Turning Nova into a paid membership (1/2)
Why and how we turned Nova into a paying membership - the learnings from the best (and toughest) decision in Nova’s history
Summary
😱 Why did we decide to turn Nova into a paid membership? How was the process and the learnings from it? - This is the first of a series of 2 editions of our newsletter where we will shift topics a little bit and move from our typical focus on talent insights to a more Nova-specific subject which we know has been of great interest to many of you in the past few months: our shift from a free to a paid membership. We will try to explain the causes, our thought process, the implementation, and the learnings so far.
🔎 What do top talent want in their ideal job? How much should you pay them? - Download Nova’s 2023 Top Talent Report to get the latest data and insights on how to attract and recruit top talent from some of the most demanded backgrounds (Data, Software, Product, Consulting, Investments, Marketing, or Sales profiles).
😱 Turning Nova into a paid membership 1/2
Since we launched Nova in 2020 (from the ashes of the old “Nova 100”), our membership has been free of charge up until 2023. However, in June 2023, we took a big leap of faith and finally decided to make the Nova membership a paid subscription. It was a tough decision, but most likely the very best we have made in these 4 years.
We want to share now publicly the reasons, the process, and the learnings, not only for the sake of transparency with members and with those of you who follow our journey but also so that it may inspire other entrepreneurs creating their communities or facing the challenge of moving from free to paid.
1. Was it always in the plan to charge a membership?
Yes, since we launched, we planned to charge the membership to Novas at some point. It was clear to us that members would get value from a platform that connected them with other top talent and with great opportunities, so we expected that many would be ready to pay for it.
When we checked the P&L of companies we admire like LinkedIn or Xing, which are similar in a way, they both have B2B and B2C subscriptions which are relatively similar in size, so it was clearly doable to have a 2-sided talent platform with significant revenue streams on both sides.
Moreover, we knew that, if we truly wanted to be a talent-centric platform, a pure B2B business model would always put B2B clients first, as they would be the ones paying the salaries at the end of the month. That did not resonate with our #1 Principle (Member Obsession), so we planned to charge members to align our incentives around serving them as their “agents” before serving our B2B client companies.
However, we decided to postpone this decision for 2 reasons:
The most obvious opportunity was B2B recruitment, as we launched Nova from an already existing Headhunting and Employer Branding company, Nova 100, so we knew how to make money B2B. To serve B2B customers, the larger the community, the easier to find great candidates and thus grow our revenues (provided that we maintained the quality that sets us apart from LinkedIn, Xing, or similar recruitment platforms).
When we launched, we felt that the value perceived by members was relatively low, at least compared to the value we imagined Nova could bring to members. We started by using a third-party networking platform to gather members and publish jobs and events, but the overall member experience had a big room for improvement and the amount of opportunities was limited, so we were not confident that people would be ready to pay back then.
Thus, we decided to have a free membership from the start so that we would capture the value offered to members mainly through B2B revenues until we had more confidence in our B2C value proposal. Therefore, we concentrated our efforts on creating a scalable B2B revenue model.
2. The learnings of trying to scale the B2B SaaS
When we launched in 2020, we did not have any technology platform for clients, so our revenues were purely service-based (i.e. Headhunting and Employer Branding) for a while, trying to be better than traditional headhunters by using our community as a competitive advantage to reach great candidates faster and from a more trusted source.
However, also from the outstart, the plan was to build a B2B platform that could serve clients in a more scalable way, with a SaaS-like revenue model and no service from our internal teams. We piloted the first version of such a platform (which we called Telescope, following our galactic metaphor) in 2021. Telescope was a reversed-headhunting tool that enabled clients to contact Novas open for a change through their anonymous profiles, which allowed candidates to maintain their privacy while we avoided being bypassed.
Unfortunately, it did not fly for lack of liquidity on the candidate side, so we learned that, for a platform like Telescope to work, we needed many more candidates than the ~1k Novas who were open for the test, probably 2-3 orders of magnitude more (100k-1M).
After the “failure” of Telescope, in 2022 we decided to launch a simpler, job-board-like platform which we called “Nova Recruiter”, open for the entire network (+20.000 Novas, not only those looking for a change) and their referrals. Here, clients could post a job and receive candidates without human intervention. This version started to work better and gained traction through 2023 as we became able to provide larger volumes of candidates per job, and it tied up very well with our service business, which was sold on top of the subscription.
However, in this process, we also learned that the B2B SaaS could not yet scale as fast as we hoped it for, again because 20,000 diverse members, although better than the old Telescope, was still not enough. Clients kept asking us for the service part (i.e. Headhunting with Talent Agents in our team), simply because there is often not enough liquidity of candidates to ensure they can close a complex process with a top Nova using only the SaaS, particularly when the seniority was relatively high for our pool (above 5-10 years of experience) or when the profile was very high in demand (i.e. Software Engineers).
By May 2023, we were better than almost any headhunter out there on the B2B recruitment service, and we could say we had PMF (Product-Market Fit) there, but that was not the business we set ourselves to build as it is complex and slow to scale. We had always wanted a platform and scalable business, so we had to admit to ourselves that we did not have a full PMF just yet in SaaS B2B.
The only way to reach it was to scale the B2C side probably by 10x, but how to do it without burning tons of capital? During the 2023 liquidity crunch in the VC market, it was unlikely that we could raise the money the B2C growth would require.
3. The evolution of the B2C between 2020 and May 2023
In the meantime, our community had grown from an original database of ~5.000 people to over 18.000 by May 2023. We had launched a proprietary member platform (Nova Connect, a kind of LinkedIn for Novas with dedicated features) and we had expanded to Italy.
The community was thriving:
We moved from creating events in Madrid and Stockholm to hosting them in +20 cities around the world, including many outside Spain, Sweden, and Italy such as London, Paris, Zurich, Dubai, or Washington DC, and with outstanding speakers like Andrea Agnelli (Exor, holding of companies like Juventus Football Club, Ferrari ), Pablo Fernández Álvarez (Clicars, Clidrive, Clibrain) or Peter Carlsson (Northvolt).
Novas were using more and more the member platform. We launched services like Gravity, which enabled them to network 1-1 with curated matches on a regular basis. When we offered a mentoring program, more than 500 mentee-mentor pairs were created.
Many Novas had met great people through us: startups were being launched by Nova co-founders, hundreds of people found jobs without us even intervening, people made friends, found inspiration in mentor-mentee relationships and some even entered into love relationships.
Furthermore, we had already proof that we could start charging members for premium services. For instance, we introduced paying services for members, including courses in Nebula or coaching through our Talent Agents.
Finally, our brand recognition was through the roof and the “signaling effect” of our membership had become one of the best proofs of being a top-talented individual.
We were already past the 90k followers on LinkedIn, and members shared their Nova certificates when joining and put them on their CVs and LinkedIn profiles as a badge of honor, a stamp that certified their outstanding talent.
Slowly but steadily, it became clear to us that our selection process to filter great people was working, and that our community was serving a great need that neither LinkedIn nor headhunters covered: to meet great people and connect genuinely.
Think about it: when was the last time you met with someone new and relevant on LinkedIn?
People were proud to be Nova members and connected with new interesting people through us. We had clear PMF on the B2C side… but we had to prove it by making people pay.
4. The solution: moving to a paid membership
Let’s be clear: moving from a free to a paid Nova membership was scary, to say the least. What if nobody paid?
If we have had 5M€ in the bank and 2 years of runway to accelerate member growth and keep iterating our B2B SaaS business, we would most likely not have dared.
But you know what? We would have missed on a great opportunity, so we are thankful that it was not our situation: we were rather fighting in a moment of hardship with little cash in the bank, a poor Q1 performance, and a very recent round of layoffs still in our memories.
Therefore, with a clear PMF on B2C, a hard path towards full SaaS B2B PMF, a tight cash situation, and few (if any) opportunities to bring institutional investment, we realized the only way forward was to be brave and introduce the paying membership earlier than expected. If it worked, it would solve almost all our problems at once:
It would finally align the organization with our #1 Principle, Member Obsession. Members would stop being the product and would become the client.
It would generate a lot of cash upfront which would improve our cash position and bring us closer to profitability.
It would prove the value of the Nova membership and would help our case in front of investors.
It would enable us to control growth and be able to invest in it without burning cash (investing in growth is a money-making activity as long as our CAC remains below the membership price, even more so if we consider the full member LTV).
By controlling growth, we would be able to accelerate it, and this would bring us closer to the B2B SaaS PMF.
So, in May 2023, with all these considerations in mind, we decided to look into the potential of turning Nova into a paid community.
Stay tuned if you want to learn about the process, outcomes, and learnings of the wildest period of work in the history of Nova.
🔎 The Top Talent Report 2023
The Top Talent Report 2023 was created as the result of a survey answered by +1.000 Nova members in April and May 2023.
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