David Barnard:
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Let's get into the show.
Hello, I'm your host, David Barnard. My guest today is Kenneth Schlenker, co-founder, and CEO of Opal, the focus company. On the podcast, I talk with Kenneth about why retention is the only real moat, how dropping paid conversion from 20% to 9% increased revenue, and why he sees the rise in competition as a net positive for Opal.
Hey, Kenneth, it's so great to have you back on the podcast.
Kenneth Schlenker:
Thanks so much for having me back.
David Barnard:
We've got a lot to catch up on. Last time we spoke, you were at 5 million in ARR. You since shared that you hit 10 million in ARR pretty soon after that, so you were scaling rapidly. I now hit over a million daily active users. The app has just been taken off.
I wanted to talk through some of that with you and see what it's taken to get there. Yeah, tell me first about what it took from last we spoke at 5 million to get to that 10 million.
Kenneth Schlenker:
Yeah. It sounds now a long time ago, but yeah, we had a great conversation last time. We're really in the process of scaling with, at the time, a hard paywall. We got to scale pretty efficiently with a small team. I think we reached $10 million in annual care revenue, like 11 people back then.
But after that, what happened was we weren't growing as fast as we'd like in terms of users. For us, what really matters is to be able to create a product that could be used by lots of people, because we're addressing this massive issue.
We stopped focusing on revenue, really focusing on what product can we build that can be a billion user products. That's the trajectory that changed. Happy to talk about the stuff that we've done to get there.
David Barnard:
Yeah. Hey, one of the things, you just did a great talk at Tokyo App Growth Annual last week, and you and I got to hang out a little bit in Tokyo. One of the things you shared in that talk was that you had a mindset shift from efficiency to company building. Tell me a little bit about that.
Kenneth Schlenker:
Yeah. I think this is maybe a counterintuitive take, but you read a lot today about the billion dollar one person company. If you buy into that, basically someone with AI can just vibe code their way into getting to 10 million, 20 million, 100 million in revenue, and then create this massive company. I think that's a lie.
I think that the companies that actually do reach a billion people and billions of valuations, they need more than one person. They actually need a team. You need a brand. You need retention. AI can be used to improve the value that the product gives to users. Then, and only then, I think, they can really create massive amounts of value.
Yeah, I think that was the topic of the talk, which I gave at the conference. I think a lot of the apps that we see today, they're coming online. I love the entrepreneur, the results we're seeing in lots of people. They're being able to create new stuff. But I think also it's important that people understand that there needs to be more than that to be able to build massive companies. That's the shift that we've been on where what we want to do is we want to make sure we can create a product that is on path to be a billion user product.
Starts with a team, figuring out the right kind of team, building a brand, building a product that has a lot of retention, and then figuring out how to actually use AI to improve the value we give to users.
David Barnard:
Yeah. A quote from your talk that I really loved was, "Teams create product soul. You can't vibe code a brand."
I love that. What's your thinking there?
Kenneth Schlenker:
Yeah. I think maybe sometimes people think that apps are just tools. But actually, people want to connect with the apps that they use. They want to feel something. The brand is super important. I think some of the best apps out there have this soul in them. I think that in order to have that soul, you really need people that are really caring about this.
It doesn't have to be a lot of people. Some very small teams create really soulful products. But I think that a recipe for a failure in my mind is just to create something that has a function, which AI does really, really well. You can basically create note-taking app. You can create calorie apps. You can create whatever you want. That's just a function. But you need more than that to be able to be successful, in my mind.
David Barnard:
Yeah. One last AI take before we move on, but back to more Opal specific stuff. What are your thoughts on people saying, "AI is going to eat all of consumer apps?"
You've seen this. Competition for in the screen time space is huge. Then AI has unlocked the ability to spin up a screen time app quicker than ever. That's actually a popular category that I see a ton of indies launching into. How do you think about the way that's going to impact Opal's business? Then, how do you think that's going to impact the app economy more broadly?
Kenneth Schlenker:
Yeah, there's a lot of screen time apps, since we went on the podcast. Actually, someone came to the conference last week, walked up to me, and said that she was super inspired by Opal and created her own version of a screen time app. I think it's one of the very popular categories these days.
The thing is, first of all, I think the way I see competition is I think that it's actually a net positive for us. I think what it does is it helps more people realize that this problem is real, educate the market, get more people to use apps. There's five billion people in the world that have a smartphone. Maybe today, probably, give or take, a few dozen million that have used the screen time app or using a screen time app. There's still a kind of massive opportunity to grow.
I think the challenge/problem is that a lot of these apps are actually copying existing stuff. Instead of trying to build out new categories and reach out to newer kinds of people, they're limiting themselves by just copying what exists.
In my mind, the biggest challenge for screen time is if I walk down the street, and I talk to 10 people in any city, it could be in Texas and New York, wherever it is, and I ask random set of people like, "Do you spend too much time on your phone?"
Everybody will say, "Yes."
Or maybe like 8 out of 10. But then if the next question is, there's an app, would you download this app to help you? Today, you'd lose a lot of people. Because a lot of people say, "What do you mean an app to what to do? How does it help me manage my screen time? Is it going to be blocking apps? That's crazy. That's not really something that I want to do."
The problem that I think we need to address as a category is how do we actually create something that these people can use that's not what Opal already does, but that's other things? That's really what we're trying to build for Opal, which is figuring out how we can make it so much easier to use a screen time app, no setup required. That it's not just about restriction. That it's really about being able to coach you in your day-to-day.
That's a long-winded answer, but I think that I applaud competition. I think it helps educate the market. But I think also the opportunity is much larger. It's going to require innovation and new kinds of apps, and completely new kinds of UI that you're probably not going to get by just typing in cloud like make an Opal copy in five minutes, right?
David Barnard:
Yeah. We've seen this play out for years, even without AI coding. It's not that hard. The engineering side is a lot of hours, but it's not some insurmountable thing. It never has been. You look at some of the big categories like language learning. Duolingo, despite the recent setback in its stock price is still a multi-billion dollar company making over a billion dollars a year. Then you look at that category. There are just so many apps, and huge ones. Babbel is massive, right up there nipping on their heels.
I think for the broader industry, and then for Opal specifically, you're still going to have category winners like Opal that are the brand in the space, even if there are hundreds of apps that do the same thing. To your point earlier, it's like, "Yeah, you can copy Opal or easier than ever to copy aspects of Opal, but you can't copy the soul. You can't copy the taste that went into it."
As people experiment with these apps, they'll probably be hungry for more, and then go looking for the best app to do it. I think Opal as the leader in the space, as you've grown the team, and improved the product, it just becomes this momentum that isn't going to get stopped by 200 more people vibe coding another screen time app.
Kenneth Schlenker:
Yeah. Can I bring you in my next investor pitch? I love that.
No, I fully believe it. Then one more thing is, we talked about what happened since the last podcast. One of the thing I mentioned is, and we had a hard paywall, now we're truly freemium. We give away the product for free. That's also something that I think is very valuable for us in the long run. Because we're getting to a point where we passed a million DAUs, as you said. We're growing really fast.
It comes to a point where people have heard about the app. They hear it from their friends. We see a lot of interesting dynamics of students that are using it together. We see interesting dynamics also in the family world where you have maybe a teenager in the family that's using the app, and actually recommend it to their parents, or the other way around. All of that makes our position stronger, and activating these network effects. It's really powered by freemium.
I think that's why I'm very confident in the future of consumer apps in general. I think when you have a great product that has retention, that has a great brand, you're in excellent position. I think what you can do on top of that is you can use artificial intelligence to actually improve this product. By improving this product, what I mean is not saying just moving the metrics, it's really like, "How do you actually really improve the value that you give to users?"
If you're very confident, the value that you give to users, whether it's giving them time back, which is what we do or make them more productive, whether it's helping learn language, you can actually use AI to make that better, and that really will make your product a lot stronger.
It's interesting. I'm sure you see this all the time. Maybe in the public markets, at least, the apps, software, SaaS of course, and also some consumer software, it gets punished by the market to say, "Hey, they're not AI native."
But I think it's some misunderstanding of what consumer apps really are. It's not just function. It's also entertainment. It's also something that people like to do, and something that people love. You can't just replace that with an agent or something else that does it automatically.
David Barnard:
I wanted to dig a little deeper into the switch to freemium, because that was a big deal for Opal. You shared a slide in your presentation showing that your download to paid dropped from 20% all the way down to 9%, which sounds super scary to have your conversion more than cut in half, but why did that ultimately end up being good for the company?
Kenneth Schlenker:
No, we did that. We gave away the product for free. You mentioned that our pay penetration, so that's how many people are paying subscribers within the monthly active users went from about 20% to 9%. That's scary when you see this chart, but it was the right decision.
The reason it's the right decision is because when you give the product away for free, the people that are using the product become your marketing. What we've seen as a consequence is also a shift where we have a lot more organic growth than we ever have. It's massively increased. What we're able to do is we're able to accelerate this organic growth as well with some features we can talk about.
Another thing that we've seen is as a consequence of freemium, is that we have a new kind of user or a new segment that exists. We started with a segment of, I would say, professional pros that are interested in productivity. People like you and me, people probably listen to this podcast that care about their time and place a high ROI and saving time. That was the initial segment.
But making the app free really helped us unlock students as a second segment. High school students and college students who are now two third of our DAUs are our students. What it does is not only it's great for our mission, because we know and we really want students to be able to build these healthy digital habits in their day-to-day. That's great for the mission. But it's also great for organic growth. Because students talk about it.
What this also allowed us to do is now we're entering a third segment that's being unlocked where students basically, especially in high school, are telling their schools, "Hey, instead of taking the phones away while we're in school, why don't you work with Opal to be able to create a phone policy?"
Now, we have also this third segment with schools that's opening. What I would say is, I think that the freemium strategy is really helpful to be able to grow organically and also unlock new segments that aren't necessarily people will actually pay upfront for products.
It depends on what you're looking for as an app founder, whether you're trying to build lifestyle business, but if you're trying to truly create a product that has the potential to get used by hundreds of millions of people or billions of people, which is really what we think we must do because of the size of the problem we're facing, then I think freemium is a really good strategy to get there.
Yeah. To sum up, we've seen a decrease in our conversion to paid, but we've also seen as a consequence of that, an explosion of our DAUs and revenue with it. It's a short-term, scary drop, but what happens in the long-term is that it pays back tenfold.
David Barnard:
That's amazing. Another thing you did share in that presentation is a question you ask yourself of where to draw the line of freemium. I think this is a little counterintuitive, but I think really important to dig into. You said, "Would a non-payer recommend the app? If no, give away more."
Why?
Kenneth Schlenker:
Yeah. I think if you want the freemium dynamic to really pay out, you need to make sure that the free users are recommending the app. Otherwise, that doesn't work. I think that's a good way to measure the quality of your freemium product. You got to figure out whether free users are going to recommend the app.
I think that's an issue a lot of apps I see where they're just giving away small amounts or maybe it feels like a trial, and then it's recapped. If you do that, you're probably not going to benefit from the organic growth potential of freemium.
David Barnard:
Yeah, totally. It's a tough balance of what to give away, and what not to. Were there any specific tough calls that y'all made where it's like, "This really could, should be behind the paywall, but it really is such a good part of the experience that we don't want to take it away from the free users?"
What were some of the hard decisions? Did you have to reverse any? Did you make a bad column and reverse it? Or how did things go on determining what went into paid?
Kenneth Schlenker:
Yeah. We've made a lot of mistakes and some success. I think the core is to experiment and measure two things. The LTV of installs, how people are converting and paying, and also to measure the retention overall, free plus paid. You want to make sure that you can find the sweet spot where you're increasing both. It's really hard.
We have this feature called blocks. Basically, you're blocking apps from 9 to 10 on Monday to Friday. You're blocking social media, for example. Also, it could be, you put together an open limit. I can only open Instagram 10 times during the day. Each of these are blocks.
We've experimented with how many should we give it for free. You can have one, you can have two, three or four. I think today, it's actually three. We've tried many different approaches all the way from having just one, which is pretty restrictive and offering more. Turns out that three is enough for free users to get a great experience. They can actually really use that app, try out a few different things, and then also really power users that are convinced will pay because they want more. That's one where it worked out pretty well.
David Barnard:
No, that's a great example. Maybe a way to think about that, yeah. It's like the people who are going to be the heaviest users, what's the thing that's most important to them? Then throttling it to where the free users still get a great experience is interesting.
AI is making this so tough with freemium because you almost can't give things away. It's hard to do a freemium app. I've been vibe coding this app on the side. I'm working on this AI coaching feature. Golly, it can get super expensive.
At first I started out like, "Oh, I'm going to use Opus 4.6 because it's so much better."
Then I was like, "Oh, maybe I'll use Sonnet." Then I was like, "Oh, maybe I'll use Gemini Flash." And it's tough these days to really draw those lines and create that great freemium experience, especially if you're using AI.
But even if you're not using AI, it's just such an important place to really be thoughful, and to do some experimentation. Like you said, you didn't just land on three by magic, guessing it or whatever. You tried one. You tried five. You figured it out. I think that's what people need to take away, is you just need to try it.
For me, vibe coding this app, I need to see how users actually use it, because maybe I can get away with a better model, more coaching, and things like that. Maybe I can do a freemium tier, but I don't know until I actually get it out there and start testing it.
Kenneth Schlenker:
Yeah. With AI, I think it changes the equation because you're, of course, paying for the service of using. If you're using a server side model, you're paying for that. You need to make sure that the value that you're creating is actually higher than, of course, the cost that you incur.
I feel like a lot of people, at the beginning this way too, the value is so cool of all these tools. You're just going all in, and building incredible stuff. Then there's probably a second phase, which is way like, "Does it make economic sense, actually? Can I charge enough for this? Are people actually winning? Is it good enough that people will need to pay for this on top?"
It's a different kind of reality, I guess, than when you were just making an app that doesn't have actually this marginal cost on top of it. But yeah, coming back to, I think AI, it's massively valuable, obviously. We see some incredible things that I'm like everyone fully using a lot of these tools.
I think that every consumer app is about to have AI, whether it's fitness app, whether it's learning app, finance app, screen time app too. But I think the question that maybe people need to ask is, how do you actually build an AI that's on your user's side? What I mean by that is, how do we actually build an AI that actually helps deliver more value to users?
I think that today, there's not enough people doing that. It's not so much about, I think, using AI to maybe trick users into doing something. I think it really has to come from, what is the exact core value of why people are using my app, and how can I make that a lot better using AI?
David Barnard:
Yeah. I'll quote your presentation again since it's all so top of mind. I haven't done a podcast where I actually saw the podcast speak so recent to the podcast. But it's fun because I can quote you back to yourself from the things you really nailed in your presentation. You said, "If your user wins, you win, that's it."
I love that quote.
Kenneth Schlenker:
Yeah. I think it's important to remember that. You can get caught up with all that it can do and add some fancy features to the app. If you do that, you're probably going to get a lot of early adopters. A lot of people are excited about AI right now, so they're trying a lot of stuff out. But really, to really have lasting value, you need to figure out how to make your users win. That's the hardest part. But it can be amazing. There's definitely lots of potential there.
David Barnard:
Yeah, it's just such a great framing. This is how you should think about every feature. Does this feature make my user win? Does it improve their life? Does it enhance whatever they're doing in the app? Really thinking deeply about how each of those features impacts the user experience, such a great way to think about it.
You mentioned Opal for Schools. I wanted to go deeper on that. Was this something that happened somewhat organically of students using it, and them requesting schools? Or did you strategize like, "Hey, this is a great almost B2B opportunity. We can sell the schools. We can expand the footprint."
How did that come about?
Kenneth Schlenker:
Totally organically. I had here that one day, maybe we'd work with colleges, but working with schools to high school was not something that I thought about. But what happened was it started last year, we literally got an email from a high school in Los Angeles, Harvard-Westlake, that essentially what happened is they had asked their students, "Basically, the state is telling us we to ban phones, what should we do?"
Students got back to them, and said, "Many of us are using this app called Opal. We're using it on our own. No one's telling us to do that, but maybe you should reach out to them."
They had reached out to us to see if we could do something together. We found that it was interesting actually to do that. What we've done is we built Opal for Schools. What it is, it's a phone policy that schools can use to help their students focus and thrive. The way it works is the students download the Opal app. Then when they walk into campus, when they walk into school, the banned apps are blocked in their phone, but they can still access the apps that are authorized. Which is often being able to text mom and dad, but also educational apps.
For example, in some circumstances, some cases school would say, "ChatGPT can be used," or this specific kind of physics apps or this calculator app.
The interesting part is that when they leave school, instead of just being handed back their phone, being able to go and just binge on the social media, they still have the app. What we see is that a lot of students are actually still using the app after school to set up their sleep schedule, to be able to do focus timers, and study. It's really not a bell to bell solution, but a bell to bed solution. It's a full cycle.
Yeah, we've tried it with one school. Now, we're actually scaling in across the states with many high schools around the US. It really becomes a very interesting new area for us, not only because again, super aligned around mission. We really, really like that. I think it's a whole chapter we could open. But it's a much smarter way to actually do phone and policy rather than taking the phones away. We're actually teaching something to kids to get a tool that they can use after school.
From a business perspective, it makes sense because it really helps position Opal in the family. People talk about it on a local community level as well because every student uses it. Helps a lot as well. But yes, it's a new distribution for us that is super interesting and extremely mission aligned. Because we need to make sure that education is still, and continues to be an important effector for progress. We can be a part of that.
David Barnard:
Another aspect to it too is that those students will eventually graduate, become professionals, want the tools, and no longer have it provided by the school. It's also growing up that next generation of pro users who are professionals who can afford the more expensive tier and stuff.
Kenneth Schlenker:
I was very impressed. I remember my college days when our college library, they used to have PCs, and then they did renovation. All of a sudden, they had 100% Mac everywhere. This newest, beautiful Mac that had been, I guess, practically given away by Apple to be present in college.
Yeah, I think obviously from this perspective, it makes sense to make sure that the next generation knows about the products, can use them, and loves them. I think that in our case, of course, that's part of the value. I think it's also aligned with the fact that we do need the next generation to learn to build these skills, to build healthier habits in the previous generations. It works together.
David Barnard:
That's awesome. A great counter example here and something you said in passing is that the students need to love it. Because my kids all have now Chromebooks that the schools hand out. They are terrible. My kids will never buy a Chromebook. They beg to use my laptop. We do have a home iMac.
If you're going to go that route, you still have to have an amazing product. Because that's what actually generates the word of mouth, so much of what you've been talking about is having that core product, the core brand, and that's how it actually pays off.
Kenneth Schlenker:
Yeah. It's been interesting for B2B, B2C. Basically, we're really focused on people, like B2C, making sure that we have the best possible app. That's all of it. It turns out a lot of students are using the app, and actually love it on their own. Again, it's not something that people tell them to do, their parents, or their school. They use it on their own.
But we're also happy to have this natural extension of working with schools. But for me, the compass is always, how do we build the best possible experience for the user, make it fun, make it motivating, make it as easy to use as possible. As long as we do that, we'll still be able to make sure that the next generation wants to use the app as well.
David Barnard:
Are you able to share in broad strokes what that financial arrangement looks like? Are schools actually paying per student for this or are you just giving it away for that eventual benefit?
Kenneth Schlenker:
We do charge schools for deployments, and using this service a per student fee that is very competitive compared to alternative solutions. We do charge schools. But, for sure, the benefit for our businesses expands way beyond that revenue. That's why we're able to charge cheaper prices to schools because of that kind of other value that it brings to the business.
David Barnard:
Yeah, that makes it a whole new world for a consumer app founder to be writing contracts with school districts. Are you ramping a sales team or how are you handling that?
Kenneth Schlenker:
It's probably new, but we have someone excellent that's in charge of the team, Andy Bennett, who is head of Opal for Schools. He's been talking to, and partnering up with so many different schools. He was at South by Southwest EDU a few weeks ago doing a presentation there with a lot of educational leaders, talking to press. We were recently front page news on LA Times for actually the fact that we now have one of the important private schools in Los Angeles that's using the product and many others.
Yeah, it's a whole new world. I think it works though very, very well together with the consumer product.
David Barnard:
I love to see it. It's so cool to see consumer apps expand beyond the consumer base. Seeing apps like Common Headspace years ago doing partnerships with insurance companies, and Calm. I don't know if they're still doing it, but they had a section in CVS that was the Calm shop, like a few shelves where they had sleep gummies, sleep masks, and things like that. It's just really cool when you think about these consumer apps as a brand, as something bigger than just the app. There's just so many opportunities.
I think it's cool to see all the different ways things that start as consumer apps actually end up monetizing in so many different ways. I wouldn't have guessed schools. It probably makes sense for more apps out there to expand that way if they're really able to provide value to students and school districts.
Kenneth Schlenker:
Yeah. I think when you have an app, and people love it, first of all, you're able to touch so many people. Millions of people literally, more than 10 million people downloaded Opal. It's a massive amount of reach. There's a lot of adjacent things that you can do in new segments like we talked about, but also new products that you can maybe sell to them as well.
But for us, really, the journey's been the initial product market fit was on professionals that are increasing our privacy is still a big part of what's of our customer base. Then we expanded to a new segments with students as we opened up freemium, and then we have this new segment as well going into the education world.
I think that when you look at screen time overall, and that's why I'm super optimistic about there's competition. But there's also so much space with like five billion people with a smartphone. Every single person needs help on managing their screen time and building these healthy habits.
But you also see other segments that are possible that are more health and lifestyle segments similar to what UROAI, I think and WHOOP have done in the health metrics measurements. But screen time is also a big, big part of people's health. Health and lifestyle, this is also a massive one.
Beyond that, I also think that as more and more research is showing the impact of screen time on health, the impact of screen time on productivity, you're also going to get insurers that are going to take a big part of this. You're also going to see employers that are going to want to build tools, buy tools, or license tools for their team.
We believe that that's why it's so important to actually build the most loved and the most important brand in that category because a brand can travel. When you have a great brand, you can go from one segment to another, to another, and build a billion user products and billion user category, which is what we're working on.
David Barnard:
Yeah. You've brought up brand a lot. I wanted to dig a little deeper in that. What are some of the key things that you think make the Opal brand, the touches in the app, the name itself, the design, the feel? How do you classify or quantify brand for Opal?
Kenneth Schlenker:
Yeah, there's a lot of things. The company started with a manifesto, actually, that I wrote before building a product. It was really more like thinking about what is going on here. We've got trillion-dollar companies. They're selling people's attention. They've built this technology that everybody uses every single day.
Technology is really good, but because of this business model, and because of the companies that are building the technology used by people, we have the outcomes that we know, which is overuse of screen time, et cetera.
The manifesto's basically saying, "We can change this, and we can actually design products differently to benefit of all the great stuff that technology brings to people, all the good stuff, but also read out the bad."
We started with that. Then the product was a consequence of that. Yeah, the name is an important part of our story. Opal is a gemstone. That's why you get all these gemstones inside the app in our marketing as well. Opal, actually also, the reason I chose this name is that it was striking to me that phones are basically something that you touch all day, every day, hundreds of times per day.
What are phones made of? Basically glass, aluminum, all sorts of different kinds of components. They're electrically charged. They tend to be warm because of what's going on in it. I was thinking about, what is the exact opposite from a tactile perspective to a phone? That's where a gemstone came up, opal in particular. Opal is a gemstone that's set to calm the mind, in particular blue opal that comes in different variations. It's also a very, very precious gemstone. That's the reason why the name happens. It's not random. There's a real reason why it's Opal.
Then the whole product experience is centered around the fact that the more you focus, the more you can unlock these Opal gemstones with different colors, and different shapes. We put a lot of effort to, as constant debates in our team, to basically make sure that the entire experience revolves around these gemstones. That's obviously one of the things.
The most loved interaction in the app, which sounds completely stupid, but the most of interaction is that unlocking of that stone. When you get granted a new gemstone, because you've passed a new milestone. You've used the app for a certain amount of days, for example. You get to tap to crack the gemstone. That's the most loved interaction. People really remember this, talk about it, and really helps build the brand because this is what the kind of things that people remember.
Another example is, we try to do more things that are unusual or companies might not do normally. We have these stickers. I have one on my phone here. It says, "Scrolling Kills."
It's like a PSA, public service announcement. Actually, it does not mention Opal, which is also a controversial take. But we've distributed thousands of them to our customers, to users. We even bought this massive billboard in New York last year with the message, "Scrolling Kills."
Basically, we want this message, we want this conversation to happen. We want to be the company that helps make these changes. That's another example. There's many, many smaller details inside the app in how we do marketing, partner with creators, partner with different artists that help, I think, build that brand, and make it strong.
David Barnard:
I love that gemstone interaction. I was able to watch a video of that interaction in researching all this. I imagine that was very costly to make. A lot of effort went into it from artists and from programmers to get that interaction dialed in. But I think more apps should find ways to have those little magical moments, those little touch points that make it feel special.
This is maybe an example of what you're saying about using technology for good. Here, you're almost dopamine hacking in a way. It's special. It's encased in a rock. You don't know what it's going to look like. You tap, and then it breaks open. It's like this reveal moment. I'd imagine there's haptics, audio, and other things going on. It is kind of a dopamine moment. But you're using that as a reward for them actually being more present, and not using their screens as much.
Yeah, I think folks listening to this should think about ways in their product to create those kinds of magical moments. It really is so magical inside Opal.
Kenneth Schlenker:
Yeah, thank you. I appreciate it. It's tough to decide to invest in that kind of thing because it's not really measurable. There's always like 50 other things that you need to do that seem more urgent, bigger features, or bug fixes. It's difficult to make the decision to say, "Wait, I'm actually going to invest whatever, a few weeks building this thing, and doing it right."
But in the end, that's what people remember. That's what the brand, really, is built on. Those kinds of smaller details that feel unreasonably sophisticated, but yeah, it did bring magic to the experience.
David Barnard:
A few minutes ago, you mentioned that Opal had had over 10 million downloads. You didn't say over 20, so I imagine it's somewhere in the low, above 10 million. But then as we talked about it earlier, you have over a million daily active users, which clued me in that you have some pretty awesome retention. How do you think about retention? How's that gone for Opal?
Kenneth Schlenker:
We do have great retention. For us, the way we look at it is we need to make sure that you can do ... It's easy enough to go on the detox for three days, and say, "Okay, I'm going to put my phone away for three days," which by the way is a start.
But it's really difficult to do it on the long run. That's why retention is so important to us, is actually to be able to change habits in the long run, we really need people to be able to stick around. The way we think about it is it's definitely become the core, the only way you can really grow your users. We saw how important that is to have organic growth. The only way you can grow your DAUs is basically having great retention, obviously. It's really something that has been super important for us to crack.
We experimented a lot, lots of tests to be able to figure out what drives retention. It starts from the initial onboarding. What do you actually onboard people to? Yes, retention is super important. We're definitely, today, in the top rank, I would say, in terms of early retention. Day one to day seven on par with or better than companies like apps like Duolingo, Spotify, or Strava.
I think the challenge for us is today is really how do we actually ... We've got this, I would say, niche of people that are motivated enough to build healthier habits with digital technology. There's a few millions. We talked about a few millions. But really, what I'm focused on today is I'm thinking about how do we actually get the next hundred millions, and get this billion user product?
That really to me is about making it way easier to take the first step, making it way easier to get the benefits without having to have so much commitments. I know this podcast talked about what we've done in the last year, but I'm spending a lot of time today thinking about what we're building in next year. That's really what we're thinking about today.
David Barnard:
I'm going to quote you back to yourself again, because this was just so good. "Retention is the ultimate proof of value. If a user comes back, you're creating something real. If they don't, nothing else matters."
Kenneth Schlenker:
Yeah, that's true. Again, I think the reason I was saying that is because if you look at X today or Twitter, you're talking about revenue, revenue, revenue. People quickly growing their MR, which is great. I love RevenueCat. I love revenue too.
But I think retention really, really is the only way to have lasting value, is the only real moat. It's two different things. It's one thing to be able to convince someone to try out a product and to pay for it at the beginning, but it's another thing to be able to get people to actually stay for a long run, and create lasting value.
By the way, the Opal really started with just this first part. Clearly at the beginning, that's what you should be doing. But very quickly, it's also about how do you actually build lasting value. The only way to see that is retention. That's how you measure it. Yeah.
David Barnard:
One of my colleagues was saying that there are just too many apps launching right now where onboarding is the product, where there isn't a real product. It doesn't actually even do the things it says in onboarding. It's just all about getting people to a hard paywall, taking their money. But that's just a short-term arbitrage. That's not building a real business because they're not renewing over time. The magic of subscriptions, and the magic of this business model is that those cohorts stack over time.
I imagine with the Opal, you can look at those early cohorts from six years ago who are still paying you money, and have paid it every month or every year. When you start stacking those cohorts, and as you get to year six, seven, eight, it's just incredible how that works if you have that retentive product. It really is just, that's how you build a real business versus just a short-term arbitrage, make some cash, and then watch it all unwind.
Kenneth Schlenker:
I think it's probably unpopular to say because of what's going on right now with ... The loudest voices are more about cash grab businesses. But I agree with you here.
Yeah. By the way, I think AI is truly incredible. Again, you can build amazing products that we haven't seen yet. I test so many. You can build incredible products that really serve your users in amazing ways. But I think that today, a lot of hype coded apps are in the other category, which is basically being able to quickly create products that unfortunately have no retention, don't have a brand, and are not really delivering value to users. That's not very sustainable.
You need to make sure you have a brand. You need to make sure you have retention. You need to make sure you are delivering value to users.
David Barnard:
Yeah, such a great point. We talked about how you shifted a lot of user acquisition to organic and are getting so much more organic traffic. But I imagine you still do a ton of paid ads. Actually, I know that for sure, because I do still get the One Opal ad that just crushes. It seems like your phone is a nuclear grade weapon aimed against you. It's really kind of shocking. Rightfully so, and it's true.
But any tips for, one, finding those kinds of creatives that you can run for ... I first saw it maybe a year or two ago, it's still running. Finding those creatives that just crush, can continue to go, any other lessons, and top learnings around paid ads recently?
Kenneth Schlenker:
Yeah. By the way, I hate to always bring it back to this, but I think it really comes back to the brand. Because we put so much effort into building that brand, and building a product that is that brand. We were able to get this particular video. I want to tell you the story. I don't think I've told it before, but it's kind of interesting.
We saw this video actually that I think a friend of mine sent me this. It was posted organically by someone. It got a little bit of virality organically. I saw the video. I was like, "This is incredible because it looks like it's an Opal ad, but it's not."
I DM'd the person. Actually, it was someone in my team, Marjorie, who DM'd this person, and said, "We'd love to maybe license this video."
The guy wrote back, and said, "Actually, I use Opal. It was an inspiration for making this video."
David Barnard:
That's incredible.
Kenneth Schlenker:
It was going back full circle. He didn't do it as an ad, but he said, "We have to get people to change."
It's a great filmmaker. Obviously, the video is amazing. We had no idea how we performed, but we did ask him if we could use the video. He said, "Yes, of course," as an ad.
Basically, literally it is, the organic video with the Opal logo attached. That's it.
David Barnard:
Wow.
Kenneth Schlenker:
It turned out to be pretty successful because I think it's seen today by dozens of millions of people. Interestingly enough, it's also not just an ad, it's a big part of our brand. Also, it has value outside of getting people down to the app.
We've heard a lot of people that seen the ad, and that said they completely change the habits without even downloading the app. It kind of also has a life of its own.
But since that, we've also partnered a lot with various creators that have made videos that are just organic videos that we've either repurposed or we commissioned new creative videos. But I guess we have a unique and fair advantage here, which is that a lot of creatives, like actual people who are filmmakers or designers, actually are users of Opal because it's pretty popular amongst this group of people. I think we get a bit of an unfair advantage here of tapping into this community, because they really care about this mission, and they really care about our product.
David Barnard:
You actually hired one of your users, right? She now does videos just for Opal?
Kenneth Schlenker:
Yeah, yeah, absolutely. We actually hired many of our users in our team. But this particular one, we are accelerating organic growth in many different ways. One of the ways we do that is we found this person who was mentioning Opal in a video on TikTok, and thought she was great. Basically, we hired her. She's part of a team. She's basically building an educational media for us. Her name is Olivia. The channel's called Olivia Unplugged.
Basically, she's educating people about topics around screen time and focus. But it can go all the way from how to make friends because people don't know yet to how to make friends anymore offline, to how to build a bedtime routine, and all of these kinds of different topics. She does this in such an amazing way.
It's not your Opal brand account. It's like creator account that is powered by Opal. Opal gets mentioned in the videos. There's a link in bio. But I think it works.
It works really well because we went from 0 to I think now 700,000 followers across different platforms, and millions of views in a few months. It's not just about the numbers because it's really relevant. The content is actually exactly like what the brand wants to say. It's very, very relevant.
David Barnard:
Yeah. That's so cool. Hiring so many users and not hiring creators who were users, and organically posting content, finding organic content, and repurposing it as an ad, so many cool stories.
We are coming up on time. But there's three questions I've been asking every guest who'd come on. Let's get to that. The first one is, what's your biggest win of the last year? The experiment that performed way better than expected, something you implemented, what's your biggest win?
Kenneth Schlenker:
The biggest win is streaks. Believe it or not, we have our own way of counting streaks. But essentially, the more you focus with Opal, the more you get a streak.
We've also put a lot of effort, speaking of brand and making this beautiful. The streak is represented by this small frame, which is not like an emoji flame, but actually an animated flame. You can get beautiful Opal gemstones once you reach different streak milestones. That's, I would say, the biggest win in the last year to improve retention and growth.
David Barnard:
Yeah, that's so cool. Streaks don't work for a lot of apps. So many apps try streaks. But it's great to hear. It makes sense that it's landing for Opal. What was your biggest fail of the past year?
Kenneth Schlenker:
Yeah. What I would say is it's probably like we bought this billboard that says, "Scrolling Kills," in New York.
Okay. I would say it's a fail in the sense that we intentionally didn't make attribution really obvious. It didn't say clearly opalapp.com or getting Opal. It's a fail in the sense that no impact on downloads, no impact on revenue, but that wasn't the point. The point was really kind of a brand statement.
Actually, and just I think to finish on that, we signed a school in New York. The moment that we signed the deal, the head of that school actually didn't tell us that he saw the billboard. Because he saw the billboard, he actually was more comfortable signing. It's kind of those things that are not really directly measurable, but that do make an impact. It's, I would say, like a half failure here.
David Barnard:
I just Googled that while you were talking. When you Google Scrolling Kills, at least for me, pretty much everything that shows up is Opal related. You have scrollingkills.us, Scrolling Kills, Opal Saves. It's kind of cool to have this secondary tagline that you can own. Almost a trademark of you created this phrase that you can just put on a billboard, and that even though you probably, like you said, it didn't impact downloads, but it created an impression. Then that impression is tied to the Opal brand online, which is so cool.
Kenneth Schlenker:
Yeah. No, thank you. I appreciate it. It's definitely why we did this. We want to carry a message that's important beyond just downloading the app. It's actually just something that is important for society at large, and want to be a part of that.
David Barnard:
Yeah, that's so cool. All right, last question. It's fill in the blank. Growth would be easier if ...
Kenneth Schlenker:
Families got involved.
David Barnard:
Nice.
Kenneth Schlenker:
I think that every single parent probably in the world today is worried or concerned about their children's screen time. The problem today is that it's such a conflict within the family. It's the number one source of conflict between teenagers, kids, and their parents.
What we want to do is we want to change that. Instead of conflict, make this something that people can do together. Make that a collaboration. Growth would be a lot easier if families got involved. Because we would be able to make sure that we get one person in the family, and then everyone else in the family follows soon. That's something that we're working on.
David Barnard:
Yeah. Did you already launch or you're soon to launch a family feature? Because you told me about this last fall. I'm actually pretty excited about it.
Kenneth Schlenker:
We're taking our time. We're taking our time. But it's coming. It's coming very, very soon.
David Barnard:
Cool. All right. As we wrap up, anything else you wanted to share, you're hiring, looking for more creators, anything else our audience can do for you?
Kenneth Schlenker:
We're working on a big step change in the Opal experience this spring, actually. Yeah. What the audience can do is to watch out for the next big update. It's going to be pretty incredible. I'm really excited about it, and share any feedback that they have to us directly on the app. That's always super helpful. Things that work, things that don't work. This is how we learn. This is how we grow. Really appreciate that.
I'm really glad to got to talk, David, today. This has been amazing. Thank you for the conference also last week. This has been a great conversation. Thank you very much.
David Barnard:
Yeah, thanks for joining me. It was so fun chatting through all this stuff. You have a very different perspective, like you said, than a lot of people in the industry right now. I think it'll be great for people to hear. Thank you.
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Welcome to the Sub Club Podcast, a show dedicated to the best practices for building, and growing app businesses. We sit down with the entrepreneurs, investors, and builders behind the most successful apps in the world to learn from their successes and failures.
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Let's get into the show.
Hello, I'm your host, David Barnard. My guest today is Kenneth Schlenker, co-founder, and CEO of Opal, the focus company. On the podcast, I talk with Kenneth about why retention is the only real moat, how dropping paid conversion from 20% to 9% increased revenue, and why he sees the rise in competition as a net positive for Opal.
Hey, Kenneth, it's so great to have you back on the podcast.
Kenneth Schlenker:
Thanks so much for having me back.
David Barnard:
We've got a lot to catch up on. Last time we spoke, you were at 5 million in ARR. You since shared that you hit 10 million in ARR pretty soon after that, so you were scaling rapidly. I now hit over a million daily active users. The app has just been taken off.
I wanted to talk through some of that with you and see what it's taken to get there. Yeah, tell me first about what it took from last we spoke at 5 million to get to that 10 million.
Kenneth Schlenker:
Yeah. It sounds now a long time ago, but yeah, we had a great conversation last time. We're really in the process of scaling with, at the time, a hard paywall. We got to scale pretty efficiently with a small team. I think we reached $10 million in annual care revenue, like 11 people back then.
But after that, what happened was we weren't growing as fast as we'd like in terms of users. For us, what really matters is to be able to create a product that could be used by lots of people, because we're addressing this massive issue.
We stopped focusing on revenue, really focusing on what product can we build that can be a billion user products. That's the trajectory that changed. Happy to talk about the stuff that we've done to get there.
David Barnard:
Yeah. Hey, one of the things, you just did a great talk at Tokyo App Growth Annual last week, and you and I got to hang out a little bit in Tokyo. One of the things you shared in that talk was that you had a mindset shift from efficiency to company building. Tell me a little bit about that.
Kenneth Schlenker:
Yeah. I think this is maybe a counterintuitive take, but you read a lot today about the billion dollar one person company. If you buy into that, basically someone with AI can just vibe code their way into getting to 10 million, 20 million, 100 million in revenue, and then create this massive company. I think that's a lie.
I think that the companies that actually do reach a billion people and billions of valuations, they need more than one person. They actually need a team. You need a brand. You need retention. AI can be used to improve the value that the product gives to users. Then, and only then, I think, they can really create massive amounts of value.
Yeah, I think that was the topic of the talk, which I gave at the conference. I think a lot of the apps that we see today, they're coming online. I love the entrepreneur, the results we're seeing in lots of people. They're being able to create new stuff. But I think also it's important that people understand that there needs to be more than that to be able to build massive companies. That's the shift that we've been on where what we want to do is we want to make sure we can create a product that is on path to be a billion user product.
Starts with a team, figuring out the right kind of team, building a brand, building a product that has a lot of retention, and then figuring out how to actually use AI to improve the value we give to users.
David Barnard:
Yeah. A quote from your talk that I really loved was, "Teams create product soul. You can't vibe code a brand."
I love that. What's your thinking there?
Kenneth Schlenker:
Yeah. I think maybe sometimes people think that apps are just tools. But actually, people want to connect with the apps that they use. They want to feel something. The brand is super important. I think some of the best apps out there have this soul in them. I think that in order to have that soul, you really need people that are really caring about this.
It doesn't have to be a lot of people. Some very small teams create really soulful products. But I think that a recipe for a failure in my mind is just to create something that has a function, which AI does really, really well. You can basically create note-taking app. You can create calorie apps. You can create whatever you want. That's just a function. But you need more than that to be able to be successful, in my mind.
David Barnard:
Yeah. One last AI take before we move on, but back to more Opal specific stuff. What are your thoughts on people saying, "AI is going to eat all of consumer apps?"
You've seen this. Competition for in the screen time space is huge. Then AI has unlocked the ability to spin up a screen time app quicker than ever. That's actually a popular category that I see a ton of indies launching into. How do you think about the way that's going to impact Opal's business? Then, how do you think that's going to impact the app economy more broadly?
Kenneth Schlenker:
Yeah, there's a lot of screen time apps, since we went on the podcast. Actually, someone came to the conference last week, walked up to me, and said that she was super inspired by Opal and created her own version of a screen time app. I think it's one of the very popular categories these days.
The thing is, first of all, I think the way I see competition is I think that it's actually a net positive for us. I think what it does is it helps more people realize that this problem is real, educate the market, get more people to use apps. There's five billion people in the world that have a smartphone. Maybe today, probably, give or take, a few dozen million that have used the screen time app or using a screen time app. There's still a kind of massive opportunity to grow.
I think the challenge/problem is that a lot of these apps are actually copying existing stuff. Instead of trying to build out new categories and reach out to newer kinds of people, they're limiting themselves by just copying what exists.
In my mind, the biggest challenge for screen time is if I walk down the street, and I talk to 10 people in any city, it could be in Texas and New York, wherever it is, and I ask random set of people like, "Do you spend too much time on your phone?"
Everybody will say, "Yes."
Or maybe like 8 out of 10. But then if the next question is, there's an app, would you download this app to help you? Today, you'd lose a lot of people. Because a lot of people say, "What do you mean an app to what to do? How does it help me manage my screen time? Is it going to be blocking apps? That's crazy. That's not really something that I want to do."
The problem that I think we need to address as a category is how do we actually create something that these people can use that's not what Opal already does, but that's other things? That's really what we're trying to build for Opal, which is figuring out how we can make it so much easier to use a screen time app, no setup required. That it's not just about restriction. That it's really about being able to coach you in your day-to-day.
That's a long-winded answer, but I think that I applaud competition. I think it helps educate the market. But I think also the opportunity is much larger. It's going to require innovation and new kinds of apps, and completely new kinds of UI that you're probably not going to get by just typing in cloud like make an Opal copy in five minutes, right?
David Barnard:
Yeah. We've seen this play out for years, even without AI coding. It's not that hard. The engineering side is a lot of hours, but it's not some insurmountable thing. It never has been. You look at some of the big categories like language learning. Duolingo, despite the recent setback in its stock price is still a multi-billion dollar company making over a billion dollars a year. Then you look at that category. There are just so many apps, and huge ones. Babbel is massive, right up there nipping on their heels.
I think for the broader industry, and then for Opal specifically, you're still going to have category winners like Opal that are the brand in the space, even if there are hundreds of apps that do the same thing. To your point earlier, it's like, "Yeah, you can copy Opal or easier than ever to copy aspects of Opal, but you can't copy the soul. You can't copy the taste that went into it."
As people experiment with these apps, they'll probably be hungry for more, and then go looking for the best app to do it. I think Opal as the leader in the space, as you've grown the team, and improved the product, it just becomes this momentum that isn't going to get stopped by 200 more people vibe coding another screen time app.
Kenneth Schlenker:
Yeah. Can I bring you in my next investor pitch? I love that.
No, I fully believe it. Then one more thing is, we talked about what happened since the last podcast. One of the thing I mentioned is, and we had a hard paywall, now we're truly freemium. We give away the product for free. That's also something that I think is very valuable for us in the long run. Because we're getting to a point where we passed a million DAUs, as you said. We're growing really fast.
It comes to a point where people have heard about the app. They hear it from their friends. We see a lot of interesting dynamics of students that are using it together. We see interesting dynamics also in the family world where you have maybe a teenager in the family that's using the app, and actually recommend it to their parents, or the other way around. All of that makes our position stronger, and activating these network effects. It's really powered by freemium.
I think that's why I'm very confident in the future of consumer apps in general. I think when you have a great product that has retention, that has a great brand, you're in excellent position. I think what you can do on top of that is you can use artificial intelligence to actually improve this product. By improving this product, what I mean is not saying just moving the metrics, it's really like, "How do you actually really improve the value that you give to users?"
If you're very confident, the value that you give to users, whether it's giving them time back, which is what we do or make them more productive, whether it's helping learn language, you can actually use AI to make that better, and that really will make your product a lot stronger.
It's interesting. I'm sure you see this all the time. Maybe in the public markets, at least, the apps, software, SaaS of course, and also some consumer software, it gets punished by the market to say, "Hey, they're not AI native."
But I think it's some misunderstanding of what consumer apps really are. It's not just function. It's also entertainment. It's also something that people like to do, and something that people love. You can't just replace that with an agent or something else that does it automatically.
David Barnard:
I wanted to dig a little deeper into the switch to freemium, because that was a big deal for Opal. You shared a slide in your presentation showing that your download to paid dropped from 20% all the way down to 9%, which sounds super scary to have your conversion more than cut in half, but why did that ultimately end up being good for the company?
Kenneth Schlenker:
No, we did that. We gave away the product for free. You mentioned that our pay penetration, so that's how many people are paying subscribers within the monthly active users went from about 20% to 9%. That's scary when you see this chart, but it was the right decision.
The reason it's the right decision is because when you give the product away for free, the people that are using the product become your marketing. What we've seen as a consequence is also a shift where we have a lot more organic growth than we ever have. It's massively increased. What we're able to do is we're able to accelerate this organic growth as well with some features we can talk about.
Another thing that we've seen is as a consequence of freemium, is that we have a new kind of user or a new segment that exists. We started with a segment of, I would say, professional pros that are interested in productivity. People like you and me, people probably listen to this podcast that care about their time and place a high ROI and saving time. That was the initial segment.
But making the app free really helped us unlock students as a second segment. High school students and college students who are now two third of our DAUs are our students. What it does is not only it's great for our mission, because we know and we really want students to be able to build these healthy digital habits in their day-to-day. That's great for the mission. But it's also great for organic growth. Because students talk about it.
What this also allowed us to do is now we're entering a third segment that's being unlocked where students basically, especially in high school, are telling their schools, "Hey, instead of taking the phones away while we're in school, why don't you work with Opal to be able to create a phone policy?"
Now, we have also this third segment with schools that's opening. What I would say is, I think that the freemium strategy is really helpful to be able to grow organically and also unlock new segments that aren't necessarily people will actually pay upfront for products.
It depends on what you're looking for as an app founder, whether you're trying to build lifestyle business, but if you're trying to truly create a product that has the potential to get used by hundreds of millions of people or billions of people, which is really what we think we must do because of the size of the problem we're facing, then I think freemium is a really good strategy to get there.
Yeah. To sum up, we've seen a decrease in our conversion to paid, but we've also seen as a consequence of that, an explosion of our DAUs and revenue with it. It's a short-term, scary drop, but what happens in the long-term is that it pays back tenfold.
David Barnard:
That's amazing. Another thing you did share in that presentation is a question you ask yourself of where to draw the line of freemium. I think this is a little counterintuitive, but I think really important to dig into. You said, "Would a non-payer recommend the app? If no, give away more."
Why?
Kenneth Schlenker:
Yeah. I think if you want the freemium dynamic to really pay out, you need to make sure that the free users are recommending the app. Otherwise, that doesn't work. I think that's a good way to measure the quality of your freemium product. You got to figure out whether free users are going to recommend the app.
I think that's an issue a lot of apps I see where they're just giving away small amounts or maybe it feels like a trial, and then it's recapped. If you do that, you're probably not going to benefit from the organic growth potential of freemium.
David Barnard:
Yeah, totally. It's a tough balance of what to give away, and what not to. Were there any specific tough calls that y'all made where it's like, "This really could, should be behind the paywall, but it really is such a good part of the experience that we don't want to take it away from the free users?"
What were some of the hard decisions? Did you have to reverse any? Did you make a bad column and reverse it? Or how did things go on determining what went into paid?
Kenneth Schlenker:
Yeah. We've made a lot of mistakes and some success. I think the core is to experiment and measure two things. The LTV of installs, how people are converting and paying, and also to measure the retention overall, free plus paid. You want to make sure that you can find the sweet spot where you're increasing both. It's really hard.
We have this feature called blocks. Basically, you're blocking apps from 9 to 10 on Monday to Friday. You're blocking social media, for example. Also, it could be, you put together an open limit. I can only open Instagram 10 times during the day. Each of these are blocks.
We've experimented with how many should we give it for free. You can have one, you can have two, three or four. I think today, it's actually three. We've tried many different approaches all the way from having just one, which is pretty restrictive and offering more. Turns out that three is enough for free users to get a great experience. They can actually really use that app, try out a few different things, and then also really power users that are convinced will pay because they want more. That's one where it worked out pretty well.
David Barnard:
No, that's a great example. Maybe a way to think about that, yeah. It's like the people who are going to be the heaviest users, what's the thing that's most important to them? Then throttling it to where the free users still get a great experience is interesting.
AI is making this so tough with freemium because you almost can't give things away. It's hard to do a freemium app. I've been vibe coding this app on the side. I'm working on this AI coaching feature. Golly, it can get super expensive.
At first I started out like, "Oh, I'm going to use Opus 4.6 because it's so much better."
Then I was like, "Oh, maybe I'll use Sonnet." Then I was like, "Oh, maybe I'll use Gemini Flash." And it's tough these days to really draw those lines and create that great freemium experience, especially if you're using AI.
But even if you're not using AI, it's just such an important place to really be thoughful, and to do some experimentation. Like you said, you didn't just land on three by magic, guessing it or whatever. You tried one. You tried five. You figured it out. I think that's what people need to take away, is you just need to try it.
For me, vibe coding this app, I need to see how users actually use it, because maybe I can get away with a better model, more coaching, and things like that. Maybe I can do a freemium tier, but I don't know until I actually get it out there and start testing it.
Kenneth Schlenker:
Yeah. With AI, I think it changes the equation because you're, of course, paying for the service of using. If you're using a server side model, you're paying for that. You need to make sure that the value that you're creating is actually higher than, of course, the cost that you incur.
I feel like a lot of people, at the beginning this way too, the value is so cool of all these tools. You're just going all in, and building incredible stuff. Then there's probably a second phase, which is way like, "Does it make economic sense, actually? Can I charge enough for this? Are people actually winning? Is it good enough that people will need to pay for this on top?"
It's a different kind of reality, I guess, than when you were just making an app that doesn't have actually this marginal cost on top of it. But yeah, coming back to, I think AI, it's massively valuable, obviously. We see some incredible things that I'm like everyone fully using a lot of these tools.
I think that every consumer app is about to have AI, whether it's fitness app, whether it's learning app, finance app, screen time app too. But I think the question that maybe people need to ask is, how do you actually build an AI that's on your user's side? What I mean by that is, how do we actually build an AI that actually helps deliver more value to users?
I think that today, there's not enough people doing that. It's not so much about, I think, using AI to maybe trick users into doing something. I think it really has to come from, what is the exact core value of why people are using my app, and how can I make that a lot better using AI?
David Barnard:
Yeah. I'll quote your presentation again since it's all so top of mind. I haven't done a podcast where I actually saw the podcast speak so recent to the podcast. But it's fun because I can quote you back to yourself from the things you really nailed in your presentation. You said, "If your user wins, you win, that's it."
I love that quote.
Kenneth Schlenker:
Yeah. I think it's important to remember that. You can get caught up with all that it can do and add some fancy features to the app. If you do that, you're probably going to get a lot of early adopters. A lot of people are excited about AI right now, so they're trying a lot of stuff out. But really, to really have lasting value, you need to figure out how to make your users win. That's the hardest part. But it can be amazing. There's definitely lots of potential there.
David Barnard:
Yeah, it's just such a great framing. This is how you should think about every feature. Does this feature make my user win? Does it improve their life? Does it enhance whatever they're doing in the app? Really thinking deeply about how each of those features impacts the user experience, such a great way to think about it.
You mentioned Opal for Schools. I wanted to go deeper on that. Was this something that happened somewhat organically of students using it, and them requesting schools? Or did you strategize like, "Hey, this is a great almost B2B opportunity. We can sell the schools. We can expand the footprint."
How did that come about?
Kenneth Schlenker:
Totally organically. I had here that one day, maybe we'd work with colleges, but working with schools to high school was not something that I thought about. But what happened was it started last year, we literally got an email from a high school in Los Angeles, Harvard-Westlake, that essentially what happened is they had asked their students, "Basically, the state is telling us we to ban phones, what should we do?"
Students got back to them, and said, "Many of us are using this app called Opal. We're using it on our own. No one's telling us to do that, but maybe you should reach out to them."
They had reached out to us to see if we could do something together. We found that it was interesting actually to do that. What we've done is we built Opal for Schools. What it is, it's a phone policy that schools can use to help their students focus and thrive. The way it works is the students download the Opal app. Then when they walk into campus, when they walk into school, the banned apps are blocked in their phone, but they can still access the apps that are authorized. Which is often being able to text mom and dad, but also educational apps.
For example, in some circumstances, some cases school would say, "ChatGPT can be used," or this specific kind of physics apps or this calculator app.
The interesting part is that when they leave school, instead of just being handed back their phone, being able to go and just binge on the social media, they still have the app. What we see is that a lot of students are actually still using the app after school to set up their sleep schedule, to be able to do focus timers, and study. It's really not a bell to bell solution, but a bell to bed solution. It's a full cycle.
Yeah, we've tried it with one school. Now, we're actually scaling in across the states with many high schools around the US. It really becomes a very interesting new area for us, not only because again, super aligned around mission. We really, really like that. I think it's a whole chapter we could open. But it's a much smarter way to actually do phone and policy rather than taking the phones away. We're actually teaching something to kids to get a tool that they can use after school.
From a business perspective, it makes sense because it really helps position Opal in the family. People talk about it on a local community level as well because every student uses it. Helps a lot as well. But yes, it's a new distribution for us that is super interesting and extremely mission aligned. Because we need to make sure that education is still, and continues to be an important effector for progress. We can be a part of that.
David Barnard:
Another aspect to it too is that those students will eventually graduate, become professionals, want the tools, and no longer have it provided by the school. It's also growing up that next generation of pro users who are professionals who can afford the more expensive tier and stuff.
Kenneth Schlenker:
I was very impressed. I remember my college days when our college library, they used to have PCs, and then they did renovation. All of a sudden, they had 100% Mac everywhere. This newest, beautiful Mac that had been, I guess, practically given away by Apple to be present in college.
Yeah, I think obviously from this perspective, it makes sense to make sure that the next generation knows about the products, can use them, and loves them. I think that in our case, of course, that's part of the value. I think it's also aligned with the fact that we do need the next generation to learn to build these skills, to build healthier habits in the previous generations. It works together.
David Barnard:
That's awesome. A great counter example here and something you said in passing is that the students need to love it. Because my kids all have now Chromebooks that the schools hand out. They are terrible. My kids will never buy a Chromebook. They beg to use my laptop. We do have a home iMac.
If you're going to go that route, you still have to have an amazing product. Because that's what actually generates the word of mouth, so much of what you've been talking about is having that core product, the core brand, and that's how it actually pays off.
Kenneth Schlenker:
Yeah. It's been interesting for B2B, B2C. Basically, we're really focused on people, like B2C, making sure that we have the best possible app. That's all of it. It turns out a lot of students are using the app, and actually love it on their own. Again, it's not something that people tell them to do, their parents, or their school. They use it on their own.
But we're also happy to have this natural extension of working with schools. But for me, the compass is always, how do we build the best possible experience for the user, make it fun, make it motivating, make it as easy to use as possible. As long as we do that, we'll still be able to make sure that the next generation wants to use the app as well.
David Barnard:
Are you able to share in broad strokes what that financial arrangement looks like? Are schools actually paying per student for this or are you just giving it away for that eventual benefit?
Kenneth Schlenker:
We do charge schools for deployments, and using this service a per student fee that is very competitive compared to alternative solutions. We do charge schools. But, for sure, the benefit for our businesses expands way beyond that revenue. That's why we're able to charge cheaper prices to schools because of that kind of other value that it brings to the business.
David Barnard:
Yeah, that makes it a whole new world for a consumer app founder to be writing contracts with school districts. Are you ramping a sales team or how are you handling that?
Kenneth Schlenker:
It's probably new, but we have someone excellent that's in charge of the team, Andy Bennett, who is head of Opal for Schools. He's been talking to, and partnering up with so many different schools. He was at South by Southwest EDU a few weeks ago doing a presentation there with a lot of educational leaders, talking to press. We were recently front page news on LA Times for actually the fact that we now have one of the important private schools in Los Angeles that's using the product and many others.
Yeah, it's a whole new world. I think it works though very, very well together with the consumer product.
David Barnard:
I love to see it. It's so cool to see consumer apps expand beyond the consumer base. Seeing apps like Common Headspace years ago doing partnerships with insurance companies, and Calm. I don't know if they're still doing it, but they had a section in CVS that was the Calm shop, like a few shelves where they had sleep gummies, sleep masks, and things like that. It's just really cool when you think about these consumer apps as a brand, as something bigger than just the app. There's just so many opportunities.
I think it's cool to see all the different ways things that start as consumer apps actually end up monetizing in so many different ways. I wouldn't have guessed schools. It probably makes sense for more apps out there to expand that way if they're really able to provide value to students and school districts.
Kenneth Schlenker:
Yeah. I think when you have an app, and people love it, first of all, you're able to touch so many people. Millions of people literally, more than 10 million people downloaded Opal. It's a massive amount of reach. There's a lot of adjacent things that you can do in new segments like we talked about, but also new products that you can maybe sell to them as well.
But for us, really, the journey's been the initial product market fit was on professionals that are increasing our privacy is still a big part of what's of our customer base. Then we expanded to a new segments with students as we opened up freemium, and then we have this new segment as well going into the education world.
I think that when you look at screen time overall, and that's why I'm super optimistic about there's competition. But there's also so much space with like five billion people with a smartphone. Every single person needs help on managing their screen time and building these healthy habits.
But you also see other segments that are possible that are more health and lifestyle segments similar to what UROAI, I think and WHOOP have done in the health metrics measurements. But screen time is also a big, big part of people's health. Health and lifestyle, this is also a massive one.
Beyond that, I also think that as more and more research is showing the impact of screen time on health, the impact of screen time on productivity, you're also going to get insurers that are going to take a big part of this. You're also going to see employers that are going to want to build tools, buy tools, or license tools for their team.
We believe that that's why it's so important to actually build the most loved and the most important brand in that category because a brand can travel. When you have a great brand, you can go from one segment to another, to another, and build a billion user products and billion user category, which is what we're working on.
David Barnard:
Yeah. You've brought up brand a lot. I wanted to dig a little deeper in that. What are some of the key things that you think make the Opal brand, the touches in the app, the name itself, the design, the feel? How do you classify or quantify brand for Opal?
Kenneth Schlenker:
Yeah, there's a lot of things. The company started with a manifesto, actually, that I wrote before building a product. It was really more like thinking about what is going on here. We've got trillion-dollar companies. They're selling people's attention. They've built this technology that everybody uses every single day.
Technology is really good, but because of this business model, and because of the companies that are building the technology used by people, we have the outcomes that we know, which is overuse of screen time, et cetera.
The manifesto's basically saying, "We can change this, and we can actually design products differently to benefit of all the great stuff that technology brings to people, all the good stuff, but also read out the bad."
We started with that. Then the product was a consequence of that. Yeah, the name is an important part of our story. Opal is a gemstone. That's why you get all these gemstones inside the app in our marketing as well. Opal, actually also, the reason I chose this name is that it was striking to me that phones are basically something that you touch all day, every day, hundreds of times per day.
What are phones made of? Basically glass, aluminum, all sorts of different kinds of components. They're electrically charged. They tend to be warm because of what's going on in it. I was thinking about, what is the exact opposite from a tactile perspective to a phone? That's where a gemstone came up, opal in particular. Opal is a gemstone that's set to calm the mind, in particular blue opal that comes in different variations. It's also a very, very precious gemstone. That's the reason why the name happens. It's not random. There's a real reason why it's Opal.
Then the whole product experience is centered around the fact that the more you focus, the more you can unlock these Opal gemstones with different colors, and different shapes. We put a lot of effort to, as constant debates in our team, to basically make sure that the entire experience revolves around these gemstones. That's obviously one of the things.
The most loved interaction in the app, which sounds completely stupid, but the most of interaction is that unlocking of that stone. When you get granted a new gemstone, because you've passed a new milestone. You've used the app for a certain amount of days, for example. You get to tap to crack the gemstone. That's the most loved interaction. People really remember this, talk about it, and really helps build the brand because this is what the kind of things that people remember.
Another example is, we try to do more things that are unusual or companies might not do normally. We have these stickers. I have one on my phone here. It says, "Scrolling Kills."
It's like a PSA, public service announcement. Actually, it does not mention Opal, which is also a controversial take. But we've distributed thousands of them to our customers, to users. We even bought this massive billboard in New York last year with the message, "Scrolling Kills."
Basically, we want this message, we want this conversation to happen. We want to be the company that helps make these changes. That's another example. There's many, many smaller details inside the app in how we do marketing, partner with creators, partner with different artists that help, I think, build that brand, and make it strong.
David Barnard:
I love that gemstone interaction. I was able to watch a video of that interaction in researching all this. I imagine that was very costly to make. A lot of effort went into it from artists and from programmers to get that interaction dialed in. But I think more apps should find ways to have those little magical moments, those little touch points that make it feel special.
This is maybe an example of what you're saying about using technology for good. Here, you're almost dopamine hacking in a way. It's special. It's encased in a rock. You don't know what it's going to look like. You tap, and then it breaks open. It's like this reveal moment. I'd imagine there's haptics, audio, and other things going on. It is kind of a dopamine moment. But you're using that as a reward for them actually being more present, and not using their screens as much.
Yeah, I think folks listening to this should think about ways in their product to create those kinds of magical moments. It really is so magical inside Opal.
Kenneth Schlenker:
Yeah, thank you. I appreciate it. It's tough to decide to invest in that kind of thing because it's not really measurable. There's always like 50 other things that you need to do that seem more urgent, bigger features, or bug fixes. It's difficult to make the decision to say, "Wait, I'm actually going to invest whatever, a few weeks building this thing, and doing it right."
But in the end, that's what people remember. That's what the brand, really, is built on. Those kinds of smaller details that feel unreasonably sophisticated, but yeah, it did bring magic to the experience.
David Barnard:
A few minutes ago, you mentioned that Opal had had over 10 million downloads. You didn't say over 20, so I imagine it's somewhere in the low, above 10 million. But then as we talked about it earlier, you have over a million daily active users, which clued me in that you have some pretty awesome retention. How do you think about retention? How's that gone for Opal?
Kenneth Schlenker:
We do have great retention. For us, the way we look at it is we need to make sure that you can do ... It's easy enough to go on the detox for three days, and say, "Okay, I'm going to put my phone away for three days," which by the way is a start.
But it's really difficult to do it on the long run. That's why retention is so important to us, is actually to be able to change habits in the long run, we really need people to be able to stick around. The way we think about it is it's definitely become the core, the only way you can really grow your users. We saw how important that is to have organic growth. The only way you can grow your DAUs is basically having great retention, obviously. It's really something that has been super important for us to crack.
We experimented a lot, lots of tests to be able to figure out what drives retention. It starts from the initial onboarding. What do you actually onboard people to? Yes, retention is super important. We're definitely, today, in the top rank, I would say, in terms of early retention. Day one to day seven on par with or better than companies like apps like Duolingo, Spotify, or Strava.
I think the challenge for us is today is really how do we actually ... We've got this, I would say, niche of people that are motivated enough to build healthier habits with digital technology. There's a few millions. We talked about a few millions. But really, what I'm focused on today is I'm thinking about how do we actually get the next hundred millions, and get this billion user product?
That really to me is about making it way easier to take the first step, making it way easier to get the benefits without having to have so much commitments. I know this podcast talked about what we've done in the last year, but I'm spending a lot of time today thinking about what we're building in next year. That's really what we're thinking about today.
David Barnard:
I'm going to quote you back to yourself again, because this was just so good. "Retention is the ultimate proof of value. If a user comes back, you're creating something real. If they don't, nothing else matters."
Kenneth Schlenker:
Yeah, that's true. Again, I think the reason I was saying that is because if you look at X today or Twitter, you're talking about revenue, revenue, revenue. People quickly growing their MR, which is great. I love RevenueCat. I love revenue too.
But I think retention really, really is the only way to have lasting value, is the only real moat. It's two different things. It's one thing to be able to convince someone to try out a product and to pay for it at the beginning, but it's another thing to be able to get people to actually stay for a long run, and create lasting value.
By the way, the Opal really started with just this first part. Clearly at the beginning, that's what you should be doing. But very quickly, it's also about how do you actually build lasting value. The only way to see that is retention. That's how you measure it. Yeah.
David Barnard:
One of my colleagues was saying that there are just too many apps launching right now where onboarding is the product, where there isn't a real product. It doesn't actually even do the things it says in onboarding. It's just all about getting people to a hard paywall, taking their money. But that's just a short-term arbitrage. That's not building a real business because they're not renewing over time. The magic of subscriptions, and the magic of this business model is that those cohorts stack over time.
I imagine with the Opal, you can look at those early cohorts from six years ago who are still paying you money, and have paid it every month or every year. When you start stacking those cohorts, and as you get to year six, seven, eight, it's just incredible how that works if you have that retentive product. It really is just, that's how you build a real business versus just a short-term arbitrage, make some cash, and then watch it all unwind.
Kenneth Schlenker:
I think it's probably unpopular to say because of what's going on right now with ... The loudest voices are more about cash grab businesses. But I agree with you here.
Yeah. By the way, I think AI is truly incredible. Again, you can build amazing products that we haven't seen yet. I test so many. You can build incredible products that really serve your users in amazing ways. But I think that today, a lot of hype coded apps are in the other category, which is basically being able to quickly create products that unfortunately have no retention, don't have a brand, and are not really delivering value to users. That's not very sustainable.
You need to make sure you have a brand. You need to make sure you have retention. You need to make sure you are delivering value to users.
David Barnard:
Yeah, such a great point. We talked about how you shifted a lot of user acquisition to organic and are getting so much more organic traffic. But I imagine you still do a ton of paid ads. Actually, I know that for sure, because I do still get the One Opal ad that just crushes. It seems like your phone is a nuclear grade weapon aimed against you. It's really kind of shocking. Rightfully so, and it's true.
But any tips for, one, finding those kinds of creatives that you can run for ... I first saw it maybe a year or two ago, it's still running. Finding those creatives that just crush, can continue to go, any other lessons, and top learnings around paid ads recently?
Kenneth Schlenker:
Yeah. By the way, I hate to always bring it back to this, but I think it really comes back to the brand. Because we put so much effort into building that brand, and building a product that is that brand. We were able to get this particular video. I want to tell you the story. I don't think I've told it before, but it's kind of interesting.
We saw this video actually that I think a friend of mine sent me this. It was posted organically by someone. It got a little bit of virality organically. I saw the video. I was like, "This is incredible because it looks like it's an Opal ad, but it's not."
I DM'd the person. Actually, it was someone in my team, Marjorie, who DM'd this person, and said, "We'd love to maybe license this video."
The guy wrote back, and said, "Actually, I use Opal. It was an inspiration for making this video."
David Barnard:
That's incredible.
Kenneth Schlenker:
It was going back full circle. He didn't do it as an ad, but he said, "We have to get people to change."
It's a great filmmaker. Obviously, the video is amazing. We had no idea how we performed, but we did ask him if we could use the video. He said, "Yes, of course," as an ad.
Basically, literally it is, the organic video with the Opal logo attached. That's it.
David Barnard:
Wow.
Kenneth Schlenker:
It turned out to be pretty successful because I think it's seen today by dozens of millions of people. Interestingly enough, it's also not just an ad, it's a big part of our brand. Also, it has value outside of getting people down to the app.
We've heard a lot of people that seen the ad, and that said they completely change the habits without even downloading the app. It kind of also has a life of its own.
But since that, we've also partnered a lot with various creators that have made videos that are just organic videos that we've either repurposed or we commissioned new creative videos. But I guess we have a unique and fair advantage here, which is that a lot of creatives, like actual people who are filmmakers or designers, actually are users of Opal because it's pretty popular amongst this group of people. I think we get a bit of an unfair advantage here of tapping into this community, because they really care about this mission, and they really care about our product.
David Barnard:
You actually hired one of your users, right? She now does videos just for Opal?
Kenneth Schlenker:
Yeah, yeah, absolutely. We actually hired many of our users in our team. But this particular one, we are accelerating organic growth in many different ways. One of the ways we do that is we found this person who was mentioning Opal in a video on TikTok, and thought she was great. Basically, we hired her. She's part of a team. She's basically building an educational media for us. Her name is Olivia. The channel's called Olivia Unplugged.
Basically, she's educating people about topics around screen time and focus. But it can go all the way from how to make friends because people don't know yet to how to make friends anymore offline, to how to build a bedtime routine, and all of these kinds of different topics. She does this in such an amazing way.
It's not your Opal brand account. It's like creator account that is powered by Opal. Opal gets mentioned in the videos. There's a link in bio. But I think it works.
It works really well because we went from 0 to I think now 700,000 followers across different platforms, and millions of views in a few months. It's not just about the numbers because it's really relevant. The content is actually exactly like what the brand wants to say. It's very, very relevant.
David Barnard:
Yeah. That's so cool. Hiring so many users and not hiring creators who were users, and organically posting content, finding organic content, and repurposing it as an ad, so many cool stories.
We are coming up on time. But there's three questions I've been asking every guest who'd come on. Let's get to that. The first one is, what's your biggest win of the last year? The experiment that performed way better than expected, something you implemented, what's your biggest win?
Kenneth Schlenker:
The biggest win is streaks. Believe it or not, we have our own way of counting streaks. But essentially, the more you focus with Opal, the more you get a streak.
We've also put a lot of effort, speaking of brand and making this beautiful. The streak is represented by this small frame, which is not like an emoji flame, but actually an animated flame. You can get beautiful Opal gemstones once you reach different streak milestones. That's, I would say, the biggest win in the last year to improve retention and growth.
David Barnard:
Yeah, that's so cool. Streaks don't work for a lot of apps. So many apps try streaks. But it's great to hear. It makes sense that it's landing for Opal. What was your biggest fail of the past year?
Kenneth Schlenker:
Yeah. What I would say is it's probably like we bought this billboard that says, "Scrolling Kills," in New York.
Okay. I would say it's a fail in the sense that we intentionally didn't make attribution really obvious. It didn't say clearly opalapp.com or getting Opal. It's a fail in the sense that no impact on downloads, no impact on revenue, but that wasn't the point. The point was really kind of a brand statement.
Actually, and just I think to finish on that, we signed a school in New York. The moment that we signed the deal, the head of that school actually didn't tell us that he saw the billboard. Because he saw the billboard, he actually was more comfortable signing. It's kind of those things that are not really directly measurable, but that do make an impact. It's, I would say, like a half failure here.
David Barnard:
I just Googled that while you were talking. When you Google Scrolling Kills, at least for me, pretty much everything that shows up is Opal related. You have scrollingkills.us, Scrolling Kills, Opal Saves. It's kind of cool to have this secondary tagline that you can own. Almost a trademark of you created this phrase that you can just put on a billboard, and that even though you probably, like you said, it didn't impact downloads, but it created an impression. Then that impression is tied to the Opal brand online, which is so cool.
Kenneth Schlenker:
Yeah. No, thank you. I appreciate it. It's definitely why we did this. We want to carry a message that's important beyond just downloading the app. It's actually just something that is important for society at large, and want to be a part of that.
David Barnard:
Yeah, that's so cool. All right, last question. It's fill in the blank. Growth would be easier if ...
Kenneth Schlenker:
Families got involved.
David Barnard:
Nice.
Kenneth Schlenker:
I think that every single parent probably in the world today is worried or concerned about their children's screen time. The problem today is that it's such a conflict within the family. It's the number one source of conflict between teenagers, kids, and their parents.
What we want to do is we want to change that. Instead of conflict, make this something that people can do together. Make that a collaboration. Growth would be a lot easier if families got involved. Because we would be able to make sure that we get one person in the family, and then everyone else in the family follows soon. That's something that we're working on.
David Barnard:
Yeah. Did you already launch or you're soon to launch a family feature? Because you told me about this last fall. I'm actually pretty excited about it.
Kenneth Schlenker:
We're taking our time. We're taking our time. But it's coming. It's coming very, very soon.
David Barnard:
Cool. All right. As we wrap up, anything else you wanted to share, you're hiring, looking for more creators, anything else our audience can do for you?
Kenneth Schlenker:
We're working on a big step change in the Opal experience this spring, actually. Yeah. What the audience can do is to watch out for the next big update. It's going to be pretty incredible. I'm really excited about it, and share any feedback that they have to us directly on the app. That's always super helpful. Things that work, things that don't work. This is how we learn. This is how we grow. Really appreciate that.
I'm really glad to got to talk, David, today. This has been amazing. Thank you for the conference also last week. This has been a great conversation. Thank you very much.
David Barnard:
Yeah, thanks for joining me. It was so fun chatting through all this stuff. You have a very different perspective, like you said, than a lot of people in the industry right now. I think it'll be great for people to hear. Thank you.
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