Keep what people bought the device for free; charge for new add-ons like meal planning

Michael Segal… to pay a subscription, but there's a spectrum between I get why you're charging a subscription, and I'm feeling ripped off angry, and disgust. When it's something that they feel on almost a values basis should be free, the emotion that is elicited is disgust and anger. And when you're trying to build a multi-billion dollar brand, that is not an emotion, even if it's actually short term subscription maximizing, not an emotion you want to elicit.

Michael SegalSo, we have had times where we put something behind the paywall and it makes the numbers go up, but we learned through reviews and just interviews that it's very begrudging or even anger eliciting. And our point of view is we want to steer clear that we're not a get rich quick scheme here. We're trying to build something for a generational company. So, we keep our pulse on the emotional reaction to where the line is, not just some quant A/B test of what performs.

David BarnardThat's exactly what I was going to ask next is do you test things in and out of the subscription bundle. So, it sounds like yes, you do. So, then is there any line you draw, you lean toward putting something behind the subscription first, and then you'll pull it out if you hit those roadblocks? Or is it just such a case by case? And do you have any other examples of something maybe that wasn't behind the paywall that you put behind the paywall?

Mark Ungerer… out new things that are like, hey. A good example was we launched a meal planning module. And it was like, for people who are meal planners, it's really clear what that's going to do. Think I'm going to be able to plan the family's meals. And we said that wasn't part of the product before, so you're still getting the same thing that you got for $300, for that same $300 and this new thing that they can grok is going to go behind the paywall.

Mark UngererAnd a lot of those things we don't even test. Sometimes we just say, hey, that makes sense. It's obviously easier to start behind the paywall when you're adding something new that passes that, yeah, I grok it, I want it test and then move it out, then the other way around. It's very painful. So, that's how we've felt our way into it. Also, counterintuitive point number one here is we have tried changing the merchandising of how do we show what is in the bundle to users. And those changes often don't change the attach rate, what we call the attach rate, what percent are subscribing, very much.

Mark UngererSo, a lot of times we get the sense that as long as there's value in the bundle and the customer is excited about Skylight, they're like, give me the whole thing. I want this subscription, and they're going to start with it and turn it on. And this optimizing of how exactly do we frame it. We haven't yet seen a ton of change in the attach rates based on how we rebundle things.

Michael Segal… when I went to your conference, like, okay, there are some people that are 10X more rigorous at testing the paywalls at every step than we are. Cool, let's do that. But as I said, we have yet to have or find that perfect growth PM who's going to drive that for us. So, these are all early instincts. But I do think they've proven out time and again this emotion first cautious philosophy. I'll give you one very ripped from the headlines example.

Michael SegalWhen we launched in 2018 or maybe it was early 19 for Calendar, we're like, you know what? We know how to do photos on a device. We're just going to put that behind the paywall. No rigor at all. Just like, if you're buying it for a calendar, cool. If you also want it to be a photo frame, 39 bucks a year, which by the way is a magic number where people don't really care that much. And it worked. It just worked out of the box, but it's now been eight years and the market has evolved. And now our customers are telling us that... not overwhelmingly, but some customers are starting to say much more than two years ago, hey, guys, this photo screensaver really should be free. And so, we're having active discussion about do we make it totally free. Do we make it partly free, moving it outside of the paywall based on changing tastes? Which it's going to happen over a decade as the competition and the market evolves.

Mark UngererOn that example with the screensaver, there's also this second order effect. The first one is like, hey, we got more subscribers and ARR goes up, great. But the second order effect is people didn't come to buy Calendar for the frame, but we often listen to customers and they say, boy, I bought it for the Calendar. It's great that we're organized, but my kids love the photos. And so, people who have it just light up about the product and the …