“We weren’t giving the user a real reason to upgrade.”
That’s how Ajay Mehta, cofounder and president of Tolan, describes the first version of the free tier for his company’s AI companion app.
Freemium opened up the top of the funnel, but it resulted in an initial short-term hit to subscriber conversion and ARPU, which was particularly problematic given that every session a user spends with their Tolan results in non-trivial AI costs.
So Ajay’s team spent a year running hundreds of A/B tests that boosted subscriber conversion +200% and ARPU +218%, ultimately paving the way to Tolan’s recent announcement that it had raised $30M in additional funding from Union Square Ventures and Khosla Ventures.
In this episode, Ajay returns to Subversive as the podcast’s first repeat guest to discuss:
- Why Tolan shifted its focus from Gen Z women to Millennial moms
- How it decided which features to give away vs. put behind the paywall
- Using cheaper open source models to make its free tier sustainable
- The specific A/B tests that helped Tolan maximize subscriber conversion
- How a single paywall test directly drove a 40%+ lift in ARPU
- Why the company expanded from one subscription tier to three
- How Tolan layered in in-app purchases and ads for additional monetization
- Tolan's vision for competing vs. Instinct, Muse, and Grok Bot in Personal AI
Ajay Mehta:
Phil Carter:
