The Phenom App user acquisition machine
The Phenom App user acquisition machine
In this podcast series we ask experienced Appreneurs for one success story and one fail.
Phenom is an iOS App for Athletes to to show off their gear and game. Brian covers their approach to user acquisition in the teen segment and nailing their position as the identity for Athletes.
Here is a quick TL;DR:
- Building community and their approach to “influencer marketing”.
- This is a cool story about how authenticity makes for effective user acquisition. These guys were high school athletes and they are scratching their own itch.
- Another lesson in persistence, having previously started a non-tech startup (sports apparel!) they re-started in the same space but a completely different approach.
- Many people say that “influencer marketing” is just too expensive, Phenom don’t agree if relationships are the foundation.
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David: Hello. This is David Jones and I’m here with Brian Verne from Phenom. Brian, how are you doing?
Brian: I’m doing well, thanks. How about yourself?
David: Yeah, great. I’m great. Tell us about Phenom.
Brian: Yes. So, yeah, I think simply put, you know, Phenom is a community for high school athletes or young athletes, in particular. And it’s a place for them to talk about the different products and brands that they love, and you know, share stories about their athletic achievements. You know, for the young athlete, it’s really just a direct reflection, you know, of their sensibilities and their persona, really kind of distilling things down, you know, to a level of what is important to a middle school or high school athlete in demand, you know, how can we create a story-telling experience, you know, for these young athletes to just talk about things that are, you know, relevant to them, you know, as a young athlete. Everyone then always kind of wants to know, “Well, you know, that sounds cool but how do you guys actually make money? How is it an actual business?” And you know, I think, you know timing is kind of everything in business in general, but we noticed the landscape in sports changing. And you know, brands like Nike, Under Armour, Adidas, big sports retailers, they care a tremendous amount about the young athlete, and you know, that high school athlete segment. And you know, we found that brands, you have a hard time reaching these young athletes grassroots and granular level, and they want to get product feedback, or they want to understand consumer behavior, you know, particularly you know, at the most impressionable time. And so, ultimately, you know, while we are a tool for young athletes to, you know, talk about things that they care about, we’re really a platform for major brands and retailers and marketers to tap into the high school athlete segment, to get product feedback and to understand consumer behavior at a really, really grassroots and granular level.
David: Ah, cool, cool. So just for the record, it’s Phenom which is “P-H-E-N-O-M,” right?
Brian: Correct, yup. Yeah. It’s an iOS app-only. It’s available, you know, on iOS App Store, actually, only in North America at the moment. But definitely, it will be expanded to the EMEA regions as well as cross-platform, you know, planned in the near future.
David: Gotcha, gotcha. And so, is the activity up or down this week with spring break?
Brian: That’s a good question. You know, it’s definitely up for us but some of that is relative to some of the margin efforts, you know, we’ve turned back on, you know, over the last week or so.
Brian: Just do that, and test some cohorts.
Brian: But you know, I think activity is—on the one hand, it’s somewhat, you know, seasonal or variable, you know, dependent on what sports are in season at that point in time. But on the other hand, it’s, you know, our numbers actually tell us, it’s been pretty consistent, you know, from when we launched until now.
David: Do the users actually end up sort of, like putting content in there that’s unrelated to the sports and product activity? Like has it bled across into other parts of their lives?
Brian: Not particularly.
David: Right, so—
Brian: So every once in a while.
David: Stay pretty focused.
Brian: Yeah, yeah, yeah. And what we found, and really, what—excuse me—our goal as a business is we want to capture every single segment of an athlete’s experience. And so, you know, if you think about that anecdotally, you know, I might be in the locker or I might be pre-game or I might be playing in a game, or I might be in training mode, or might be in recovery mode, or I might have just gotten a new pair of shoes or a bat or a glove or lacrosse stick and I want to show that off. So when we think about our user experience, we think about it in that context of athletes have all these moments that happen throughout the day or throughout the course of their career, and you know, how can Phenom be the means for them to share all that information. And even, you know, with our products still, you know, kind of being, you know, in MVP stage. You know, we’ve been able to capture tons and tons of behavior which has really kind of shed light on, you know, on where we want to head and I think more importantly, you know, validated some of the key parts of our own thesis as a business.
David: Yeah, so what’s kind of like a classic user case for a person that you’ve kind of found is the way they actually prefer to do it? Is it literally they download the app, they fill out some basics in their profile and then they do—the first thing they do is kind of like put in just the, you know, the last achievement they did or something like that?
Brian: Yeah, our athletes—our users are interacting with gear a lot. And so, you know, they’ve added, you know, about a quarter million—250,000 products, to link their Phenom profiles. And you know, putting that in like super layman’s terms, it’s kind of like a Pinterest but for young athletes.
Brian: And young athletes are creating a collection of their gear, in what we call their, you know, their “Phenom Locker.” The second piece, you know, which you alluded to a moment ago is, you know, this idea of sharing their achievements. And yeah, I mean, those achievements are—it’s a wide spectrum. So you know, we see users posting, you know, photos from the gym or like doing something specific as like a speed ladder or—excuse me—in-game photos in the locker room. Post-game gym stunt, pictures of the new product they got. So from that point of view, it’s actually validated, you know, where we’re trying to head and in creating this constant pulse of what’s going on in, you know, the sports community.
David: That’s great. So tell me, what’s kind of the approaches you’ve been taking to acquisition this? Actually, first thing first, so the user comes along, they download, they log in and they’re using what to log in and identify themselves?
Brian: We have Facebook go off, and sign up an e-mail, is that what you’re alluding to?
David: Yeah, yeah. Okay. So you’re piggybacking on normal social-type things which means you can kind of like do some sort of, like, give the nexus to their social graph at some stage?
Brian: Sure, sure.
David: Yeah, okay. Alright. So you do that. Yeah, so from an acquisition perspective, what’s kind of like been your areas of, you know, charging down to experiment with?
Brian: Yeah, so you know, I think this is actually, you know, a big strength of the company and, you know, I think about why, you know, it probably adds to that, you know, a number of different ways. One, you know, most of us, myself included, were college athletes. And so, we really understand the space and we really understand what makes-
Brian: -what athletes think. And so, one of the problems is that I feel like we built a really aspirational brand and this was even leading up to even having a product. You know, we kind of launched on some social channels and really built a rapport with, you know, early kind of trench of evangelists or users, so to speak, who then, you know, went out and championed our product, and even more importantly, you know, our brand. Then, you know, as we’ve launched and kind of exited, you know, what was more or less like the private beta, we were thinking of, you know, kind of outside the box, like how can we build a community that, you know, in a way that doesn’t just kind of fall under the, you know, the status quo, you know, channels of acquiring users which you would typically think of. Well, maybe a Facebook ad or a promoted tweet or more recently, you know, Instagram’s actual, you know, traditional ad platform. And we have always been against that because it’s really expensive and even, you know, when you are able to optimize, you know, the average cost-per-install is still around, you know, $2 which is, you know, it’s fairly expensive.
Brian: You know, especially when you’re still, you know, kind of working towards product market fit and just rapidly testing. You don’t want to pay a ton of money and to churn users.
David: Yeah, yeah. Exactly.
Brian: -in early stages. So we kind of looked at Instagram and that was where we, you know, we saw our most success early on as I mentioned, just kind of building our brand and building our community. And in layman’s terms, I suppose, that I don’t want to get into too much detail because, you know, frankly, this is you know, a huge advantage of ours. We’ve built a pretty sophisticated influencer network. And what I mean by that is, you know, accounts that are in the sports genre or sports-focused and you know post relevant content and have a relevant followership or following, I should say, of generally, athletes or people who are sports enthusiasts. And we kind of have it, you know, down to a science now where, you know, we’re working with, you know, our influencers who we’ve built rapport with over a period of six months or so. And you know, we’re giving them content to share. We’re continuously optimizing the content and the captions and, you know, making sure that, you know, it always stays diversified and fresh-
David: Yup, right.
Brian: And we’ve become more and more data-driven as a company. And so, you know, we really understand, you know, almost you know to, I would say, within a couple percent on any given day, what type of adoption we’re going to get. And so that’s a lot for us to generate about, you know, 70,000 or so new users over the last couple of quarters. And, you know, it’s been incredibly cost-effective, we’re, you know, outperforming the industry standard by, you know, 10-20 times at any given day.
Brian: So, you know, with that in mind, you know, I think it’s something that, you know, we don’t necessarily lean on, but it’s just added benefit that we have in terms of growing community.
David: So you based, I mean, if we wanted that right back, you sort of came from a place where you are sort of scratching your own itch. You had a lot of understanding about the demographic. You came from that. You’re athletes yourselves. You understood. You talk the language. You understand kind of like where people’s heads are at and stuff like that.
Brian: Sure, right.
David: And then what you did was you started to build the relationships through the social channels for that to sort of like boot strap that particular thing.
David: So you’ve basically kept that authentic right from the start.
David: I guess when you do it like that, you actually kind of like reading the signals back all the time too. You know, you’re actually in conversation with people.
Brian: Certainly, certainly.
David: Mm-hmm. Yeah, I find that, you know, quite often when we talk to people, it’s something about, you know, understanding, you know, the sector that you’re actually in and that’s being, you know, being like you actually live in that yourself. That’s the best way to kind of understand what people are looking for, so that sounds very cool.
David: Then, you know, maybe easy to throw a few bucks at advertising, but you just don’t get that learning and you don’t have that authenticity and stuff like that.
Brian: No, absolutely. But I think, you know, it boils down to just understanding, you know, what makes people tick. And I don’t think that’s just, you know, exclusive to sports or our space. But, you know, I do think that myself and my partners have just done a great job of, you know, being able to tap into, you know, the persona and the sensibilities of our users to, you know, to create, you know, this aspirational brand and something that they want to be a part of. And, you know, now we’re at a point where, you know, we’re starting to, you know, build up a little bit of critical mass and, you know, have a large enough sampling size as well where we can get a really good understanding of, you know, what we should do with the product and, you know, where we should take it, what key features are actually important and-
David: [Laughs] That’s subtracting rather than adding.
Brian: Exactly. So it’s been, you know, especially during our time here at 500, that’s been, you know, incredibly valuable just, you know, really digging into the data and, you know, understanding, you know, the levers and—
Brian: –like laying the gears of success. And our marketing efforts have definitely contributed to being able to have the luxury to do it fast.
David: So the way you’ve approached it is, you know, it seems a bit of a contrast to the way other people sort of talk about influencer marketing, which is, you know, kind of like caught up with this idea that I’m going to try that as an acquisition channel, and I’ll go up. I’ll go often talk to a rep for some influencers. And, you know, I insert a coin and I get a result and the net, sort of, thing that I hear around the traps is that actually, it doesn’t end up being a very efficient spend. Do you have any opinions on that kind of standard, sort of the cookie cutter type approach?
Brian: Yeah. There’s a number of market places out there that we’re quite familiar with, that have tried to build up a network of influencers under their umbrella and then they—I mean, they basically upcharge quite a bit to tap into and try to bank. I mean, there’s been a few exits recently too, like, how do I say Instafluence and Niche sold to Twitter. And so this one originally bank on the names sold to the New York Times. So from their perspective, sure, I think there have been success. I think I would agree with you though, and this is something that we notice straight away, we’re like, “Well, you know, it certainly takes a lot of work and it absolutely does.” And we have, you know, team members of our team, Jamie and Corey are almost full-time and are running, you know, our social channels and making sure all the operations are going smoothly. So it’s a lot of legwork, but it’s way more effective and, you know, way, way more cost effective, I’ll tell you that much than kind of going through a middle man.
David: Gotcha, gotcha. Yeah, it just seems like everybody’s going to try that particular thing. But you know, you’ve got to actually make sure that you’ve got that authenticity and understanding the sector, a) the influencer comes from, and b) the sector who’s actually following that influencer. You guys know it from both sides by the sounds of it.
David: Yeah, that’s really cool. Well, let’s chalk that up to a win, I think that’s great. So, you know, in terms of, you know, one win and one fail, tell us about what fails have you hit, and I’m sure 500’s actually helped you [Laughs] help you sort of like find some of those. But what’s a big fail you’d like to talk about? Nobody ever wants to talk about the fail. [Laughs] But it’s funny from an entrepreneurial perspective, you actually have, you know, like a thousand fails a day and the two wins are the ones that keep you going, sort of thing, right?
Brian: Yes. It’s funny, you know, when success on one hand is kind of predicated on a series of failures-
Brian: And just kind of learning from those. I mean, I think of, you know, a big thing in, you know, I also, I sometimes, I don’t even like to think of it as failure just because, you know, it has such a negative connotation, and you’re constantly just testing things-
David: Yeah, get it right, get it right, get it right, yeah?
Brian: Kind of see how it works, right?
Brian: I mean, that’s especially, you know…
David: Is there anything you thought was actually going to really come out, “You guys, this is going to totally crush it!” And you put it out there and nothing happens? [Laughs]
Brian: No, no. I think what I was going to get into was just overall product, right? So, you know, we’re still, you know, working towards, you know, really finding, you know, this “stickiness” factor and there definitely is some things that we’ve learned, you know, by our data and, you know, our analytics over the last couple of months and I would say that’s been a huge part of, you know, the whole 500 experience is just making those distilled things down to a simple level, understanding the leverage, understanding what, you know, the key indicators of success are and really knowing how, you know, how to measure that. I’ll give you a shameless plug here.
David: [Laughs] Good on you, mate.
Brian: One of the things that we did not have in place was a good, you know, push notification or retention tool. So, you know, by implementing StreetHawk the other day, for instance, I think we’re going to see a nice little uptick in some of our retention and other things that we’re testing. But just in general, you know, I think our biggest challenge as a business, just knowing, you know, what we do well in some of the wins that we have under our belt is just getting that perfect, like product market state and, you know, making sure that, you know, we always build the best user experience and, you know, it’s a consumer mobile company, and that’s all the challenge. You know, you’re working towards, you know, finding that stickiness and it’s not always easy.
David: Yeah. Yeah, that’s sort of like one of those things that you just got to try out and just see what happens. So we won’t call them “fails,” we’ll just call them “iterations” or-
David: [Laughs]—or lessons or something like that.
Brian: Right, right, right.
David: Did you guys have a tech company before or is this your first time up at play?
Brian: Now, we have a weird, weird, weird story or I should say, we’ve taken a very circuitous route. So my business partner, Mike and I, had—we had another company prior to this. It was a performance athletic apparel brand. And, you know, we were trying to be a niche alternative, you know, to your Nike or your Under Armour. I’ll say it was probably one of the dumbest ideas ever.
David: [Laughs] But it’s awesome.
Brian: I mean, we were 22 years old when we kind of came up with it. And you know, we’re both former college baseball players, really sports-oriented. And, man, we were just really dumb and naïve. And so, not only did we not really know anything about business, but we didn’t really know anything about that space at all. And so we bootstrapped it. It’s incredibly fascinating. You know, I know more about athletic apparel and supply chain and cut-and-sew than probably 99% of people in the world now.
David: [Laughs] That’s great.
Brian: A skill that’s probably worth nothing to me at this point of my life. But, yeah, we’d bootstrapped it. We, you know, we generated some revenue, you know. It was fascinating and I think it kind of built up some mental fortitude and some of the intangibles that, you know, that it carried over into what we’re doing now. And as we’ve gotten a little bit older and a little bit more seasoned, although we’re still, you know, both idiots-
Brian: -you become a bit more sophisticated. I think, you know, maybe subconsciously or in hindsight. I think about all of our experiences and you’ve certainly had, you know, more experience and a lot more success than we’ve had. But I think you would agree that over time, you just get smarter and you’re able to work faster and things start to come together.
David: Tell us about the “mental fortitude.” What were the things that, you know, just the knocks that you take that actually build that strength as an entrepreneur?
Brian: Yeah, I mean, again, I would say that we might have a slightly different perspective or experience than others just because one—so we were founded in Cleveland. That’s our hometown. And… you know, speaking specifically about Phenom, for instance, you know, Cleveland isn’t necessarily known as, you know, a consumer tech town. There’s not—there’s really—
David: You’ve got Dellavedova though! [Laughs]
Brian: We do have Delly and we love Delly.
Brian: I love Delly. I hope he locks up Steph (Curry) in the finals again.
David: [Laughs] Would be good to see a replay of that. [Laughs]
Brian: Exactly, exactly. You know, if we’re going to talk about Cleveland sports, I could stay on for another two hours.
Brian: So we were founded in Cleveland, you know, really wanted to set precedent that consumer tech could be a viable market in our hometown, and kind of lay the pavement for others to kind of follow on our footsteps. You know, we were successful in raising, you know, a little bit of money, a couple of C-rounds, have a street launch, got our business off the ground. But, it was a challenge just being, you know, stumbled on an island where there weren’t as many like-minded folks. And so, you know, definitely coming out to the Bay Area has been really very invigorating and just the density of like-minded people and talent and resources, I think the 500 Startups experience, our cohort is kind of a microcosm of the whole region, you know, where we have, all these knowledge shared and all these incredibly smart people, you know, at our disposal, it really helps you move the needle for your business. But, I mean, obviously in general, building a startup and being an early stage company, you’re definitely going to experience your ebbs and flows. And I think it’s important to stay pretty grounded and stay focused and, you know, humble because this is often times very humbling, you know. It would be going on really well one day or even one minute, and then you get this horrible e-mail and you’re like, “God, like the world’s going to end.”
David: [Laughs] It’s a very bipolar lifestyle, I think.
Brian: Yeah, I know. It certainly is. But it’s fun and you know, like I said, we’re athletes and this is just kind of an alternative arena in which to compete and that, I really, really enjoy and you kind of get used to, you know, living on the edge, so to speak.
David: Yeah, it’s a marathon filled with sprints.
Brian: It certainly is.
David: [Laughs] So what’s next for you guys?
Brian: Well, we got another—what? Five weeks or so during the 500 Startups cohort.
David: Right, right. Yup.
Brian: You know, much like I would—and all of my peers, you know, would probably say, “You know, we’re out fundraising again and, you know, trying to close another round.” But most importantly, it’s just, you know, massive product iterations and just continuing the show, you know, the bond’s full growth on the product side.
Brian: And huge emphasis on, you know, our retention and engagement. You know, we’ve been fortunate enough to kind of prove out the commercial viability of what we’re doing, you know, on the brand side and I think that’s a plus just because we, you know, we have, you know, some social proof from some major, major brands who are, you know, and are willing to, you know, pay us. So, you know, for us to really win and, even more importantly win big, it’s just—it’s going to be a matter of us, you know, winning product.
Brian: And just really solving, you know, all of those, you know, all of those problems so that, you know, we, you know, ultimately become the digital identity for every young athlete in the world.
David: Yeah, yeah. Now, that’s a great vision. Alright, I really appreciate your time. It would be great to come back and have a chat in a couple of months to see how you’re going with your growth and…
Brian: Absolutely, absolutely.
David: Yeah, really appreciate your time. Thanks, mate.
Brian: Take care.
David: Ciao for now, bye.