Hi Reader -

Before I scaled an app from $30K a month in ad spend to $1.5M(profitably), first I cut it to zero. I've told the zero part before.

What I didn't tell you is what happened in the two months after. Because turning the spend off turned out to be the easy half. Zero spend fixes exactly one thing: it stops you paying to pour users into a leaky bucket. It does not fix the bucket.

And in a five-person company, zero spend isn't a strategy. It's a countdown. Or a ticking time bomb. Pick your metaphor.

For the first couple of weeks we did the responsible-sounding stuff. Stared at the retention curves. Rebuilt onboarding. Tightened the first session.

The curves moved a little. A little, with the fuse lit, is the same as nothing.

So we did the thing nobody on a growth team wants to do. We looked at the product's core loop. Not the funnel. Not the flow. Not any 'growth hacks' or 'viral mechanics.' But the actual thing people were using the app for - and paying for.

It was a daily puzzle app. New users got a handful of free puzzles. After that, the daily puzzle cost money. And the retention data was embarrassingly simple: the users who retained were the ones played the daily puzzle every single day.

So the one feature that could build a daily habit was the one we'd put behind a paywall. Right at the point the habit should have been forming, we were making it really hard for them to form the habit.

Strong monetization. Terrible retention. Those weren't two problems. They were one decision.

So we made the daily puzzle free. Every day. Miss a day and want it back? That's the archive, and the archive is what you pay for.

Which means we took the one thing people were reliably paying for and gave it away, on the bet that a habit was worth more than a transaction. I had to say that out loud to the board.

Picture the pitch. Step one: stop spending money. Step two: stop making money. Step three: trust me on this. Really. (I was a lot of fun to have around that quarter.)

Monetization took the hit. On purpose. And retention moved. Not a little this time. Turns out a user who shows up every day will eventually find something to pay for(in this case, they engaged a ton with our ads AND paid for extra puzzles in the archives once they were done with the daily puzzle).

Two months after the whiteboard, we turned spend back on.

$10k a month. Then $100k. $300k. $600k. $1M. Eleven months later, $1.5M a month, profitably. (The scaling half is on LinkedIn.)

Here's the zoom out.

For any app to scale, "will they come back" needs to get answered before "will they pay." Not after. Before. Most teams know this.

A lot of teams also have a monetization dashboard that's green, a retention dashboard they'd rather not open, and a board deck due Thursday.

So they optimize the funnel, A/B test the paywall, and tell themselves "we'll fix retention once we have scale." Scale doesn't fix retention. Scale is retention with money on top.

Anywayyy if you're spending $50k+/month and want someone who'll tell you which number is actually the problem, even when the answer is "stop spending," reply "HABIT" and we'll talk.

Or don't. I'm sure "we'll fix retention once we have scale" is working great for everyone who's said it.

Later,
Shamanth

P.S. Deconstruction of the week: I pulled 3,265 ads from the top 4 chess apps on Meta. The full deck, with every ad and the videos, is here.

In case you missed it, the latest Intelligent Artifice episode: Steve P. Young on going from ASO to paywall optimization.

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