How AllTrails Leveraged Product-Channel Fit To Scale Its Subscription App
Growth and investment takeaways from a profitable app
David BarnardMarch 15, 2022
Outdoor adventure app AllTrails has more than one million subscribers and tens of millions of active users. Throughout its history, the company has been cautious about taking funding. But ultimately, they took cash at the right time and for the right reasons to fuel their growth.
AllTrails CEO Ron Schneidermann says the company experienced hypergrowth — without compromising their values or getting stuck on the hamster wheel of pleasing investors.
AllTrails was early to the subscription revenue model (it launched on the web in 2012) and continues to experiment with freemium pricing and feature mix. Six years and one pandemic into his journey with the company, Ron couldn’t love it more.
“Subscription businesses are magical,” he says.
On a recent episode of the Sub Club podcast, Ron dished about AllTrails’ growth. He discussed the importance of product-channel fit, how funding can support your business’s original mission rather than derail it, and when to consider expanding beyond your core user market.
He also chatted pricing strategy and revealed which two factors are the “lifeblood” of tech companies.
“Good bones” and a ripe market
When he joined the AllTrails team in 2015, Ron discovered they’d nailed product-channel fit.
AllTrails had a strong SEO game, with content showing up in results for hyperlocal, high-intent searches related to hiking trails. Taking advantage of a market that was already primed for its product has been key.
“We’re able to parlay all the mobile-first SEO traffic into incremental organic app installs, and that’s a huge driver of our business,” says Ron.
Back then, the product itself needed a lot of work, but Ron says it had “good bones.”
A beautiful app isn’t enough
Marketing to potential customers who were already searching for a solution like AllTrails contrasted with what Ron had seen at other app businesses: founders trying to push a flashy product without bothering to find out if anyone wanted it.
As a founder, it’s easy to fall in love with your idea and not test your assumptions on your intended users. But you have to do thorough market research to be successful.
“I see really great products — beautifully designed products — that can’t crack the code on [product-market fit or product-channel fit],” says Ron.
Even if initial interest indicates that some people are willing to pay money for your app, you need to understand whether the market is large enough to sustain a subscription-based business.
If you take funding, do it on your terms
Honestly evaluating the scalability factor is crucial if you’re going to seek VC or PE backing. Too many fledgling companies take on funding too soon and start sliding down the proverbial slippery slope.
Despite a handshake agreement with the founder, who wanted help with growing and eventually selling the business, Ron and his colleagues doubted whether it was worth the effort of trying to raise money at all.
Aside from AllTrails’s $3 million in seed funding, the team decided to keep the company lean and maintain as much control as possible. Without a cash infusion, Ron says, their approach had to be “super scrappy.”
Throughout 2016 and 2017, they selected one goal per quarter — e.g., bounce rate or conversion rate — and were laser-focused on improving that metric alone until they saw results.
It’s an approach they call “relentless prioritization,” and it helped AllTrails avoid getting stuck in a growth model that would depend on an unsustainable level of paid-user acquisition to satisfy their investors’ preferred metrics.
“Do more faster”
It paid off. The app had a breakout year in 2018. That was shortly before Ron took over as CEO, and he had a renewed sense of optimism about what more capital could do for the company.
He made a list of potential strategic partners and eventually secured $75 million in funding from growth equity firm Spectrum Equity.
Describing his ideal funding source, he says, “I wanted a value-adding partner — someone who could bring in a sense of community [so we wouldn’t have to] reinvent the wheel all the time.”
Spectrum was part of a portfolio of similar companies and supported Ron’s plans for establishing strategic partnerships.
Instead of micromanaging the AllTrails team or asking them to cut costs, Spectrum encouraged Ron and his team to go bigger — even global.
What funding can unlock
With the equity firm’s support, AllTrails began to partner with other businesses like Headspace and reach new market segments.
When he took over as CEO in 2019, Ron felt he had a board he could trust — a “dream team” that would help him see opportunities he wouldn’t have otherwise seen on his own.
By the time the COVID-19 pandemic spread across the globe, AllTrails was poised to be creative and adaptable.
The lesson here? It’s important to find the right partners, and taking funding doesn’t have to be limiting or restrictive. That’s especially true if your app falls on the blurring line between business and personal SaaS.
When it’s time for brand repositioning
In its early years, AllTrails was geared toward the van life crowd — “backcountry folks,” as Ron calls them.
Because they tended to be off the grid, many of them didn’t want to pay for a subscription. They also had specific requests that only experienced, niche hikers would have.
Sometimes, it’s not a great idea to make big decisions based on the whims of your fringe customers. Had AllTrails stuck with its original market of experienced hikers, extreme outdoor athletes, and van-lifers, it probably wouldn’t have grown its subscriber base to one million and counting.
The need for a branding reboot became clear for Ron when he considered how his own outdoorsy family might use the app. They weren’t living in a van, but they spent a fair amount of time exploring. Yet, he realized his wife wasn’t always comfortable taking the kids out for a hike on an unfamiliar trail without him.
He decided it was time to “tear down the barriers to entry” and go after a larger market segment: people who simply enjoyed being outside.
App pricing 101: Consider the wisdom of the crowd
AllTrails has mastered the art of the pivot in more ways than one.
The team is constantly evaluating the app’s freemium pricing for its three buckets of users: 1) Free unauthenticated users, 2) Free registered users, and 3) Pro subscribers.
Ron loves the upfront advantage of annual pricing but isn’t opposed to offering a monthly tier in the future if it’s dictated by popular demand.
Ultimately, there’s no one-size-fits-all pricing model. The “right” way to price your subscription app will fall somewhere in the Venn diagram of your goals and your users’ needs.
It’s important to select meaningful pricing-related key performance indicators (KPIs) to get a true picture of your app’s health and identify growth opportunities.
For AllTrails, the most significant metrics are registration rate and pro conversion rate. But Ron says he also likes to explore qualitative data (like reviews) when it’s time to make decisions about which features to put behind the paywall.
Users who stick with the free version are valuable, too: They add trail updates and share a huge amount of user-generated content (UGC).
The lifeblood of a subscription business
AllTrails’ growth is showing no sign of stopping. In 2021, they doubled the size of their team for the third year in a row.
Ron’s take on the company’s success? They dared not to follow the model so many startups have been sold. AllTrails’ foundation rests on culture and momentum — the two most important elements of a fast-growing SaaS business.
“Don’t fall victim to the classic Silicon Valley startup story: You go out, you raise a big round, and you have an IPO. It never works. It never works that way,” he says.
Take a page from the AllTrails book instead.
Only take funding if it allows you to stick to your core values, be curious enough to venture beyond your original market, and stay open to changes in your pricing model.
Oh, and follow Ron’s life pro tip: Make sure you’re always the dumbest person in the room.
This article is based on an episode of our podcast, Sub Club — which explores best practices and insider secrets for scaling your app. Subscribe via Apple, Google, Spotify or wherever you get your podcasts.