NIKLAS JANSEN: Why was audio so important?
I'd like to understand why audio is so important for Blinkist
is first, you have to understand commuting and traffic jams.
So this is the car version of a traffic jam.
Because we're in New York, I thought maybe
we'd also look at the human version of a traffic jam.
Maybe let's do a quick Q&A. Who of you commutes
more than 30 minutes per day?
Like most people.
What are you doing?
Are you consuming content when you're commuting?
Who is listening to audio when they commute?
Other question-- like five years ago,
did you listen to audio when you were commuting?
So that's very interesting, because we
started as a text-only company, just producing text content.
And we started speaking to a lot of customers.
So text worked well.
We kept growing, but not crazy growth.
So we started talking to customers to understand,
are we missing something in order
to really convert more people to subscription
or to retain those subscribers for longer?
So we started talking to a lot of people in the US,
because the US is naturally our biggest market.
We are a German, Berlin-based company,
but US was our biggest market from day one.
And what we realized is that a lot of our customers and users
would tell us that, hey, I like what you do,
but I don't have time to read Blinkist.
I already have-- I'm reading "The New York Times"
or "The Wall Street Journal."
I don't have time to read Blinkist.
But actually, I'm commuting every day 30 minutes,
an hour, like two hours, and I would have time
to listen to content.
I would really love to learn something new when
I commute in my car or in the subway, but there's no product
or there's no offering which really helps
me to learn something new.
And this clear insight really struck with us, saying,
oh, look.
There's a need.
People want to learn something new when they commute,
but there's not a real good chance for them to do that,
because there's not a real option
for them to acquire new knowledge when
basically yes, they say their hands are busy
but their mind is free.
So you can't really read, because you're moving.
You could listen, but there is no option for that.
So what we did is we talked a lot about that.
So having this clear insight, nobody
would say, well, go off and try something out
and just build a product and see if it works.
Back at this point, we were maybe 15 people,
so it felt like a very big decision for us to say, OK,
we're going to start producing audio content.
We're going to change the product
from a text-only product to an audio product.
And as it is with these big decisions,
we kept pushing off this decision for a while.
At some point, we were sitting in a room-- six, seven people--
and we talked about the topic of audio again.
And at this time, growth had slowed down a little bit
in terms of new subscribers.
And we said, OK.
It felt like, OK, it's now or never.
Either we try audio now or we will never
have a chance to try it again.
So we were sitting in this room discussing the topic of audio
again.
And I don't know really what changed,
but suddenly everyone's super excited saying, yeah, let's
try it.
Let's just do it.
So we went off and said, OK, let's try audio.
Let's make a plan.
But what's very important is that we
tried to do this in a very structured way.
So we basically set two principles,
or we created a framework for us that said first,
let's be very clear about our goals
and expectations of audio.
And second, let's make it very easy
for us to get out of it if our expectations are not met.
So what the first one means is let's
be very clear about what we expect from audio.
It's we said, OK, first, it's going
to increase the usability of the product, which
means more people are likely to convert to Blinkist,
because there's now room.
There is a time when they can use Blinkist,
and therefore, they would convert to the product.
Second, we thought with audio, the perceived value
of the product might be higher, so we could actually
charge more for Blinkist than we could charge before.
In terms of make it easy to get out,
we said to ourselves, OK, instead of investing a million
to that, building a new team, hiring people,
let's do a different approach.
Let's find a couple of people within the company
that are super excited and passionate about audio.
Let's give them a little bit--
just create an outline of what we need in order
to go to the market with an audio product,
and then let's give them full autonomy.
Let them run and figure something out,
and what they will build over three or four months,
we're going to launch, and then see if audio works.
So what we did--
we had just five people across the company.
One person from content, one person from marketing,
one person from tech, all excited about audio.
They were musicians or podcast aficionados back then.
And we said, OK, here is a small budget.
We need 50 audio versions to launch that.
We need an audio player on the app.
You have like three months.
Try it out.
And they just like-- because they
were so passionate and motivated,
and excited about it, you didn't need to motivate them.
They were just basically working like crazy for three months
because they really wanted to move forward with the audio.
And this is really how we could set up audio
to test for audio without any new hires,
still with a company of 15 people,
and really basically creating a second product-- a product
we didn't have before.
So end of 2014, we finally launched audio,
and this is just three months after we made the decision.
So the decision we kept pushing off
for nearly a year, because it felt like such a big project
and such a big commitment.
In the end, we were able to make it happen within three months.
And as George said, this launch changed the trajectory
of the business and of the company completely,
and I think it's the main driver for the revenue growth
we have seen in the last three years.
It grew revenue, or it was important for the business
side for two reasons.
Or it was so important because it increased the lifetime
value of our customers tremendously,
and this mostly for two reasons.
The first one, and this is an old screenshot,
but what you can see, we introduced a new subscription
tier called Premium.
We were not as smart as the guys at Tinder,
so we didn't pay too much attention on naming.
We just said we had Plus and Premium.
That sounds really cool.
If I had to make the decision again,
I probably would do it differently.
Maybe something like Gold and--
[LAUGHTER]
So you still are number one.
We are trying, but maybe next year.
But what is important?
We said OK.
As I said, we wanted to increase price,
so we created a new price tier, which
was way higher than the initial price tier,
so it was more than 50% more expensive
than the initial price that we had before.
And what's also important is we also raised the price
for the non-audio price, too.
So just to make this clear, Premium includes audio.
Plus didn't include audio.
And we also had a Premium feature
connect to Evernote and [INAUDIBLE] person.
So we increased the price so the price for Premium
was 50% higher than the initial price,
and we also increased the price for the Plus subscription,
which didn't change at all.
It was the same subscription as before,
but we felt like now the product has a higher perceived value,
so we increased that price too, which
just was really important for us in terms of increasing lifetime
value.
Maybe a note on pricing and how we arrived at these price
points is pretty--
there's no magic behind it.
We basically just looked at comparable products
like Headspace back then and note, oh, they
charge around $80 per year.
And we were charging $40 at this time,
so we were basically under-priced
compared to other products.
So let's just do $80 as well, because what we learned
is that pricing is often relative.
It's very hard for you to say OK, I'm
willing to pay this amount of money for this type of value
I'm getting from this product.
But what people are very good at is comparing.
So they say, oh, I pay $10 for Netflix per month
and I get unlimited movies and series, which is $120 per year.
So I'll pay $80 for Blinkist, where I get maybe
unlimited book summaries and text and audio.
That sounds like a fair deal.
So this is how we got to the price,
by just looking at what our peers are charging
and go with this price point, because this
is what people would expect.
So that's the first point why it really helped
increase the lifetime value.
The second point, and it's very obvious as well,
is just increased retention.
Because audio created a new way for people
to consume content at times where there
was no competition back then.
So people who used audio sticked around
for longer, and therefore, renewals
increased, and therefore, lifetime value increased.
Today, audio is really at the center of the whole company
and of the product.
So we have the audio product, which
is the main way how people consume content today
at Blinkist.
We launched podcasts.
We have one really well-working podcast called "Simplify"
with more than a couple of million of downloads
where we talk to book authors about their life
and about their books.
We also have actions for Google Assistant.
I think this is how it's called.
Right?
I don't call it Skills.
That would be another company.
[LAUGHTER]
Just the way we think about audio--
audio is really the center of all products we build now,
and audio is also a big, big topic
for innovation at Blinkist.
So in the Blinkist style--
so that's the story of how we got to audio.
How we started, and I tried to distill the key messages
from this talk, and what we are doing at Blinkist
is we are distilling the key insights from books.
I tried to distill the key insights from this talk.
And the key message of this presentation is--
and excuse me for this very long sentence,
but you might know that Germans like long words
and long sentences.
I have to read it because it's so long.
But it is, "User-centric product innovation can help you
to unlock value by expanding your value proposition."
Laura, you should have one.
Maybe four.
But this is like--
what I mean by that is I think it's very important
when you think about building new products
and try to do innovation that you focus on your customers.
Listen to your customers.
Try to understand their problems.
Try to find needs that are not served yet,
rather than approaching this from a business side.
Saying oh yeah, it would be cool if we had that.
And then try to build that, and then
try to charge more for that.
That won't work.
But if you really try to understand customers
and what they are facing, what problems they have
and what you can solve, then this
is a good opportunity to introduce this.
And also increase prices, which then unlocks value
for your company and for the business.
The first one-- the Blink number one of this presentation
is, the "impact is hard to estimate beforehand."
So as you see for audio, we pushed it off.
Then we said, OK, we'd do it.
We didn't know if it's going to work out or not.
So what we knew is there is a need for audio,
but we didn't know if Blinkist is
the right product and the right solution to serve this need.
So you could discuss this for years.
We did.
Or just try it.
And I think it's important that you do research,
but I believe strongly in that at some point,
you have to trust your intuition,
or listen to your gut saying OK, you
have to collect a lot of data.
Look at that, but then you have to make a decision based
on that.
So what we do at Blinkist, we call
this data-driven intuition, which basically
means we collect data, but the data won't give you the answer.
You have to still make a leap of faith at some point,
because you will never have perfect data to make
a decision.
And sometimes, timing.
Often, timing is super important.
So one thing when it comes to audio
at Blinkist, what is important is
when you look at when we launched audio,
it's end of November 2014, so we were working for three months.
So we started in September more or less, working on audio.
In October 2014, the Serial podcast was launched,
and Serial podcast, in hindsight,
is probably the podcast that opened up audio again
for a whole generation or for basically everyone.
And that's very interesting, because we
didn't create this trend.
But we were basically at the same time,
maybe arriving at the same insight,
or just there at the right time.
Because suddenly, audio was the thing,
and everyone was looking for audio products.
Without Serial, I'm not sure if Blinkist audio would have been
that successful, to be honest.
But you don't know before and you just have to try that.
So timing, obviously is important.
But without trying, you will never
be able to capitalize on trends.
The second key insight here is "Start to learn by doing."
"Keep the down side covered."
So I think what we try to avoid is just building business
plans just creating these Excel sheets and then say yes or no.
But say OK, there is ideas we have.
Let's test it.
But let's test it so that we have the down side covered.
We don't invest in the whole team.
We build a lean experiment with what we think
is needed to validate that, and then we run with that,
and then we see if we want to double down on it or not.
And I think for us, this squad that we used,
assembled of these five people, was really crucial
for the success of the project, because these people were
passionate about it.
So we didn't need to motivate them, saying hey,
you're working on this.
Now please can you come and make it happen?
They made it happen because they wanted to make it happen,
and they spent all the time doing research about audio.
They spent all the time going into the details
to find a really, really good audio experience.
They spent all the time on figuring out, fixing
all the bugs in the audio player,
so we had a really good product for a first version,
but still in a very lean way.
The third insight is, "When it comes to pricing,
users often create their own pricing analogies
for your product."
So as I said before, you can be very scientific about pricing.
This might work.
I don't know.
We never tried it.
For us what worked is just looking at the market
and finding comparables, because this is what,
in our experience, people will mostly make pricing decisions
based on.
They will look what other products are charging.
They know, based on that, they will make a decision
if your product is cheap or expensive.
Of course, if you're in a market where basically there
is no comparable product, then you're in a very good position,
but if you're in entertainment, education,
there are comparable products.
And the default comparable product
for everything that has to do with content, I feel,
is either Spotify or Netflix, because this
is what people will always compare you to in the end.
Because they know what value they get there,
and if you try to be much more expensive,
then either you need something very, very exclusive
or a very, very small market niche where people say,
OK, I need this for my profession
and I'm paying for whatever is needed.
Or you try to stick within the frame what
other companies are charging.
The last insight.
Blink number four is, "Be ready to fail."
Even the best ideas can fail.
So as I said, we didn't know if audio was
going to be successful or not.
For us, it was successful.
But of course, you can fail.
And we had another big experiment.
We believed strongly in community at Blinkist.
We talked to customers again, and we
thought we heard them telling us,
hey, it would be cool if you could have sharing features
and I could comment and I could share within Blinkist.
And we thought cool, because the business is very interested in
that too, so if we had a viral growth component at Blinkist,
we might grow faster and we don't have to invest
that much money marketing.
So I think in hindsight, it was more like the business side
speaking and us just hearing something we
wanted to hear about community.
We launched it.
We worked six months on this and it was probably the worst
feature we ever launched.
Probably because we didn't really
pay attention to our customers, but more to the business
interest, and it failed spectacularly.
So that can happen, and I think just you can learn from that
and try to do it better next time.
What's very important, as I said, be ready to fail.
Therefore, start small.
Don't bet the whole company on one idea,
but just find a way to do it in a way
that you can always exit easily without making
it too hard to get out of it.
Thanks.
[APPLAUSE]