just like you guys should you guys should meet and and we did and uh that's kind of the how it started. Yeah, >> that's pretty cool. Jacob, is there an unofficial policy if if I ever leave Revenue Cat, do I get invited or or I just get the boot? How does that work? I don't think I would get the invit. >> Nobody leaves Revenue Cat. That's the thing. I didn't know you guys were Loom alums. Uh obviously like massive fans, still daily active. That's like such a great interesting product, right? And that it makes a lot of sense like how that sets you up for this project, right? It's like summarization, note-taking, info collection, and I think so much what works great about Loom is like recording a video, you can do it with QuickTime Player, right? So, it's like in some ways not that complicated, but Loom makes an amazing product out of it, right? And it's mostly the dressing, right? And like the interfacing and like the delivery. So, seems like there's a real parallel here between, you know, Coconut and and and Loom. I think not a lot of people pick up on that, but it is kind of loom on easy mode a little bit, recording audio and uploading it and summarizing it and all that. >> I just want to say my favorite part of that night. Absolutely. I think it was at Elephante Brett in Santa Monica and I was living like a couple blocks away. I won't say who uh to protect the innocent, but someone was like, you know, looked at Brett, looked at me and was like, "You two should meet and I'm not going to be part of this. It's like I'm going to walk away because I I shouldn't know about what you guys talk about. >> That's why ex employees are not invited to offsite >> and so I think the you know the universe if you put out startup vibes and you know I don't know the universe has a way of like making things work out. >> Was it like you two just really hit it off like these these kind of founder stories are so fascinating to me like how did two people get together to build these things? Like did you hit it off and then like hey let's just build something together cuz it sounds like you started building before you actually built coconut. I might interject and just say like you know obviously choosing co-founders is like a super fraught thing and like there's probably as many failures way probably way more failure like most startup early stage startup failures are because of co-founder mismatch like they sometimes get labeled other things but most of the time it's like co-founders just weren't the right combo but like if you haven't worked with somebody directly I would say both coming through the same alma modders of the same organization certainly is like the next best thing right because you at least know you've passed through like a similar cultural filter and also like This is under under appreciated probably is that you have a shared social network too, right? So you have like outside of the financial alignment that you have starting a company, you kind of have an incentive not to screw the other person because like you have similar friends, right? So you like you don't want to like mess up, you know, there's there's more in it than just like the time, right? There's like there's there's a lot more connection, but it it's super hard. I mean, I I don't want to take over the podcast, but like I think this is one of like the hardest problems you can get right in starting a company. >> I think there's kind of an obvious complimentary skill set, right? So Brett's background is making apps. My background is making apps, but I'm not especially technical. And so me having a design and product background, which is what I did at Loom. And then as a first-time founder realizing that if you build it, they will not come. You have to level up marketing. And so I had to get relatively decent at marketing in my first startup. And then Brett with an engineering background, but does so much more than just engineering. I think there was like a very obvious skill set match. And the last thing I'll say there, I'd be curious to hear what Brett has to say about this. I was mostly like, you know, bugging Brett like, hey, you know, hey, I have this idea. I'd love to execute on this. And it's him being like, um, well, maybe. I don't know. We'll see. And then, you know, eventually I bugged him to do one and then the next. And then we were just kind of hacking and iterating. And, uh, you know, you know, thankfully he said yes. >> So, you met, you hit it off, you figured out you wanted to build something together. You started tinkering with the the Siri thing. Um, but then tell us the story of like when you realized like coconut was what you were going to build and and how you got that to launch. >> So yeah, like I had mentioned, I'd been building a lot for Emma, which is this archetype that I had in my head, who's my little sister. She was entering college as a first year uh civil engineering major. She still is a civil engineer. So we were thinking about this. We were thinking a lot about how can we, you know, summarize things, help people learn. It's kind of a mishmash of things. And then we arrived at Cocoonote. There were some apps, not iOS apps, but actually web apps that were out there on the market doing a similar thing, but they weren't taking it seriously and so we just decided to execute on it. I would say one of the things that we did really, really well in hindsight is get momentum as soon as possible. So we had a free trial from day one, but we were in effect charging from day one. And this is where you know this will play out over the course of two years. David, Jacob, my fascination with checking the revenue cat chart led to my wife to have basically an intervention. Like, Zach, I think you have a problem. You check this thing way too often. And it started from basically day one because we were trying to get, you know, momentum as quickly as possible. One way to look at momentum would be, you know, something on mix panel. So like usage and retention and very important metrics, but there's nothing quite like the dopamine high of realizing you're creating something valuable to the world and people are returning. >> You captured some of it, right? Like there's it's hard to debate something is being done there. You can have a lot of useless mix panel events, right? I've always thought about this like I don't >> intentionally in some ways don't want to create fidget spinners for app founders, right? Like some sort of just addiction. But I also think that like hey starting and building I think is intense and it takes like a ridiculous amount of focus. I think they're you know much to the detriment of the loved ones in your life. Like checking that thing frequently is not the worst thing in the world, right? You have to stare at it every day. Was it on the mobile app? Was that was that because the mobile app I think came out like halfway probably through >> I was checking mobile web. I always had >> mobile. Yeah. >> Yeah. The the the mobile app we we released is like we really weaponized the uh the push notification addiction uh for people. So anyway, >> the widget even Yeah. >> Yeah. So, this is my official like surgeon general's warning to like, you know, you can adjust your notification settings. You don't have to get a notification and check your thing every single time, but you know, if you want to get acquired by Quizlet, maybe you do. I don't know. >> How long were y'all were working on it before the April 2024 launch? >> Not super long. We really wanted to scope it down and launch something quickly and basic and I would say we achieved that and it like sort of worked when we launched, you know, but that was fine. There's a lot about it honestly that looks the same today as it did back then. Um, which is which is cool, but there was plenty of like audio recordings getting lost and and things like that. >> I guess you know it's it kind of feels like this is one of those cases where new fundamental technology breakthrough like this wouldn't have been an app you could have built two years prior, right? >> Totally. Yeah. >> And so you guys there's a huge first movers advantage, right, to getting this and this would have been very early. I remember around this time looking for like casual note-taking apps like there were some of them I forget like they've all like cycled in and out already for yeah like the business context and I was like man it'd be nice if I could just set this on the table you know when I'm meeting with somebody in person but yeah how much of the how much of the product improvement did you guys just kind of get for free as like the models progressed over those two years? Was it was it substantial? Did the product just get better and cheaper to like operate every every two months as the models shipped or or was it like a lot of like product development and fixing and harness building? >> Uh definitely both. I mean um you know adding new features, building things as new capabilities come out, >> right? Adapting to new functionality. >> Yeah. Yeah. That's something we still do today. And that could be like building a podcast uh that you can create. Um, so you're kind of going from audio to text to a summary and then back to audio again in a shorter form. >> It would be weird to just listen to your lecture again, right? Maybe. I don't know. That's funny that there was demand for that. >> Yeah. I think it gives people some safety knowing that they can listen to it again and like kind of zone out um or if they want to replay something. >> Oh, interesting. like in the moment people are relaxed more like so your app is provide even when their recording is happening you're providing value because like they just have the peace of mind that this is recorded I can like reference it later like all of those things that's I guess obvious when you say it but like uh you think of app value being delivered when an app is used right and I guess the app is being used at that point but not in a consumptive way right it's just being it's doing its job passively which is cool >> right right they're recording it to really come back later and use what they're getting right now and it's something We discovered from feedback when like things would go wrong, you know, and realize how much trust they're giving us. >> Oh yeah, that's a bad moment. >> Losing it. >> Losing a recording. Ouch. >> One of the best things that we did, we just asked our customers, how would you describe Cocoonote? And a great majority of them, it was shocking how consistent this was. They use Cocoonote to never miss a key detail. And that is exactly what we put in the first App Store preview screen. And so I think one of the cool things that we did with Coconut that I'd never done in the past is listen to how your customers describe your product and then say that back to them. Right? There are parallels here with even presidential campaigns or government, you know, position campaigns where you're listening to what resonates with your voter base and then you're saying it back to them. And I think that's in part what a good marketer does. >> That's fascinating. You know, I was just thinking I actually had a version of this in the '9s by having this amazing study group and like what I did I I didn't take notes. Two girls that I would take every class with who were in my same degree plan would take meticulous notes and then we'd have study groups together where I was like chill listening getting the bigger concepts. They were taking notes. I was more relaxed and then our study sessions were incredible. So like you basically productized what I like lucked into >> the the classic group project hanger on monetized. That's a good point though. It's you know what I mean like like I mean okay we talk about technology as like deflationary right and like it's a weird because you didn't pay to be part of a study group right but you were lucky to have that you had to put energy to put that together. It's difficult to like find the right people and all that stuff. And I was bringing that up to the point Brett was saying about like being able to be relaxed during the session and really listen has value and like it was valuable. I wasn't just the hanger on. Like there was value to them for me to like bring in context that they missed because they were frantically taking notes. >> More brains are better than one whether they run on a GPU or not. >> Yeah. Yeah. So, like that's what's so cool is like and and for those who don't aren't fully familiar with the product, you record lectures like in high school, college, and then it generates notes, flashcards, quizzes, podcasts, games, mind maps, like it it generates all this other content. And that's kind of what we were doing in this study group in the '90s >> with immense human effort, right? Which which um goes back to the deflationary point, right? Like this technology just like free money. It's free real estate, right? It's not free obviously, but very very cheap compared to like the alternative. >> In those early days, what were the key like insights and product unlocks that that took you because it sounds like you you got some initial launch traction, but what were those like stepping stone moments that really kind of like kept taking it to that next level? >> Well, there's something that I look for in consumer apps and trying to understand why they've been so successful. And I I look at ones like Ladder or All Trails or Strava and I think that they all associate with like a person's identity and then it's something that they repeat frequently whether it's like running or weightlifting. And to us we we felt like we were capturing a student's identity and going to class and recording as something you do daily or or a few times a week. And that was a big thing for us is trying to find something that not just brings value but you could do it like in an often and repeated way. >> And you build up this like also just this corpus right over time right of like you know especially if like subsequent classes like physics 1 2 3 you can now go back and reference physics 2 you get all this like lock in right uh which is really powerful in terms of like retention and things like that. >> Totally. >> Let's dive into growth. How did you promote the launch and and like what did traction look like out of the gate? >> Yeah. On so on the growth marketing side, we as I mentioned before, we wanted to get traction. There's a great quote by I think Sam Alman, right, which is momentum is like oxygen for a startup. So you want to get as much momentum as soon as possible. And I know in some way I'm stating the obvious, but there are very clear trade-offs, right? In some cases, you delay a launch. In some cases, you want to perfect certain flows or perfect this and that. Maybe you delay your launch because of hiring, whatever. I think the thing that we got really really right from the start is we wanted to get as much momentum as possible as quickly as possible because momentum is like oxygen. You just feed off of that momentum and and it lets you put more and more energy and more and more cash if you need to into the company to keep it growing. So in the early days it was very obvious that we were going to use social media to grow. I think we live in this really interesting time where it does not matter generally speaking how many followers you have on short form video. It just matters if you make great content. And so we were trying everything in the beginning. I have some interesting stories. I don't know if I should share them but maybe we can circle back to those early days. I mean it is like a true grind right and it felt it feels good right to be part of that game but we were trying everything we could and then I would say we worked with you know easily 30 content creators of various types in the early days I would say in the first two months and really three of them ended up making a huge difference one of them in particular ran the main coconut.app app account and generated hundreds of millions of views. And I think I can speak for Brett on this. >> We're very lucky to have worked with him and started working with him very early on because he was a key part of our growth. >> I know you guys don't want to say it, but that was Mr. Beast. >> Jimmy, if you're listening, we'd love to work with you. >> Uh I So I was going to ask the model there, did were were you two ever dancing on a TikTok? Did you like try any first-party stuff yourself or did you go straight to like, hey, we're just going to like identify creators and have them run and like that's in itself a process, right? You're like trying different creators and seeing who's good. How did you did How did you do it? >> I think Brett danced on Tik Tok a couple times, then we got banned and so then we had to figure out what else to do. >> It was that good. >> Yeah. Yeah. Um so we were not dancing on Tik Tok, but we were definitely talking to a lot of creators and studying like what's working in the market. Um plenty of learnings I'd say on the on the growth side. I don't know if this is exactly relevant but some some timeline there within 45 days we had crossed 100,000 ARR within four months we crossed a million and then within five months we had crossed 2 million and so we just had more and more capital more and more confidence to reinvest into the company to keep growing and keep working with creators. Did you guys I mean this gets into cash flow questions but being bootstrapped is I think it's very interesting but like did you at all infuse cash in at all or were you I guess maybe by the way of not taking any money out for yourselves or anything like that like it's a flywheel but like you kind of there's like a minimum buy in to get scale for these like how did you manage that? >> Yeah, it's a bit of both of what you said both of adding some in and it's really slow in the beginning on Apple like the delay of get paid. Yeah.com/payouts. I don't know if we have that set up yet, but we're working on a product there. >> It's really slow in the beginning, especially if you then try to like recognize your revenue on an acrruel basis and things like that, which we had to learn. And it >> it's a good way to descend into madness is what that >> Yeah. So, yeah, we put in a bit both in the beginning to get things going and then we really don't have even today much of a free tier. You can use it a little bit before you start a free trial, but that helped as well. did cogs of produc like the LLM calls and like all that stuff. Does was that material for you guys where you had to consider it or was there enough of a spread? It didn't really matter. >> Not really. I I think in the beginning we didn't pay much attention to it. Always felt like it'd be a good problem to have if we end up having that problem. And then as we grew, you know, there's like startup plans you can get on in the first year, free credits, things like that. And then as we rolled off of those, we did make some decisions to be more like cost efficient, but it was overall totally fine. Yeah, you have to figure in like the giving away tokens at the beginning of an experience is just part of your CAC kind of, right? It's like you have to give that away. I think too many people again it's like yeah I mean maybe maybe Zach having gone through a venture back you kind of had the model of like capital equals growth because I think I see sometimes with bootstrap David's bootstrapped a lot of things but like because the um you know dipping below the zero is into your personal money like there tends to be a real hesitance right and that it's almost it's it is almost easier to bet I mean it's why a lot of people raise venture I don't think it's a bad reason to is like it's easier to spend somebody else's money it really is right and there's good and bad things about that the good things being is like you're a little bit credited protected or whatever and all those but like you know from the bootstrapper side I think sometimes you know like people are hesitant and not even in like I'm going to spend 100k my own money like that's a big swing but even like oh I can't even ship a product with negative gross margins or even like even like risk my gross margins because oh my god what's going to happen right and I think that can make you make some really suboptimal decisions right if you're too concerned about with it too early almost everything gets cheaper at scale right like as you get bigger one you figure out how to make it cheaper models are deflationary like our models are getting cheaper. So even like today's functionality will just be half the cost in a year when the time comes. Yeah, it's a flip side. In computer science, they always say no premature optimization. That's totally true in companies too. Like don't don't optimize at the beginning. So that's really interesting. So you guys had like very low cogs, maybe higher than like an app that didn't have any AI like backing, but not not something that was a concern. And then you just you just started the flywheel with a little bit of your own cash to like get it going. And then and then did it just was it just like pull out reinvest pull out reinvest like cycle all the way up? Was it was it fairly smooth or how did the how did the scaling go? >> Yeah. Yeah, I would say so. Um we were able to just uh continue working out of the the app store revenue. Stripe as well. We have an Android app now. And one interesting thing is that like the the audio transcription costs are actually more than the LLM generally. And so that's like one that might be surprising, but even there like the local models are getting really good. And I think that if we were starting from scratch, we could probably use those. >> Yeah. I mean, I guess it's like you only need you need you need good transcription quality, not like perfect maybe, right? Like especially if the LM is probably, you know, it's going to know it's going to know the professor didn't say fish, right? Or something like it's going to do a pretty good job of like fixing that, I would imagine. Jacob, one one thing to add on to this in terms of the finances is that we were very mindful of the financial, you know, structure from basically day one. We knew we'd have to invest some upfront and it was, you know, around 10,000 maybe each that we had to invest up front to get things off the ground, but pretty much every month from inception to the acquisition, we were around 50% ebidom margins. And so we really tried to be lean. And then to your point around raising or reinvesting, there are absolutely trade-offs. One of the reasons why I think we're so excited to to now be under Quizlet is that we can think longer term, right? We we can make longer term decisions without this, you know, make believe%. Yeah. Yeah. Exactly. And so I think your ability to think long term is definitely influenced by your capital structure, your capital situation. >> And so I'm very happy to have had that. And then on the other side of it, right, it is really nice to have the cash flow. So that financial discipline I think led us to have cash flow kind of throughout which was nice. >> Let's go back to process though because I think a lot of folks will be interested. So you each put in around 10K. How did you reach out to those first creators? Were you just finding people on TikTok and then DMing them? And you know, were those early ones paid? Did you do any kind of referral? Like how did you get that flywheel going? because so many people listening to this podcast, you know, are trying to figure that out. >> It was an absolute grind in the beginning because you're just trying to find the channel that works, right? And then you just want to exploit may not be the right word, but you want to double down and you really want to spam more or less that channel until you reach the limit. We were reaching out all the above, David. So, we were reaching out to creators through if they had an email in their bio. Uh, funny observation here. If you reach out to a content creator, I have my opinions on influencers that we can circle back to, but if you reach out to a content creator and their email is, you know, it's at sunsetaggency.com or something, any agency sounding, you're too late. Those agencies exist to eliminate the alpha that you are trying to create. Okay? So, they are almost always going to take more than they give in terms of the value that they provide to the company. There are always exceptions 100%. But generally speaking, that's been my observation. >> Probably a lot of like mid-tier creators too who like hear, oh, I have an agency and they get it and it's actually like value destructive for them. >> Totally. Yeah. Absolutely. If they have a Gmail in their bio and they have, you know, 5 10k followers, good engagement, that's great. That's a really nice sweet spot. And these numbers are very flexible. But we know whenever social media switched over from a follower graph to an interest graph and with a for you page and algorithmic distribution, the number of followers you have matters less and less, right? The quality of the content you create matters a ton. So in at Scout, my last startup, the product studio, our first Tik Tok, got 8 million views. We had never posted to the account before, but we got 8 million views. It drove 150,000 signups over a 2-day period. I think at that time, this was 2021. if we were an app, not a website, I think we would have been number one in in the app store. And so I learned the value of great content posted on Tik Tok at that time. And so we knew that that would be the case. It was just a matter of how do we get there? >> So that's what you meant about content creator. And you I I noticed you chose your words very carefully there, content creator, not influencer. So the strategy wasn't to find an influencer an audience. The strategy was find a content creator who produces great content. 100%. Yeah, couldn't have said it better myself. >> One of the struggles with with UGC and this playbook is generating content that converts versus generating content that just gets a bunch of views. And then depending on how you're paying the creators, you know, if you're paying on a view basis, they can really rack up the bill, you know, doing just funny Tik Toks that get attention but then don't convert. How did you address that both, you know, financially and then also in kind of learning what did convert and kind of incentivizing that kind of content? >> Yeah, a couple things come to mind. One is being hands-on with the content creation team. So, today our content team is about 25 people, 25 part-time creators that are all contractors. Throughout the the lifespan of Coconut pre-acquisition, we were between five and 10 maybe at the very most we had 12 content creators. And so we kept a very small team. I worked with everyone closely. I met with everyone onetoone. I would say some of our competitors and some people or some you know founders that are building out similar creator programs approach it very very differently. So, we always had the mentality, great quote by Brian Chesy, who I look up to very much as like a design background, CEO. He says, "We want to build the the Navy Seals, not the Navy." And we had that approach with our team overall and especially on the content team. So, get to know every single one of the creators. Make sure you spend time with them. Make sure you're enabling them with what creative actually works and letting them know what converts. And it's not a perfect science, but when you have a video getting 20, 30 million views, you know what impact it has, right? Because you know exactly when it's going viral, and then you can measure on those couple days that it's going viral, what impact did it have downfunnel. And so I think it's just a matter of like spending time with the content team, making sure they know what converts, what doesn't convert. And at the end of the day, what we found is that if you frame your product as a novel toy, people are going to treat it like a toy. They do not want to pay for that thing. they are you know for better for worse I think people are very entitled that if something's digital it should be free right which is probably subsidized by a lot of the venture stuff built in the last 1015 years but if you frame it as a solution to a problem then people are much more willing to pay it attracts a higher willingness to pay customer I know you have a few stories related to that like there's one video that got 41 million views 4 and a.5 million likes like massively viral video But that didn't convert. I mean, I I would imagine you had quite a few of those. Any lessons of like why that one didn't convert specifically? >> I think it goes to framing your product as a novel toy and not a solution to a problem. So, we were experimenting with something called PDF tobrain.com, which we've sent since uh sunset. And we we kind of thought Brett put it in a really nice way. It would be kind of like a Trojan horse. And so you can, you know, picture this as, hey, I have this really long PDF and I don't want to read it or there's this really long video or lecture recording, whatever it may be, and I want to consume it in a way that is, you know, more familiar to me. And so we put a voice over with a background kind of Minecraft parkour video. It was one of several things that you could put in the background. And uh, you know, true brain rot. It gets roasted online, but people absolutely loved it. But one of the things that we learned is that that is a toy and it's not something that people are going to pay for. So, I think it has a place in a product suite, but it's definitely not the thing that's going to move the needle in terms of revenue traction. >> Do you have this in in Coconut at all? Can I brain rot my PDFs? Uh, just like, you know, bespoke, nice, tasteful brain rot. Do you know what I mean? Like nature, like a nature video side by side or something like this. It's not there right now, but you know, I think we just need to tidy up some of the product and we can we can bring it back. >> Has anybody I mean this is off topic, but has anybody done any like research on this? Cuz like it just like took off this like thing of like split screening all these videos, right? I mean, I used to work with a bunch of like animators and stuff and they would always have like a video up on the side and like the theist I always had is like like you had something engaging or verbal center like listening to something or watching something so that your drawing center. Yeah. I don't know if this is real or not, neurology, but this is almost the inverse, right? Where it's like have something engaging your visual center, like your visual distraction, whatever, so that your like verbal center can like listen and actually take in the content. We've slapped this like brain rot label on it sort of like which is it's funny, right? But like there's probably actually some at least a research worthy neurological benefit to it potentially like if the people like it, right? And there you go. It's you're putting actual content in there. It's like, you know, so what's the harm, right? What's the harm? I do think there's something there, Jacob. I'll plug one of our drops, one of our products, uh, and a feature is speedreadit.com. We saw a demo on Twitter X and it was a way to read, you know, I would say significantly faster than you can if you're just reading a document or a PDF, right? >> By doing, I forget what the method's called, like where the word stays centered and it like slides across. >> Exactly. And to your point, Jacob, one of the things that they do in the demo is they play classical music in the background. And so we kind of made our own I think using 11 labs and it's something that occupies some part of the brain and you're right absolutely it'd be amazing to have more scientific research on this but the intuition and the like observed experience with this is very much if some parts of your brain are satisfied or occupied then you're much more likely to be able to concentrate on something else right maybe the words that are in front of you. So we do a lot of experiments like that. It's funny. Yeah, the labeling of it as brain rot is like uh maybe a disservice, right? >> True. But it it is interesting that those didn't convert. Well, you learned those kind of lessons around what didn't convert. Any takeaways from what did? I mean, you know, you you've shared a high level, but like more specifically, you know, were you better demonstrating the product in the video? Were there better hooks? Like what were the things that convert? because that I mean that's what's so tough right now with UGC is to actually produce those like converting videos and and hooks. >> Yeah, I think at a high level you want to make sure that your product is seen as a solution to an existing problem or as Brett mentioned it resonates deeply at an identity level. So I am fit therefore I'm going to use ladder as an example or I am a runner so I'm going to use runner or strava and so you want content that is more identity focused building brand affinity within a certain audience or market and or shows your product as a solution to a problem and those broadly speaking are what we see the most the best conversion with. So much of what you did was UGC and trying to go viral. But did you take any of those videos and turn them into paid and did you do any paid, you know, as you grew? >> We tried and we don't do it anymore. I think that it's something that I would like to try again. But under our our model, you know, like what would have been success for us was being first first purchase profitable on the ads and we weren't able to get there. I think that looking back, you know, there it could be part of like the market that you're advertising towards, but it also could be that I don't know, Zach, I'm curious what you think of this, but I feel like neither of us like took a ton of ownership there to really like spend like more than half our time or more than half our time on it. And so, we kind of just like slowly didn't get anywhere. And if we did it again, I feel like we could figure it out. you kind of need I mean maybe not a full-time person but like I mean you should always be kind of doing growth and product all at the same time right and so you can split that up maybe each of you is doing half growth half product or one person doing product one person doing growth or engineering and product however you want to split it but like I always felt I've very similar experience for perform or performance marketing it's like Zach if you didn't do the like creator marketing you probably could have dedicated the time and got deep on it and all that stuff but I think that's why I don't know how much this is true now but like you people shipping an indie app and the first thing they do is like oh I got to stop Facebook ads and like whatever and it's like you might not you know one the spends you got to do to get the good data the attention it's going to take it's like that should not be the first tool you grab for I think I think UGC that channel is much more controllable and like much more um probably if you find it much more efficient I don't know this might be true broadly for all growth channels like there's very few growth channels that you can halfass if you want them to work like you got to try you know everybody's trying, right? So, if you're not trying, it's like you're not going to you're not going to be able to break through. >> Yep. And I would say if you're just starting out and you don't know where your customers hang out online, that's bad news. Why would you start running ads? That indicates some lack of fundamental knowledge that you should have as a founder. Like, if you don't know where your customers are hanging out online, that that's that's bad news. To Brett's question, it was certainly underexplored. I think it's hard. We worked with some very good and solid people, but it's hard outsourcing some things to an agency because I think the incentives, generally speaking, of an agency, I heard someone put it this way, is like, you know, they will do enough to keep you happy, but they're never going to be as invested. And so, I think aligning incentives in some really sharp way around performance marketing is a good idea. One thing that surprised me is we always thought you could just pour fuel on the fire. So those videos that are getting 30 million views, let's assume they convert well. Well, let's just run ads behind it. Why would it not work just as well? Surprisingly, that wasn't really our experience. That when we worked with an outside agency to do clips, so we would, you know, have basically B-roll and raw videos that were unedited from the same content team that was posting. And then we would upload that into a a Google Drive and share that with a like a clip agency. they would chop it up and kind of make something specific to performance marketing that those as a creative that cohort outperformed our more organic approach. I found that really interesting because I always assume you could just pour fuel on the fire. With that said, we still really weren't able to get um ads to work and it's something that I think we can invest in in the future. >> Targeting students I imagine made that especially hard. I'm honestly surprised at the the whole story of Coconote in that college students and high school students are famously hard to monetize. So, let let's dig into h how did you get kids to pay for your app and what was the price and did you experiment with pricing? >> Yeah, great question. Definitely did a lot of experimentation. I think we've tried to always have something running. Um, even at launch we were testing like should there be a free trial or not. The college student archetype, I would say, didn't really like get to us. Like, we didn't want that to limit us from charging a lot of money. Like, we wanted to be a premium product and be seen as a premium product. I think that Zach and I kind of just are product builders who feel like we want to put something out that has a lot of craft and charge for it is part of it. Probably also like not knowing what our cost would be is was also part of it. So, we put the app out charging $99 per year and $19.99 per month. I think around like 80% of people subscribe to the annual tier. So, we push that pretty hard. And I think part of like the price too is we want to be seen as premium so that we also are seen as as reliable. I I kind of like talked about it a little bit earlier, but there's a huge amount of trust you have to gain to get someone to like stop writing their notes and instead trust that you will like take care of it cuz they're going to have to be, you know, take an exam on it either way. And I think that the premium feeling helps with that to to believe that we're not going to lose their recording. >> Yeah, I think it's a I mean, I don't know, David, you probably have a better sense, but just in terms of like the utilities for students, not that that's full what you guys are, but like that's a high price point. I think of the ones in my head I can think of off the top it's like third of that maybe for an annual right like 50 would be high which you know I don't know if it works it works right it's also nice that the in terms of like not having it's being so levered on ad spend right usually allows you to go cheaper but I don't know I mean you're a bootstrap company it's better to have fewer higher paying customers it really is maybe this was mentioned but there's there was no premium right so after a week can I keep using it anyway or am I done >> yeah you hit on a good few good things there you can make one note for free without starting a trial and and that's it. >> Basically a hard pay wall, you know, not quite, but like essentially a hard pay wall. >> Yeah. And and we even I mean one of our early experiments like we launched at $99.99, but we one of our early tests was raising it to 129 and we saw the the magical like more users and more revenues uh at the same time. And so that's where we've been for most of most of it. But I do think we are one of the more expensive options on the market. and to some of the reliability stuff. Like you can go into the cheaper options and start recording audio and like get a phone call and lose your recording, you know? Like Apple does not make it super easy to do this in a reliable way. It's it's really not like a meeting notetaker on Zoom where you you like probably have perfect Wi-Fi and your like computer is taking care of >> session based like you're actively engaged in it, right? Like it's like PC mostly. I mean, Zoom on the phone doesn't work very well, right? It does have suffer from those things like if you get a phone call or something, it'll kick you out and cancel your video and things like that. >> Y >> that's tricky. I did AV session audio, whatever. The Apple APIs for this are not a dream. Uh having known for personal experience, so uh like getting those right, uh somebody's going to roast me because I probably used the wrong framework name. It's probably changed five times. But obviously like optimizing your price testing, there's some of that. But like most of your pricing authority just comes from having a really good product. You know, it's just having something that like people will pay for and and scarcity, right? It's like is there an is there a comparable alternative? And if the answer is no, you have a lot of you know, really when really great products are hard to make, right? So if it's a rare thing, if you made a really great product, it's a rare thing, you can charge a lot for it because it's just not it's just not anywhere. I think we've seen this in AI tools generally like two years ago there was only like one model that was really really good and they had a lot of pricing authority and now there's like other comparable models right and we've talked about the prices are going down right it's like very classic economic supply demand which is interesting too cuz like did you see I'm sure somebody like caught on to your guys' game and was like oh we're going to make no no note or something right like somebody trying to like fast follow you >> there's got to be hund hundreds like there's there's cocoonote like with an R at the end. There's there's one that's just like a different fruit instead of a coconut. There's all kinds of clones out there, you know? I'm sure it impacts us, right? But they are kind of just like mosquitoes in a way, you know, like they're not taking themselves seriously. >> I'm sure it impacts you, but it may not be net negative, right? It may it may be such that those are like lead gen or like I've do this all the time. Come in, I have a need, I I try the premium app, it's like 100 and whatever. I'm like, I just need it for like I just want to try it and then I go to the second tier and I'm like this sucks. Uh I'm going to go back and like try the good one. It's not always directly competitive, right? It's that's only true in markets of a true commodity, right? And apps I don't even think there's any exceptions. Like apps are not true commodities, right? They can get close but like there's always some difference and to some degree commodities are not true commodities, right? Unless they pass through some very normal strong regulation process. So yeah, I think like just generally it's probably helps more than hurt would be would be my guess because they're also spending on ads probably, right? So like and those users are going to see that they're going to search cocooner and they're going to see you number two and they're going to be like wait this one looks less sketchy. I wonder if some of that pricing power also just came from positioning and positioning it as a tool for students. You know, we've talked about this a lot on a podcast like you know ladder in the health and fitness industry. They're charging $130 a year in an industry where it's $130 a month to go to a nice gym and like $130 an hour for a trainer. And for college students, I mean, paying 40, 50, $100,000 a year to go to school and then this is $130 a year. I I did see one of your ads was like, uh, my friend's mom got her this app, Cocoon Note. Did you kind of position it of like, you know, bug your parents to help pay for this or or like was there any of of that that you did find successful? >> Yeah, especially in the early days, a good portion of our videos that are going viral on our Instagram were around, you know, my mom just changed my life. And so we did spend a good portion of the uh the early days. >> That's for other mom. So that's not for the student, right? Like you have a student video that's like my mom changed my life and then you see other mom being like, "Oh, I want to change my pukam's life." Right? That was very much the thinking. I mean, the I used to say this to our creators all the time. I said, "Imagine you're on campus at, you know, student orientation and you see a daughter and her mom, right? And the daughter's just starting college and her mom's there with her." And I said, "Hey, I would like you to go offer a a notetaker, something that's going to help improve your grades and, you know, make sure you never miss a detail in lecture, etc., help you study, be a personalized study coach, etc." and it's $130 to do it. Who are you going to ask? I think the obvious answer is you're going to ask the mom, right? And so early on, we were very keen on marketing to moms. I think we've since like to taken a step back. And by the way, these are not mutually exclusive. There's a big overlap. It's finding who the buyer and the most intent is, right? And you can have good marketing to whoever might be in need, right? I wonder how many app developers get stuck down the route of like, oh, I have to like advertise to the primary user of the product, right? And that may or may not be the decision maker in a purchase. >> David, to your broader question around monetization, just two quick things to add on that are a little bit higher level. One, great majority of our customers are lifelong learners, and so they may be quote unquote non-traditional students. Brett and I have talked to a lot of our customers that are, you know, not in the quote unquote traditional 18 to 22 or 23 year old college student age. They could be studying for something that's not at an accredited university. they could be at a university but outside of that age range any number of you know derivatives there always amazing to to talk to customers that are just making it happen. Second thing is that I'm very glad this again it's not very tactical but I'm very glad we ignored traditional conventional wisdom. I have a lot of, you know, smart friends that if I would have gone to with the the idea for coconut, they would have said, "Zack, no one's gonna buy this, right? You're targeting college students that, right?" And I'm so glad we did not do that. I think in the early days of an idea, you can almost imagine it like a seed and you want to like shelter it from a lot of harm, right? So that it it can at least sprout because in hindsight, it's like, "Oh, this was amazing. Congrats." But only with the benefit of hindsight do those smart people say that whenever it starts out they will always gravitate towards the reason it will not work. And I think a much better framework is what happens if it does work right what impact can we have on our customers what economic value can we create etc. So I'm very glad we did that. Yeah, I mean that's exactly why I asked the question and what what I would have thought externally, you know, just having heard from so many. But it's like I mean it's like my app, a weather app, like college students are not going to pay for weather app. And so a lot of the conventional wisdom around what people will and won't pay for is formed based on totally different products. And so when you come to the market with a unique value prop with a brand new product that's enabled by AI in a way that you know you could never create this product before it's like you you've unlocked demand for that in a way that nobody else had and can charge a premium for it. So yeah it's really cool. One thing on there is like we are aware that like it's expensive and that there are there are students at the end of the day and we want Cooko to be available to as many students as possible and it kind of goes back to what Zach was saying earlier around being able to think longer term under Quizlet and stay tuned on on that. But I I think that we'll be able to get Cooko into more people's hands in the future. >> That's awesome. you know, one of the keys in converting folks who saw this UGC video is nailing the onboarding. What were some of the lessons you learned in, you know, getting people in and convincing them of the value and eventually, you know, getting them to start that free trial? Yeah, I think that there's kind of like a like a meta at this point for consumer apps of have a long onboarding and then hit them with a hard payw wall or basically get someone to start a trial within the first session honestly if not 24 hours and we have always had like a decent onboarding but we hadn't spent a ton of time optimizing it and we ran a test trying to basically like double the length. I think our onboarding is 15 screens or something. I remember when we started talking to Quizlet team, that's something that they commented on. I mean, it really works. Like, it really works to get people a bit more invested into what they're doing and feel like it's more personalized, show them some social proof, and it increased our trial start by 16%. Which we already felt like it was pretty good. And so, to continue to raise it was was awesome. And it's one of those things that continues to compound. What's funny is like as an engineer whenever you start a new product you kind of like build the login screen first and because you kind of need it right to start playing around with things and then it ends up staying there throughout the rest of the the product but one of the nice things about being like there's not always a lot of nice things about being in Apple and Google's walls but uh one of the nice things is you actually don't really need to create an account to make a purchase because you're already signed into your Apple or Google account. So I think the biggest win that we had was moving log to after the payw wall basically at the end of onboarding. >> It's very interesting. It's like a there's some I think revenuecat.com makes this pretty easy. But that is tricky, right? Like being able to take a payment before you have an identity marker being able to associate those. There's a bunch of plumbing we do to like make that possible. And that introduces a lot of complexity now because now and but which is there no matter where you put it is that the like Apple purchase state and the like the account state are like not the same thing which isn't the case when you control the entire like purchase payments flow like you would if you were doing Stripe on the web or something like this. It is a big advantage, right? You know, users don't have to think about it. You're not pulling out a credit card. It's like they know it's secure. >> Yeah. They've kind of already done the double tap to pay at that point. So they'll double tap to sign in. I think we were seeing like 10% drop off by having login being the very first screen. >> Were you capturing any contact details before that? >> No, this this is just like you download the app and open it and now you're forced to create an account. >> Well, once people do start that free trial and as a hard payw wall, keeping them and having them convert is that next big key. what what were the unlocks there for helping people convert and and any stats around your trial start and trial conversion rates that you want to share? >> I feel like web and e-commerce have had like a really big lead when it comes to this stuff like the real like optimizations and and the benefits of being like outside of Apple's walls. Um it's more of like the wild west of what you can do. Um, we wanted to try some cancellation flows there on our website and there's like the standard asking questions about why they're cancelling things like that. And we were able to retain like 25% of people from cancelling, which we felt like was pretty big. And to do that, we tried three things. One of them is like your standard discount offers. You get 30% off if you stay or something like that. Another one is pausing. So because we have students as our users, they come May or June, they don't want they don't want to keep paying over the summer. And so we thought we could try pausing for 3 months. And then the last one was trial extensions. And this is one that I haven't seen that much, but basically if you're on a free trial and you go to cancel, then we basically say, do you need do you just need more time? And offer them seven more days. And that was the most successful one by far. And it really keeps people on that autorenew. And I I think it's so hard to get them back onto auto renew once they once they leave. But um that was a big win for us. And I think there's a way to actually do this on Apple and Google now, too. And so I'm going to be um exploring that. >> Apple does now have it's in it's in limited beta right now. You have to ask for it and get approved and everything like that, but it's a retention offers in App Store settings. Like when they're actually outside of your app trying to cancel, uh you can now like show a screen and offer a discount and things like that. I I don't I actually don't know off the top of my head what all you can do. I think it's only a discount. I don't think you can add additional trial. Are y'all doing any of that inside the app as well? Like do you have inside settings where people go to to like look for cancellation inside the app or or is that only on the web that you're you're seeing those wins and doing that? >> It's only on the web. It's also in the app if you subscribe through Stripe and then we can just show it in a web view. But yeah, that's the one that I still want to bring to to mobile. Yeah, it's harder to do with Apple Payments, but worth trying. Well, as we wrap up, I did want to like actually talk through the acquisition. How how did that start? What was the the process? Did they reach out to you? You reach out to them? Did you talk to a banker about selling a broker? What was the process? >> Quizlet actually reached out. I would say we were only a few months old and we were talking with Quizlet. I remember when Brett first brought it to me. He was like, hey, you know, someone reached out. Should we take this call? And I said, you know, I'd rather not just say we're heads down building. We had been around for a couple months. Like, what could possibly come of that? And uh I think Brett literally slept on it and he came back and said, I'd really like to take the call. Like, let's just see what you know what's going on. >> I don't know. Some people know what they want to do with the company when they start it. Some people don't. Was this like pre-ised at all? Did you be like, "Hey, we want to build this and sell this. Hey, we just want to see this." Did you have those discussions or was did it was it more open-ended? >> I would say we we had a healthy outlook and we didn't have our blinders on. We had conversations with a handful of companies eventually when we kind of committed to going down this path it was taking up a good bit of time. And that's, you know, the one thing I would say to other founders. If you're getting inbound and you're really weighing the options here of acquisition, I would say make sure you keep your eye on the ball cuz the moment you take your eye off the ball, they're going to that will reflect negatively in the ongoing conversations. We'll say that. And so the the moment we kind of said, hey, we're going to take this seriously, but we want to keep our energy focused on building and growing the product, we worked with an investment bank. We worked with a partner named Chris Park at Areative Partners, and they were really great to work with. and then they kind of led the process from there. So we actually got in back in touch with Quizlet through the investment bank baker. So we built a relationship with Quizlet and uh we we really loved I think there's a lot of mission overlap for what it's worth. Something that we haven't covered is that Cocoon's mission is to give learners superpowers and that is not the explicit mission of Quizlet but I would say in spirit it is very very similar right learners can be of all ages. For me, one of the things that I love about our mission statement is that we acknowledge on the superpowers front, it is intentionally vague. The foundational LLM, you know, or AI model providers are doing amazing work and we have no right to compete with them. So, we want to recognize that and our job is to basically tailor the foundational work that's being done, the amazing foundational work, turn it into a superpower for learners. And so while that isn't the explicit mission of Quizlet, it's very much in spirit I would say the mission in some way, shape or form of Quizlet. And so we were able to think much longer term. A lot of things kind of over overlapped and thankfully the deal closed in December of last year. >> Yeah. I mean and I have to imagine just having like mission alignment also like I mean I have to speak as a Quizlet user and like of you know a watcher for a long time. It's a great company, right? They have good brand, they have good products, right? Uh makes it a lot easier to kind of swallow the idea of like your baby going someplace else. Um, and obviously like the integration work which I'm sure you're doing now and like all of that stuff is like you know it's not just a dollar in very rare cases it's a dollar a dollars and a signature and it's over right like there's there's a partnership that will take many years right as this plays out but like from from okay we're going to do this or we're seriously thinking about it till like closed the deal like how long did that last for you guys? >> It was kind of running in the background throughout the year throughout last year. I mean there's there's different like phases. >> There's the talking phase, then there's the Netflixing phase, right? Yeah. >> Yeah. Yeah. Yeah. There's there's that, but also with the banker like the banker's preparing things on their end and stuff like that where we're not really like actively doing anything and they're just getting ready to reach out to people. So, it was um it felt like a long time to be honest. >> That's a long time. Like your whole company's two years and change, right? So, like >> it's half of it. >> Yeah. Yeah. Yeah. Chris was kind of our our third co-founder a little bit. >> H that's great. Tell me if I'm cutting too deep, but did you keep it to between the two of you or did like the rest of the team know or like how did you manage that for that period of time? >> Yeah. Yeah, we we kept it between us. It felt like the kind of thing where, you know, we ourselves were not banking on anything happening, you know, like we didn't want to feel like it was in the bag or anything like that and so we wouldn't want to share it. >> Yeah. It's it's it can be a real distraction. like just literally like you start counting your money or whatever, you know, even if especially if you don't know what the deal is going to be shaped like, right? You just start imagining and and whatever. I mean, I'm sure for you guys it was even if you managed it well, probably took a lot of mental fortitude to kind of keep it compartmentalized and keep leading the business. And so you you managed to keep growing through that whole period uh that you were very happy with. >> Yeah, totally. I don't think we have the the metrics pulled up, but but revenue grew quite a bit. I would say roughly doubled uh throughout that time. Jacob, I think you you may appreciate this. My wife didn't even know, much less the folks on the team. >> Wow, that's a commitment. I would never be able to hold that line. And so, yeah, she, you know, she knew we were talking with Quizlet, but she had no knowledge of like, you know, where the process stood. And >> I think that's smart. You're like not letting it leak out a part of your mind, right? You're just being like keeping it compartmentalized and be like, "Hey, this is just this little thing. I'm not going to treat it like a thing until it's real, right?" and getting a spouse overly, you know, excited and like it's hard enough as an individual not letting it distract you of like, oh, the money's coming and like what am I going to do with the money or like, oh, it's going to be such a relief. I mean, there's so many like emotions tied into it. And then with another person, then all their emotions get tied into it. Any baggage they have about like money and security and everything else like that, like it it's a very emotional thing. Okay, Zach, did they find out like after close? Like there was some point that you told them that this deal was going to happen, right? You check they still don't know. >> Yeah. Have you told them? Are they going to find out on the pod from the pod? >> Yeah. Well, I wouldn't send her a sub club pod. I'm kidding. >> It's not really your back. >> Um the story is uh is is pretty funny. We were driving from uh North Carolina. So, it was right before the holidays. And uh we were driving from North Carolina where I'm from originally. So, we were visiting my family up to Connecticut to see my wife's family and I was day one of the flu. So, I felt terrible. It was one of the worst drives of my life. So, uh yeah, you know, Brett and I were talking and uh we were kind of waiting for for things to really close, i.e. the the wire. And so, yeah, when it happened, I pulled over into a Taco Bell parking lot and I told my wife and uh we celebrated with Taco Bell. She cried. >> That was that was the first moment she had heard of it. She was familiar, but she wasn't familiar with like where things stood. So, she knew something was, you know, going on. You know, she knew we flew out to San Francisco and met with the Quizlet team. A lot of people listening to this podcast, I'd say everybody has a life outside of sub club podcast. They're silly little apps, you know what I mean? Like, and and like how those integrate and these these things like the spouses and the people around us, like they influence this stuff and like how we interact with them really matters. and like your psychology bleeds into their psychology and back and forth and and I think uh it doesn't get talked about much like most not many people have been through this >> early on I started reaching out to you know founder CEOs to talk about M&A process and and kind of how they handled it how they thought about it people that have been through it you know successfully whatever and one of the best pieces of advice I got is you know I think a great leader shelters other people and so people on the team our engineers content creators they didn't know about it until the day of close it's not that we were withholding information because we didn't want them to know. It's that we wanted to shield them. >> Nothing happened yet. And these things fall apart in the last week. >> Totally. Signal to noise. And I think it's the same thing, you know, with my wife that it was just like a signal to noise. I wanted to shelter her from that. But I think the way, you know, she reacted was a it was very much like the founder. If you guys have seen that, >> the McDonald's movie. >> Exactly. Clearly, we're not, you know, Coconut's not McDonald's. But I think there's there are similar emotions from going through it from failing time and time again and to finally having something that a lot of people dream of and to be partnered with a company like Quizlet. It's a really fantastic moment to share. >> How has your life been different like mentally as founders stuff like pre and post like maybe in in ways you expected and maybe in ways you didn't. >> On my side I think I focus on my health more. I'm not a parent yet and hopefully that is in uh my future for my wife and I. But I assume parents have a similar mentality where you take care of your baby, you take care of your child more so before you take care of yourself. Like you can go without and your baby is the one that you want to see flourish. And you know, I guess it's probably the best analogy that that Cocoon note was my baby, our baby. Not to be weird, Brett, but you know, it's like uh it's something that you care so deeply about that you make sacrifices with yourself. And unfortunately, I had some weird like health things come up in the last couple years and I more or less ignored them. But I think I've been able to focus >> tech debt in the software world, right? You took a little debt on health debt. It's a real thing. I mean, especially if you know there's like some sort of like liquidity event or even not some sort of event, some sort of thing that's like like oneway door. You know, those trade-offs make sense, right? I think the similar calculation for people who are holding for a long time, like that's also important, right? you if you didn't sell if you wasn't going to change the operating model and how you guys are operating at some point you would have to address that right whether or not the company sold or not right so it just kind of changes the timing on on these things which I guess kind of fits into Zach the point you're making earlier about like just how it allows you to change your outlook like being sort of like attached to a larger larger organization I'm sure there's obviously synergies between the products and like those very interesting collaborations to go on but also just having like being attached to a larger resource pool like lets you be a little more ambitious, let you be a little more like long-term and stuff like that, which I think is that's the bullc case for selling to a good a well-lined company, right? Is like you can actually you are actually hoping to have a net net market positive merger, right? So that both parties are actually worth more like after it. Um and those are some of the reasons why, right? >> If there is a wave of M&A with AI native apps, very few founders will be able to talk about the deal terms. be it they're not comfortable or I would say more likely because they don't want the corp dev team or whatever the acquirer doesn't want that information out there. >> There's lots of reasons for both parties to not talk about it which is very understandable. >> I still think it's great that you guys and uh have been sharing with us and and other founders too and and things like this cuz yeah I mean Zach you kind of hit on it like you can as a founder you can go out and find those stories and if you know and you can network but like it's it's I don't think talked about enough. This is also such a niche topic. Like there's probably a couple thousand people for whom will go through this experience at any given period in the shape that you guys have have gone through. But I mean obviously like many people listening to this podcast aspire to do that. I do it's one path, right? And I think there won't be another story quite like Coconut, but there will be others that that are similar, right? And so it's good to get these written down and and out there. >> Yeah. >> Yeah. Thank you so much for sharing. I think this is a great place to wrap up. You know what a what a great story and and thank you both for like being so open to share >> and congrats. Did I say congrats at the beginning like congrat what what a what a congrats to both to Quizlet as well. I'm sure they're listening like uh what a get you know good for them good for you guys. >> Anything else you all want to share as we're wrapping up I know being part of Quizlet now you've probably had some uh more people you're wanting to hire and things you're wanting to do with the app. Anything you wanted to shout out there? >> Yeah. Yeah, sure. I mean first thank you guys so much for having us on. We're huge fans of everything that that you guys do. Zach and I are part of Quizlet and Quizlet's hiring across product design, engineering, all of that. I specifically think that I I'm hoping I can find an iOS engineer out of this podcast. >> This is a great audience for that. >> Should you meet my friend Codex? Uh he's very good at it. Uh yeah, >> so I'm continuing to work on the Coconut engineering team, but also the sub subscription growth in general at Quizlet. And so if anyone is interested in coming and building pay walls for Quizlet, we're one of the biggest premium consumer apps out there. We've got we can run experiments that add a million dollars of revenue per year and it's a lot of fun and we're looking for for iOS engineers. >> Well, congrats again and thanks so much for joining us. This was a lot of fun. I appreciate y'all. >> Thank you guys. >> Thank you. >> Thanks so much for listening. If you have a minute, please leave a review in your favorite podcast player. You can also stop by chat.subclub.com to join our private community.
On the podcast: about hitting $1M ARR in four months with no paid ads, why trial extensions beat discounts for saving cancellations, and why you should be hiring content creators, not influencers. Top Takeaways: 📈 Momentum is oxygen — get to revenue fast Reaching your first dollars quickly, even with a minimal product, creates a flywheel of confidence and capital that compounds over time. 🎯 Frame your product as a solution, not a toy Content that positions your app as the answer to a real problem converts; content that makes it look fun and novel does not. 🤝 Hire content creators, not influencers Follower counts are irrelevant in the age of algorithmic distribution. Look for creators with 5K followers and a Gmail address, avoid influencers repped by an agency. ⏳ Trial extensions beat discounts for saving cancellations When a user tries to cancel during a free trial, offering more time converts better than offering a lower price, and it avoids devaluing your product. 🚪 Move login to after the paywall Forcing account creation before users have experienced any value is a silent conversion killer. Removing it from the front of onboarding can cut drop-off by 10% or more. About Brett Bauman & Zack Hargett: 🚀 Brett Bauman & Zack Hargett, Co-founders, Coconote, an AI-powered note-taking app revolutionizing how students engage with lectures. 👋 Brett Bauman LinkedIn - https://www.linkedin.com/in/brett-bauman 👋 Zack Hargett LinkedIn - https://www.linkedin.com/in/zackaryhargett 💬Brett on X - https://x.com/brttbmn 💬Zack on X- https://x.com/zackhargett 🖥️ Quizlet website - https://www.quizlet.com 📩 Quizlet careers - https://quizlet.com/careers Subscribe to the podcast → https://www.subclub.co Follow Us: • David Barnard: https://twitter.com/drbarnard • Jacob Eiting: https://twitter.com/jeiting • RevenueCat: https://twitter.com/RevenueCat • Sub Club: https://twitter.com/SubClubHQ Episode Highlights: [0:00] Introducing Coconote: The AI note-taking app that scaled to millions in ARR [2:15] The founding insight: Why students desperately needed better notes [5:05] Launch momentum: Hitting $100K ARR in the first 45 days [7:40] From idea to $1M ARR in just four months [10:12] Why most founders misunderstand marketing early on [12:31] The key distribution insight: Where your customers actually spend time online [15:22] Creator marketing vs influencer marketing: Why the difference matters [18:05] How short-form content became Coconote’s primary growth engine [21:40] Turning viral attention into real revenue with better messaging [24:25] Premium pricing for students: Why Coconote charged $99+ per year [27:11] Building trust when your product affects exams and grades [30:03] Improving conversions: The onboarding experiments that increased trial starts [33:20] Removing friction: Why login moved after the paywall [36:05] Retention lessons: Why trial extensions beat discounts [39:00] The psychology behind cancellations and keeping users subscribed [42:10] Managing explosive growth while keeping the team small [45:35] Acquisition conversations with Quizlet begin [48:10] Keeping acquisition talks confidential while running the company [51:05] The emotional moment when the acquisition finally closed [54:01] Reflecting on the journey from scrappy startup to exit [56:22] Final lessons for founders building AI products today