How to launch a consumer app

Meta’s new Threads app represents the highest-profile app launch in quite some time — arguably, ever. The drama around Meta’s decision to build a functional clone of Twitter (now, X) aside, the launch process of Threads was fascinating to behold, for a number of reasons:

  • It was the first standalone product by Meta since Messenger that the company supported with full-throated, public enthusiasm, including extensive engagement from Mark Zuckerberg;
  • Threads benefited from the portability of users’ existing Instagram friend graphs, allowing the social networking property to sidestep a cold start problem of requiring users to find accounts to follow in order to extract utility from Threads upon first use;
  • Threads amassed more than 100MM registrations in just a week, upsetting any conceivable digital consumer product adoption record.

And yet, as I discuss in Meta’s firehose, as stirring and frenetic as the launch of Threads was to behold, product teams can take little guidance from it. Very few companies have an engaged user base across a portfolio of apps numbering in the billions — in Meta’s case, 3.07BN Daily Active People as of Q2 2023. And similarly, very few companies could summon the priceless degree of earned media from which Threads benefitted over the first week of its launch, with every major news publication in the world seemingly writing about the service, including a regular cadence of updates on registration counts.

But perhaps more poignantly, no other company could risk exposing an immature, feature-bare product to as many people as Meta did with Threads. Launching a consumer product is a tight-rope walk that often takes shape across two stages:

  • In the beta or soft launch stage, a product team aims to collect just enough usage and engagement data to iteratively optimize the product while limiting the reach of the product from users that would be attractive when the product is more mature. For mobile apps, this is often accomplished through targeted user acquisition in markets (countries) that are representative of the American market from a user monetization standpoint but are small and not strategically important. The purpose of the soft launch is to determine whether an app’s unit economics are scalable, and to what extent — to answer the questions: What is the total addressable market for this app, and Can that total addressable market be reached economically, in its entirety or close to it?
  • The global launch stage is entered affirmatively by the product team when it reaches a sufficient degree of confidence through soft launch iterations that the app has the potential to reach a commercially meaningful scale. In the global launch stage, a product team may attempt to generate mass awareness of the app (“buzz”) in a flurry of marketing activity that will engender free, organic adoption and earned media, or it may simply focus on growth through performance marketing against profitable unit economics.

After the global launch, the developer enters what I characterize as the three stages of the marketing lifecycle, over which the developer utilizes performance marketing tactics — be they direct response or brand-oriented, or some mix thereof — to promote the product to as much of its total addressable market as possible given workable LTV-to-CAC unit economics. I outline my conception of the three stages in this piece (see also this presentation):

In the Honeymoon Stage, the product is new and few people are aware of it: each channel across which ads are run is fertile ground, and since the most relevant users are being reached for the first time, campaign performance should be relatively strong. Given a “quality” waterfall of advertising channels, the marketing team has the luxury of exclusively using high-quality, high-transparency channels: owned inventory, direct API reporting access, large reach, etc. Because the product is new, few churned users exist: even the product’s tourists are engaged, and as a result, on a relative basis compared to the remainder of the product’s lifecycle, the effective unit acquisition costs are low.

The Growth Stage starts once the product has reached a point of saturation on the channels through which it was launched and the marketing team needs to descend beyond the top tier of sources in the quality waterfall to reach new users. This change introduces a number of challenges: an increase in traffic channels creates more campaign management overhead, and lower-quality channels require closer supervision as they’re more susceptible to fraud. User acquisition teams tend to grow during the growth stage as the amount of manual work (eg. reporting, frequent ad creative testing) needed to maintain growth increases.

The Strategy Stage begins when the marketing team is forced to use more complex procedures for acquiring users than merely running direct response ad campaigns. Specific strategies for reaching new users — like IP integrations, partnerships, out-of-home media campaigns, television commercials, contests / sweepstakes, heavy integration between marketing campaigns and the product, brand-building exercises, etc. — are constructed and executed, sometimes on fixed-length intervals, to reach users outside of the limited pool that is available in direct response ad inventory. Note that the marketing team might be using these kinds of techniques from as early as the Honeymoon stage, but what defines the Strategy stage is the fact that direct response alone is no longer viable: other advertising approaches need to be worked into the marketing mix (oftentimes in conjunction with direct response campaigns, eg. television ads coordinated with mobile direct response ads in a specific market) in order to reach new users. This stage also invites sophisticated and holistic marketing measurement methodologies given the diversity of channel types and tactics being utilized.

A developer’s methodical and deliberate progression through these phases of the product’s lifecycle — from the various stages of the launch into the three stages of growth management once the product is live globally — is managed by the two buckets of engagement metrics that unlock systematic growth: retention and monetization. Nurturing a product from the earliest beta to managed, strategic growth is a robust analytical process; no developer wants to leave their product’s scale trajectory to chance.

For this reason, I find the term “product / market fit” unhelpfully vague — it conjures the image of a blindfolded person feeling aimlessly in the dark for a gold bar. To some degree, building a product from scratch is an iterative, trial-and-error process that necessitates decision-making that can’t be substantiated by data. But I view a product launch as more akin to a team of specialists navigating through a perfectly illuminated obstacle course to reach a gold bar: each obstacle is a new set of product frictions to address, but the pathway to riches is mostly understood and the only inflexible impediment to reaching it is opportunity cost and access to resources.

I prefer to conceive of a product’s likelihood of achieving an appealing commercial outcome as viability, which I define as:

A product’s ability to systematically and efficiently penetrate a total addressable market that is sizable enough to present an attractive commercial opportunity.

Methodically assessing product viability at launch requires a forward-looking view of the product’s methodical journey through the five stages of its lifecycle. I use the word methodical here to imply that the product team is actively managing its progression through the various stages of the product’s lifecycle with consideration to economically efficient revenue growth.

To my mind, four distinct approaches exist for bringing a consumer app to market:

  1. Attempt to seed virality through high-visibility, top-of-the-funnel activities like PR, celebrity endorsements, influencer campaigns, etc. This approach is difficult to test for effectiveness a priori and tends to result in binary outcomes;
  2. Attempt to engineer interest and organic discovery through a gatekeeper mechanic. This usually takes the form of a waitlist coupled with invitations, where an initial audience of influencers or thought leaders ultimately instill interest (“FOMO”) in a much larger audience, and early product growth is achieved through the dissemination of invitation codes;
  3. Cross-promotion. This is the pathway to growth taken by Threads: expose an existing audience to a new product with the intention of either fully shifting that audience’s engagement (abandoning the existing product in favor of the new one) or extending its engagement (complementing the existing product’s use case with a new product). I write about cross-promotion as a growth strategy in App portfolios and strategic cross-promotion and The app ecosystem and the fungibility of users.
  4. Systematic, profitable growth delivered through performance marketing. I outline this method in Building a marketing P&L using LTV and ROAS and in It’s time to retire the LTV metric: it’s a methodical, iterative approach that constantly re-tests user unit economics and uses that information to drive economically-sound investments into user base growth through marketing campaigns.

While approaches #1 and #2 are often attractive to product leadership because they are free or low-cost and don’t require expensive machinery related to marketing analytics to be built, they are difficult to control. Virality, firstly, is not a business strategy; it’s a commercial form of hope. But more importantly, virality — either engendered through celebrity endorsements or gate-keeping FOMO — can take on a momentum of its own that ultimately may be counter-productive, exposing a product to a volume of users that isn’t appropriate for the product’s functional state (eg. the product lacks critical functionality to support strong retention and monetization). This could result in the product progressing through the five stages of its lifecycle prematurely.

This all relates to a product launch because that is precisely where these determinations are made with analytical rigor. Cohort value math is not static over time. As a product grows, it’s not atypical for cohorts to degrade in engagement as total addressable market penetration progresses: audience segments tend to be onboarded in decreasing order of relevance. This reality presents a product team with two options for growth:

  • Allow product metrics and therefore marketing efficiency (ROAS) to degrade over time while marketing spending remains consistent;
  • Reduce marketing spend over time to maintain consistent marketing efficiency (ROAS).

The composition of a retentive product’s DAU should age over time in terms of cohort tenure. This is fairly easy to exemplify through Theseus, my open-source cohort analytics library. Consider two products, each of which launches on Day 1 and wants to attain 10,000 DAU within 10 days. Product 1 retains poorly; as a result, it must acquire more total users in order to reach 10,000 DAU by Day 11, but what’s more, the number of users it must acquire to reach this DAU level increases dramatically over time as past cohorts churn, such that nearly 40% of its 10,000 DAU on Day 11 are onboarded that same day:

Product 2 retains much better than Product 1 and therefore needs to onboard fewer total users to reach 10,000 DAU by Day 11. And on Day 11, less than 20% of the product’s DAU was onboarded that same day:

Retention is the most foundational product viability metric, dictating the magnitude of user base growth required to penetrate the product’s total addressable market. And for most consumer apps, this user base growth is achieved through marketing: at the launch, and later, by definition, across the three stages of the product’s marketing lifecycle. Monetization can often be improved for a product without impairing retention through close collaboration between the product and marketing teams. But product retention impacts the cost of growth by delivering cohort compounding, without which, DAU must be constantly acquired.

So retention is therefore at the heart of the viability question: as new users are introduced to the product, how quickly do they churn out, and does replacement cost increase over time through eroding marketing efficiency? This directly informs the unit economics of growth and the viability of the product. And no matter which growth approach from the four outlined above is chosen — but especially with performance-marketing-led growth — retention is the core consideration for whether a product’s total addressable market can be activated efficiently.