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Patrick Campbell Joins for a Growth Model Breakdown of Loom, Plus Patrick Campbell’s Pricing Corner

Hosts: Brian Balfour & Fareed Mosavat

Topics: Patrick’s Pricing Corner (Hot takes on Unity, AI, and the economy); Loom’s Growth Loops

Release Date: Oct 19, 2023

This week, Unsolicited Feedback is thrilled to welcome Patrick Campbell. Patrick was founder and CEO of ProfitWell, an analytics tool for subscription companies, which was sold to payments company Paddle about a year ago for $200 million. This week’s episode features:

1️⃣ Patrick Campbell’s Pricing Corner as he dishes out hot-takes on Unity’s pricing faux pa, AI’s monetization challenges, and the state of the macroeconomy (starts at 12:22)

2️⃣ A Deep Dive into Loom’s growth models in light of their acquisition by Atlassian. Plus, is the acquisition a win-win? (starts at 30:49)

The Growth Loops that led to Loom’s Acquisition

Loom Growth Loops:

Let's explore the primary growth loops that drove Loom's remarkable growth.

First, to ensure we're all on the same page, growth loops are active or passive mechanisms that increase acquisition or retention in a self-reinforcing manner. While linear tactics do help us gather our first users, they also require us to constantly put more into the funnel for one-directional input and output. In contrast, a growth loop creates an always-on process where one cohort of users feeds into the next.

Loom utilized several growth loops that contributed to their remarkable growth. One of the main loops was their viral acquisition engine, which was driven by their free account offering. The free account allowed users to build a habit and spread the usage of Loom through sharing, resulting in a viral acquisition effect. It was a User Generated, User Distributed Loop consisting of the following steps:

  1. Entry: The user creates a Loom video.
  2. Trigger: The user shares that Loom video with a colleague or client.
  3. Action: The colleague or client views or comments on that video.
  4. Back to Entry: Some subset of those colleagues or clients will begin using Loom.

Environmental & Manufactured Loops Power Loom’s Retention

In addition to Manufactured Loops, Loom has developed a robust environmental loop that enhances its retention.

Environmental loops are mechanisms that utilize the user's environment or external factors to strengthen and maintain engagement with a product or service. These loops rely on the context in which the product is used and create a seamless experience that encourages users to continue their interactions.

Specifically, Loom is available in all the places where you might need to record: in your applications, on your desktop, and in your browser. It is constantly accessible, just one click away.

Loom also offers a strong manufactured loop to combat camera anxiety:

  1. Trigger: The loop starts when a user creates a Loom Video and shares it with a colleague or client.
  2. Action: The colleague or client is then prompted to take an action, such as playing or commenting on the video.
  3. Reward: Every time someone comments on or views the video, Loom sends an email notification to the user, providing a little dopamine boost. This reward gives the user a sense of accomplishment and transparency.
  4. Trigger: This reward then triggers a new set of actions as the original user wants to create more videos, thus repeating the loop.

This habit loop is an example of a manufactured trigger, which is a cue created by the product strategy to reinforce the habit loop.

Furthermore, Loom has reduced significant friction in the first step by adding AI as a step 1a in the process, which helps clean up the video and gives the core user additional confidence to share it.

Looms Monetization Model fueled it’s growth

Loom's pricing model is designed to balance acquisition and engagement, with a free plan that allows for viral growth and a paid plan that offers additional features and removes limitations.

"Additionally, in that tier, there's Loom branding on it. So you get a bit of extra acquisition value."

They have strategically kept Loom's pricing high to maximize revenue from highly engaged users.

The price is high because they need to make enough money from their superusers to support their free tier for the long tail. And they have done a great job packaging it so that for lean-in users, the 5-minute video length cap, 25 videos per month maximum, and Loom branding are enough to encourage them to upgrade, but not so prohibitive that a newer or casual fan of Loom cannot use the product for free.

Acquisition was a Win-Win:

Atlassian gains a new front-door to sell its other products.

"Loom drives the acquisition of logos. Those logos then move from Loom to Jira to Confluence to Opsgenie, and so on. This is the next level of fuel for the business."

Atlassian has already stated its plans to integrate Loom heavily into its other product lines.

"As Atlassian consolidates Loom into its platform, engineers will soon be able to visually log issues in Jira. Leaders will use videos to connect with employees on a larger scale. Sales teams will send tailored videos and updates to clients."

Atlassian gains access to new customers in education and customer success, which are slightly further from its core product.

Loom achieves much deeper defensibility.

Loom avoids the need to become a multi-product company. As a single-product company, an acquisition price of $975M is highly impressive, and it's difficult to develop a multi-product DNA at this stage in the company's growth.

And, Loom delivers a healthy return for it’s employees and investors!