Building the Berkshire Hathaway of Consumer Subscriptions — Eric Crowley, GP Bullhound

Sub Club by RevenueCat

On the podcast: The B2B opportunity for B2C apps, the App Store alone being bigger than most Fortune 500 companies, and which current or future company will build the Berkshire Hathaway of consumer subscriptions.

Top Takeaways

📱 The App Store ecosystem is far from saturated. With a nearly doubled revenue from content being purchased since 2019 and hosting close to a billion subscriptions, the Apple App Store shows that there's still plenty of room for growth and opportunity. Despite debates about consumer fatigue, these numbers signify an ecosystem that is not only surviving but thriving.

👮 The regulatory spotlight could spark change in App Store fees. Amid increasing pressure from global and domestic regulators, the question looms: Will Apple and Google adjust their app store fees? If they do, it's not just a legal win, but also a potential cash flow boost for app developers. The decision could also be a tactical move for Apple to win back transactions currently lost to alternative payment systems.

🤝 The boundary between B2C and B2B is becoming increasingly fluid, offering a new avenue for growth. Brands like Peloton and Headspace, which thrived in the B2C space during the pandemic, are now venturing into B2B. This isn't a pivot but a strategic expansion, rooted in the belief that what consumers love, businesses will too. This trend underlines the potential of consumer-centric design in unlocking new business opportunities.

3️⃣ The Three C's: Content, Commerce, Community. Companies face three key challenges: acquisition, conversion, and retention. Content lures in users, commerce seals the deal, and a robust community keeps them coming back. It's not just a formula; it's the backbone of today's thriving subscription apps.

🤔There are untapped categories ripe for disruption.

While we often see a couple of dominant brands taking over established categories like dating or fitness, there are still numerous untapped markets in the consumer subscription space. Categories like Femtech and family management are just the tip of the iceberg, presenting just a few examples of the opportunities that await innovative apps.

About Eric Crowley

💼Partner at GP Bullhound, focusing primarily on mergers and acquisitions, capital raises, and advisory transactions for technology companies.

📈 With more than a decade in investment banking and edtech growth, Eric focuses on transactions for U.S. and Europe-based growth-stage CSS, adtech, digital services, and fintech companies.

💡 “Who's the Apple of female health? Who’s the brand you go to that is by far the best, [where] you don't question it, you buy it? There isn't one. There should be one, and — for something that happens millions of times a year — why isn't there an Apple of female health?”

👋 LinkedIn and X, formerly known as Twitter

Links & Resources

‣ Check out the CSS 2023 report

‣ GP Bullhound

‣ The evolution of consumer subscription apps

‣ Future subscription trends

‣ What venture investors look for when buying an app

Episode Highlights

[2:05] Doubling iPhone numbers: Apple’s consistently high growth sees 90 billion in profits this year.

[6:23] Apps are the internet: More people want to use apps over internet sites thanks to superior UX and UI, signaling more investment into apps.

[10:27] App economics: Consumer trends clearly indicate that apps have a lot more room to grow.

[15:01] Regulator attention: The growth of in-app purchases is pressuring Apple and Google to open up payments.

[21:48] Berkshire App-away: From textiles to hundreds of over $300 billion in revenue in 2022, the trajectory of Warren Buffett’s Berkshire Hathaway portends what may soon happen in the app world.

[26:39] Making M&A waves: Eric talks through some recent significant CSS buyouts.

[29:12] B2B2C: B2B and B2C are blending, with movements between the two showing what Eric calls “growth extension,” rather than pivoting. But will they cannibalize each other?

[34:46] Three Cs: Content, commerce, and community are leading to more UGC.

[41:11] Becoming the Apple of X: So-called “category killers” show where the greatest potential for success in the app space lies.

[49:44] It could be you: Nearly 80% of companies featured in the annual CSS report raised or sold for a great exit.