“How Exploding Topics Revamped Its Business Model and Achieved Success” is a video by Brian Dean that chronicles the remarkable journey of the startup Exploding Topics. Initially experiencing rapid growth, the company soon found itself facing an existential crisis as churn began to outpace growth. Recognizing the need for a change, Exploding Topics pivoted to a Software as a Service (SaaS) model, offering personalized trend tracking features and avatar-specific options for different customer groups. They also focused on creating bottom-of-the-funnel content, resulting in stabilizing their monthly recurring revenue and achieving significant growth. The main takeaway from this story is that sometimes, big changes are required to turn around a struggling business.”
In his video, Brian Dean shares his personal experience of turning his struggling startup, Exploding Topics, into a thriving success. After a fast start, the company faced challenges when churn started to surpass growth, leading to a period of negative revenue growth. Realizing the need for a significant change, they shifted their business model to a SaaS approach, offering personalized trend tracking features for different customer groups. This change, along with the addition of avatar-specific features, restored stability and success to the company. The key lesson here is that when a business is struggling, it often requires substantial changes to turn things around.
The Struggling Start
Starting a startup is never an easy task. It takes a lot of hard work, dedication, and perseverance. When Exploding Topics first began, it experienced a rapid growth phase that seemed promising. Within a month, they went from zero to $10,000 in monthly recurring revenue (MRR). However, this initial success was short-lived and soon an existential crisis loomed over the company.
Initial Rapid Growth
Exploding Topics saw explosive growth right from the start. They had spent their first year building an email list and growing their audience. When they finally launched their product, they had a pool of potential customers who were ready to buy. This initial surge in revenue gave them hope and excitement for the future.
Existential Crisis
As the initial excitement dwindled, Exploding Topics faced a major challenge. Churn, the rate at which customers cancel their subscriptions, started to outpace their growth. In the early days, they were able to outgrow churn because their MRR was relatively low. But as they scaled and their MRR increased, it became harder to offset the impact of churn with new customer acquisitions.
Churn Outpacing Growth
The struggle to outpace churn became more evident when Exploding Topics experienced a string of negative MRR growth months. This negative trend in growth continued for four consecutive months, creating an alarm bell for the company. They knew that they had to take immediate action to turn the business around and avoid the dreaded death spiral.
Realization and Evaluation
Recognizing the need for change, Exploding Topics evaluated their monetization strategy and customer expectations. They realized that their existing strategy of a paid newsletter was not meeting the needs and expectations of their customers. Furthermore, the lack of personalization in their product was causing high churn rates among certain customer segments.
Monetization Strategy Shortcomings
The paid newsletter model was not personalized and did not cater to specific niches within their customer base. While some customers appreciated the wide range of trends covered in the newsletter, others wanted more focused and tailored content. This mismatch in expectations led to dissatisfaction and higher churn rates.
Customer Expectations
Customers who signed up for the paid product, Exploding Topics Pro, were expecting a greater version of the free tool. They wanted personalized trend tracking features that were relevant to their specific industries or interests. However, the company was unable to meet these expectations with their existing product offering, leading to disappointment and a higher churn rate.
High Churn Rate
The combination of a non-personalized product and unmet customer expectations resulted in a high churn rate for Exploding Topics. They needed to make a big change to address these issues and regain customer confidence and trust.
The Pivotal Change
In order to turn the business around, Exploding Topics made a significant pivot in their business model. They transitioned from a paid newsletter model to a Software as a Service (SaaS) model. This change allowed them to provide personalized trend tracking features that catered to the specific needs of their customers.
Introduction of SaaS Model
The transition to a SaaS model meant that Exploding Topics now offered a platform and tool for their customers instead of just a newsletter. Customers could now log in and access a wide range of features and functionalities that were not available before. This change not only met the expectations of their customers but also helped to reduce churn.
Personalized Trend Tracking Features
One of the key changes implemented by Exploding Topics was the introduction of personalized trend tracking features. They recognized that their customer base consisted of two primary groups: VCs and investors, and e-commerce businesses. To cater to these groups, they created specific features that provided tailored information and trends for each group.
Avatar-Specific Features
Exploding Topics created a feature called “Trending Startups” for VCs and investors. This feature allowed them to access a curated list of trending startups along with relevant data such as funding rounds and employee count. For e-commerce businesses, they developed a similar feature called “Trending Products.” This feature provided a list of trending products in different categories with pricing and reviews. These avatar-specific features ensured that each customer group received the information that was most relevant and valuable to their business.
Serving the Best Customer Groups
By focusing on their best customer groups, Exploding Topics was able to provide exceptional value and strengthen their relationship with those customers.
Trending Startups for Investors
The “Trending Startups” feature catered specifically to VCs and investors. It empowered them to identify and explore startups that aligned with their investment goals and interests. By providing up-to-date information on funding rounds and company details, Exploding Topics became a valuable resource for investors in their decision-making process.
Trending Products for E-Commerce Businesses
The “Trending Products” feature was designed with e-commerce businesses in mind. It allowed them to stay up-to-date with the latest trends in their industry and discover products that were in high demand. With pricing and review information readily available, businesses could make informed decisions on which products to add to their inventory. This feature helped e-commerce businesses drive sales and stay ahead of their competition.
Bottom-of-the-Funnel Content Creation
Aside from the personalized trend tracking features, Exploding Topics also focused on creating bottom-of-the-funnel content to further engage and retain their customers.
Lists of Alternatives to Popular Tools
One type of content they created was lists of alternatives to popular tools in various industries. These lists provided valuable insights for customers who were in the process of evaluating different tools and software solutions. By offering alternatives, Exploding Topics positioned themselves as a trusted advisor and resource for their customers, increasing customer loyalty and reducing churn.
“Best Tools for” Posts
In addition to alternative lists, Exploding Topics also created “Best Tools for” posts. These posts curated the best tools and software solutions for specific needs and industries. By highlighting the top-performing tools and providing in-depth analysis, customers could make educated decisions on which tools to invest in. This content strategy not only provided value to their audience but also positioned Exploding Topics as an authority in the industry.
Stabilizing Monthly Recurring Revenue
With the implementation of the SaaS model, personalized trend tracking features, and bottom-of-the-funnel content creation, Exploding Topics was able to stabilize its monthly recurring revenue (MRR). The changes they made addressed the root causes of high churn rates and improved customer satisfaction and engagement. As a result, MRR started to grow steadily, and the company started seeing positive results.
Achieving Significant Growth
With a stabilized MRR, Exploding Topics was able to focus on achieving significant growth. By continuously adding new features and improving their product, they attracted new customers and retained existing ones. The personalized trend tracking features, avatar-specific features, and bottom-of-the-funnel content all contributed to the company’s growth trajectory.
The Big Change Pays Off
The pivotal change that Exploding Topics made, from a paid newsletter model to a SaaS model, paid off tremendously. By aligning their product with customer expectations and providing personalized features, they were able to regain customer trust and loyalty. The introduction of avatar-specific features further strengthened their position in the market and allowed them to serve their best customer groups effectively.
Conclusion
Turning around a struggling business requires identifying the underlying issues, recognizing the need for big changes, and taking decisive action. Exploding Topics experienced the struggle firsthand but managed to overcome it through careful evaluation and a willingness to make significant changes. Their transition to a SaaS model, implementation of personalized trend tracking features, and focus on avatar-specific features were instrumental in their success. The story of Exploding Topics teaches us that big changes indeed require big changes, and recognizing the need for change is crucial for turning a struggling business around.