Loom's $975M acquisition. What's so special?💰
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Loom was acquired for $975 million by Atlassian last week.
Loom is a simple screen recording tool that lets you record your screen and yourself to share an update or a release with your team quickly and for free.
I got really curious about Loom’s story after I listened to the Unsolicited Feedback episode with Brian Balfour, Patrick Campbell, & Fareed Mosavat discussing Loom’s acquisition that happened last week.
They also discussed Loom's acquisition, engagement, monetization, and growth loops.
I’ll share a few insights I learned from the podcast and my own thoughts about Loom.
Acquisition
Loom's acquisition strength lies in its innate sharing dynamics.
This powerful mechanism has made Loom highly defensible when it comes to net new user acquisition.
The user-generated user-distributed content loop (UGC - UDC) stands out as Loom's most powerful growth loop.
Essentially, this content loop is a cycle where content, once produced, gets shared, attracting more users.
This virality can be illustrated with a simple scenario: An individual uses Loom to showcase a new UI design, shares it in a team channel, and this action alone can lead to multiple team members becoming active Loom users.
The Loom app has become so popular and a top choice for screen recording that it even became a noun.
People say “I’ll send you a quick Loom”.
Retention
While acquisition is vital, retaining users is equally critical.
Instead of solely relying on the product's features, they recognize that retention is often determined by the product's qualitative use case and the frequency at which users experience this problem.
For Loom, a potential retention metric could be the number of videos recorded weekly.
However, Loom also employs environmental growth loops, which means that the rate of retention is highly dependent on the user’s environment and external factors that are beyond their control.
As a result, it’s difficult to manage how frequently users experience this problem or need.
Monetization
Loom offers 3 plans: Starter, Business, and Enterprise.
Their core value metrics are velocity (# of videos and length) and feature differentiation.
The Starter plan, for instance, is a self-serve model allowing up to 25 videos under 5 minutes.
The business plan offers unlimited videos and length while adding features like AI add-ons and the removal of Loom's branding.
The Enterprise plan is tailored for larger organizations layering on the IT, security, and compliance requirements, and follows a sales-led growth model.
Loom's Pricing Plans:
Starter Plan:
Growth Model: Self-serve / PLG
Velocity: up to 25 videos, each with a max length of 5 minutes.
Business Plan:
Growth Model: Self-serve with a reverse trial on top of it / PLG.
Velocity: Unlimited videos & recording length
Feature Differentiation: Option to remove Loom’s branding and access to AI add-ons.
Enterprise Plan:
Growth Model: Sales-led growth (SLG) / SLG Product-Assisted.
Feature Differentiation: Best for larger organizations with advanced IT, security, and compliance requirements.
One of their monetization strategies was giving Loom for free for 90 days during COVID-19, after noticing the shift to remote work.
That served as a powerful user acquisition avenue, and later, they monetized that customer base.
Also, they recently launched a beta version of Loom specifically for sales, aiming to capture more willingness to pay from their most active segment.
That’s a Wrap
Loom's almost $1B acquisition by Atlassian is a testament to its success.
It's a simple, yet effective screen-recording tool that just hits the point and has the network effects built into it.
Loom's powerful sharing dynamics (user-generated user-distributed content loop) serve as a powerful acquisition loop and have made it the top choice for screen recording.
On the retention front, Loom revolves around the environmental growth loops, that are heavily dependent on external factors.
Their growth mix is a mix of PLG (Product-Led Growth) and SLG (Sales-Led Growth) Product-Assisted growth models, using a reverse trial as their conversion tactic.
Loom monetizes users based on velocity and feature differentiation value metrics.