Welcome to the Sub Club Podcast, a show dedicated to the best practices for building and growing app businesses. We sit down with the entrepreneurs, investors and builders behind the most successful apps in the world to learn from their successes and failures. Sub Club is brought to you by RevenueCat. Thousands of the world's best apps trust RevenueCat to power in-app purchases, manage customers,
and grow revenue across iOS, Android and the web. You can learn more at RevenueCat.com. Let's get into the show. Hello Vegas! Good morning. It's nice to see your lovely faces so early in Vegas. I hope you weren't out drinking too late last night. This is a live taping that first stop on the Sub Club
Podcast World Tour. We'll be in London, New York, San Francisco, or Lynn later this year. If you haven't heard of the Sub Club Podcast, I talk to industry experts like Ramit every two weeks on the podcast. Looking forward to this chat today. I think there's a lot we can learn from one of the leaders of some of the biggest apps in the app stores. My guest is Ramit. He's a lead PM on monetization at Microsoft, covering Office 365 and CoPilot. Thanks for joining me on the podcast today.
Thank you. Thank you so much. I'm the growth lead for Microsoft 365 apps for MacOS and I support growth for the mobile apps. Essentially the core apps were at Excel PowerPoint and also supporting the CoPilot app and the Microsoft 365 app as well. All of them, big apps, so excited to talk about them and all views are my own and do not represent Microsoft's official stance. I'm supposed to say that.
Of course. One of the things when you and I were first starting talking about having this conversation today that really struck me about our early conversations is that it really sounds like you and your team and even the kind of app team inside Microsoft is like a startup inside a startup inside the biggest company in the world. I always thought of Microsoft as enterprise and people go to the web to download Word and it's a native app on Mac and I kind of always thought
the apps were almost an afterthought. But the more we talked, it's like, I mean, Microsoft is very serious about building fantastic apps and monetizing them on the app stores. Yes. Yeah, so tell me a little bit about that kind of approach and how you think about growing an app business inside the biggest company in the world. Yeah. In the very, say, like 2013,
2014 era, these apps started as companion apps to the desktop apps. So there is always this concept of desktop class productivity, which is that you have a screen, which is say an iPad or a desktop and that's where work gets done. And then there's mobile productivity where you have light edits. And then over time, we started to see that mobile being the primary device, a lot of customers. And this is more true in Asia and other regions than US, but mobile being the primary device and
not a shared device. So people have, say in one family, they would be like two, like everybody will have a phone and maybe they will have one laptop. So we started to see people doing very long firm documents, like sometimes up to 50 pages of documents from their mobile phones. So that's
when we started to get very serious about this. And then the other trend that we saw was that because App Store has a very, very frictionless experience for buying subscription, we started to see that Microsoft 365 subscription, especially in consumer, like our personal and family subscriptions and now co-pilot pro, keep seeing this trend that people just want to make the purchase from their phone. So it's kind of like how a lot of people buy from the Amazon app,
rather than from the website. Because it's just a more handy device, when your credit card is attached. And we see almost a 5x higher trial to paid conversion rate on mobile than on other direct channels sometimes. Because of very obvious reasons like this, credit card is already attached. And there is a frictionless experience, people trust providers like Apple, Google, Amazon,
to essentially manage their subscription. So while we have a very large direct business, we started to see that App Store has this real potential in terms of a very high trial to paid, credit card already attached, people having this as their primary device. That's where they're managing a lot of subscriptions from. So those were some of the things and then we started to get very serious. And App Store just gave us so much organic traffic that sure we pay some percentage
to the App Store, but anywhere you acquire you have to pay some percentage. So basically, the organic traffic just blew our mind and so we just invested and here we are. It's so funny, because Apple is so protective of their percentage. And I think people discount just how much it being so convenient is actually increasing conversion rates and leading to new subscribers. You just wouldn't subscribe on the web. So you hadn't told me that before sitting here on the
stage that you had see a 5x increase in conversion from trial, that's incredible. Yeah, in some platform, obviously, we sell across multiple platforms. I think only on consumer we have like 10 different channels that we are selling on. So we have other channels that also perform very well, but App Store is one of the highest performing in terms of trial to paid conversion specifically.
Yeah, that's amazing. And how do you view competing on the App Store though? As far as there are so many productivity apps, you know, so many, no, it's apps, so many places that you can create documents and everything like that. How does a massive brand like Microsoft approach competing
in this marketplace that is very different from the web? Yeah, I mean, it has been a bit of a learning for sure, but one of the things I will say, so competing on App Store, you just have to operate like a startup because if you see any other distribution channel like a web or say even retail partnerships, those kind of things, we have some advantage there that okay, we have an exclusive deal with a retailer or we have a website that has same millions of users that are coming
on App Store. It's very democratic. App Store, I like to think about it like YouTube is, right? Like Paramount pictures and a YouTube influencer, they're pretty much competing for the same eyeball. So we don't get a lot of advantage. Of course, there is some brand value that we do get. So when we do our ASO, for example, we have branded keywords, that's part of our strategy and then unbranded keywords, but App Store is unlike anything else in the sense that a startup can start in Bangalore
and start taking the spot on some keyword and start showing up above word, right? We have to be like at our best game and we try to retain at least the top three spots in most of the categories. And to your other question, being a massive brand, so think of this as like startups are kind of like department stores and we are like the cost goals. So we have all the scenarios. We have, I mean, if you look at our Microsoft 365 Act specifically, like it has word excel,
PowerPoint, notes, PDF, signing and this scanner. And so there is so many scenarios that are there. So from a value perspective, the value density is very high for our app. So for like $9.99 for the family and $6.99 for personal, just the value that we can pack into one app and those prices are obviously US prices. Some countries may be different, but like just the value that we can pack into one app, it can be up to 50 to 60% cheaper if you go and buy all those scenarios
individually versus you buy like a M365 subscription. I know I'm giving a very department store type of methodology, but like you just see how much value we can pack into one app. It just blows, you know, I mean, if you try to buy say a scanning subscription, et cetera, et cetera, it will cost you a lot more than buying one from Microsoft. And the other thing that it also helps us is that a lot of productivity
scenarios are very one time use. So like for example, in one month, you will have one scan and use case. In one month, you will have one say two document use case. But when you combine everything together in one app, then your retention is maintained because you know, you may have a scanning use case today, but you may have a document use case, then you may have a. So overall on a sweet level, we see good retention because on a sweet level, there is that retention, which is maintained
because of different, different use cases that people have a use for. So with the apps we're being so competitive, and I think the supplies to any app these days is it's so commoditized, there's so many apps in every category like I have a weather app side project that there's like 100 weather apps. And so I'm constantly thinking like how do I differentiate and how do I kind of
stay ahead. As Microsoft, you've got way more resources to be able to think about those kind of things, but how do you approach that differentiation and adding enough value and kind of staying ahead of the curve? There's no one good answer to something like this, but in general, if I have to talk about from a framework perspective, you're trying to maintain a leadership position and this applies to like broader than App Store, then you have to think about neutralization. So this is a
framework that one of our VPs used to talk about a lot. So you have to keep neutralizing any competitor move, for example, then you have to keep differentiating, then you have to keep incubating, and you have to keep maintaining on so for example Apple releases dark mode, Apple release, Vision Pro. So we always maintain a leadership position in the sense that our apps are already on Vision Pro day one, we were day one dark mode, we were day one on most of the new innovations that
come out like we are day one there. So as soon as something gets launched inside WWDC, we are thinking okay, how does it apply it? And then depending on the stage of your app, like if you are mature app versus the startup, you can like do different percentages. Like now say we do 30% incubation
because we are a more mature app. In the past, we were more bothered with like neutralization and differentiation, but now we can just do a lot more incubation because we have a base and now we are focusing on okay, how can we bring AI, how can we bring some of the more advanced features that
can pretty much help people do complete document creation on their mobile. Like they don't, if you think about what AI can do these days, like you don't need 10 tabs, you can just pull all the information like one place and create any artifact like a document video, etc. So we are very focused on that. I want to talk more about AI, but before we move on, I want to really kind
of state that framework because I think a lot of apps can use this. Like when you're competing, thinking about neutralizing, so when you see another app come out with a very differentiated feature, you might not like copy that, I mean especially Microsoft, but like as an app developer,
finding a way to neutralize that in that, like find your own way to differentiate or have some form of functionality that handles aspects of those use cases, and then differentiate, make sure that you create new things that are differentiated, maintain that leadership position, and then incubate, like constantly be like talking to users, like doing user research, and trying new things.
Right. And it's cool to hear that like, again, the biggest company in the world thinks a lot like a startup, and thinks through these kind of frameworks about neutralize, differentiate, maintain, and anything. Yeah, I mean, if you have an app on the app, so it's not like a bond you bought and it'll keep paying dividends, you know, you have to keep working on it. Like you have to keep at it, and you have to keep thinking about the next thing, and the next thing, and the next thing,
because it's a pretty competitive marketplace. And the other thing that I would also say is that when you are thinking about these four things, I think it's very important to think about them from the lens of jobs to be done, rather than like say this competition brought something, and then we copy, we never copy, we genuinely first see, okay, is this job even important for
the customer? So I think that's super important to have a very clear, even the largest app, so like even if you take an app such as Word, there's a very defined set of jobs that Word needs to do for a user, like people should be able to create a resume, they should be able to create a note, they should be able to write a book. Like I can list out 10 things that Word should be able to do,
or Excel, like you know, you should be able to create a spreadsheet, a budget, or invoice. So if the app is able to do all of those things on any form factor, beat mobile iPad or desktop, it's super important that we focus on that aspect, that what are we trying to do, and then there will
always be more, so we are a more horizontal, like from product standpoint, we have a more horizontal solution, there will always be more vertical solutions, like for example, somebody would have a very, very tight, invoicing app, which will have many, many things, like bank connections, etc. I mean, Excel will not go that deep into something like this, but then of course there could be add-ins
that can support something like that. So there is that horizontal versus vertical focus that you have to think about, you can't go to focus on one vertical if you're trying to build up more horizontal presence. All right, so now I do want to get to AI. I think, you know, so many people, I mean, such a buzz word, so many AI apps doing really well, and so many people thinking like, what should our
AI strategy be as an app? And I think too many people are throwing it in as a gimmick, and not like deeply thinking through like, what is this new paradigm of AI mean for our app, and how can we introduce it into the app in a way that actually increases the value, and like people actually use it instead of just being like some kind of gimmick you throw in,
so that your title can say whatever, whatever AI. And then Microsoft, it's like you get working on co-pilot, and then being at Microsoft, you've got like a front-row seat, but not only that, but you work with a lot of teams across the company, user research, and other folks to really understand how to take the best of AI and implement them in a thoughtful way that actually brings value. So, what's that approach? How do you take this new hot technology and actually make something meaningful
from it? Yeah, so I mean, first of all, I am myself kind of new to AI, and secondly, whatever I will say will be irrelevant in one month, but it's going so fast right now, and things are changing so fast. But I mean, let's just hone down particularly into say, Generative AI, AI is a very broad term, like this machine learning, this that, but like Generative AI has a few things, at least, and that's my opinion, like it has a few things that are interesting. I think one of them is
summarization. It can really summarize, so like meetings can get summarized, for example, or any document can get summarized. It can do an outline-based creation, so like you can give an outline, and some of these things are already sort of available in Microsoft 365 now. So, outline to document is something, and it's also a change in habit that has to happen. So like, I think the features and the capabilities are there, like people also need to now start to learn how to use
them. There's a big emerging prompt engineering field out there. One more thing which I find is very interesting is RIG, the real augmented generation. So, at least in the context of, say, a document or a note type of scenario, you can potentially pull a bunch of information on a smaller device now from different parts of the web. So like, in the past, if you were trying to say author something, you're going to Wikipedia, you're going to like 10 websites. Now you can ask Copilot to bring
some of that information to you and also reference it. So, I think retrieval augmented generation is pretty powerful, and people are using, I have seen many startups that are using it very successfully, and that could be a pretty big thing. And then there are some of the other scenarios, like translation, which has been around for a while now. So, I think it's very, very important that in the context of whatever your app you're building, how do these new capabilities help? Because there is a
problem map like how I talked about jobs to be done, and then there's a solution map. So in the past, we used to have create, read, update, delete. Like, if you think about it, most of the apps were kind of like crud apps, and then databases came, Kafka, like big data came, and so capabilities increased, you know, you could process a lot of it. And now it's AI. So, I think it's an increase in solution map, but ultimately it's on the developers on how they make
it useful for the jobs to be done. Like, you can throw in a bunch of AI, like most apps just go and integrate with open AI's API, but like there has to be some meaning. It's almost like saying that, oh, I have an app, and there's this new database, like 10 years back, 20 years back, there were apps that would just do some kind of a read operation or a write operation or
database, because databases were cool at the time. And so similarly AI is cool at this time, but ultimately the companies that win will have to find a very meaningful use case that uses these. There will be some companies that will not find a use case, because for some companies, summarization or RIG is not relevant, and that's okay. It's not the end of the world. I think there's a lot of hubris, right? Like, if I don't do anything with AI, my investor will not find me,
my career will go nowhere. So I think that's a very scared approach. The problem map in solution have to align. One of the things we talked about a few weeks ago was, I just love the way you framed it. And this is the way I think a lot of people could think about how to bring AI into an app is that whatever somebody might want to go to their computer to do, how can AI help do that in an app? How can we bring more desktop-class experience? And a great example I've seen in the
market is photo room. They do background removal. It's like historically, that was like, you got to go into Photoshop. You're not going to do that on your phone. You're going to do that on a desktop with a big monitor, and you're going to have the tool, and you're going to do the outline. It was like a ton of work, and photo room came along, and just makes it like seconds inside an app.
And so I like that framework of thinking of like, how do we bring these desktop-class productivity into mobile on the small screen by using these new tools and these new capabilities? And again, like you said, it's not just about chat GPT-style, large language models. It's also about using other algorithms and other technologies that are springing up around the kind of chat GPT. So what are some other examples at Microsoft of kind of bringing those desktop-class experiences
into mobile that is shown to be really useful to customers? I mean, so far, what I talked about like summarization, like meeting summarization, or like a retrieval augmented generation. Those are interesting scenarios. And I mean, in consumer, there are a lot of things that people are trying, and some with this more success, some with less success. Some funny example is like, you can now create a song for your loved one, and it will be like, in any language, you can go to Bing and
just tell it to create a song for you. And it's a bit gimmicky, but it's a real thing. I'm sure some developers will probably find a use case for something like that algorithm, because that algorithm can do things. I don't think that right now any real songs are getting created by AI, but that day will happen. So I think that's a more consumery thing. On the more business side, I think, yeah, meeting transcriptions, recapping meetings. Those are some very
interesting scenarios. Like you enter a meeting a little bit late. You can get a recap of what has happened. Your meeting notes are sent to you. Task items are sent to you. So I think those are like good examples of things that are actually useful, because now you don't need that. And I think one more, which is very interesting, which I tried, is writing status updates. So essentially, I do my work in Word files, Excel files, etc. And then co-pilot can actually pull a lot of that
information and write a status on a given topic. So if I can prompt it properly, it will write a whole status that I can then send out to the team, or at least write 80% of it, which is pretty good. Like it's a big time saver. I think it just becomes super useful when it gets connected with all the apps that you are working on. And then it can pull data from your context, because that's live data that it's pulling. And then it can really help you write content. A lot of people are
writing books these days with AI. I think you may have seen like author plus AI. So, so. So yeah. Those specific examples aren't going to apply to a lot of apps, but I think the thinking behind it is how you have to think about it. And a couple of other examples you had shared with me were slide generation, in PowerPoint. Like being able to on your phone create a more sophisticated presentation quickly using AI. And then getting insights from Excel. Like if you're on a desktop
computer, what are you going to do? You're going to sit there with your keyboard and mouse and create complex equations and your reference web to figure out, you know, how do I do this exact equation in Excel. And now in Excel, there is capability to use AI to get some insights from that data. And so the way to think about it is that like jobs to be done is like what are the things that people would do on desktop that they can do in the app? And I thought those were some really good
examples. The other thing I wanted to talk about is your approach to growth and the way you think about it. And again, I was like surprised when we started talking that your team just in the past few months implemented an MMP for the first time. And so you think, you know, Microsoft's got everything together and like the biggest company that they got all the resources, they're super
sophisticated. But like you're on the learning curve like a lot of the people here in the Alliance and who are going to be listening on the podcast of like, okay, we need to find new channels to explore. So how do you think about growth and you know, starting to really push as you all seem more and more success in selling these solutions to consumers on the app store? How do you approach that growth? I think one of the things which is and I'll specifically keep it
to sort of mobile and Mac and app stores for this talk. But I mean, we see the app stores as the channel which can bring us a lot of organic traffic. And it can enable frictionless in app purchase, for example, right? And to grow that we are doing pretty much what all of the other people are doing. And you're right, like we are not as advanced as one would think. Like so we have a pretty good ASO story in general. We have user research that kind of informs us what kind of
scenarios are important. We also get a lot of like Gen Z trend and those kind of things. And then we're able to take that and put it in our keyword optimization. And then we also have a jobs to be done approach like we know, okay, we think that, okay, these are the 10 things that we really want our apps to rank for. And because it's a very broad app, we have over time also become good at,
okay, what are the things that people are willing to pay for? So I think it's important to know that just going a little bit deeper into keywords like what kind of customers do you want to acquire? The ones that will actually find value enough that they will want to pay for the premium subscription.
So we are getting better there. And then we are integrating with an MMP. I mean, I think one of the things that happened in the 2015 to 2018 era, we got MMP, we got an engagement platform, etc. And we kind of misimplemented some of that because one of the things, I mean, it wasn't, it was a combination of a lot of things. So what happened in that time like privacy loss changed a lot like GDPR came along and we are under more scrutiny than any other app. And we have enterprise
customers. So we sell one app, it's one app for all customers, enterprise and consumers. So I think the implementations, they were not done in such a way that it could handle GDPR and handle. And also like a lot of the software companies, most of them in this conference like they were also pretty young back then and the solutions weren't very advanced. So at that time we had an MMP, we had an engagement platform and one of the things that we kept facing was actually two things we
kept facing. One was privacy issues because privacy laws were changing really, really fast. And the second thing that we also faced at that time was just like value that we were getting from this software because we were paying these big bills because we had a very big monthly active user base even at that time. So we were paying these big bills but we were not really using it because on one side we were just figuring out the products because at that time like the
products were not at a place where you could start doing optimization. So optimization comes much after your product market fit is there. So we obviously had product market fit in a big way on desktop but it took some years to kind of get that same stickiness on mobile where we saw okay our mobile apps or iPad apps are now like at a point where we can now start doing optimization. So I think now the pendulum is turning again now we are okay we are at a point where the apps
have good product market fit and now we are optimizing. So MMP is there, ASO strategy is there. We try to use all of Apple's promotional offers, promo codes and contingent pricing is a new thing. We are looking into that. So we try to be as up to date with whatever we can do with these apps. One of the problems that we always run into is just justifying the business case for some of these things. So when you have an app that has double or triple digit million
Mao then most of the time the magnitude of opportunity has to be very high. So it's like the team size doesn't grow the same way how your Mao is growing right like because also team size cannot grow. You cannot like because like to add one engineer or say to add 10 engineers you also need a manager.
Your team size doesn't exactly grow and all of you know that. So our thinking has to keep growing. As our Mao is growing we have to think bigger and bigger and our prioritization has to be more and more strict because like if you have double or triple digit million Mao you can't be spending time on an optimization that will impact one million users. You have to be spending time on something that will impact say 50 or 100 whatever right it's a big number. So our framework our VP is very very
strict about this like estimated impact. Any kind of vendor we have to bring in or anything that we have to do any kind of optimization he's like okay give me the estimated impact and then we have this huge list of ideas that come from all sorts of places and then we are like okay let's triage
and a lot of times you would be surprised that the biggest ideas are the simplest ones like okay let's do something on purchase or let's do something on the first and experience because if you have an app that big then sometimes the simplest things like performance reliability file open speed size of the app those things matters are to matter a lot. Are we able to 100% transaction completion because with that kind of numbers you know you know at one point we were seeing 5-6% transaction
failure. So we first have to fix that. So I think that is where it becomes different from startups because it's not all that different though and that's what I was thinking the whole time we're talking is that I think too many small apps don't have that prioritization framework in place. I hear apps all the time they're like a hundred thousand dollars a month in revenue you know like orders of magnitude smaller than what you're working on but then they go trying like oh we got to have
win-back campaigns and so if you're only at a hundred thousand dollars a month and you only have thousands or tens of thousands of users like that's not low-hanging fruit and so from the smallest apps in the app store to the biggest apps in the app store you really should be thinking about these
prioritization frameworks and you should every feature that you're working on every tool that you're going to implement every strategy that you're going to put in place you should be thinking and have a hypothesis like what's the real impact can it be through our business and again if
you're like oh yeah we got to do win-backs like that's a huge thing we'll okay if a thousand people are going to turn from your app over the next six months and you can hope to win back five to ten percent like how meaningful of a impact your business is that compared to like so many other
opportunities that you can have much higher impact in your business I think that's actually a great way to think about it yeah so as we wrap up we're going to link to your LinkedIn but anything else you want to share like is your team hiring or like anything you want to share
from your end I'm actually not sure my team might be hiring because I know I actually don't have that information top-up but yeah I mean please feel free to reach out for any questions or discuss any app growth strategy I'm pretty active on LinkedIn so awesome and then for those of you here in
the audience as I said earlier you know the sub club podcast we talk to folks like Ramit every two weeks and we actually talk everybody from like indie apps who are scaling up mid-market apps who are having the same struggles and then of course I do work for revenue cat in these kind of
conversations I don't talk a ton about it but we're a subscription monetization platform that helps with all this kind of stuff kind of that base layer of infrastructure that does push data to win back see you and again I'm like here on stage saying don't focus on win-backs if you're
early but as you grow that's a really important thing and like our data revenue cat can really help push that so yeah I think everybody for joining and I hope you enjoyed a conversation today and check out the sub club podcast and revenue cat and everything else we're working on 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